In a bad situation, don't know what to do

libramoon175

The day before yesterday I paid £500 towards it, halving it. That's the loan that scares me the most.

I've been on the phone to StepChange this morning and they've recommended a debt management plan for me. It's made me feel a lot more positive so I'll see what happens with that!

warby68

First of all I don't think you need to panic and quite probably with your decent income and fairly low living expenses, your debt should be fixable by you yourself without any particular debt remedies if you are prepared to make the necessary changes.

Just looking short term, your budget appears to only be in deficit by the payday loan repayment of which there are only 2 left. Cutting your entertainment out for just 6 weeks will cover that while you work on the longer term.

Second, you need to be realistic on what is to blame for your debt situation. I think you've pretty much admitted you just spend every penny. But I think you've also overspent quite considerably for a while as your debt level is much greater than the 4m of income you've lost since September.

The fact you've been looking into debt remedies rather than your own habits first might tell a bit of a story. Are you looking for someone to make it easy for you rather than fixing it yourself?

The good people on here have loads of advice to give on managing your various debts and budgetting going forwards but I have a feeling you need to get yourself fully into 'the zone' first by which I mean move away from the panic and looking for easy fixes and settle down to making the adjustments you need to make your own solution.

You've taken a big step and asked for help plus you've got a job so the basics are there and good luck

libramoon175

I'm definitely in panic mode.
From what I can see a DMP reduces the monthly payments into something manageable that I can afford. I've got 4 payments of the payday loan left because of the high interest!

I've definitely always had this habit of, I'll buy it : pay for it now and worry about it later. Because there was always more credit available and I figured that if I could make the payments then why not. So I'm having to change my way of thinking about money entirely.

warby68

libramoon175 wrote: »

I'm definitely in panic mode.
From what I can see a DMP reduces the monthly payments into something manageable that I can afford. I've got 4 payments of the payday loan left because of the high interest!

I've definitely always had this habit of, I'll buy it : pay for it now and worry about it later. Because there was always more credit available and I figured that if I could make the payments then why not. So I'm having to change my way of thinking about money entirely.

A DMP has implications though for quite a long time - that's why you should take your time before deciding that's the right path for you. After all, 'quick fixes' are part of why you're where you are right now.

Just don't rush it - let some of the people here see if there are any other options open for making your debts more manageable (cheaper rates/longer terms) while you really dig deep and work out a totally new way of budgetting and managing your money.

If you can work out how much you can realistically throw at debt repayment over a period that will help with solutions.

And being a little more brutal, it has to be just a little painful if you're going to change for the longer term. If its an 'easy' fix, the bad habits will be harder to break.

theoretica

If the dance classes are necessary for work, I would move them out of 'entertainment' and make a separate category for them. As they are necessary for work, can you find a way to claim back income tax on them, or are you already? If you drop one or two occasionally could you keep up some of the work for that time by yourself? How much do you need the comments (and large room) of a class, rather than just the time to work?

You will be in a much better state once that payday loan is gone - until then your entertainment needs to be practically zero, or a portion of any extra money you raise. What do you have that you could sell? How much of the money that slipped through your fingers went on tangible things?

libramoon175

Good point about the dance classes. I can definitely just do the bare minimum for a while.

datlex

OP your SOA doesn't make sense. Are bills included in your rent? Also is the council tax really £189 a month (£63 x 3)? One small change I can see is to your mobile bill, most companies will let you change tariffs when you are within contract. £35 is high. Ask your provider what your average and maximum usage is for each of text, data and calls. Then look for an alternative. As said above you can save on entertainment (keep eye out for vouchers - I am certain some of your friends will love to save too) and review your grocery spend- down shift brands, cook, change supermarket etc.

That being said you cannot make huge reductions. I suspect you could give yourself £1000 to pay debts a month.

Given the interest rates you are paying across loans, you might want to look at consolidating. (Go in branch and have a chat with your bank manager - make clear at start it is not a formal application you are looking at options. They are however the best people to be understanding as they have a relationship with you.) http://www.moneysupermarket.com/loans/calculator/ a £23,000 loan at 20% (I suspect it will be a high interest rate) would be £680.10 per month for 4 years. The amounts due to each creditor could be cleared quickly.