Please Advise

james1073

Hello,

Can somebody please advise me on what I should do.
I am currently stuck in my £1300 overdraft due to constantly increasing for essentials and social outings.
I have a salary of £200 (after tax) per week.
I pay £50 a week car insurance, £35 a week rent and a car debt of £30 a week.
Thats £115 a week outgoings in total, plus I have to run my car (to work etc), which costs around £30-£40 a week. I then have cigarettes and dinners - roughly £25 a week. So I have around £30 a week usually, either to treat myself and my girlfriend or pay for something that comes up.

If I do manage to save £50 or so over 2 weeks, there is usually something that comes up that I have to pay for (car related, social), so then I'm back to nothing, still with a £1300 overdraft (charging me £24 a month).

What I want to know is; would it be best to get a loan? which will allow me to pay off my debt regulary and also stop me paying £24 a month "dead money" for my overdraft.

I have no idea how much to borrow and for what period I should pay it off over. I'm not good with money as you can see, so can someone please advise!

Thank you

James

clarab_3

James, if you borrowed money, that would be an additional outgoing each week/month for the repayment... I don't see where you woud have the spare cash to make that repayment?

PS - stop smoking!

james1073

I stop paying £50 a week for my insurance for the next 3 months, then I get another policy for around £20-25 a week instead.

Would it be best to pay off my overdraft gradually and incure the charges, or get a loan and pay interest on it?

Thanks for the reply.

P.S - I'm planning on it!

tealady

The best thing to do is write up an SOA (see Southerenscousers sticky at the top) and watch the advice roll in. Chances are you won't need a loan and we will be able to help you clear you O/D quickly.

Jenna

Hi James,

I wouldn't bother taking out a new loan, as you might just end up re-spending on the overdraft and still needing to pay back the loan! Unless of course you have iron willpower, in which case this doesn't apply :rolleyes:

Personally, I'd go with one of two approaches:

1. When you have some spare money saved, say £25 (as you say you usually manage to save some up, but then spend it again), ask your bank to reduce your overdraft by that amount

or

2. Open a new (decent - see the Articles section for ideas!) account WITHOUT an overdraft facility, and transfer across your "going out" budget to that. Then, only take this card out with you! Alternatively, you might also like to stop using your overdraft account entirely - cut up the card too - and only use your new account. Then when you have a little money saved, transfer it across to the overdraft account

From what you've said, it sounds like you're used to the flexibility of an overdraft. The benefit (and danger! lol) of an overdraft is that if you decide that you "need" to go out, you just draw down on the overdraft and go out. So, I think you need to look at ways of stopping yourself doing this first - this will probably have a much bigger effect in paying off your debts than getting a new loan!

Just a quick thought too ... when you go out, do you buy lots of drinks for your mates? And maybe every other weekend, try staying in with your girlfriend and cooking her dinner / watching a movie or something; much cheaper and usually more fun!

Anyways - hope some of this helps. Let us know how it goes!

Burlesque_Babe

Hi James - can I just check - your car insurance - you say it is £50 a week? That's £200 a month. Do you mean £50 a month for your car insurance?

mikegould

Hello James,
I get the feeling your around 18-19 years of age,
I dont wanna lecture you on the real world etc, but, your really should get this sorted sooner then later.

atleast you've made the first step coming to see us all at MSE, we'll look after you. I'm not going to preach about the car insurance, i'm sure your just paying a large amount because of your age.

See if you can get the insurace any cheaper, which may work, but atleast cut down on the miles you do, I'm sure your out most evenings, and you know its money you cant afford..

I've been in the same boat when I was younger, spending money i did not have because my friends were doing it, but when you find out years later, ie, when your all 25, your all paying of debts you got when you were in your late teens.

sorry if i've got to to a little rant, i'll leave it for now, can you add more info on your story.

ie, if you've got a nice car, it might be worth selling, and getting a cheaper one of ebay etc..


Mike

tallyhoh

Hi James,

Do you really need the car? You dont sound very old & its a shame to have to pay out all that money. You should be spending it having some fun (not too much though).

Isnt there any sort of transport to work or cant you get a lift?

tifnstav

even if its £50 a month thats still a hefty chunk of cash. could you shop around for a different insurer and go through quidco if poss to get cashback?

would you be able to get a second job? i worked in a bar for years every saturday and sunday night, i didn't miss the social side because it came with the job. and fridays were still free if i wanted to go out.

start taking your lunch to work, £5 a day on lunch and cigarettes is £1200 per year (i'm working it out on 5 days a week for 48 weeks of the year that you would work accounting for holidays). Quit smoking, your girlfriend will want to snog you more.

don't get a loan - thats just getting more debt to pay a debt and you may be tempted to lend more than you need and fritter it away.

good luck though - its a pain having an overdraft, i've had mine for 7 years and i started getting rid of it at the start of the year. from £1500 i'm down to £450.

In_Search_Of_Me

Taking out a loan will cost you more (just look at the interest payments over the term of the loan - I regret the day I took mine out & cost me 8000 over the term of the loan; could have gone on a luxury hol every year for 8 years on that interest alone!!) and will not stop you spending so I suggest that you either get extra work or cut down spending; even better do both & you'll be quids in!! Let us know how you get on!

redrabbit29

Hey there,

I have done a quick SOA in a bit of a clearer format, using a per-month format. I did this on an excel spreadsheet, you can download it if you want here: http://www.mediafire.com/?3x3mekjadsx

Anyway, here is what your SOA looks like

IN
£800

OUT

Rent: £140
Petrol: £160
Car Insurance: £200
Car Debt: £120
Cigarettes & Dinner: £96


The first thing I noticed was the car insurance. As others have said, £200 a month is extortionate. I realise you may be young but surely there are cheaper options? That's £2400 a year for just car insurance. What car is it out of interest? :rolleyes:

Anyway, also the petrol - that is a lot of money for petrol too! Do you use your car excessively? How come the costs are so much? Is it possible to walk or get a train/bus to work? - just an idea.

I always think about spending in terms of what is essential and what is not. The spending on cigarettes and dinners is not essential. You're spending a hell of a lot on that.

Also try to add to your Statement of Affairs every other expense, car tax, car mot's, mobile phone costs (do you have one?), etc....

Hope this helps, good luck and well done for trying to get out of debt.