£45k in debt, what to pay off first?

Lee-10

Good Afternoon,

I have been humming and harring about putting my situation on here, but have read some good advice from you all so giving it a go to see if I can get some. I am not struggling to pay my debt, I just have a lot of debt (45000), and not sure what to try and pay off first. i have attached a joint SOA for myself and wife.

I have started to pay a little extra off the Zopa Loan, is this the approach you would take


Statement Of Affairs And Personal Balance Sheet

Household Information
Number Of Adults In Household. . . . . . . . . . . . . . . . 2
Number Of Children In Household . . . . . . . . . . . . . . 1
Number Of Cars Owned . . . . . . . . . . . . . . . . . . . . . . 2

Monthly Income Details
Monthly Income After Tax. . . . . . . . . . . . . . . . . . . . . £3,450.00
Partners Monthly Income After Tax. . . . . . . . . . . . . . £900.00
Total Monthly Income. . . . . . . . . . . . . . . . . . . . . . . . . £4,350.00

Monthly Expense Details
Mortgage. . .. . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . £965.97
Council Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £201.00
Electricity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £64.00
Gas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £56.00
Water Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £45.00
Mobile Phone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £79.55
TV License. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £12.00
Satellite/Cable TV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .£48.00
Internet Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £36.00
Groceries Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .£650.00
Clothing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £100.00
Petrol/Diesel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £200.00
Road Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . £17.50
Car Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £50.00
Buildings Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £11.00
Contents Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .£11.00
Life Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .£66.82
Haircuts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £100.00
Entertainment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £100.00
Savings (Total). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £400.00
Total Monthly Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . £3,213.84


Assets
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £500.00
House Value (Gross). . . . . . . . . . . . . . . . . . . . . . . . . . . . .£310,000.00
Car(s). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £12,500.00
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £323,000.00


Secured & HP Debts
Description
Mortgage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £222.876


Unsecured Debts
Company Debt Monthly Apr
Zopa Loan £1,413.57 £88.33 7.00%
Tesco C/Card £2,899.40 £35.00 0.00% . (Sep 20)
MBNA C/Card £3,759.50 £37.59 0.00% . (Dec 20)
Barclay C/Card £5,498.00 £123.70 0.00% (May 20)
Tesco Loan £10,112.56 £133.06 3.00%
Halifax C/Card £5,452.23 £54.52 0.00% . (Sep 20)
Wife - Halifax Loan (Car) £7,460.45 £184.72 3.90%
Wife - Barclaycard C/Card £3,431.06 £78.97 0.00% . (Jan 21)
Sofa Finance £1,315.44 £36.54 0.00%
Wife - MBNA C/Card £3,464.70 £35.00 0.00% . (Sep 21)
Total Unsecured Debts £44,806.91 £807.43


Monthly Budget Summary
Total Monthly Income £4,350.00
Expenses (Including Hp & Secured Debts) £3,213.84
Available For Debt Repayments £1,136.16
Monthly Unsecured Debt Repayments £807.43
Amount Surplus Or Short For Making Debt Repayments £328.73

Personal Balance Sheet Summary
Total Assets (Things You Own) £323,000.00
Total Hp & Secured Debt £222,876
Total Unsecured Debt £41,342.21
Net Assets £323,000.00

EssexHebridean

HI Lee, welcome to the boards.

It's good that you're not struggling to meet the payments, but equally having the amount of debt you have is not a comfortable place to be in and does leave you rather vulnerable should the worst happen re employment for example.

Comments on the SOA in red below:

Lee-10 wrote: »

Good Afternoon,

I have been humming and harring about putting my situation on here, but have read some good advice from you all so giving it a go to see if I can get some. I am not struggling to pay my debt, I just have a lot of debt (45000), and not sure what to try and pay off first. i have attached a joint SOA for myself and wife.

I have started to pay a little extra off the Zopa Loan, is this the approach you would take Nope - not initially anyway - see below


Statement Of Affairs And Personal Balance Sheet

Household Information
Number Of Adults In Household. . . . . . . . . . . . . . . . 2
Number Of Children In Household . . . . . . . . . . . . . . 1
Number Of Cars Owned . . . . . . . . . . . . . . . . . . . . . . 2

Monthly Income Details
Monthly Income After Tax. . . . . . . . . . . . . . . . . . . . . £3,450.00
Partners Monthly Income After Tax. . . . . . . . . . . . . . £900.00
Total Monthly Income. . . . . . . . . . . . . . . . . . . . . . . . . £4,350.00

