How best to pay this debt?

kandishuffle

MovingForwards wrote: »

One of my other little tricks is to 'move the pennies' from my main current account and distribute it between all my other accounts.

So my wages give me 4p in pennies and I transfer it out.

If I do food shopping and it comes to £14.06, for example, I share the 94p between my accounts.

The first 50p in the 99p goes into my dedicated debt current account and the rest between my other accounts.

It may help?
It does build up.

That's a really good idea and hardly seems like effort at all AND it keeps the balance in your account a tidy figure. Thanks! I will give that a shot.

kandishuffle

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 3
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1350
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1350

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 36
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 25
Clothing................................ 0 AMENDED
Petrol/diesel........................... 50
Road tax................................ 17.06
Car Insurance........................... 42
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 9
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 AMENDED
Haircuts................................ 0
Entertainment........................... 25
Holiday................................. 0 AMENDED
Emergency fund.......................... 0
Netflix................................. 7.99
Total monthly expenses.................. 542.05


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1200
Other assets............................ 0
Total Assets............................ 1200

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Lloyds Loan....................9648.87...292.......3.3
Lloyds Overdraft...............1000......0.........11.3
Santander Loan.................3575.29...108.......22.89
Halifax Credit Card............2356.84...50........27.45
Barclaycard....................1081.47...25........19.1
Monzo Overdraft................750.......20........0
Santander Overdraft ...........500.......20........0
Total unsecured debts..........18912.47..515.......-


Monthly Budget Summary
Total monthly income.................... 1,350
Expenses (including HP & secured debts). 542.05
Available for debt repayments........... 807.95
Monthly UNsecured debt repayments....... 515
Amount left after debt repayments....... 292.95

Personal Balance Sheet Summary
Total assets (things you own)........... 1,200
Total HP & Secured debt................. -0
Total Unsecured debt.................... -18,912.47
Net Assets.............................. -17,712.47

[/i]

I have decided to follow some of the helpful suggestions and cut out my presents, holiday and clothing budget. Once I get a few debts paid off, I can always save some money for Christmas presents. I'm okay for clothing as I have a lot. Holiday for this year is booked and already paid for. I've also cancelled my £21.99 Gym membership. To be fair, I did go almost everyday BUT I'm more than happy to use my dumbells at home and run outside until my debts are much, much lower.

Spotify has also been cancelled so that's another £9.99 saved.

Like I've mentioned in my first SOA, groceries is for stuff that isn't covered in the food shop under my rent payment. So anything I fancy such as 'fun' snacks like crisps or soda. It also covers my toiletries and other female needs.

I've developed a lot of social anxiety over the last year or so, so the 'entertainment' funds are usually the occasional coffees or movie tickets. My local independent cinema do £3.50 tickets. I'm also a frequent library visitor so taking a book to a quiet coffee shop once a week is a nice break from work and being at home.

Just wondering what else I need to prioritise first. I'm thinking the Santander Loan but maybe it would be quicker to pay of the Monzo overdraft as it's a small amount so a quicker/easier victory?

MovingForwards

I picked my smaller debts off first, it did feel good getting rid of them one at a time

Think had I started with the biggest I would have felt like I was drowning.

Most people say go for the highest interest rate debt first.

But it's you managing it and need to do what will keep you focused and on track.

Your new SOA looks like a huge improvement on your outgoings already

Geht_fit

You should try popping your debts into a snowball calculator, such as what's the cost.com

I really like this one because you can forecast both payments in order of interest and also size of debt. It's also interesting to tweak the amount that you think you could overpay by, as it shows the impact of even the smallest change.

Good luck!

mark55man

good luck - not going to improve on the advice here, but you should think about starting a diary - or even turning this thread into one, although the title is a bit wrong for that

you will need lot's of support over the next couple of years, and the bunch on the debt-free diaries board are helpful and non judgemental.

As an uncle, I think that if I had one of my nephews/nieces staying with and they were in financial trouble I would be wanting to do a bit more to help. So I don't know if you have shared the full extent of your problem but if you think you wouldn't be forcing them into something you could ask for a temporary reduction while you deal with the worst of your debts. Be careful though they may feel unable to say no, and if you suspect that would cause them problem then don't go there.

