Managing loan while out of work.

nubbz

Hi,

I posted this is the student forum but didn't get much response so thought I'd try and reword it and re-post it here.

My monthly out goings are as follows.
I currently OWE about £20k with tesco at £375 a month as a personal Loan.
£75 a month for my Car insurance
About £100 a month on fuel
About £150 a month on food
Don't pay rent.
I make about £2000 a month.

What I want to do is go to college in September 2019.
I can get rid of the car easily enough which will save a lot of money. But can only do this once I leave my job.
But I'm still left with the loan.
I can't practically clear it by September..
Which is annoying because that's what I wanted to do.

What is the best option for me to do?
1) Make over-payments to reduce term which will result in greater interest rebate
2)Make over-payments to reduce the proceeding monthly payments down to a more manageable figure
3)Make no over-payments and just put the money in a pot and use that to cover your regular payments once you go back into F/T education.
4) Don't pay the loan and deal with the consequences (Not something I want to deal with as I live with my parents).
5) Pay off as much as I can then refinance the loan to extend it's length which may result in more manageable monthly payments. But I don't think the chances of me getting approved to refinance the loan would be high.
6) Phone Tesco when I leave my job and see if they will agree to lower my monthly payments and extend my loan.

The course I plan on doing will be about 2/3 days a week.
If I only worked 16 hours a week P/T while on the course I could earn about £500 a month which would cover my loan payment but wouldn't leave me with much spending money for travel and food.
That is just a worst case scenario though based on minimum wage earnings.

I think if I can get the loan payment down to £150 a month I could handle it easily while out of work. It's just getting it to that amount. xD

fatrab

I think you might have missed option 7.


7. Put your plans on hold for an additional year and keep working/make overpayments so that you've paid the debt off before you do the course.


How much is your car worth?

nubbz

fatrab wrote: »

I think you might have missed option 7.


7. Put your plans on hold for an additional year and keep working/make overpayments so that you've paid the debt off before you do the course.


How much is your car worth?

That was the original plan.
Car is worth about £600. I sold my original car to reduce other debt. Annoyingly though the Tesco Loan is a debt consolidation loan which has given me 1 easy payment to make but the problem with it is.. there is no flexibility with it. Kinda wish I didn't go down the consolidation road now but ah well; I have to live with my decisions.

Yea, if I wait 1 year I will easily pay off the loan.
Mentally and Physically though, I know I can't do it. I hate my job so much I need out of it.
I've already put off going back to college for almost 6 years now as well; just focusing on my career and I can't do it anymore. Heck I'll be surprised if I can stay in my job until September.

So ye not an option. I will sooner eat my own turd.

Fireflyaway

I'm with fatrab. Get all your finances in order. Will be a whole lot less stressful.
Other option is to work more. If you are at uni 3 days a week that leaves 4 days in the week to work. That's 32 hours of income available and working weekends you might get paid a better rate. It's not as though you have to do this forever either.

nubbz

Fireflyaway wrote: »

I'm with fatrab. Get all your finances in order. Will be a whole lot less stressful.
Other option is to work more. If you are at uni 3 days a week that leaves 4 days in the week to work. That's 32 hours of income available and working weekends you might get paid a better rate. It's not as though you have to do this forever either.

Ye. I know.
I really want to BUT I know I can't.
I've already scarified quite a lot and paid off a heck of a lot this year alone. The thought of waiting until Sep 2020 is just too much.
I have a trade skill so I can find work quite easily and earn between £10-16 an hour.

I think my plan atm is going to be to pay £5000 off of the loan just to reduce the monthly payments a bit. Then save up another £3000 as emergency money. That I can use if I need to cover any repayments.

I know what I need to do, it's just doing it.. I currently do 50 hours a week even though I could easily do more but mentally feel like I cant. I think a year of just paying off bills has got to me LOL. It's so easy to write down what to do on paper but when you start doing it month in month out it gets to you man.

fatrab

In that case option 3 is your only choice in my opinion.

Build up a fund to pay your bills while you take a year out.

Best of luck!

nubbz

fatrab wrote: »

In that case option 3 is your only choice in my opinion.

Build up a fund to pay your bills while you take a year out.

Best of luck!

Thanks. I thought about it a bit more and it does make sense.
I intend to do an access course then a 3-4 year degree so potentially up to 5 years out of work.

So I could save up 10k ( I think I can do this in 9 months at a push ) Then for every repayment cover half of it with the savings and half with my P/T job. This will make the 10k last twice as long and will give me more time to find extra work to pay off loan whilst at college if I get the time. Also half of 375 is about 180 which I can easily manage whilst at college.

Dunno how much sense that makes to anyone else but it makes enough sense in my head so I'm gonna go for it.

enthusiasticsaver

I also think you need to put college plans on hold or build up enough savings to cover the payments while you are at college. If you work part time and have savings that should hopefully see you through. What about any college fees etc?

Debt consolidation loans by the way are never recommended on here.

Debtnomoreplease

Morning, I totally agree with those above to pay the debt first, then think of your next career move. You may have a slight idea of the costs of Uni or the course you're planning on doing, but 5 years out of work you can imagine ALOT more costs will be involved somewhere along the lines. The money you save beforehand, won't last long.

We all want to get rid of debt over night, but sadly it's not possible. It's hard, boring work to clear it, but from experience-the best feeling ever to start a fresh a debt free!

To start on such a long course, with so much debt is risky (I think anyway) Surely, you'd feel better to start a complete afresh. We've all done jobs, things we don't want to do to get rid of our debt, but trust me-it's the best lesson learnt, as it sure as hell makes me not want to ever get back in debt again!!

Another year of pure graft and paying off this debt could see you debt free and have good savings behind you to start 5 years of a new course.

I just worry that so many things will 'pop' up during those 5 years and you'll end up in an even worse position-it does happen and things do happen, so best to try and be prepared.

Have you also looked into the future and if your course has a lot of job availability in the future etc?

At the end of the day, of course it's your Choice, but we are here to offer experienced advice from those who have been in debt for years.

mrsjolie

You need to take an extra year to pay off you debts. Sorry if that isn't what you want to hear but you did ask the question ...