Fastest, Easiest way to clear debt and be happy?!

azyyy

Hey,

In my previous years I've struggled with a number of issues, addiction, moving out of family home and recently it has caused my finances and debt to spiral out of control, I have completed an SOA (Im not sure the %'s are correct as hard to find them on the apps) and was wondering if anyone had any advice about the fastest easiest way for me to clear my debts - and improve my credit score - had a shock when I recently checked my score and it was below 300.
Me and my girlfriend were planning to buy a house in the coming years - but I've recently just had to move back home with my parents as I could barely even afford rent whilst living alone. I need to begin saving for my new life, but with this debt hanging over me it just seems impossible right now, and its been affecting my mental health for a while now - but more recently its really starting to have an affect on my daily life.

I was wondering about the best options to clear debt and improve my credit score. Would a consolidation loan help? (I have actually tried applying but am unlikely to be approved with decent interest rates - seems only ones who would offer me anything are around the 30-40% mark). I cant even get approval for a balance transfer credit card right now.

Nay suggestions on what to do next? I've looked at IVAs and other ways of trying to manage it, but just have no idea how to approach anything. Any help anyone could offer would be great.
Thanks in advance.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1699
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1699

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 214.5
Rent.................................... 250
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 20
Gas..................................... 20
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 92
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 100
Clothing................................ 0
Petrol/diesel........................... 120
Road tax................................ 2
Car Insurance........................... 90
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 15
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 11.75
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 40
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Subscription............................ 3.99
Spotify................................. 9.99
Netflix................................. 7.99
Total monthly expenses.................. 1027.22


Assets
Cash.................................... 40
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 8500
Other assets............................ 1750
Total Assets............................ 10290


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 10560....(214.5)....10
Total secured & HP debts...... 10560.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Tesco Loan.....................5076......125.......9
Lloyds loan....................1925......105.......18
Barlcaycard....................1500......75........5
Tesco Overdraft................500.......100.......5
Lloyds Overdraft...............1000......50........5
Argos Card.....................320.......30........10
Tesco Credit Card..............200.......50........5
Total unsecured debts..........10521.....535.......-


Monthly Budget Summary
Total monthly income.................... 1,699
Expenses (including HP & secured debts). 1,027.22
Available for debt repayments........... 671.78
Monthly UNsecured debt repayments....... 535
Amount left after debt repayments....... 136.78

Personal Balance Sheet Summary
Total assets (things you own)........... 10,290
Total HP & Secured debt................. -10,560
Total Unsecured debt.................... -10,521
Net Assets.............................. -10,791

Willing2Learn

Just a few queries:

• Why no Emergency Fund? An EF is an essential part of every successful monthly budget. It means you don't have to look to spend using credit when something crops up.
• Why no contents insurance? What if you become a victim of burglary?
• Do you not get haircuts?
• Why nothing on car parking? Is it always free?
• Why no cost for internet?
• What about TV license?
• Do you not pay Council Tax?

If it were me, in the first instance I would focus on getting rid of the two overdrafts, as this facility can be withdrawn at any time without notice.
After that, my attention would turn toward the Lloyds loan as the APR is costing you the most money

Google snowballing debts

Edit: And welcome to the forum

getmore4less

but I've recently just had to move back home with my parents

£290 to live at home will they help with that cost.

Mobile £92 why so high?

Car is costing £240pm + £214 the HP must be the car its the only thing you have.

£1k a year is insurance.

When did you buy the car what do you use it for?

Spotify and netflix you can't afford them.

Can you add up the charges on all the accounts for each of the last 6 months and itemize them.

EssexHebridean

Well done for taking the tricky first step and saying "help" - never easy but when it's done, it's done! As usual I'll add comments below in red.

azyyy wrote: »

Hey,

In my previous years I've struggled with a number of issues, addiction, moving out of family home and recently it has caused my finances and debt to spiral out of control, I have completed an SOA (Im not sure the %'s are correct as hard to find them on the apps) Let's assume they are for now and you can alter them if you find differently later. and was wondering if anyone had any advice about the fastest easiest way for me to clear my debts - and improve my credit score - had a shock when I recently checked my score and it was below 300. Don't worry too much about the number there - it's your credit history we need to be thinking about. Sign up to the MSE Credit Club (free) if you've not already and that will help you to get a better overall picture and understanding.
Me and my girlfriend were planning to buy a house in the coming years - but I've recently just had to move back home with my parents as I could barely even afford rent whilst living alone. I need to begin saving for my new life, but with this debt hanging over me it just seems impossible right now, and its been affecting my mental health for a while now - but more recently its really starting to have an affect on my daily life.

