Determined to get rid of my debt ASAP!

bilko89

Hi all.

After having a look on Martin's blog pages on the subject I would love to have the forums input and advice for the situation I find myself in!

My current debt stands at £4,701.91, which is made up of mostly payday loans, a couple of mobile phone contracts (defaulted) and credit cards. All of which I have agreements in place, interest frozen and paying £100 per month overall to creditors.

I certainly do NOT want to be paying £100 per month for 47 months! What I was pondering was of course continuing to pay my £100 per month but also putting away say £50 per month (will be up to £120 as a hire purchase I have ends soon) and saving up a good amount of money before offering settlements to each of my creditors. My other half is also currently applying for jobs after being unemployed since having our second child (2 years ago) so the majority, if not all of this would also go towards the "savings". Just really wanted to rack the communities brains about my idea and if it makes sense?

Also, in terms of discussing settlement figures with creditors, I know Martin provides great templates and instructions on how to do this but is there a better way to do this or will me doing it using this guide get me the best results anyway?

Sorry for badgering on, your replies and input are much appreciated :beer:

National_Debtline

Hi Bilko89,


There are likely to be a few different opinions on this one. I would suggest it is better to increase the monthly payments to the debts so you can shave time off the repayment plan, rather than save to do the full and final offers.


As an example, an extra £50per month would mean a total of £150pm paid to the debts, so they would take 31months to repay - not 47. If you could increase the payments by £120pm (so a total of £220pm) is paid, that would take the repayments to 21months (less than 2 years). So you will have taken nearly 2 years off your repayment plan. A common problem with trying to save the money is that the savings get used and that means that the you still only pay your £100 instalments and the lump sum offers may dry up and become unsuitable.


Full payments would also result in the debts showing as fully settled on your credit file, rather than partially settled, which is a bit better in the long run if you want to rebuild your rating.


Laura
@natdebtline

EssexHebridean

Get yourself an SOA done and posted up so we can see whether there is anywhere else you can make savings within your current budget - who knows, maybe we can get that repayment schedule down a bit further for you!

I doubt you will find ANYONE on these forums who wanted to spend the time they did paying off their debts - full & finals are great, but more often than not come into play when someone for whatever reason gets an unexpected sum of money. Amassing sufficient money for F&F's is risky due to - as Laura suggests - the risk of something unexpected coming up that the "pot" of money has to be used for.

enthusiasticsaver

I would agree with Laura. If you can afford to pay more then increase the payment and that will shave more time off the repayment period.

bilko89

Thanks for all your comments, SOA below!

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 1365.54
Partners monthly income after tax....... 0
Benefits................................ 531.28
Other income............................ 0
Total monthly income.................... 1896.82

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 121.00 £71 per month ending 2 months
Rent.................................... 300 usually £260, paying £40 more for arrears
Management charge (leasehold property).. 0
Council tax............................. 150 usually £100, paying £50 more for arrears
Electricity............................. 40
Gas..................................... 40
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 17.99
Mobile phone............................ 32
TV Licence.............................. 18.18
Satellite/Cable TV...................... 89.34 Internet incl.
Internet Services....................... 0
Groceries etc. ......................... 240
Clothing................................ 0
Petrol/diesel........................... 90
Road tax................................ 0
Car Insurance........................... 125 Loan paying to Aunt, ending in May
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 56 2 Clubs
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthdays)...... 40
Haircuts................................ 27
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Wedding................................. 150 Married in December, last payment
Total monthly expenses.................. 1536.52


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0 Owned by finance company until paid off
Other assets............................ 0
Total Assets............................ 0


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 124.25...(71).......0<
Hire Purchase (HP).............510.51...(50.01)....0
Total secured & HP debts...... 634.76....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Council Tax 15/16..............64.35.....9.........0
Benefit Overpayment............62.5......9.........0
Arc Europe (Payday)............85........3.........0
Car Finance....................10995.....215.......0
Lowell (Store Acc).............66.73.....10........0
Old Insurance .................625.......5.........0
My Jar.........................200.......5.........0
Payday Express.................124.41....3.........0
Uncle Buck.....................160.......4.........0
Moneyboat......................292.......7.........0
Fredrickson (mobile)...........329.65....8.........0
Moneybox 24/7..................232.......6.........0
Provident......................280.......7.........0
Lowell (mobile)................347.......8.........0
Wescot (Overdraft).............722.......1.........0
Lending Stream.................65........2.........0
MoorCroft (CC).................1138......28........0
Total unsecured debts..........15788.64..330.......-


