Digging myself out of my twenties Debt Hole

[Deleted User]

Digging myself out of my twenties Debt Hole

Dear all

I've been lurking on this board for some time, drawing inspiration from everyone's kind advice and support to one another. It's now time for me to bite the bullet and dig myself out of the gaping financial hole that I dug for myself in my twenties, where I relied on credit and lived an expensive lifestyle, and sort out this debt mess. The majority of my friends are getting married, having children, buying houses...and the only significant dependents I have are my HSBC and Barclaycard credit accounts..!! Time to grow up, pay these off and get on the housing ladder...

I've spent some time today doing an SOA, which I have pasted at the bottom of my post.

To give some context, I live by myself in Manchester and commute 80 minutes each day by train 3 days/week and by car 1-2 days/week to Liverpool for a well paid job that I love and that I could only do in Liverpool due to the location of the office and expertise there. My life (friends, family) is in Manchester, but the commute overto Liverpool is demanding (time and money!). As friends are starting to settle, my social life is quietening in Manchester, so once my tenancy is up next year (Nov 2020), I'll be moving to Liverpool. This will help me to save on rent, car parking and commuting costs.

I lived for 18 months without a car and recently bought one again after I realised that being able to get out of the city and into the hills for some peace and quiet is hugely important for my mental wellbeing. I have done most hikes accessible by public transport within 2 hours of Manchester and have been left on the platform after my return train has been cancelled shivering and wet enough times to dream about how much better it was when I had the car...!

I am only paying the minimum amount on my credit cards as this is all I can afford at the moment. Come Spring 2021 I will need to transfer the balances over to a new 0% offer, if there is one available for me. I have a good credit rating as I always pay and am on the electoral role etc... As you can see from my monthly summary, money is tight!

I am looking for any advice from you kind and experienced bunch, as to where and how I can trim my spending, so that I can start to financially plan for my 30s and beyond. I've changed energy providers, I claim tax relief for my professional fees, cancelled my gym membership, and I shop at budget supermarkets, bulk cook and freeze everything. I would like to be able to socialise but realise that presently this costs around £40/month...so probably need to cut down on heading out and have more evenings in. Likewise money on clothes over the year adds up - definitely going to try harder in 2020 to be more of a conscious consumer. My phone contract is up in July, so I'll switch to PAYG in the summer. I followed Martin's advice and withdrew my savings to pay a large chunk on my CCs earlier this year... so now I have not a penny to my name in savings, which is worrying.

I'd be grateful for any kind advice on how to proceed and where you might start with my 12.4k of debt! Also, any tips on how you deal with the constant anxiety that accompanies debt which runs into five figures..? Some days I find the worry really tough to manage.

Many thanks to all in advance of your support, and Happy Christmas _party_

Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 2240
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2240

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 765
Management charge (leasehold property).. 0
Council tax............................. 80
Electricity............................. 84.5
Gas..................................... 0
Oil..................................... 0
Water rates............................. 30.93
Telephone (land line)................... 0
Mobile phone............................ 35.38
TV Licence.............................. 13.2
Satellite/Cable TV...................... 0
Internet Services....................... 22
Groceries etc. ......................... 220
Clothing................................ 30
Petrol/diesel........................... 120
Road tax................................ 2.5
Car Insurance........................... 64.74
Car maintenance (including MOT)......... 20
Car parking............................. 118.53
Other travel............................ 45.46
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 5
Pet insurance/vet bills................. 10
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 10
Entertainment........................... 19
Holiday................................. 50
Emergency fund.......................... 0
Personal shopping (non-groceries)....... 15
Meals/drinks out........................ 40
Professional fees (compulsory).......... 62.75
Total monthly expenses.................. 1893.99


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 4700
Other assets............................ 0
Total Assets............................ 4700

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................4676.5....108.......0
HSBC...........................7277.19...182.......0
Halifax........................411.83....6.........22.2
Total unsecured debts..........12365.52..296.......-


Monthly Budget Summary
Total monthly income.................... 2,240
Expenses (including HP & secured debts). 1,893.99
Available for debt repayments........... 346.01
Monthly UNsecured debt repayments....... 296
Amount left after debt repayments....... 50.01

Personal Balance Sheet Summary
Total assets (things you own)........... 4,700
Total HP & Secured debt................. -0
Total Unsecured debt.................... -12,365.52
Net Assets.............................. -7,665.52

Created using the SOA calculator at LemonFool.
Reproduced on Moneysavingexpert with permission, using other browser.

fatbelly

Is the Halifax account an overdraft? You are only paying £6 per month but the apr is 22.2. That's the first thing to knock on the head. Martin has some ideas here.

https://www.moneysavingexpert.com/banking/cut-overdraft-costs/

Are you registered with topcashback and quidco? One thing that looks expensive is your car insurance and it should be possible to reduce this at the next renewal, maybe with some cashback. It's worth spending a few evenings doing your research on that. In fact anything that you buy online can probably be bought with some cashback

Your debt is coming down slowly (3.5 years to debt-free) but if you can shave some bits off your expenditure it should come down more quickly.

