My Plan - Good or bad? and advice please!!

BGJ91

So here's my story.... I'm in my early 20's and a couple of years ago had my first taste of getting credit and getting a good wage, having control over money. Long story short, I lost control a bit and got in a lot of trouble with payday loan companies. I learnt my lesson the hard way! I'm now in a better position, and me and my partner and looking at moving in together and buying our first house in about a years time. Before that I need to get debt free so I can save for a deposit. She's saving about £800 a month at the minute so we have a little to start with.

I earn £1540 p/m after tax, student loans and pensions.

My out goings are:
£100 family member loan (he bailed me out when I got in deep trouble) £2000 left to pay
£165 - Car and service plan (PCP, no missed payments)
£100 - O2, phone and iPad**
£30 - Vodafone, phone**
£93 - 118 money loan (£1000 loan, £763 to pay off)
£50 - Very account (£700 to pay off)
£50 - Litlewoods account (£400 to pay off)
£50 - 3 phone (£600 to pay off)
£40 - misc (other things like gym etc)
£35 - car insurance

HSBC Student overdraft (-£2000) paying £32 p/m at the minute to cover just the interest
Barclay Card initial - (£1150) - paying £50 a month off


I now it doesn't look good, and I've made plenty of mistakes, but I'm on the road to getting out of this and in a better position than 12 months ago. I have lots of phone contracts and catalogue accounts because at my lowest it seemed like a good idae to get loads on credit and sell the device to pay off payday loans. I now regret it massively. I have one phone and that's with O2, the rest are just running their courses. I've paid 2 phone contracts off last month to the sum of £500.

Now my plan was to just pay the interest in the overdraft and credit card, concentrate on paying off every Jong else so that it frees up more money per month to then concentrate all my money into paying the overdraft and BC off. However, I'm now thinking, is it better to pay those off first? As they'd havehe Biggest effect on a mortgage and it's better to get them out of the way ASAP, as on all the other items I have never missed payments and won't miss any. Then concentrate on them after?

I know it's a mess, and I knows it's complicated. But I'm really trying to make a good go of this and sort my financial life out, get a clean slate. Now in Jan, I'll get a wage of about 1800 due to back pay. Where should I put the extra money? my plan was to pay off 118 money.

Soon as I'm more debt free, the saving will start!

I'm after any advice or tips, I still live at home so pay no other bills. I'm willing to do whatever it takes to fix this.

Thanks

BGJ91

I should also say, that over the past 2 years I've gone through the sleepless nights (weeks) the worry, the hiding from my partner, so now knows much more and I've come out the other side looking to really fox this. As I said I'm in a much much better position that 12 months ago

Tyrone_Black

We'd need to know what the interest rates are on each to make suggestions. I'm guessing the 118 loan is at a high rate?

BGJ91

Well on a £1000 loan it's £679 interest. It's 93 p/m to October, or 766 to clear it next month.
74.1% APR
HSBC is £32 interest p/m on £2000

Barclaycard is £24.91 interest on £1200

Sanctioned_Parts_List

First off, have you done a full SOA yet? Because the outgoings above are not your full outgoings - you still have room and board to cover. This will let you know how much money you really have left at the end of the month.

Second, type "debt snowball calculator" into your search engine of choice and plug your debts into one of the free ones (http://whatsthecost.com/snowball.aspx); it'll help you identify the most profitable order in which to clear the debts.

Third, does your partner now know about these debts? If so, will she help? It seems that 1 month of her normal savings would clear your horribly expensive debt without waiting for your back-pay (and saving another month's interest). If you're looking to buy a house together, it's in her interest to help you get sorted asap.

Fourth, will your family member allow you to suspend repayments for a year to allow you to make some headway on more expensive debt?

getmore4less

Use this for the SOA format in MSE to post.
http://www.stoozing.com/calculator/soa.php

snowball calculators
http://www.stoozing.com/calculator/snowball-calculator.php
http://www.whatsthecost.com/snowball.aspx

Once you have the rates you can do a plan,

paying of phone contracts may not be the best thing to do unless you get a very good discount that is equivilent to a better rate than the most expensive debt.

The Barclaycard is 27% APR.
The OD is 21%

enthusiasticsaver

As above I would agree - do a soa and put down rates of interest but yes as a gut reaction I would say get rid of the horrific 118 loan money loan. That is the most awful rate of interest. Presumably you must have been in a dire situation to take that out !!!

thegreenone

I would agree with getting rid of 118 asap but can you also squeeze a bit more to get shot of Littlewoods over the next two months? That £50 could go to Barclays to pay double and get rid of that one in ten months'ish. With the £93 from 118, I would pay £33 to HSBC to double repayments there and put the remaining £60 into a savings account. Find one fairly untouchable, so at least you have started saving. You sound as though the fog has lifted and you can see the light at the end of the tunnel. Good luck.

northerner999

100 per cent agree with those who say prioritise payday loan.

As a rule of thumb, throw every spare penny you have at those charged no most interest.

If you are totally serious you need to bring in as much extra income as you can. Any DVDs you don't watch, CDs you don't listen to? eBay, music magpie, car boot the lot. May not bring in much, but the compound interest saved will really add up. Sign up for online surveys etc, and look at the board/page son here about upping income. Will be amazed at what you can actually raise if you put your mind to it.

Kitten868

I really think the snowball calculator is the best way forward for your plan. Just pay minimums not what you think you should pay. Just google debt snowballing calculator.
And I also agree with trying to bring in extra income just for debt.
Well done in confronting this

DoctorLove

Hi mate,

Not much to add beyond what others have already said - highest interest rates should be your priority.

BUT

One thing you mentioned reminded me of myself a few years ago... "I have lots of phone contracts and catalogue accounts because at my lowest it seemed like a good idea to get loads on credit and sell the device to pay off payday loans. I now regret it massively.".

Don't take this the wrong way or think I'm prying but why were you taking out PDL's and then ordering stuff and taking out phone contracts etc? No easy way to ask this - was it for gambling?

I was in a bad place and I used to take PDL's with the intention of clearing them each month and then when that failed I ordered stuff and took out phone contracts to sell the phones... Hence my asking.

There is no shame if this is the case, but you need to be honest with yourself if I'm right and get some help if you need it or you'll be forever sabotaging yourself