Monthly Budget Summary
Total monthly income.................... 1,896.82
Expenses (including HP & secured debts). 1,536.52
Available for debt repayments........... 360.3
Monthly UNsecured debt repayments....... 330
Amount left after debt repayments....... 30.3

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -634.76
Total Unsecured debt.................... -15,788.64
Net Assets.............................. -16,423.4

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

MallyGirl

bilko89 wrote: »

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 1365.54
Partners monthly income after tax....... 0
Benefits................................ 531.28
Other income............................ 0
Total monthly income.................... 1896.82

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 121.00 £71 per month ending 2 months
Rent.................................... 300 usually £260, paying £40 more for arrears
Management charge (leasehold property).. 0
Council tax............................. 150 usually £100, paying £50 more for arrears
Electricity............................. 40
Gas..................................... 40
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 17.99
Mobile phone............................ 32
TV Licence.............................. 18.18
Satellite/Cable TV...................... 89.34 Internet incl.It continues to astound me the number of people in debt who spend this sort of money on TV each month. Sky etc are a luxury niot a necessity. Ditch and get cheaper internet till you are back on your feet
Internet Services....................... 0
Groceries etc. ......................... 240
Clothing................................ 0
Petrol/diesel........................... 90
Road tax................................ 0
Car Insurance........................... 125 Loan paying to Aunt, ending in May
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 56 2 Clubs
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0 you should have this
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthdays)...... 40 £500 a year on presents needs to be trimmed
Haircuts................................ 27 try a local college
Entertainment........................... 0 ?none
Holiday................................. 0
Emergency fund.......................... 0 you should try to put something away or you will be straight back to PDL when something breaks
Wedding................................. 150 Married in December, last payment
Total monthly expenses.................. 1536.52


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0 Owned by finance company until paid off
Other assets............................ 0
Total Assets............................ 0


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 124.25...(71).......0<
Hire Purchase (HP).............510.51...(50.01)....0
Total secured & HP debts...... 634.76....-.........-

Unsecured Debts are these all really 0%?
Description....................Debt......Monthly...APR
Council Tax 15/16..............64.35.....9.........0
Benefit Overpayment............62.5......9.........0
Arc Europe (Payday)............85........3.........0
Car Finance....................10995.....215.......0
Lowell (Store Acc).............66.73.....10........0
Old Insurance .................625.......5.........0
My Jar.........................200.......5.........0
Payday Express.................124.41....3.........0
Uncle Buck.....................160.......4.........0
Moneyboat......................292.......7.........0
Fredrickson (mobile)...........329.65....8.........0
Moneybox 24/7..................232.......6.........0
Provident......................280.......7.........0
Lowell (mobile)................347.......8.........0
Wescot (Overdraft).............722.......1.........0
Lending Stream.................65........2.........0
MoorCroft (CC).................1138......28........0
Total unsecured debts..........15788.64..330.......-


Monthly Budget Summary
Total monthly income.................... 1,896.82
Expenses (including HP & secured debts). 1,536.52
Available for debt repayments........... 360.3
Monthly UNsecured debt repayments....... 330
Amount left after debt repayments....... 30.3

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -634.76
Total Unsecured debt.................... -15,788.64
Net Assets.............................. -16,423.4

[/font]

a few comments in green.
If your partner could get any sort of work - pub work in the evening while you look after the kids - it could make all the difference

EssexHebridean

That was quick work - nice one! I'll stick comments in blue as you already have red in there!

bilko89 wrote: »

Thanks for all your comments, SOA below!

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 1365.54
Partners monthly income after tax....... 0 can this be increased at all? Avon/Betterware/Kleeneze type thing, or something fully home-based even?
Benefits................................ 531.28
Other income............................ 0
Total monthly income.................... 1896.82

