£228,000 debt at the age of 23

enthusiasticsaver

Good start on getting rid of two debts.

prodigalson

@billy2shots

billy2shots wrote: »

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.

Initially I was a sole trader so paid only income tax at the highest rate (40-45%), and my business requires a significant amount of working capital.

My accountant has structured everything in the following way:
I have loaned money to the company that has been incorporated.
I draw from the loan initially given to the company till I as a creditor have been repaid. The loan given to the company is £84,000 (working capital)
After being repaid I can take a dividends or salary. My accountant has told me to put aside money to pay taxes, he sends me an email every month regarding how much I will need to put aside. And you are correct in saying taking dividends would be more tax efficient (38% tax rate).

I haven't given out all these details before as this is an online forum, if anyone requires more information, I would be happy to answer.

prodigalson

14-09-18 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 17/09/18)
CC1 – 1,100
CC2 – 1,200
CC3 – 1,800
Emergency Fund: £1,000/£1,000 (+£500)

It’s been a rough week so far. Was looking forward to paying off two debts today but this was not possible due to unexpected expenses. I helped a family member pay for her master’s degree, which has put my plans back about a week. But if I can help someone improve their life, especially a family member than I should help even if I have to make a few sacrifices.

I have upped my emergency fund, which now has £1,000. This will only cover one month’s mortgage payment as I pay ~£910 per month. So I hope to have at least £5,000 put aside to cover my expenses and payments for 3 months.

If anyone has any ideas or advice to help get rid of this debt faster, I would appreciate it. Thanks for the input so far guys.