I was wondering about the best options to clear debt and improve my credit score. Would a consolidation loan help? Nope, most likely the opposite - first we need to tackle the day to day managing money and living within a budget, and consolidating doesn't help with that. (I have actually tried applying but am unlikely to be approved with decent interest rates - seems only ones who would offer me anything are around the 30-40% mark). I cant even get approval for a balance transfer credit card right now. Again the MSE credit Club can help you keep an eye on eligibility for things, which should improve as you work at reducing the debt

Nay suggestions on what to do next? I've looked at IVAs and other ways of trying to manage it, but just have no idea how to approach anything. Any help anyone could offer would be great.
Thanks in advance. take things one step at a time - you're currently on step one!

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1699
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1699

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 214.5
Rent.................................... 250 Is this what you're paying to your parents? Any chance they'd take a "break even" amount just covering the cost of you being there while you get things sorted?
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 20 No offence but it seems a bit mean of your parents to be asking you for money for utilities as well as you paying keep? Can you discuss this with them?
Gas..................................... 20
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 92 OUCHY!! How long until you're out of contract?
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 100 Same as the rent/gas/electric really - that's a lot of money you're parting with to live at home!
Clothing................................ 0 You need to budget something here even if only £5 per month for essentials - stick that amount aside into a savings account so it's there when you need new socks.
Petrol/diesel........................... 120 This is quite high - read Martin's guide to driving economically and think whether you can reduce your mileage
Road tax................................ 2 Are you paying this monthly? If so, stop, pay annually for such a small amount as I'm pretty sure they charge a premium on a monthly DD?
Car Insurance........................... 90 Make sure you use comparison sites at every renewal - can you put a more experience named driver on the policy to bring the cost down? One of your parents maybe?
Car maintenance (including MOT)......... 30 make sure you really are saving this each month
Car parking............................. 0
Other travel............................ 15
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 11.75 Is this prescription costs? If so have you looked into a pre-paid card?
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 40 This is quite high - can you reduce it a little at least for the moment? Make clear to people that you will only be buying token presents for the time being?
Haircuts................................ 0 Do you use clippers and do it yourself?
Entertainment........................... 0 You never go out, take your GF to the pictures, quick bite to eat or a drink, grab a coffee? have a good think about this category
Holiday................................. 0
Emergency fund.......................... 0 As a car owner you could do with something here.
Subscription............................ 3.99 Can this go?
Spotify................................. 9.99 I'd suggest that if you want to clear the debt ASAP you can lose either this or the netflix.
Netflix................................. 7.99
Total monthly expenses.................. 1027.22


Assets
Cash.................................... 40 is this car maintenance money saved?
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 8500
Other assets............................ 1750
Total Assets............................ 10290


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 10560....(214.5)....10 Car finance?
Total secured & HP debts...... 10560.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Tesco Loan.....................5076......125.......9
Lloyds loan....................1925......105.......18
Barlcaycard....................1500......75........5
Tesco Overdraft................500.......100.......5
Lloyds Overdraft...............1000......50........5
Argos Card.....................320.......30........10
Tesco Credit Card..............200.......50........5
Total unsecured debts..........10521.....535.......-


Monthly Budget Summary
Total monthly income.................... 1,699
Expenses (including HP & secured debts). 1,027.22
Available for debt repayments........... 671.78
Monthly UNsecured debt repayments....... 535
Amount left after debt repayments....... 136.78 OK - good start - so where is that money going?

Personal Balance Sheet Summary
Total assets (things you own)........... 10,290
Total HP & Secured debt................. -10,560
Total Unsecured debt.................... -10,521
Net Assets.............................. -10,791

On paper you currently have £1600 a year spare, so first job is to work out where that's going.
second job I would suggest is a spending diary so you can track anything that you may not have remembered for putting on here.

I'd suggest talking to parents about a reduction in "keep" money for now - allowing you're buying your own food, and contributing £40 to gas/electric, that £250 you're giving them seems a little steep to me I have to say - maybe ask them if you can halve it for 6 months to give you some breathing space?

Third job is to go through that SOA and work out ANYWHERE you can save ANYTHING - bin netflix - £10, Shave your food bill by 10% - £10, cut your fuel spend in the car by 10% - £12, halve what you spend on present - £20 - that's an extra £52 right there - add that to the "spare" £136 a month that you already have and that's a great lump off the Argos card in just one month - in fact if you do that that card will be gone in 2 months. You then turn your attention to the next smallest balance - if all interest rates are the same - or the next highest interest rate if they're not - you follow? I agree with Willing2Learn about the overdrafts but have a REALLY good look at the card APR's as well - I suspect you're being very optimistic on some of them!