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 121.00 £71 per month ending 2 months How does this correlate to £121 a month? Do you mean that £71 of this ends in 2 months?
Rent.................................... 300 usually £260, paying £40 more for arrears
Management charge (leasehold property).. 0
Council tax............................. 150 usually £100, paying £50 more for arrears
Electricity............................. 40
Gas..................................... 40
Oil..................................... 0
Water rates............................. 0 Do I take it from that you're in Scotland so this is included in Council Tax?
Telephone (land line)................... 17.99
Mobile phone............................ 32
TV Licence.............................. 18.18
Satellite/Cable TV...................... 89.34 Internet incl. You KNOW you're paying too much for this, right? Can you switch to a basic package for the time being? Ring and haggle at the very least - we have no debt but still only pay about £60 a month and that includes line rental, too!
Internet Services....................... 0
Groceries etc. ......................... 240 Bit steep - there's wiggle room there at least to knock off the odd £40 - try the Old Style board for inspiration & help!
Clothing................................ 0 Do you not wear any? You're going to get awful cold in winter you know... Seriously - you need to be realistic about this exercise
Petrol/diesel........................... 90 Why are you paying for petrol/diesel when you don;t have a car?
Road tax................................ 0
Car Insurance........................... 125 Loan paying to Aunt, ending in May £125 per MONTH? Really? Is this actually nothing to do with a car, as it says above that you don't have one...
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 56 2 Clubs
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0 How come? If you have possessions, you need this. Seriously - imagine that fire that sweeps through your home when you're out - all you have is the clothes you stand up in - now what are you going to do? It's not a big sum but does need sorting ASAP, especially with kids in the picture.
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthdays)...... 40 until the debt is sorted, trim this a bit.
Haircuts................................ 27 Per month? You don't say whether you are male or female but I'm guessing male - can yours be done with clippers? Are the kids young enough that home hair cuts won't leave them being beaten to a pulp at school?
Entertainment........................... 0 Never? Nothing? Not the odd coffee when you're out, a quick burger with the kids, a trip to the cinema, the occasional family outing?
Holiday................................. 0
Emergency fund.......................... 0
Wedding................................. 150 Married in December, last payment So that's £150 you're about to have freed up to add to your debt payment, yes?
Total monthly expenses.................. 1536.52


Assets
Cash.................................... 0 where is the cash that you budget for presents? Do you actually budget this, as it seems unlikely you spend exactly that amount every month?
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0 Owned by finance company until paid off Ahh - this explains that one then...you do need to add in that you have a car above, and you do need to be budgeting for whatever isn't covered by the deal you have - so new tyres, servicing, tax, etc.
Other assets............................ 0
Total Assets............................ 0


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 124.25...(71).......0<
Hire Purchase (HP).............510.51...(50.01)....0
Total secured & HP debts...... 634.76....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Council Tax 15/16..............64.35.....9.........0 Is this included within what you're showing as paying extra above? If so you need to remove it from one place or the other as it's skewing the picture at the moment
Benefit Overpayment............62.5......9.........0
Arc Europe (Payday)............85........3.........0
Car Finance....................10995.....215.......0
Lowell (Store Acc).............66.73.....10........0
Old Insurance .................625.......5.........0
My Jar.........................200.......5.........0
Payday Express.................124.41....3.........0
Uncle Buck.....................160.......4.........0
Moneyboat......................292.......7.........0
Fredrickson (mobile)...........329.65....8.........0
Moneybox 24/7..................232.......6.........0
Provident......................280.......7.........0
Lowell (mobile)................347.......8.........0
Wescot (Overdraft).............722.......1.........0
Lending Stream.................65........2.........0
MoorCroft (CC).................1138......28........0
Total unsecured debts..........15788.64..330.......-


Monthly Budget Summary
Total monthly income.................... 1,896.82
Expenses (including HP & secured debts). 1,536.52
Available for debt repayments........... 360.3
Monthly UNsecured debt repayments....... 330
Amount left after debt repayments....... 30.3 Do you actually have this left?

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -634.76
Total Unsecured debt.................... -15,788.64
Net Assets.............................. -16,423.4

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

OK - it's not the prettiest picture but it's certainly not the worst either.

Look at shaving off expenditure where you can, but you DO need to think about budgeting for stuff like insurances and car maintenance too - otherwise when something goes wrong you are back to square one.

For now, deal with contents insurance by paying monthly - that's your first year sorted and a basic policy won't cost you much more than £10 per month. You have that £150 payment coming to an end, so sort yourself a "budget/emergency" savings account, and from the point where that money becomes free, put £50 a month into that account and DON'T TOUCH IT UNTIL SOMETHING BECOMES PAYABLE!! (This also doubles as an emergency fund).Hopefully then when next year's car insurance comes due, you will have enough in there to pay it upfront. ditto tax, Mot etc. That "spare" £100 then goes over to debt. Then when your secured loan payment (£71 a month?) ends, that also goes to the debt - prioritising the most "expensive" first - ie the one with the highest interest rate. Take a look at the snowball calculator and play about with that to see how different scenarios reduce how long it will take you to pay this back.

Good luck!

bilko89

Absolutely superb folks, thanks!

@MallyGirl

Yes, I know now that it's ridiculous what we pay for our TV package, I will be right onto that!

