Deperately trying to break the debt cycle

zazou_uk

Help please… I have just discovered this website even though I bought Martin's book a few months ago. The forum is brilliant as I have quickly learnt that there are so many people are in the same boat as me and the advice is fab and has encouraged me to finally take control of my finances and pull myself out of the depressing cycle of having no maoney by the end of each month.

I earn (what I feel is a v respectable sum) of 1694+ per month but never seem to have any money by the end of the month. The last couple of months have been particularly bad and I ran out of funds by week 2 in May!! Aaghhhhhh. I bought a flat in November and regularly make the following:

mortgage 606.16 (interest only at present - sub prime mortgage)
gas - 30
electricity - 40,
gym 54.
Cc debt 70
Sofa payment (50 for next 6 mths 0interest free as my uncle put it on his ccd)
Water - 51.40
CC - 65
Food etc - 150
Cable - 30
b/band - 17.99
I also have an overdraft of 400 with the halifax which use every month. What can I do to reverse this cycle? Obviously with a new flat I have had to buy furniture and other bits and pieces and pay upfront for things like council tax. I have no credit cards currently but have run into trouble in the past and have approx 3700 with a debt collection agency and I have agreed to pay 70 pm. My parents gave me 6k about 18 months ago to pay of my debts but in my calculations managed to miss this the cc debt and it spiralled to over 3k. I have completed the budget planner and am 324 in the red (this includes my overdraft). I have no chance to be extravagant as the money is all gone. As I have no access to credit (except my overdraft), when it's gone, it's gone. In April I borrowed 300 from those pay day loan people and repayment was 375. They agreed for me to make 2 payments of 187.50 (End April & End May). Today I have 12 to last till the end of the month and need to buy a bus pass. I cannot borrow money off anyone as they all have their own problems. I discovered that my cheque for my council tax bounced (104) so I now have arrears on my account. I also have a next account (owe just over 200 on it).

This month I splurged on me (naughty & v stupid I know was my 30) and am kicking myself, and have not been able to pay
quarterly BT bill 120,
o/s council tax 234 (march, april & May),
Next bill - minimum payment of 10,
50 to my uncle for sofa

and of course the bank (halifax) will now charge me for failed DD & as the charge will take me over my limit they will charge me again. Having been down the numerous letters from creditors and phone calls I do not want to be in that position again. No savings left, as all went on flat. Thankfully no CCJ's. So do I bite the bullet and try and get a loan to pay of everything and then have 1 payment in addition to manageable bills. Would have to go to those lenders that specialise in loans for people with less than perfect credit or just try an work through everything slowly, but do not want to make my credit record any worse than it is.

Any advice gratefully received .

Yours

Trying to break the cycle of debt and and willing to finally take control of finances

mountainofdebt

Can't give you any real advice except £120 seems rather alot (putting it politely!) for a quarter! Makes me feel better about the £60 bills I was getting!

Seriously though if you do talk alot on the phone then can I suggest you sign up to 18866 (https://www.18866.com).

Also how many do you cater for ....£150 seems alot for one person....does this figure include alot of takeaways - if you are anything like I was then I guess it was!

Trouble with consolidating your loans is that you are fooled into thinking that you have more money than you really have and so don't put the spare cash towards the debt and sometimes (well in my case anyway) before you know it, the debt has increased.

btw how did you miss the £3k DEBT???

stellagypsy

Don't overlook your Council Tax - you can get a summons if you have missed 3 payments. Ring them and be totally honest with them over your situation and you will most likely find they will try and help you out. Ignore it and it WILL NOT go away. Remember, this is the one you can (ultimately) go to jail for so you need to keep 'em sweet.

Also -
ditch the gym (you can't afford it)
cable TV (ditto) - get a freeview box
Phone - switch to BT Option 1 (10.50 per month) and sign up with 1899 / 18866 - see home telephones board for more info, save yourself a fortune! Also, in the past I found that BT are very easy to negotiate with regarding bills you can't pay - try it, you might find they will spread the cost for you.
Water - seems high - have you got arrears?
Food etc - seems high for one, I can feed 3 adults for that - look at the old style board and learn to cook if you currently buy convenience meals.

This should free up a fair amount. Then ring CCCs / Payplan or similar FREE debt advice organisations and ask them to negotiate reduced payments with your creditors on your behalf.

