31k debts

camz2017

Hi all

I am relatively young, at 25, some silly choices from being in university to now has landed me with £31,000 debt spread as follows:

Natwest Loan: £8365.03 - 18.9%
Barclaycard: £14838.40 - 6.9% for life
MBNA: £7600 - 6.9% for 2 years
Bank Overdraft: £162.39 - 18.9%
Total = £30965.82

It began at university where at one stage I had 3 student accounts, all with overdrafts around £2000, plus a credit card offered by the same student account lenders, who offered it when I reached the end of my overdraft... Since then at graduation I paid a deposit on a property of around another £2000, and then being in London on a salary of low £20k, with around 10k debt, and high minimum repayments meant I overspent every month for multiple years, with credit cards just raising my limits over and over, getting me into debt deeper and deeper.

I am currently paying the minimum repayments, and extra when I can do. Really determined to fix this, have just setup a YNAB account to track spending. Top tips and help?

NineDeuce

As long as you had a laugh at the time, that's all that matters....

sourcrates

Hi,

Are you working now ? Can savings be made elsewhere in your budget ?

A statement of affairs will give us a better picture, available here :

http://www.stoozing.com/calculator/soa.php

We all enjoyed spending money we didn't have, but eventually the piper requires paying Ninedeuce.

National_Debtline

Hi Cameron and welcome to MSE,


The first thing would be to post a SOA for further support. It sounds as though the debts are reasonably under control and it is great that you can overpay, as long as you don't use further credit elsewhere in the same month.


Make sure you do not bank with any of the banks you owe money to in order to keep your money safe, and avoid using overdrafts so your budget is consistent. If you can regularly overpay your debts that money will come off the capital that you owe and help to drive the debt down quicker. Make sure you destroy the cards so you are not tempted to use them again.


If the minimum payments can't be sustained long term, based on your budget, then we can start to look at other options as well.


Laura
@natdebtline

National_Debtline

Hello again,


On a whole your SOA looks good. You may want to consider some contents insurance and perhaps putting a bit less towards emergencies and entertainment, but with everything as it is you could potentially overpay the debts by £200 per month (perhaps even more depending on your final decision about the car).


The key question is, do you overpay them by £200 every month? If not, then you are probably missing some expenses on your SOA and you need to look at your bank statements and receipts to try and find out where this money is going. You can try and overpay the higher APR debts to start with (as long as the loan permits overpayments without a penalty) and hopefully you will start to see the effects of overpaying soon,


Laura
@natdebtline

camz2017

I do not overpay them by £200 because I often don't take lunch to work (laziness) which is then £5 gone. I can do this 3 days a week and then throw away good food. I also eat out probably once a week.

I also can drop £100 on a date night / boys night out.

None of the above is necessary and I did not include it in the SOA as I need to be serious about the debts. Perhaps I to be realistic I should aim for £100 extra repayments and see how that goes.

I think being in debt and living beyond my means has felt almost normal, for example at uni I got £5000 from student loan for the year, but my first year halls were £4800, so I had £200 left for the year. I worked whilst studying but I was always in debt and scraping by.

Post uni I've worked crazy hours (often until 1am), and I have doubled my wage in 3 years as I knew everything was wildly out of control. I finally feel like I can manage these debts somehow instead of drowning, so whilst I have this huge burden of debt and this massive number, it strangely feels better than when I had £50 to my name and £8k of debts. Back in the day (5+ years ago) whilst studying I was using payday loans to meet minimum repayments, then working 2 jobs to meet the repayments. I can say I have never once missed a debt repayment, or a payment on anything, I have always prioritised this to my own living.

It's easy to say I've been irresponsible but I ended up just burying my head and doing silly things like money transfers from a credit card to pay another debt. Thankfully nowadays, I can meet the minimums.

Can genuinely say I really hate debt, many sleepless nights spent worrying. It has been years coming to this...

jimbo747

I left uni with a similar amount of debt and didnt pay it off until I was in 30's
Wished I'd just said sod it at 24, ain't my money I've spent, went bankrupt and started again. That £30k probably cost me nearer £60k after interest, and would have been easier, less stressful, far less impact on credit worthiness if I didn't do it the hard way. Luckily all worked out well in the end, and I had a great time spending it all so I think of it as an investment that just took near 20 years to pay off.

EssexHebridean

OK - you've already said that this is an aspirational SOA which isn't the most helpful sort,
but I'll comment anyway - a lot will carry forwards to your "correct as at now"
SOA which I'm sure you're going to create...

camz2017 wrote: »

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2460
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2460