Do you need a tv licence?

Your groceries bill is a little high for a single person. Aim for £35 per week. Clothing - aim for £5 per week, max.

Car parking is very high. With a bit of research could you park free and walk a bit?

Is your council tax being paid over 12 months?

Similarly, mse energy club could save you some money on your electricity bill.
Remember to check whether anyone on the referrers board could get you more money for switching (e.g. Bulb, Igloo)

https://forums.moneysavingexpert.com/forumdisplay.php?s=&daysprune=&f=42

[Deleted User]

Thank you so much for taking the time to reply.

The Halifax debt is on a clarity credit card which I've been leaning on too much these past couple of months in the run up to Christmas. £6 is the minimum payment as stated by Halifax...I could probably afford £30/month or so?

No I'm not registered with either of those cash back sites but will definitely take a look. I bought my car insurance through Money Super Market as there was a deal on at the time where they would match your excess of you ever had to claim. My renewal is up in September so I'll start looking early August.

Speaking honestly, I don't need a TV license - I guess that I need to get used to living without these comfy luxuries. Agree my groceries bill is a little high too. My cupboards are full of stock ingredients so in the new year I will challenge myself to eat through all the pasta and pulses and only buy the absolute bare minimum from Aldi. Clothing - thanks, will save this smaller monthly budget for emergency buys and try very hard to fall back in love with my old wardrobe!

Yes my car parking is ridiculous. I had to pay £1000/year for access to the secure garage where I live - I live right in the middle of manchester city centre which helps with the commute but means leaving the car out on the street over night (or even at all) is not an option. I have to pay to park at work on the days that I drive, again I work right in the middle of Liverpool city centre so free parking is tricky but in the new year I will have a scout around for places I can park for free and walk to the office.

Yes council tax is paid £80/month over the year, and that includes a 25% single person discount.

I used MSE energy club earlier this year to change to the cheapest supplier (Symbio I think it is called), so far going ok!

3.5 years to debt free is ok but I'll be in my mid thirties by then, I really don't want this debt to hold me back!! I get very stressed by it all, particularly how I'm falling behind societal norms and expectations (and my financially comfortable friends!!)

monetxchange

in terms of car parking, I was paying £50 a week plus at a London station car park. Now use Just Park to rent local driveways. Most of them are £5 a whole day and only add an extra few minutes on walking to the station. A lot of the people hiring out their drives are just trying to top up income too, so have been really helpful and welcoming. All done and paid on the app, you just show up and leave your car.

Willing2Learn

Hi,


Just some thoughts on your SOA:

• Is your water rates paid over 10 or 12 months?
• Is your water metered?
• I agree with the previous posts in that your car parking costs could be trimmed.
• You could suspend buying any presents for birthdays or xmas as your debt needs to be addressed. (Let your family and friends know that they should not get you any presents either).
• Entertainment, meals out and drinks should all be in one budget category. Personally, I would keep this category funded as entertainment is a human need!!
• You need to insure your home, to cover your backside and for peace of mind.
• Can you afford a holiday while paying down your debts?
• You need to put something aside each month for your emergency fund. This covers against unknown expenses that WILL crop up every now and then.
• Out of curiosity, what are the professional fees for?

Unicorn_cottage

Hi there. Lots of luck with your debt free mission. Would you consider moving to Liverpool earlier and finding somewhere cheaper to live? I know this is an extreme option and you have a pet (is it a cat?) but the rent, parking, petrol and other travel is eating a massive percentage of your income. Do you have anything that you can sell - debt busting and getting rid of stuff you don't need anymore goes hand in hand . It is easy to sell stuff nowadays with FB marketplace and you don't have to pay any fees.

ReadingTim

Mental wellbeing or not, that car is a massive drain on your resources which you can scarcely afford. If getting out into the countryside for the odd day or weekend is absolutely necessary, why not hire a car for the day? Car clubs like Zipcar sound perfect for that, and considerably cheaper.

Alternatively, and also beneficial on the social side, why not join a club for hillwalking, hiking or the likes - that will get you out and into the countryside, probably with transport laid on? Alternatively, a road cycling club will get you out into the country lanes pretty quickly - my local club (in Reading) goes out weekly for 60+ miles into Berkshire, Oxfordshire etc, I'm sure there will be clubs in Manchester or Liverpool which will do the same.