Magentasue

zazou_uk wrote:

mortgage 606.16 (interest only at present - sub prime mortgage)
gas - 30
electricity - 40,
gym 54. cancel this?
Cc debt 70
Sofa payment (50 for next 6 mths 0interest free as my uncle put it on his ccd)
Water - 51.40
CC - 65
Food etc - 150 look on moneysaving old style for ways of cutting this
Cable - 30 cancel this?
b/band - 17.99 use library instead?

quarterly BT bill 120, way too high! stop talking! check phone board
o/s council tax 234 (march, april & May),
Next bill - minimum payment of 10,
50 to my uncle for sofa

I would advise against a loan - not that I'm an expert on these things but because I think you're like me, someone who likes to spend money! You will end up with a loan repayment to find every month and still be spending.

You need to make cutbacks and get yourself into credit and stay there. If you cut your food bill in half, ditched cable, broadband and the gym that would pay your council tax.

To me, your salary looks more than adequate to pay your bills and other payments - you just need to be frugal for a few months to catch up.

Magentasue

Stella and I cross-posted - we're in stereo!

stellagypsy

Magentasue - great minds think alike!!

roger56

b/band - 17.99 use library instead?

For internet access if you switch to BT option 1, make your internet dial up number your best friend (! sounds sad but saves money). Keep internet access sensible and try to do things in one hit per day, don't keep dialling up and having short sessions.

Otherwise the advice already given is sound. Question every penny you spend at the moment and don't miss any more payments!

Good Luck

bestyman

I too was no good with money until recently.
What I did which helped a lot was to set up another bank acc with all bills on direct debit a few days after payday. Then set up a direct debit from main current acc to 2nd bank acc to cover all the direct debits plus say £50 as a safety net.( as a bonus may have £600 spare in a year for hol s etc)
That way all your bills are paid as you have no choice. Then realiaty kicks in and you realise that out of your wage you only have XXX amount , you are not as rich as you thought.
My next step , having realised how little I had was to make savings. Before the savings seemed worthless, whats a tenner a month I used to think but seeing how little I had the savings now seemed worthwhile.
My savings were.
1. Used to buy mc D , etc for lunch , only £3 I thought but over a year thats £1,000.
2.Good night out on a Sat would be 70 quid. Over a year thats another £3,500. If I do go out now I smuggle my own vodka.
3. Sack the gym . £600 saved. Use council one or walk in park.
4. Change broadband from BT to madasafish . saved about £150.
5. Change electric to zest4 . Another £100
6. Use 18866 . saved £500 a year there .
7. Change mobile phone package, O2 payg suits me , cut down using it. £200.
8. Cut down on food and shop around. Odd trip to Netto for cheap booze etc, vouchers from internet , other stores etc. No more M and S ready meals. Learn how to cook a chicken ( yes I didnt know how to cook anything that wasn`t re heated in an oven). Must have saved £1500+ a year on food.
9. Avoid bank charges/ credit card charges ) many tips on this site), open a saving acc ( first time in my life and Im 37) .Few hundred saved here.
10. Don`t overlook the little things. I now wash my car by hand, avoid paying for parking, post letters 2nd class, buy crap pop and drink value vodka instead of smirnoff. Another few quid in the bank.

My problem was the same as yours in that I was earning good money and thought I could afford to spend as I pleased. To me at first it was very difficult but now I actually enjoy been tight. LOL, Im sat here now with my coat on and the heating off, before I just used to leave it on 24/7.

Like the others have said you can pay your bills off with your income. Good luck. Don`t worry too much.

Bestyman

zazou_uk

Thank you all so much for the invaluable advice..I am actually looking forward to taking control and hopefully reaping the rewards over the next few months. It will be hard, but worth it. The 150 food bill covers food, smokes (I have now given up..day 4 & counting) newpapers, miscellaneous cash etc. I am going to open up another account to transfer out any excess cash once I have deducted outgoing bills so that it is not swallowed up by my o/draft. My parrents live in Africa, which is why phone bill so high..I will resort to email and the occasional fone call. I get free line rental with my NTL cable so could can BT and switch. Water bill...no arrears, but this is the last payment till march nxt year.

overdrawn_again

Try https://www.uswitch.com I only pay £55pm for gas and electric duel fuel!
NTL have now separated line renatl = £10.50 from teh TV package.

ADAM001

try shopping at netto,aldi- you could halve your food bill,your gas,electric and phone look expensive to me,have you tried looking for a better deal?