Monthly Expense Details
Mortgage. . .. . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . £965.97
Council Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £201.00
Electricity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £64.00 These (electricity/gas combined) are quite high - use a comparison site like the MSE Cheap energy club to check you are on the best tariffs for you.
Gas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £56.00
Water Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £45.00
Mobile Phone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £79.55 High! When you're approaching the end of your contracts shop around for a decent SIM only deal, and don't automatically upgrade your phones either - they'll definitely be good for another few years!
TV License. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £12.00 Sure? Mine has some odd pennies on there, too....
Satellite/Cable TV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .£48.00 TV & Internet combined are expensive - if this is a package deal haggle with the provider next time the contract is up. If separate, see if a package would work out better for you.
Internet Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £36.00
Groceries Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .£650.00 How many families aside from your own are you feeding?!!! Seriously - extortionate - half it to start with, then knock a big chunk more off for fun afterwards.
Clothing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £100.00 Every month? That's a pretty high spend - I have my doubts either you or your wife "need" many clothes, try to cut to essentials only for a bit.
Petrol/Diesel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £200.00
Road Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . £17.50 If you're paying this monthly I think you'll find it carries a premium to do so - look to save and pay annually. And if you are budgeting monthly just be sure that the money does get put away so it's there when needed.
Car Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £50.00
Car Maintenance???..............2 cars, reasonable mileage - you definitely need to be budgeting for a service per year plus depreciation on tyres etc, and things like screenwash, wiper blades, keeping them clean if you take them through the carwash, that sort of thing. If either or both are over 3 years old budget for the MoT tests as well.
Buildings Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £11.00
Contents Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .£11.00
Life Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .£66.82
Haircuts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £100.00 Wait What?? How much? No - just too much, either find somewhere cheaper, go less often, or preferably both.
Entertainment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £100.00
Savings (Total). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £400.00 OK - you're saving £400 monthly yet you only have £500 cash assets - something going wrong there I think....
Presents..................................Christmas is coming, and your little one will have a birthday at some point, too. Even if you don't buy for anyone else, you do need to budget for this.
Total Monthly Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . £3,213.84


Assets
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £500.00
House Value (Gross). . . . . . . . . . . . . . . . . . . . . . . . . . . . .£310,000.00
Car(s). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £12,500.00
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £323,000.00


Secured & HP Debts
Description
Mortgage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . £222.876


Unsecured Debts
Company Debt Monthly Apr
Zopa Loan £1,413.57 £88.33 7.00%
Tesco C/Card £2,899.40 £35.00 0.00% . (Sep 20)
MBNA C/Card £3,759.50 £37.59 0.00% . (Dec 20)
Barclay C/Card £5,498.00 £123.70 0.00% (May 20) This is a high balance, and finishes in 5 months - what is your contingency plan to clear this if you can't move it elsewhere?
Tesco Loan £10,112.56 £133.06 3.00%
Halifax C/Card £5,452.23 £54.52 0.00% . (Sep 20)
Wife - Halifax Loan (Car) £7,460.45 £184.72 3.90%
Wife - Barclaycard C/Card £3,431.06 £78.97 0.00% . (Jan 21)
Sofa Finance £1,315.44 £36.54 0.00% When does this finish?
Wife - MBNA C/Card £3,464.70 £35.00 0.00% . (Sep 21)
Total Unsecured Debts £44,806.91 £807.43


Monthly Budget Summary
Total Monthly Income £4,350.00
Expenses (Including Hp & Secured Debts) £3,213.84
Available For Debt Repayments £1,136.16
Monthly Unsecured Debt Repayments £807.43
Amount Surplus Or Short For Making Debt Repayments £328.73 And where is this money going each month? Is it all going to the Zopa loan currently?

Personal Balance Sheet Summary
Total Assets (Things You Own) £323,000.00
Total Hp & Secured Debt £222,876
Total Unsecured Debt £41,342.21
Net Assets £323,000.00

OK - first question - do you have that surplus you show at the end of each month? If you don't, then your SOA is wrong and you need to track down where that money is going - that's nearly 4 grand a year so you have to find that money if it's not currently available.