You can do this but it's not going to be massively fast. As soon as you can get off that mobile deal go Sim only for £10 a month - keep your existing phone until you're debt free.

Good luck!

EssexHebridean

A few notes below - mainly because it was stuff I initially thought of too and then realised the reasons!

Willing2Learn wrote: »

Just a few queries:

• Why no Emergency Fund? An EF is an essential part of every successful monthly budget. It means you don't have to look to spend using credit when something crops up.
• Why no contents insurance? What if you become a victim of burglary? OP lives with parents so their policy will cover
• Do you not get haircuts?
• Why nothing on car parking? Is it always free? Perfectly possible if you only use a car for a commute!
• Why no cost for internet? Parents presumably have internet that the OP uses?
• What about TV license? Again, parent license should cover?
• Do you not pay Council Tax? Assume parents account for that within the "keep" being paid - I certainly hope so anyway at £250 a month plus utilities!

If it were me, in the first instance I would focus on getting rid of the two overdrafts, as this facility can be withdrawn at any time without notice.
After that, my attention would turn toward the Lloyds loan as the APR is costing you the most money

Google snowballing debts

Edit: And welcome to the forum

Mnd

If the road tax is £2 a month then I think it is paid annually, no option for monthly payment.

EssexHebridean

Mnd wrote: »

If the road tax is £2 a month then I think it is paid annually, no option for monthly payment.

That did cross my mind to wonder about - if this is the case and you ARE paying annually OP, again you need to make sure you are budgeting this amount every month into savings.

For anyone else curious - the relevant Gov.uk site says

"How much it costs
The amount you pay depends on how often you want to make a payment. There’s a 5% surcharge if you pay:

monthly
every 6 months
There’s no surcharge if you pay yearly."

Mine is £30 a year and I'm fairly sure I *was* given the option to pay monthly, at the extra cost.

getmore4less

Medical (prescriptions, dentist etc).... 11.75 Is this prescription costs? If so have you looked into a pre-paid card?

https://apps.nhsbsa.nhs.uk/ppcwebsales/patient.do

A prescription costs £8.80 per item, but prepayment costs:
£29.10 for 3 months - card payment
£104 for 12 months - card or Direct Debit (10-monthly instalments of £10.40)

Might be contact lenses.

theoretica

azyyy wrote: »

Unsecured Debts
Description....................Debt......Monthly...APR
Tesco Loan.....................5076......125.......9
Lloyds loan....................1925......105.......18
Barlcaycard....................1500......75........5
Tesco Overdraft................500.......100.......5
Lloyds Overdraft...............1000......50........5
Argos Card.....................320.......30........10
Tesco Credit Card..............200.......50........5
Total unsecured debts..........10521.....535.......-

Monthly Budget Summary
Amount left after debt repayments....... 136.78

The debts that are jumping out at me for your situation are the two Tesco ones followed by the Argos. They are smaller debts with comparatively high monthly repayments - get them gone and you will have noticeably more money to put towards the other debts. They aren't the highest interest rate debts, but might be very satisfying to be rid of.

JayRitchie

theoretica wrote: »

The debts that are jumping out at me for your situation are the two Tesco ones followed by the Argos. They are smaller debts with comparatively high monthly repayments - get them gone and you will have noticeably more money to put towards the other debts. They aren't the highest interest rate debts, but might be very satisfying to be rid of.

That was my observation - the OPs position is really not that bad. The three smaller loans should be easily paid off in a few months (the payments are relatively high anyway) leaving £300 a month free to tackle the others.

Main cost to look at is the car - thats what is really making life tough.

enthusiasticsaver

I think you have overstretched with the car. The HP debt is considerably more than the value. Check you have the insurance as low as you can and you need to be saving up for maintenance.

The mobile is also ridiculously high so as soon as you are out of contract go to sim only.

Is the groceries your contribution at your parents or do you buy lunch out every day? If you do, stop and take a packed lunch. Will your parents accept a reduction in rent?

Were the loans debt consolidation loans? They never work as without a change in spending habits the debt just builds up again and you have double the amount so absolutely no a debt consolidation loan will not help particularly if you are paying 18% like your current Lloyds loan.

You need a spending diary where you record all your actual spends as I doubt you spend nothing on entertainment. No takeaways, trips to cinema or pub?

Cancel spotify. That is not essential and you can get it for free.