Facing the facts- as frightening as they are

KC112892

So firstly I best apologise as this is fairly long post but I think it's time I took the time to spell out, more to myself, the situation I've gotten myself in.

I'm 24 years old and ever since I can remember I have been absolutely pants at managing my finances, every time money lands into my bank account I feel the need to spend it- half the time on complete and utter rubbish. Every since my first job I have wanted to 'live beyond my means' without knowing that's what I wanted at the time until recently when everything blew up in my face.

Over the past 6 years I've had pay day loans, log book loans, credit cards- every form of credit I could get, the catch being my poor credit score only enabled me to get 'sketchy' credit with massive interest. Through one thing and another I was always able to pay it off before things got too serious i.e. a tax rebate, birthday/Xmas money etc so I carried on being none the wiser.

2015 involved me really going for it and wound up with 5 payday loans, the 2nd paying the first and so on. It go to the point where the 5th loan was for £1200- the most debt I had ever had and with no clue or birthdays coming up and just abandoned it.
2016 - Multiple letters and threats for the debt came in thick and fast (as well as a debt on a Barclay Card). A day after celebrating my 2 year wedding anniversary and conversations about the future came up and I had bailiffs at the door for a debt I couldn't even remember. Long story short my family bailed me out thinking I would learn my lesson.
2016 - Several more letters for my payday loans and the Barclays card I decided to call them and offer 50% to settle the accounts which they agreed (now a settled debt on my credit score for the next 7 years). During all of this I landed a new job with a big jump (big to me) in monthly wage, proceeding to get 3 more credit cards thinking the repayments would be peanuts.


Now - I am in a complete mess. I have 3 credit cards totaling £2300, a guarantor loan from my Aunt totaling £3500, a loan (interest free thank god) from my grandparents currently at £7500 and more monthly outgoings that I can manage.

I sat down with my Husband and owned up to everything (he had been completely out of the loop for the fear of him hating me).

I went through everything and worked out my current debts, interest rates and all the other bills I had to pay. I'm very lucky in the fact he pays for everything house related.

So here is the SOA:

Aqua Card Balance £1079.24 49.9% APR (monthly rate of 3.43%)
Cap one Balance £387.07 29.84% APR (monthly rate of 2.20%)
Vanquis Balance £814.15 25.97% APR (monthly rate of 2.16%)
UK Credit Guarantor Balance £3,436.28 42.9% APR
Grandparents loan Balance £7500 0% APR

Income £1387.23
Money in from Dad £30

Outgoings:
Virgin Media £65
O2 Phone Bill £42
Food Shopping £100
Grandparents Loan £200
Aqua £100
Cap one £100
Vanquis £100
Guarantor Loan £266.29
Fuel £180
Car Insurance £92
Car Service Plan £16.50
Total Monthly Outgoing = £1261.79
Total Monthly Incoming =£1417.23

Remaining = £155.44

I need advice on how best to pay of the credit cards as that is what I want clear first. the Guarantor loan will be paid off April 2017 as per the original agreement and my grandparents are happy to accept the £200 per month until I've cleared the interest accruing debts.
The remaining balance each month is going into a savings account as my car is due a service in April which could be costly- anything left afterward will go towards a credit card (hopefully there will be a big chunk).

I know a lot of you reading this 'Why didn't I just stop after the first time' and I ask myself that every single time I look at how much it is costing my now financially and emotionally but I think the only answer I have is I just didn't think it would get this bad or I would be lucky enough to get out of it somehow.

Well I'm facing up to every single debt now, all the defaults are now clear and my goal for 2017 is to get into financial shape by clearing all my interest accruing debt by Christmas.

Any advice or help would be so greatly appreciated!.

Thanks

B

Dobbibill

Hi Welcome to the forum,

Family bailing you out rarely teaches you lessons about budgeting, so they haven't really done you a long term favour so to speak.

You need to fill in a SOA - what you have is basic and doesn't include everything, real life includes everything so you are going to fall foul of the SOA you've created quite quickly. Get a more thorough accurate one completed and we can see the bigger picture.

Well done for facing up to it, that in itself takes a lot of courage.

datlex

Straight away you Virgin bill is high. See how you can cut that. Car insurance is also high again look at comparison sites try both third party and fully comp.

meer53

Where is the money for the savings coming from ? There is no council tax /water/gas/electric or insurances on your SOA so do you really have 155+ left at the end of the month, i would say not ?

Mnd

She says her husband pays all the household bills

sourcrates

Hi,

Fill out an SOA (Dobbibill has kindly provided the link).

Do you own a property or do you rent ?

KC112892

Hi,

Thank you all for the replies so far. As previous said my Husband covers every household bill. Unfortunately my car insurance cannot be reduced due to me being a young driver (I have looked in to this in detail). Our Virgin bill cannot be lowered unless we reduce services (we have basic phone internet and TV package) which I'm happy to do if required. The above set of outgoings is everything I have to pay for each month with no exceptions (my hair is done by a friend so there is no cost there and I have no plans to purchase anything clothes related etc this year at all). Do I keep the £155 building in my savings for a couple of months and if the car service doesn't cost too much to service use what I have to pay off a credit card?

