Almost 26 - no savings, 3 credit cards, and a finance agreement - savings? HELP

abbi-cr91

Okay so im very new to this forum stuff, but I have no idea how else to get my head around what to do with my money issues.

im on 22k a year - full time job, living at home with parents.

I've had people scoff at the fact im 26 and worrying about savings, but I am scared that I have literally no idea how long it will take to pay off my credit cards and save money at the same time.

I have 2x Credit cards at around 2,000 each, being charged interest on one for cash and purchases that i havent yet managed to pay off. and an additional credit card at 3% that has around 1500 on it.

The finance agreement on my car is up at the end of this onth with just under 6,000 left to pay - so i was looking to re-finance the balloon payment and continue paying it off until it is mine - which is 9.9% for either 18,24 or 36 months with GMAC - ideally id like to pay it off within 12 months but i cant afford 465£ a month!

I literally think about my money every single day and it is causing me great stress and anxiety. Im basically hoping that someone may be able to help me stop panicking and tell me its not that bad ! OR tell me i am in a bad situation but theres a way around it - people tell me as long as im making the payments its building my credit score. The main issue is that im unable to save anything a month, if anything i run into my overdraft a week before i'm paid.

Do i get a loan / do i do a balance transfer or just continue making my repayments and see out the 5 odd years itll take me to pay this debt off!

Any help is appreciated, thank you x

National_Debtline

Hi abbi-cr91

The best place to start is with a statement of affairs (SOA), you’ll find one in the sticky at the top of the board. It gives everyone the chance to see what your financial situation looks like and give advice on your best options.


Generally speaking, unless you’re earning more interest on savings than you pay on your debts, clear the debts off first. Bear in mind consolidation can often lead to getting further into debt so that's something to always be very cautious about.

Susie
@natdebtline

pennystretcher

As above, get your SOA done to see if you can clear existing debt within reasonable time. If you think that would be too long, check if you can move CC balance on 0% credit cards (MSE has a section for it - https://www.moneysavingexpert.com/credit-cards/#balancetransfer) as this might help you reduce your balance quicker.

With regards to your comment "I've had people scoff at the fact im 26 and worrying about savings," - ignore them. If I had followed the example some of my friends set, I would be deeply in debt by now and most likely looking for a DMP. You financial decisions are yours and yours only. And it sounds like you are pretty smart to look for advice at this point of time rather than accumulating debt further and then facing worse consequences, so bonus points for that and hope you get back in black sooner than you think!!!

And about your comment: "I was looking to re-finance the balloon payment and continue paying it off until it is mine - which is 9.9% for either 18,24 or 36 months with GMAC - ideally id like to pay it off within 12 months but i cant afford 465£ a month!" Budget it - once you get your SOA done, make this your priority to get paid off. Don't agree to pay more than you can afford - be sensible.

Looking forward to your updates. Have a look in the forums, older and more experienced people have gotten into much more trouble than you are in now and you and you are in first pole position as you have decided to make a plan now rather than later.

*hugs*

MerryGoRoundAvoider

As others have said we need a SOA to give you decent advice.

Top marks for recognising the risk at this stage - a lot of people get in a lot deeper and then spend eons having to dig themselves out. Generally you want to target the debts that cost you the most first and clear the cheapest debts last (AKA the snowball method).

Presumably living at home you'll be able to shove a lot more cash at the debts - fast forward 10 years and things might have changed (you might no longer be living with parents, might have kids or want your own place etc etc). You can either save now (once you pay off your debts) which will give you options and take the pressure off later, or borrow later which might cause you more stress and misery.

enthusiasticsaver

I would do an soa but I would not take out a 9.9% loan to pay off the balloon payment. If you are living at home presumably you have a lot of disposable income? Do you know how you got so much in debt?

enthusiasticsaver

One thing I would say is do not get a consolidation loan. It will make your situation much worse. At present you have £5500 of unsecured debt which is not a huge amount with your salary. Financing the car balloon payment is a problem - I hate those sorts of car deals. An unsecured loan and/or savings to buy used cars outright are much better. Is giving the car back an option?

Angry_kittens

abbi-cr91 wrote: »

I've had people scoff at the fact im 26 and worrying about savings, but I am scared that I have literally no idea how long it will take to pay off my credit cards and save money at the same time.

I wanted to address this point in particular, you've already had replies better than I can give to address other points.

It is NEVER too early to think about savings, I have saved ever since I started working at 17 and at 23 I was able to put a £30k deposit down on my first house and move out of my parents. I know I have been lucky in my circumstances in life (this does not include financial help from parents, I even paid them rent), but also feel the hard work I have put in has been rewarded.

I was and still am mocked to this day (age 25) because I don't "go out" or otherwise fritter my money, but consider the trade off more than acceptable!

By taking the time and thought to write your post on this forum you are halfway there with the mindset to do something, I wish you the best of luck!

As others have said, get an SOA up with ALL expenditure listed and the friendly folks here will help.

abbi-cr91

pennystretcher wrote: »

With regards to your comment "I've had people scoff at the fact im 26 and worrying about savings," - ignore them. If I had followed the example some of my friends set, I would be deeply in debt by now and most likely looking for a DMP. You financial decisions are yours and yours only. And it sounds like you are pretty smart to look for advice at this point of time rather than accumulating debt further and then facing worse consequences, so bonus points for that and hope you get back in black sooner than you think!!!

Thank you, this has made me smile on a rather bleak thursday morning!!
In regards to doing an SOA - i dont know if i am being a bit dense but i cant seem to find a link anywhere, could anyone give me guidance to finding this?

Thank you all for your help, you've really cheered me up
x
:beer:

comeandgo

If you are able to get a part time job to help somewhere with the Christmas period, that can help pay off credit cards too. I used to work in bars, make a few hundred pounds, it all helps.

abbi-cr91

enthusiasticsaver wrote: »

An unsecured loan and/or savings to buy used cars outright are much better. Is giving the car back an option?

Sorry to sound super naiive, what is an unsecured loan?

I could give the bar back however i'm over the milage by around 8,000 miles which equates to around 720£. Then if im getting a loan for a new car ill have to pay that off anyway so icant imagine i would be any more better off unfortunately! x

enthusiasticsaver

abbi-cr91 wrote: »

Sorry to sound super naiive, what is an unsecured loan?

I could give the bar back however i'm over the milage by around 8,000 miles which equates to around 720£. Then if im getting a loan for a new car ill have to pay that off anyway so icant imagine i would be any more better off unfortunately! x

You can get an unsecured loan from a bank, check out best buys on this website. Your own bank might be a good place to start.

Hopefully it will be less than 9.9% but if not you may have to put up with the car finance company deal for £6k was it? If you cannot get a loan for any less than the 9.9% go for the car finance deal at an affordable monthly amount (you do not have to repay within 12 months) and see if you can make overpayments once your other debts are gone unless they are on 0%.

For future reference though car financing deals are a minefield and the best way to finance them is through saving as much as possible and maybe topping up with a 0% credit card or a very low rate unsecured loan from a bank if you can get it. PCP deals, car HP etc etc are all usually very poor value.