Working hard but still in debt

moneyfacts

Have you thought about selling your £13000 car and buy one for £2k? That's a big part of your problem solved.

Also you need to learn to budget and look after your money better, so you don't waste a penny more. Well done for realising you have a problem

StrugglingWithDebt87

Yes, I'm planning on selling it to clear the remaining HP debt and then get a cheaper car. That will also reduce my outgo by £270 per month as that's my current HP.

I also need to write out a budget so I have something formal to follow.

allthe7s

Haircuts, entertainment, gifts and holiday fund all need to be drastically lowered. Car insurance is high for your age.

Others will be along soon with more suggestions

allthe7s

I really recommend doing the free trial month of ynab its a website and app budgetting tool. Im 3 weeks in to my free trial and can already say it has changed my (financial) life. I was so sceptical when others said this to me but it is so so true!

StrugglingWithDebt87

Haircut is £40 every 12 weeks. I should probably have put £13pm to average out. I live in central Bristol and review my insurance every year so very unlikely to be able to save any money on that.

Thanks for the budgeting app suggestion. I'll check it out

LabRatty

Hi,
The advantage of a DMP is that your interest would be frozen and all your payments made would be reducing the existing debt rather than just a fraction of them.
The disadvantage is that your credit file would be trashed for six years, until the defaults drop off, but you say that it's already hammered, so maybe this is not such a problem.
If you went for a DMP and paid the debt down ASAP, you could use the remaining time before your defaults disappear to save a deposit for a home, so no time would be lost plus you would have huge motivation. Others can advise how to trigger defaults as early as possible so the clock is ticking on clearing up your credit history.
All the best,
LR

moneyfacts

It sounds like you have progressed a lot, I wouldn't worry too much about credit scores as they soon repair and if you are forced to rent for an extra year, just use that time to save more of a deposit. For now, just obsessively clear that debt.

fatbelly

So with your debts

Lending stream.................700.......200.......700
Quickquid .....................1700......97........0
Wonga..........................1000......396...... .1900

go claims for

QuickQuid - claim for £6,361.
Wonga - claim for £5,375.
Sunny - claim for approx £1,260.

Does Sunny = Lending Stream?

So there is a scenario where these get repaid. Taking these out of the soa would mean you can afford the contractual payments on the other debts.

However, just about all your debt is high APR. I think I would bite the bullet, go for a dmp (maybe self-managed) and use any lump sums to try full & final settlements when they arrive. As the others have said, you would then start saving for a deposit, and on your income, a house purchase is realistic in a few years.

Fireflyaway

You have a great income so you could work out an arrangement with your creditors yourself. It might depend on how much you are willing to dent your credit history? I decided to pay minimum on most things and tackle the smallest stuff first. Check out Dave Ramsey snowball method. It kept me feeling positive and enthusiastic. The result was 2 accounts defaulted but to be honest my credit score has still improved over time. For me , the hit was worth the breathing space and it was the first time in years i didn't have to take out another payday loan just to pay the bills! You have plenty of time to buy a place, so why not pay off the debt then save hardcore to get a really juicy deposit whilst you wait for the credit file to repair?
Also how far are you through the car finance? Could you hand the car back? Once I was 50% of the way through that's what I did. On paper my current car sounds rubbish (12 year old astra) but I swear its the most reliable car I ever had and I have no payments on it.

StrugglingWithDebt87

Thank you. I'll check out Dave Ramsey.

The car finance - I have a balloon payment due at the end of April which is much lower than the car is worth. My boyfriend is going to buy the car for me (£9,800), so I can sell at the realistic value (£13,000), which means I'll have £3k - £1,500 to buy a new car + £1,500 towards debt repayments plus £270 more per month of my income which won't be going on car repayments.

What's the benefit of self managing a DMP rather than going to step change? I've had mixed dealings with my creditors. Some extremely helpful - QQ and HSBC. Others - Very, Aqua not so. This puts me off. Although at the moment I'm getting 5+ calls a day so probably over sensitive.

Fatbelly - lending stream is a different provider to sunny. I've only just taken on something with lending stream so don't think it's worth going down the affordability route .... although in hindsight I clearly can't afford it.

What does a full and final settlement mean?