I've looked into the guarantor loan as well- I can make additional payments up to £300 each month, anything over this would incur an 'admin' fee.

To be completely honest I can manage the loan I just want the cards cleared ASAP first then focus on the loan and finally start paying off the family in bigger chunks (my hope being once one debt is cleared the monthly amount I paid can go onto the next debt- I believe this is call snowballing??).

I know I've got myself into the mess and being bailed out has not helped the situation in the slightest so I'm happy to go without luxuries such as dining out etc for this year so I can be debt free.

Dobbibill

What about car tax, maintenance, car parking, dentist, opticians etc etc. do you ever buy a coffee or lunch while your out. Do you buy Christmas/Birthday presents for anyone? All the above needs to be accounted for.

The SOA will give you guidance on what to look out for on your bank statements/receipts in your purse/wallet etc

Not completing it would be naive.

angelpye

I second the SOA, it helps to do it with any evidence of spending you have i.e. bank statements and receipts. The little things add up and if you account for everything then it gives you control of the situation - you can change the little behaviours that leak out your finances.

As for not stopping the first time...I am on debt free journey Part 3. You are not alone in making the wrong turn again. Understanding why you overspend is key to turning things around in my opinion as it helps to know how to change it. I am determined there will be no Part 4 for me.

Good luck

loken152

At least you are now trying to do something about it, no need to panic just take a deep breath and look at in logically. Which method of paying off your debt are you going to use, the snowball or avalanche? If you don't know these they are as follows, this has been copied off off the net:

The Debt Snowball and the Debt Avalanche are the two main strategies for paying down your debt. The Debt Snowball method says you should start by paying off the credit cards or loans with the lowest balances first, while the Debt Avalanche method tells you to pay off the accounts with the highest interest rates first.

We have been using the snowball and it has worked for us, we shall be debt free by October 2017. Which ever method you choose, you need to start doing a monthly budget, allocate everything single pound and stick to it. On the subject of your credit cards, i would try to transfer these on to a 0% interest card, if you able to. The interest rate on them is stupidly high.

EssexHebridean

First off, well done for admitting that you have a problem. The reply right at the start that says your family have done you no favours is absolutely correct. The two things that rarely permanently solve a debt problem are bail-outs (whether via family simply handing over cash, or by "lucky" windfalls of whatever type) and consolidation. The two things that DO work to sort things out however are acknowledgement and budgeting. You're there on the first, and about to be there on the second, if you take the advice you're being given already on this thread.

A couple of things jump out - yes, in the short term you are indeed lucky to have your husband paying for the bills. However, in the long term you presumably want to turn yourself into a responsible adult and share the stuff he's currently paying - I know on the odd occasions I've been either earning very little, or out of work and earning nothing, I've HATED feeling like a kept woman, so I imagine that's the same for you. The second is that you've not said anywhere what the situation is with the cards now - are you still using them? Are they still in your purse? if the answer to either of those questions is "Yes" then the next bit is very important. Go and get your purse, and a pair of scissors. Remove the cards, one at a time, and cut them into small pieces. You CANNOT do this if you're still accessing credit - trust me on this. Get rid of the cards, and then understand - you're probably at least 10 years away from even CONSIDERING the idea of having another credit card. Possibly longer.

You say you've always been pants at managing your finances - but you know what, I bet you're actually not. More often than not, the people who say blithely "Oh I'm hopeless with money!" actually turn out not to be - once they stop using that as an excuse for not bothering to think about budgeting, and start realising that a lifestyle has to be paid for. If you think that's blunt - then I'll explain why - that paragraph is absolutely from personal experience - I've been that person. And it was laziness, pure and simple. These days I'm guessing most of my friends would say I'm one of the most "together" people with my finances that they know. I'd rather be the person I am now, than the person I was then. If you wonder why, feel free to have a read of my debt free diaries.

So - step 1, after cutting the cards up - is that SOA that people are telling you about. Not the one above that was dashed off in the space of 10 minutes and not really thought about - a proper one, that actually reflects where your money is currently going. Gather your bank and card statements, and fill in the SOA accurately - but to reflect the situation now, not what you *think* it ought to say. We'll worry about what ought to be where. Get that posted in here, and while we're looking over it, wander round your house and start looking for the things that you've spent on, that can be sold. Clothes, shoes and electronics all fetch decent money on eBay.

Target the Aqua card with its :eek: interest rate first for goodness sake - in fact personally I'd be inclined to go cap in hand to the grandparents and ask if you can drop payments to them to £100 a month just until that's gone. Every spare penny you can muster up needs to get slung at that to get it cleared. Everything else gets minimum payments. Once that one's gone, start paying grandparents back the previous amount, and turn the extra cash to the next debt down, and so on. The cards are relatively easily clearable.

You can do this, but you really have to want to. Otherwise, we'll be seeing you back here heading for bancruptcy in not very many years.