Dealing with the debt!

ladya94

Hi All!


Today is my light bulb day - 9/11/2016
I am officially taking a stand and going to speak about my debt with you all and hopefully you can help me stay motivated and get it cleared!!


For a few days now I have been reading MSE and seeing how everyone else is dealing with their debt and it has truly inspired me.


I am in debt for a few reasons - I am too impulsive, I have little self control, I am too kind hearted... some of my debt has been due to my relationship.
A few years ago I took a loan out for my SO at the time, that thankfully is paid off but you would have thought I would learn.... :mad:


My debts ...
Mum - £250 (she helped me out with my car insurance)
Personal loan - £13310.86 (13.2% apr... £3000 of this to be repaid by my SO)...
Curry's (TV that I didn't need) - £563.09 (0% apr)
Very - £371.15 (47.9% apr, £53.96 is BNPL)
Credit Card - £420 (0% interest)
Overdraft - £1000
Car - £4,688.84 (22 payments left)


Total - £20,603.94 ... SHOCKING!!!:mad:


To get me under control I have started a spread sheet to budget better! It is great and addictive feeling when you can tick off or reduce the debt and see it get closer to zero... sometimes however I feel like it is never going down.


If anyone has any advice on which payments to make first etc it'd be much appreciated.
The loan and the car payment are set up monthly. I am however hoping to clear the other items off asap so I can pay more into car/ loan and reduce the terms.
If you have a similar story to share I would love to hear it and hopefully we can support each other through!


Thank you all for reading x

EssexHebridean

welcome to DFW, and congratulations on your lightbulb moment! :T

Suggestion as always - first step is to put together a Statement of Affairs (SOA) - the link is in the "Sticky" post over on the main DFW board. That will also help with your budget. Get at least 6 months worth - ideally a years worth of statements (bank, credit card etc) together so you don't miss any occasional outgoings you may not have thought of.

For the time being I would ignore the "agreed" debts - so the loan, and the car payment, beyond making the agreed payments to them. Very is the one to attack first (and to throw every spare penny at) from the looks of what you have posted so far, I'm guessing closely followed by the overdraft - you need to establish what you're racking up in charges on that, too.

0% debts need to be minimum payment only until the interest-bearing ones are cleared - but make sure you have a clear note of when the 0% rates end, if that applies, to avoid getting caught out.

As and when the time comes to hit the loan, check carefully that there is no penalty for overpaying it. If the interest has been front-loaded you will need to get a "redemption figure" on it as there may be a refund of some interest due. What I did when we paid ours off was stashed the money into savings earning interest until I had amassed enough to clear my loan in a lump. That worked well for me.

Huskyrunner

Good luck with your journey i will check in from time too time.

ladya94

Thank you for your support!
I will get my SOA together and post for everyone to review. Today I have spoken to my bank to request statements, when the account was set up they were automatically paperless so no statements! :-(

I agree, I need to get rid of the "Very" debt and forget the password so I don't spend!
My overdraft costs around 50p per day, so currently costing me about £15 a month...

I have spoken to the bank regarding the loan and there is a charge for repaying early which is 58days worth of interest, she advised me to make over payments each month to reduce the term.

Does anyone have any tips on an app that I can use to record my daily spend?

Thank you all! Xx

EssexHebridean

People will suggest YNAB (You Need A Budget) but it's a subscription app. My suggestion would be - less glamorous I know, but good old pen and notebook for the time being - maybe think about spending on an app if you still feel you need it when you've made inroads into the debt?

On the bank statements you should be able to print them off from the online account?The bank will probably charge you for sending copies I would think?

Something worth thinking about - once you have your SOA and you start to work out a proper budget, is whether your bank allows you to open savings accounts directly linked to your current account - if you can this makes it really easy to set money aside for particular expenses without it all sitting in your current account where you might be tempted to dip into it.

ladya94

good point!! start as I mean to go on, no point wasting money at this point when every penny is crucial.


Bank statements - I have changed my online account to be able to send me paper copies every month, no charge :-) at this stage I can't print off at home as I have no printer.


