£228,000 debt at the age of 23

prodigalson

happyandcontented wrote: »

I read it as one packet of 20 per day not 20 packets per day!

I smoke a packet a day not 20 packets, I would be a :A very fast if that was the case

prodigalson

Just checked out the Azure platform, seems like it would save a lot of money, issue is I have to use Equinix severs at LD4 (london heathrow) for the speed I require, also need cross connects which would be significantly slower using Azure. Would need to find a specific provider using the platform at LD4 for a similar purpose to me.

BabyStepper

Hi prodigalson

A few thoughts...

Your soa total is not correct, it should read £2,232. This is £100 less than you have calculated.

You have missed dentist and medical expenses, clothes, contents insurance (if you don't have some, get some now) birthdays and christmas, holidays and your emergency fund from your soa. You need to add those things in.

Just say these things brought your monthly total up to £2,750 (it won't be this much). With the loan payment added in, your minimum payments would be around £4k per month.

This won't be correct either though because your credit cards and overdrafts will all have minimum payments and/or fees attached. You need to work out who takes what and when, and make a note of it. Then you will have a true idea of how much you fork out each month just to tread water in the sitauation you are in. If you can be bothered looking up interest rates then go ahead but if I were you I wouldn't bother. The reason is this.

Even if you pay an extra £1k in servicing your credit cards and overdrafts, your monthly total would still only be £5k for the month. You make £8k. If you threw all of the £3k at the cards and overdrafts you would have got rid of it all in 5 months. Even with Christmas. Even with still eating out all the time. Even with still having nights out with your mates at the cost of £400 per month.

Just do it. Have a bit of faith that this new, large income will hold for the next 5 months and take full advantage of it to get yourself in a more secure position. By the end of January you will only have the loan to deal with. (I say only, but it is massive.)

Which brings me to a point already made by another poster, your business and personal finances are in a muddle. Some if not all of the loan debt belongs to your business. You need to seperate them out. Once you have learned to run your own finances you can use the exact same skills in your business accounts. But don't confuse the two.

Good luck prodigalson and well done on achieving such a high income at such a young age. I for one am hoping you manage to maintain it and make a significant improvement in your position.

enthusiasticsaver

As others have said your personal and business finance seem to have crossed over and you are subsidising the business or drawing too high a salary from it. You are also not controlling spending and for the sake of your health if not your finances cut back or stop the smoking.


However you are young, you obviously did the right thing with buying your property and using bonuses to pay down the mortgage but understandably you don't want the stress of an investment bankers life. From the sound of it your business is doing ok but is in its infancy so you need to reign in the spending and focus on getting rid of the debt. If you stuck to that soa and paid £5000 a month off your debt it would be gone in around 15 months. You need emergency savings but £1000 is enough to start with so just keeping £1000 back from the first months debt repayment should do the trick.

prodigalson

BabyStepper wrote: »

Hi prodigalson

A few thoughts...

Your soa total is not correct, it should read £2,232. This is £100 less than you have calculated.

You have missed dentist and medical expenses, clothes, contents insurance (if you don't have some, get some now) birthdays and christmas, holidays and your emergency fund from your soa. You need to add those things in.

Just say these things brought your monthly total up to £2,750 (it won't be this much). With the loan payment added in, your minimum payments would be around £4k per month.

This won't be correct either though because your credit cards and overdrafts will all have minimum payments and/or fees attached. You need to work out who takes what and when, and make a note of it. Then you will have a true idea of how much you fork out each month just to tread water in the sitauation you are in. If you can be bothered looking up interest rates then go ahead but if I were you I wouldn't bother. The reason is this.

Even if you pay an extra £1k in servicing your credit cards and overdrafts, your monthly total would still only be £5k for the month. You make £8k. If you threw all of the £3k at the cards and overdrafts you would have got rid of it all in 5 months. Even with Christmas. Even with still eating out all the time. Even with still having nights out with your mates at the cost of £400 per month.

Just do it. Have a bit of faith that this new, large income will hold for the next 5 months and take full advantage of it to get yourself in a more secure position. By the end of January you will only have the loan to deal with. (I say only, but it is massive.)

Which brings me to a point already made by another poster, your business and personal finances are in a muddle. Some if not all of the loan debt belongs to your business. You need to seperate them out. Once you have learned to run your own finances you can use the exact same skills in your business accounts. But don't confuse the two.

Good luck prodigalson and well done on achieving such a high income at such a young age. I for one am hoping you manage to maintain it and make a significant improvement in your position.