The good news is you are in a great position to fix things at this stage. Are you still using credit cards? If so, stop - you don't need to according to your SOA (which, going forward, is now your budget. )

I reckon there's a whole heap of savings to be made. and made quickly. As a rough tot-up:
£300 at least from groceries. (See the old style board on here for advice - but intially do a brand drop - stop buying premium brands. Cook from scratch - and if you're buying pre-prepared fresh veg invest in a peeler and a knife and DIY the prep. Stopm and think about what you're spending - there are plenty of people on here feeding a family your size for well under a third of your current spend, to give you an idea.
£400 currently going to savings - saving beyond a basic emergency fund while you have debt - and interest charging debt, is a mugs game.
£50 from haircuts - at least.
£50 from clothing - at least.

later on, at least a further £100 from haggling on TV/internet and mobiles, and possibly a saving on utilities.

Right now though that's £800 to play with. This month, top your emergency fund to £1000 then that's done for the time being.
You need to factor in car expenses and presents that you currently aren't considering. I'd suggest £60 for the car maintenance and £25 for presents - this christmas will be a bit thin but by next year you'll have a sensible pot built up for the little one's christmas & birthday.
The balance goes to debt - along with the current surplus.
So month 1: £515 to debt
After that you have another £500 to play with because you're no longer putting money into savings. That's over £1000 off the debt EACH MONTH in addition to minimum payments. That means you can pretty much kill off the first 0% card before the 0% finishes.

Some people will say "save the money and pay it off the 0% when it ends" but I'm going to disagree with that in this case as I suspect for you it will be better just to get it gone. If it makes you feel better to hammer a bit off the zopa loan as it's charging interest, then round that payment up to £100 a month if the terms allow - find the extra from your grocery budget - there's plenty to spare!

You need to keep an INCREDIBLY close eye on those 0% cards as at the moment there is no certainty that you would be accepted for any new deals, I'm guessing.

You're in a massively good position to be able to deal with your debts right now - but I'd urge you to crack on and do it. Even with your disposable income it's still going to take a while - the sooner you start, the better.

zippygeorgeandben

I feel that your wife's meagre salary does not meet with what she may or may not be spending each month. Entertainment, haircuts, food (which has previous poster as suggested is an obscene amount). It is all very well you being the bread winner however, that doesn't mean that everyone has financial responsibility. All it takes is for ill health and time off work and you'll then really struggle.
Good for you on acknowledging but you both need to tackle it head on really. It's quite rewarding then seeing it go down.

Larac

Hi - having been a similar position in 2012 - I ended up in DMP as ran out of tarmac with 0% deals - can't assume you will continue to get these. IMHO the 'elephant in the room' is trying to understand why you are using CC as you seem to be overspending each month and it ends up on the CC. I have been there and until you address this - it will continue to be a problem. You have a healthy joint income so you are in a position to pay this down - but you do need to understand why you are overspending each month. You are in a good position - I ended up on DMP which trashes your credit record for six years. In my case it was cold turkey and what I needed!

mbz1984

Thanks for posting guys, really interesting stuff.
My personal position is I have 48k credit card debt after years of struggling with a gambling issue. I've now got a handle on this although always vigilant but I'm wondering if there is a better way to handle the debt legacy.

The basics are I have 48k credit card debt and earn 3100 net per month.
All 0% interest deals are finished and I'm currently paying £1850 per month onto the cards , £850 of this is interest. I'm therefore clearing some of the debt but wondered if it was worth contacting the card providers to negotiate anything better?

Anyone any experience of this or other ideas gratefully received.

Yours in support

mb

Mnd

Mbz, it's best to start your own thread, don't get your situation mixed up with the origina lposter

kazwookie

Look at food/ clothes / hair cuts.


I'd pay off the highest interest% first.

Andyjflet

Well done for posting, your spending is seriously out of control. Until you realise this and sit down with your spouse and work out a budget this wont stop.
Good news is that Mortgage is within the correct realms of 25% of your income and your car isn't extravagant.

Therefore, food at £650 and haircuts are ridiculously extortionate, cut this back at least 50% if not more and then start snowballing those debts.
Id start with Zopa loan and then the sofa.

Snowballing works well in achieving quick goals, each time you close a paid off account it will do wonders for your motivation, then take that payment you were making and it in to the next target debt. Make sure you are at the minimum payments on the other loans and cards.

so your homework is.................

1. Do a budget asap with your partner
2. Snowball into the Zopa loan and check minimums on everything else
3. Look through Martins savings pages and start getting some new quotes on insurance products, TV etc

EssexHebridean

OP have you been back and looked at the replies? Any feedback?

owen_money

EssexHebridean wrote: »

OP have you been back and looked at the replies? Any feedback?

Maybe he's still 'humming and harring', whatever that is?