Ultimately though, it's about choices and priorities - what's better for your mental wellbeing - a day out in the country, or being debt free?

fatbelly

debtfreefrom2020 wrote: »

The Halifax debt is on a clarity credit card which I've been leaning on too much these past couple of months in the run up to Christmas. £6 is the minimum payment as stated by Halifax...I could probably afford £30/month or so?

No I'm not registered with either of those cash back sites but will definitely take a look. I bought my car insurance through Money Super Market as there was a deal on at the time where they would match your excess of you ever had to claim. My renewal is up in September so I'll start looking early August.

Speaking honestly, I don't need a TV license - I guess that I need to get used to living without these comfy luxuries. Agree my groceries bill is a little high too. My cupboards are full of stock ingredients so in the new year I will challenge myself to eat through all the pasta and pulses and only buy the absolute bare minimum from Aldi. Clothing - thanks, will save this smaller monthly budget for emergency buys and try very hard to fall back in love with my old wardrobe!

Yes my car parking is ridiculous. I had to pay £1000/year for access to the secure garage where I live - I live right in the middle of manchester city centre which helps with the commute but means leaving the car out on the street over night (or even at all) is not an option. I have to pay to park at work on the days that I drive, again I work right in the middle of Liverpool city centre so free parking is tricky but in the new year I will have a scout around for places I can park for free and walk to the office.

Yes council tax is paid £80/month over the year, and that includes a 25% single person discount.

I used MSE energy club earlier this year to change to the cheapest supplier (Symbio I think it is called), so far going ok!

3.5 years to debt free is ok but I'll be in my mid thirties by then, I really don't want this debt to hold me back!! I get very stressed by it all, particularly how I'm falling behind societal norms and expectations (and my financially comfortable friends!!)

Well that's the first credit card to hit, then. You should throw all the surplus at that and just pay the min payment to the other two while they are at 0%.

Explore the cashback sites and plan to renew your car insurance at the 'sweet spot', which according to Martin is 20-26 days before the start date

https://www.moneysavingexpert.com/car-insurance/

If you don't need a tv licence go online and make a declaration. They will leave you alone for 2 years.

Symbio are good (well they're cheap which in this case is good)

And as for falling behind societal norms and expectations (and your financially comfortable friends!!) just stay focused on you. Your friends probably have worse finances than you. Don't be fooled by their houses and cars. You've got a job that you love and is well paid. If you want a goal, you could be solvent by the end of 2021 without any damage to your credit history, and be well positioned to get on the housing ladder

[Deleted User]

Good news, I applied for some contracter work with LionBridge (10-20 hours/week)..and that application seems to be ticking along nicely, so if I pass the 'entrance exam' then that's a nice side earner..though they don't advertise how much they pay per task but hopefully it is reasonable enough. Does anyone have any experience with LionBridge or others?

Willing2Learn wrote: »

Hi,


Just some thoughts on your SOA:

• Is your water rates paid over 10 or 12 months?
• Is your water metered?
• I agree with the previous posts in that your car parking costs could be trimmed.
• You could suspend buying any presents for birthdays or xmas as your debt needs to be addressed. (Let your family and friends know that they should not get you any presents either).
• Entertainment, meals out and drinks should all be in one budget category. Personally, I would keep this category funded as entertainment is a human need!!
• You need to insure your home, to cover your backside and for peace of mind.
• Can you afford a holiday while paying down your debts?
• You need to put something aside each month for your emergency fund. This covers against unknown expenses that WILL crop up every now and then.
• Out of curiosity, what are the professional fees for?

Thank you Willing2Learn for highlighting some gaps in my SOA and other points to consider.

My water is paid over 12 months and it is metered yes. I have one of those rainfall showers in my rented flat which is really lovely to shower with but very wasteful! Would love to switch it to a smaller head but I think given that it is rented I can't really make any changes.

The £1000 for car parking at my flat has already been paid back in September and isn't to be renewed until September coming (and, having just checked the terms, cannot be refunded), it's just the car parking at work which is an ongoing cost. Will try and find some nearby free and safe on street parking in Liverpool the first week that I'm back in the new year.

All my family and friends' birthdays are clustered from Sept-Jan so during autumn and winter I feel like I'm constantly thinking about what I could get as gifts, and constantly paying out! Some of the pressure this year has been relieved by saying as a family that we'll make a donation to Crisis for Christmas, rather than buying gifts for one another. This is something I'd really like to continue doing, and harks back to my attempts to be more of a conscious consumer. Also it does work out to be somewhat cheaper than buying meaningless clutter for everyone.