Thank you for your help, will definitely use this advice and update you with how I get along, should be able to get rid of everything within a year if I follow your ideas.

enthusiasticsaver wrote: »

As others have said your personal and business finance seem to have crossed over and you are subsidising the business or drawing too high a salary from it. You are also not controlling spending and for the sake of your health if not your finances cut back or stop the smoking.


However you are young, you obviously did the right thing with buying your property and using bonuses to pay down the mortgage but understandably you don't want the stress of an investment bankers life. From the sound of it your business is doing ok but is in its infancy so you need to reign in the spending and focus on getting rid of the debt. If you stuck to that soa and paid £5000 a month off your debt it would be gone in around 15 months. You need emergency savings but £1000 is enough to start with so just keeping £1000 back from the first months debt repayment should do the trick.

I have been reading a lot of books recently on personal development and a lot on savings and increasing income. Will keep back £1,000 for emergencies straightaway.

Thanks for your advice guys, will keep you updated

:money:

prodigalson

Updates:
Personal Loan – 59,200
Bank 1 overdraft – 2,500
Bank 2 overdraft – 1,500
Bank 3 overdraft – 2,000
Family Loan – 4,000
CC1 – 1,100
CC2 – 1,200
CC3 – 1,800
Emergency Fund: £130/£1,000

Working on building my emergency fund over the next few weeks!
I will be paying off that family loan on 14/09/18 - £4,000, was originally £5,000 but paid off £1,000.
Also been making minimum mortgage repayments, will not be overpaying any of mortgage anytime soon.
Have slowed down on eating takeaway or out, been getting some cheap ready meals from Tesco to save some money. It won’t be much, but just changing this habit would cover my monthly minimum payments on my credit cards. Will also be paying of “Credit card 1” and will be cancelling the card next week on 14/09/18.

prodigalson

At the end of this month, if all my meetings go well, I will have a large influx in capital in my business. My thoughts were to take some money (1/3) out of my business if everything goes well to pay of all my personal debts. I don't know if it would be a good idea business-wise. The main advantage would be less stress due to all this debt.

prodigalson

06-09-18 Updates:
Personal Loan – 58,200 (-£1,000)
Bank 1 overdraft – 2,500
Bank 2 overdraft – 1,500
Bank 3 overdraft – 2,000
Family Loan – 4,000 (to be paid 14/09/18)
CC1 – 1,100 (to be paid 14/09/18)
CC2 – 1,200
CC3 – 1,800
Emergency Fund: £220/£1,000 (+£80)

So just paid off another £1,000 off my personal loan, also added another £80 to my emergency fund! Hoping to get rid of most of my CCs this month, overdrafts have 0% interest as they are graduate accounts and one account has a free overdrafts due to being a premier customer. Only one overdraft has interest at 19.7% per year and it’s the £1,500 overdraft.

I want my emergency fund to have at least £1,000 by next week, so am slowly adding to it based on the money I have saved throughout the day and by planning ahead!

Also saving money on food today, will be cooking pasta, still wasted some money today by buying 2 lottery tickets for tomorrow’s lottery and another pack of cigs.

prodigalson

10-09-18 Updates:
Personal Loan – 58,200
Bank 1 overdraft – 2,500
Bank 2 overdraft – 1,500
Bank 3 overdraft – 2,000
Family Loan – 3,000 (to be paid 14/09/18) (-£1,000)
CC1 – 1,100 (to be paid 14/09/18)
CC2 – 1,200
CC3 – 1,800
Emergency Fund: £500/£1,000 (+£320)

Added an extra £320 to my emergency fund! Will be £1,000 by the end of next week, this definitely won’t cover my lifestyle but it’s a start if everything hits the fan, I can cut down and cover my mortgage payment at the very least using this fund. It essentially gives me a month to get back on track. Ideally this emergency fund needs to be £3,000-£5,000 in case there is a real emergency so this money could cover a few months’ expenses.

Saved money on Friday by heating up a frozen pizza in the oven. Did waste some money yesterday by going out with friends for shisha. But it’s the only time of the week when I feel a bit relaxed just chilling and talking with friends.

Hoping to be a little free-er by the end of this week, having put two debts behind me (CC1 and Family loan).

Paid another £1,000 off the family loan, remaining now: £3,000.
Can’t wait till Friday the 14th, will have two less debts!

billy2shots

Not sure if this is genuine but anyway.


Why are you paying yourself £8k a month (and paying tax) from your business and then putting your own (taxed) money back into the business?

Pay yourself less, leave more in the business and take more in dividends a couple of times a year when you have a better idea of how much money you need to leave in your business account (plus contingency).

Presumably this is a way of paying off personal debts quicker?
Not very tax efficient though and make sure you don't carry on this way after things are sorted.