Excellent idea!! I have been able to set up another account... I now have 1 that my wages will be paid into and another that my bills come out off... I will sort my SOA out and then I can set up relevant standing order to move my money across to the bills account ready...

monz

The best ones to his is snowballing the ones with higher interest. That means you are not paying the higher interest hun. Work your way down. Start doing surveys also you can make few pound here and there.

Opinion World (my fave and last month won prize draw taking me out debt)
Crowdology (£4 every 3-4 weeks.)
Ipsos I-say (can get £5 amazon vouchers every cpl weeks treat yourself or your mum)
Valued Opinions

Hope some these helps xx

EssexHebridean

Surveys are a good idea. OnePoll is a slow burner but when it pays out it's £40 a time. Just takes a while to get there but on the other hand the surveys are usually quick.

You're going to need to do the maths on the loan but I'm guessing that repayment penalty still makes it worth trying to get it gone early. Not quite sure why the bank are advising you to make OP's to reduce the term though - as that would definitely mean you would incur the penalty. Ask them whether any OP's you make can be used to reduce the CAPITAL, leaving the term as agreed and reducing the monthly payments, perhaps? It may not be possible though if the monthly payment amount forms part of the contract. If the interest is front loaded though it still makes more sense just to get it gone quicker - and the interest you'd get back would cancel the penalty, I'd imagine.

Good work on the bank statement AND on opening the additional account for paying bills from.

ladya94

Thank you Monz - I have signed up to Opinion World, it looks like a fab website! I already have 10 points and a prize draw entry!! I will keep taking the surveys xxx


Loan - I think I will need to go into the bank and speak to an advisor as I am now not sure I have fully understood what I was advised on the phone... my priority for now has to be Very I think! I have some babysitting coming up that should pay me a bit of cash that I can pay straight into very!!

ladya94

My SOA (as of 10/11/2016)

Monthly Salary - £1407 (give or take a few £'s for overtime)


Outgoings Monthly -
Rent (to my mum) - £150 per month
Car Payment - £213.12 per month
Phone bill - £54 per month (often a lot hire)
Loan Payment - £259.41 per month
Pet insurance - £6.96 per month
Phone/ Gadget insurance - £12.58 per month
Fuel - £120
Food/ Takeaway - £80


Total - £897.30


Yearly renewals -
£110 a year for Car Tax (due Feb)
£550 a year for Car Insurance (due July, should be a lot less next year)
£200 a year for Car Service/ Mot


My debts ...
Mum - £250 (down from £500)
Personal loan - £13310.86 - 13.2% apr - 76 months to go
Curry's - £563.09 (0% apr until March) down from £700
Very - £364.40 (47.9% apr, £53.96 is BNPL) Limit £400
Credit Card - £420 (0% interest) Limit £500
Overdraft - £1000 (£15 a month)
Car - £4,688.84 (22 payments left)


The money I have left over from my wages is normally spilt on the debts - some money to credit card (min payment £25), Very and the TV. I normally leave myself £100 a month just in case so at least I do have some money.
I often have babysitting/ dog walking so my wages are topped up - this money I will give straight to my mum.


Any feedback is greatly appreciated :-) x

enthusiasticsaver

I would tackle the Very account first and get rid of that 47.9%!!! That is a shocking rate.

I am guessing from what the bank told you that you can make overpayments on your personal loan without penalty but closing it early incurs 58 days interest so you need to get it as low as possible before paying it off rather than paying it off as a lump sum. This will keep the penalty as low as possible. Same goes for the £3000 from your SO. Don't close the loan just make regular overpayments as he gives you the money. Close the loan once it is almost all cleared so the 58 days is on a low balance.

If you pay 50p per day on your overdraft though that is more expensive than your loan (18.25% pa) and if the 50p is a flat fee regardless of the overdraft amount the percentage gets higher as a proportion of the debt so I would tackle that after Very and leave the loan for after the overdraft is cleared.

Re your soa your phone is expensive so can you get that down and do you really need phone insurance or is it covered under your mums contents insurance? That is £145 over the year.