Presents can certainly be looked at, only buying for kids etc..

I will look into the haircut situation with colleges, never thought of that before.

Yes, no contents insurance, if it costs as little as £10 per month I will certainly look more into.

Entertainment wise, with 2 kids we do quite a lot but only costs petrol money. Picnics, museums etc (free entry, £1 parking) we do still get out!

I know what I need to do for an emergency fund (few months worth of my salary) but looking at the above, I'm sure you'll agree that it is hard to put anything away at the moment. But hopefully by acting on your advice we should be able to.

My partner is certainly been on the job hunt in the last week and hoping the applications she has sent out, at least one will get back to her! We sat down and looked at our finances after I tried to do everything on my own. I feel like an idiot for keeping it to myself for so long as she has been amazing.


@EssexHebridean

A few of your comments have been answered above.

Yes, £71 per month will be taken off the HP payments ( I have 2) so I will be left with £50 per month to pay.

Yes, in Scotland, Water is included in CT.

Since talking to my other half, we have agreed we will give Aldi a try, we shop in ASDA/Tesco just now so we should see a saving straight away.

I usually get a load of clothes as gifts on my Birthday/Christmas so generally don't buy much at all! Probably spend £100 on clothes over the year with my own money so could be updated to £8.33/M? It's a difficult one to put a figure on!

The haircut situation, is the home monthly cost! I am £7 per month, every month and my 2 girls have never had a proper haircut, only trimmed at home. After looking at it, It should be £17/M as per year, my other half has her hair done properly maybe 3 times a year @ £40 a go. Equates to £10 per month. Again, maybe something I would have to ask her to get an accurate figure!

Yes, that £150 will be extra and will definitely be added to debt repayment!

Not every month no, but September is our busiest in terms of birthdays (4 in total). I generally have £0 in the bank for the week leading upto my monthly pay.

The CT from last year is extra. The arrears I'm adding to my council tax further up is arrears from THIS year. So both are correct.

I have just found the snowball calc website, going to give it a try once I properly work out what I'm going to be repaying per month.

I have agreed with all my creditors that interest is frozen so I can continue paying £100 per month knowing that the full £100 is eating into my debt and not going to interest. In the meantime, I will look into contents insurance, emergency funds, car funds for repairs and then with the balance left over, blitz the repayments!

Anymore advice is greatly appreciated, I will continue to post updates in here which will keep me motivated!

EssexHebridean

Ahh you're going to enjoy the snowball calculator - I warn you though it gets addictive, seeing what "what if I shave another £10 off groceries and add that to the repayments" does to the overall timescale! :rotfl:

On the clothes thing - what about your OH and the kids? On the same basis? Particularly for younger kids getting people to buy them necessary stuff rather than "goodies" for birthdays anhd christmas works well for a lot of people. Does need to get amended a bit when they're old enough to establish that knickers and socks aren't really a present for them, as such, though!

The trick of doubling up a basic emergency fund with a budgeting account for annual expenditures can work really well for some people so that's well worth thinking about. In the first instance don't panic yourself by thinking you "must" have three months salary, either, aim to build to £1000 in the first instance. Once you get by the first year of budgeting for annual spends, everything gets so much easier!

enthusiasticsaver

Others have pointed out the to package which is too high. We pay £28 for basic sky and every so often ring and threaten to leave and get 6 months half price usually. The car finance looks to be the worst debt but at least you know no interest is being paid and the maximum period is 4 years. As your utility arrears, HP, loan to aunt and wedding payments stop put these amounts to your debt and you would be amazed at how quickly it will go.

You do need an emergency fund, you could argue the kids clubs are entertainment. Can they reduce to one? Can you move mobiles to sim only at contract end? As someone else said you need contents insurance. Presumably the buildings insurance is included in rent. If you take the £71 finished HP, the £150 wedding payment and save £50 on tv package that makes it that you will have £300 spare including your existing £30 you have left. I would put minimum of £50 to emergency fund, maybe even £100 initially and put at least an extra £200 to your debt which brings your repayment term down to 28 months. Almost halved and then when the other HP and your aunts loan finishes you can bring it down further.

bilko89

Thanks ES, a lot of homework to do tonight but actually excited to see what I can get together!

Just to point out as I've seen a few comments about my loan from my aunt. I work for my aunts company and the company provide a £1000 interest free loan which has to be paid before next year end. That's why the payment is £125. This was for my car insurance after my other insurer cancelled my policy for non payment (which is a whole other story :mad: )