Geht_fit

Unsecured Debts
Description....................Debt......Monthly.. .APR
Lloyds Loan....................9648.87...292.......3.3
Lloyds Overdraft...............1000......0.........11
Santander Loan.................3575.29...108.......22.89
Monzo Overdraft................750.......20........NaN
Barclaycard....................1081.47...25....... .19.1
Halifax Credit Card............2356.84...50........22.44
Santander Overdraft............500.......20........NaN
Total unsecured debts..........18912.47..515.......-

Based on very rough calculations, if it were me, I would hit them in this order:

1. Santander Overdraft............500.......20........As mentioned previously, the interest is sky high!

2. Monzo Overdraft................750.......20........You pay a flat rate of 50p per day up to a max of £15.50 a month, so APR is about 25%

3. Lloyds Overdraft..... 1000.....0.....11
Might be controversial because the APR is lower than other debts, but I had a seriously euphoric moment when I cleared my overdrafts after having been in them for years. At this point I reduced mine to £100 in one account so that it would be impossible to slip back into them. However, you might want to keep them in case of a serious emergency that needs immediate access to cash.

Whilst paying off the overdrafts above, could you see if you could balance transfer these to a 0% card?
4. Barclaycard.....1081.47.....25.....19.1
5. Halifax CC..... 2356.84.....50.....22.44

By this point, you will be able to use the extra £115 a month to pay the Santander loan off in 18 months rather than 4 years+ (in fact, less, because you'd have been repaying it in the meantime):
6. Santander Loan.....3575.29...108.....22.89
7. Lloyds Loan....................9648.87...292.......3.3

If you are serious about paying it all off quickly, I would consider cancelling the gym membership and any holiday plans. This might sound horrendous, but when did you start your membership and how often do you use the gym? I had a £30 pm membership for 5 years and realised I only went regularly in about 4 months of the year (Jan/Feb and summer). Also, your holiday fund. If it's saving up for one, could you go without? For me, I realised a cheap holiday actually cost a fortune with travel/parking, new clothes, eating out, drinking, airport "bargains", etc. Perhaps some of your debt is from previous holidays?

Hope this is food for thought. Good luck on your journey! It is addictive once you get going and there'll be no looking back once you've paid off the smaller overdrafts.

Geht_fit

Just ignore me... �� Well done on reaching those decisions yourself. I feel like I was in a really similar situation once upon a time and I haven't been in my overdrafts or had any credit card debt for 3 years now. With your determination you'll get there! As mentioned, you should start a diary. I'd read it!

If you are serious about paying it all off quickly, I would consider cancelling the gym membership and any holiday plans. This might sound horrendous, but when did you start your membership and how often do you use the gym? I had a £30 pm membership for 5 years and realised I only went regularly in about 4 months of the year (Jan/Feb and summer). Also, your holiday fund. If it's saving up for one, could you go without? For me, I realised a cheap holiday actually cost a fortune with travel/parking, new clothes, eating out, drinking, airport "bargains", etc. Perhaps some of your debt is from previous holidays?

michael1234

I do think most of the advice given so far is good. However, given the high amount of your dept vs your income, I don't think you should completely rule out the IVA or bankruptcy route.

I am no expert in this and hopefully someone might correct me but my understanding is that the plus side of doing that is basically that you wouldn't then need to repay any of those debts! There are probably a lot of minus points such as not being able to gain credit for several (six ?) years but I thought you could still get a "basic bank account" even if you declared yourself bankrupt.

I'm really not sure and would need to research a lot more but it does strike me that you should at least research/consider that type of option.

mark55man

that's a good idea

---

^^^^^^

this thread doesn't have much on the facts of how to do it, but emphasises the point that once the mainstream gives up on your debt they sell it on to people who will make a profit even if you only pay a small fraction of the bottom line figure

https://forums.moneysavingexpert.com/discussion/5970284/haggling-a-way-to-debt-free

However, the route you are currently taking will leave you in a stronger financial position if you do get there. If not you will have spent time effort and emotion with little to show. The general advice seems to be if you are going down this route do it as soon as possible (having done all your homework!!) - then write off the next 6 years or so from getting any credit at all. if you do this make sure you have a basic bank account before you start pulling the trigger

natlie

Hi

I've been snowballing my debt using the What's the Cost Snowball Calculator and it is working for me. You can Snowball by interest rate or balance but you need to complete it regularly and stick to a realistic repayment amount

Good luck
Nat