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 907 used to split in half with a partner - includes all bills and will relocate soon
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 21 If not in contract then you can make a small saving here by going to a SIM only plan
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 160
Clothing................................ 50 Personally I'd cut this to basics/essentials only for the time being
Petrol/diesel........................... 30 You've said below that you're thinking about selling the car anyway - so stop driving it for the time being and see how you get on. You'll still have to pay tax/insurance/MoT but at least you won't be spending anything else.
Road tax................................ 10.06 Is this paid monthly or annually?
Car Insurance........................... 0 Think there should be something in here?!
Car maintenance (including MOT)......... 50 likely will sell car, it's a 2003 plate corsa I've had for 10+ years, not paying rental on it or anything, drive to aldi and lidl tbh So where is this being saved? I'm guessing it doesn't cost you that £50 every month, and you're showing no cash assets?
Car parking............................. 10 Why are you paying to park for Aldi &
Lidl? Most have free car parks? Another good reason to start leaving the car at home
Other travel............................ 125 Is this travel into central London for work?
Can it be cut at all? and more to the point, can this cost (Travelcard I assume) cover the travel costs that you're currently paying for in relation to the car?
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0 Tsk - get this sorted promptly - it'll cost you sub £10 a month and not having it is a total false economy
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10 Where do you save this? No cash assets showing?
Haircuts................................ 17 Every month? That seems quite steep...
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 100 Now we both know you're not saving this don't we - see my notes on aspirational SOAs below!
Total monthly expenses.................. 1590.06


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0 Should be a figure here even if only £400 or so
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................14838.4...330.......6.9
MBNA...........................7600......130.......6.9
Loan...........................8365......199.......18.9
Overdraft......................200.......10........18.9
Total unsecured debts..........31003.4...669.......-


Monthly Budget Summary
Total monthly income.................... 2,460
Expenses (including HP & secured debts). 1,590.06
Available for debt repayments........... 869.94
Monthly UNsecured debt repayments....... 669
Amount left after debt repayments....... 200.94 This figure isn't accurate - I'll explain why below...

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -31,003.4
Net Assets.............................. -31,003.4

OK - this illustrates nicely the problems with an aspirational SOA. You've created a false budget - the above shows you what you would like to be doing, perhaps, but NOT what is actually happening. It shows a £200 a month surplus but you don't have that, do you, and in fact it's worse than that - it should be showing at least another £160 at a guess as well - that money that you claim you're saving for car maintenance costs, presents, and emergency fund - all of which are currently NOT being saved.

So the real picture here is a surplus of £360 a month - which translates to over £4300 a year. Quite a lot of money that, no? I suspect your grocery shopping figure is also out - you say you spend £160 a month but also in another post say you can easily spend £15 a week just on work lunches, plus eating out once a week - assuming the eating out comes from the entertainment budget (£20 - £25 per meal out? Sounds a bit light to me for London) then this leaves you with approximately £60 of your grocery budget being just on lunches, and then a further £100 being spent on regular food shopping? Do you think this is correct?

I do not overpay them by £200 because I often don't take lunch to work (laziness) which is then £5 gone. I can do this 3 days a week and then throw away good food. I also eat out probably once a week.

I also can drop £100 on a date night / boys night out.

None of the above is necessary and I did not include it in the SOA as I need to be serious about the debts. Perhaps I to be realistic I should aim for £100 extra repayments and see how that goes.

OK you know some of the problems - so you're right, time to knuckle down and start being serious about getting things cleared. Redo the SOA and make it accurate this time.
- Stop talking about flogging the car and get on and do it - it won't fetch much but whatever you do get for it can go against debt. That will also then free up £90 a month that you are currently showing for maintenance/tax/fuel etc, plus whatever you pay for insurance. Pay that amount straight back against debt too.
- Think about the things you've left out on the SOA so far - contents insurance is an obvious.
- Stop wasting food and buying lunches out. If you *do* need to buy lunch ion the odd occasion make it a £3 supermarket meal deal, or better still if you have access to a microwave at work, a can of soup (45p) and a bread roll (30p)
- A lads night out or date night do NOT need to cost £100 - and you don;t "drop" that sum - you spend it - stop using language that trivialises your spends and it may help to bring things into rather sharper focus.

You can tackle the sleepless nights and anxiety but you do need to actually start taking things seriously - reading your post you're on the brink of doing that, I think?

As a renter you do need a small emergency fund but only a small one - aim to start stashing away £50 a month until you reach £500 - make sure that's stashed away somewhere you['re not tempted to raid it.

By my reckoning, if you make a few savings here and there and get some more realistic figures in, as well as getting shot of the car, you could potentially free up £400 a month at least to throw at these debts - still leaving yourself with a small entertainments budget. Prioritise shifting the OD and then throw the excess at the loan if there is no penalty for paying it off early.

Lacherlich

Hey.


Good luck with your debt busting. You seem to be in a similar situation to me.. Realised I had to do something when it hit £25k. You'll start to feel motivated when the numbers start to come down. Build yourself a tracker of your debts and put together a realistic monthly plan. It wont be possible to stick to it 100% all of the time; well I haven't anyway - but I'm still learning. I sold my car too as realised this was a large expense I didn't really need! It seems a bit daunting at first - but imagine when its all cleared. How much better things will be and how you'll feel!

camz2017

Just sitting here now taking all transactions and accounts for the past 4 months and entering it into YNAB. Eye opening, OH.MY.GOD.

Given how much I go mcdonalds and eat out, I should be morbidly obese. I filtered by mcdonalds and had 20+ transactions in 4 months, that's disgusting. Ergh.

camz2017

Ok filtering through every single transaction on everything:

Wildly out of control

July: £3133.81
August: £3297.54
September: £2569.84

Earning around £2500 a month, so overspending like an idiot. Now to breakdown where, what on, and how to tackle it.

EDIT: ok not as bad as I thought, around £1000 is work expenses.