My journey to becoming debt free in 2018

Legacy_user

Hey guys, so first of all let me start by saying I'm only 22 and don't have a massive amount of debt, £2500 odd but I have SIX defaults against my name from 3 years ago. I was stupid with money and wasn't really aware of the consequences and didn't tell my parents because I was pretty afraid of what they'd say.

BUT, I'm now earning great money, after tax I take home £2600 by myself so I have quite a lot left over a month after paying for my debts. Me and my long term girlfriend want to start buying a house in 2 years so paying them off in full is probably better for me, I'll still have the defaults but hopefully after 5 years or so it'll look much better. My credit is awful at the moment, I'm literally talking my score on Experian (not that it matters) is 182 lol.

So here are my debts:
NatWest: £108.18
Vodafone: £133.47
Wonga: £372.58
NationWide: £367.48
EE: £591.71
Barclays: £804.00

I did consider offering settlements, but I don't want creditors to think I can't pay my debts in full in the future and it's not a huge sum of money anyway (it's still a lot, but I mean not 5 figures).

I am using the snowballing method, here is my excel spreadsheet with my payments (I will spend £450 a month, I have allowed for this as I save a lot at the moment towards a house and have a few other things I pay for, ie car etc).



Green: Paid
Red: Not paid

Vodafone/NatWest wasn't paid this month because I had to chase who had the debts, this took longer than expected but is now sorted for next month!

The only thing I have on credit now is my car and my £17 phone bill (sim only, I purchase my phones outright now). I've also joined Monzo to help me cut out unwanted spending, I am trying my very best to save as much as physically possible while allowing myself to live comfortably.

Let's do this! :beer:

System

I will likely overpay in August and get that Barlcays account closed off early.

Looking forward to having no more worries about it, not to mention saving the extra £450 a month will be super nice.

fatrab

Hi and welcome to the forum!


Just a thought, would it not be better to just knuckle down for 2 months and clear the debts completely? It doesn't make sense to have savings and debts.


It would be clearer if you posted an SOA.


Best wishes

System

fatrab wrote: »

Hi and welcome to the forum!


Just a thought, would it not be better to just knuckle down for 2 months and clear the debts completely? It doesn't make sense to have savings and debts.


It would be clearer if you posted an SOA.


Best wishes

Hi, thanks for the response!

I will get an SOA posted, I have spreadsheets aligning everything I spend money on etc.I honestly would love to pay it all off within the next 2/3 months, but I have just got clear braces which I couldn't get credit on (more of a confidence thing than a necessity). I'm on them for 6 months and just pay £350 a month (rather than the £30 a month finance). I also pay £400 for my car (PCP expired last year, so my girlfriend loaned me the money to pay it in full, I pay her £400 a month until October). It worked out cheaper than me buying a new car, £6200 which I have owned since new without any problems etc.

I am trying to save just to put towards anything emergency related, I would just pay the debt off from my savings but my credit is already ruined so there's no real rush at the moment. I have contacted the lenders and said if I paid in full, would they remove the defaults. All responded saying no, it's a fair representation etc. So there's no real rush at the moment, unless I'm thinking of it wrong?

Thanks in advance!

fatrab

If you're paying interest on any of them then get those paid off asap. Otherwise the only thing you're delaying is getting on with rebuilding your credit history. If you want to be considered for a mortgage in 2 years I'd get your finances sorted asap, clear them off, draw a line under it and move on.


And make sure you're never in that situation again! You've obviously realised while you're still young enough to sort it out quickly, and the debts are relatively small.


Good on you for admitting it and dealing with it.


Cheers

System

fatrab wrote: »

If you're paying interest on any of them then get those paid off asap. Otherwise the only thing you're delaying is getting on with rebuilding your credit history. If you want to be considered for a mortgage in 2 years I'd get your finances sorted asap, clear them off, draw a line under it and move on.


And make sure you're never in that situation again! You've obviously realised while you're still young enough to sort it out quickly, and the debts are relatively small.


Good on you for admitting it and dealing with it.


Cheers

Thankfully, each lender froze all the interests for me.

I've definitely learnt my lesson, I won't be getting in this situation again! I definitely left it for far too long, but now it's finally time to grow up while I have the money free to do so.

fatrab

Wish I'd realised when I was your age!!


Best of luck!

System

I've changed it to £350, and the final month £600+, so it still works out as the same time just the final month is a little more than previously.

At the moment, this is working around a budget I have set in stone BUT if anything changes I will for sure overpay and clear them down. I'm looking forward to seeing none of this debt, and hopefully watching my credit increase

enthusiasticsaver

Firstly well done on sorting this out now while you are young. A lesson learnt. £350 a month is a sensible amount and clearing it by August is doable luckily because the debt is not huge. Then I would focus on rebuilding your credit score and saving a decent house deposit as you will get a lower interest rate if you have a larger deposit and the defaults would otherwise mean a high rate. Stack the odds in your favour.

System

enthusiasticsaver wrote: »

Firstly well done on sorting this out now while you are young. A lesson learnt. £350 a month is a sensible amount and clearing it by August is doable luckily because the debt is not huge. Then I would focus on rebuilding your credit score and saving a decent house deposit as you will get a lower interest rate if you have a larger deposit and the defaults would otherwise mean a high rate. Stack the odds in your favour.

Oh, for sure! I'll hopefully never let myself get in a similar position.

I will overpay whenever I can, I work a little on the side so sometimes can take an extra £1-200 a week home on top of my salary. I plan to switch jobs this year to a lesser paid job (it's less for a year but then will be much more than my current job). So I need to budget accordingly, hence only putting aside £350 for my debts rather than £1000 as I need to save for emergency things.

BUT I will look to overpay and hopefully get it done a lot quicker.
Looking forward to it

stinabean

Well done and welcome - wish I learnt my lesson at 22 :rotfl:

As previous, SOA would be useful. Your wage sounds amazing to me but I imagine your outgoings may be higher Here to help!

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