I agree, the lack of contents insurance as been worrying. But it was just one more cost that I couldn't afford, so I opted to avoid. Will have a look via the cashback sites in the new year and see if I can get a good deal.

No I don't suppose I really can afford a big holiday, but very occasional weekends away to keep me sane I think is worth putting some money aside for - similar to how you approach entertainment. I'd really like to spend 5 days down in Cornwall this summer if we can find somewhere cheap to stay, but no trips abroad for me this year coming I think. Likewise, I'm going to start politely declining hen dos, which are a huge expense! :mad:

Professional fees cover my registration, indemnity and college membership which goes up year on year with my seniority - I'm a junior doctor. Exams are also ridiculously expensive (~£1k) but fortunately I've not got any of those coming up for a while now. We're definitely not all paid £80k, contrary to what the misinformed Question Time audience member said the other week before the election! :rotfl:

Unicorn_cottage wrote: »

Hi there. Lots of luck with your debt free mission. Would you consider moving to Liverpool earlier and finding somewhere cheaper to live? I know this is an extreme option and you have a pet (is it a cat?) but the rent, parking, petrol and other travel is eating a massive percentage of your income. Do you have anything that you can sell - debt busting and getting rid of stuff you don't need anymore goes hand in hand . It is easy to sell stuff nowadays with FB marketplace and you don't have to pay any fees.

Thank you for wishing me luck UnicornCottage! Do you know, I hadn't actually thought of breaking my lease and leaving for Liverpool earlier, but you're right the city centre rent and commuting is really eating into my budget. I guess the thing going against this is that I'd lose a portion of the £1000 I've already forked out for parking but then again this might balance with the money saved on fuel with the commute. Hmm I think I need to do some maths!! I do have a pet - a lovely sweet rescue cat - who is a great companion, she's like a therapy cat! :A I absolutely could not be without her. In terms of costs, she's about £250/year (routine vet fees, litter, food) but I do not have insurance for her so if she does get sick then I'm going to struggle to cover the cost without a credit card. She's an indoor cat though so at much lower risk of injuries / infection etc. Yes I could probably sell some bits lying around - I have a couple of old digital cameras which would probably fetch £50-60. I tried putting some clothes on Depop but never got any interest (perhaps due to my bad fashion taste!!? :eek:) - I'll try another site in the new year as I don't have Facebook.

ReadingTim wrote: »

Mental wellbeing or not, that car is a massive drain on your resources which you can scarcely afford. If getting out into the countryside for the odd day or weekend is absolutely necessary, why not hire a car for the day? Car clubs like Zipcar sound perfect for that, and considerably cheaper.

Alternatively, and also beneficial on the social side, why not join a club for hillwalking, hiking or the likes - that will get you out and into the countryside, probably with transport laid on? Alternatively, a road cycling club will get you out into the country lanes pretty quickly - my local club (in Reading) goes out weekly for 60+ miles into Berkshire, Oxfordshire etc, I'm sure there will be clubs in Manchester or Liverpool which will do the same.

Ultimately though, it's about choices and priorities - what's better for your mental wellbeing - a day out in the country, or being debt free?

Thanks ReadingTim, I appreciate your frankness. For two years that is exactly what I did with car hire, the trouble is that the weather is so unpredictable that by the time you know it is going to be a nice weekend and worth hiring a car to escape the city, the car hire fees are really high as it is too short notice!

Thank you for suggesting ZipCar - I've had a quick scout and there isn't much in the way of club cars in Manchester, but during my search I came across Turo which does have a couple of cars for rent within 3-4 miles of where I live ...but actually being able to list your car for rental by others could be a really nice way for me to make a bit of money when the car is not in use....so thanks for your suggestion, will definitely be looking into it! :j

I already have a group that I go walking with and we're fairly active, but it's a 'get yourself there' jobby. A lot of walks we do are on public transport routes but having done these a few times over now it is nice to be able to go further afield on the weekends when we're not out as a group. I do not own a bike and having worked in A&E in Manchester and treating lots of cyclists who've been knocked off their bikes by taxis and the like I really am not confident enough to get out on a bike.

I agree it is a tough balance with money, but having that freedom in the last few months since getting the car has really improved my mental wellbeing after two years of being car-less. Especially with a big family emergency that we had over the autumn, being able to hop into a car and drive up and down the motorway on multiple occasions at very short notice was a huge relief. I realise how privileged that sounds and perhaps I just don't have the financial scope right now to have such a luxury. I am seriously going to look into the renting out my car with Turo or another similar scheme - it could actually be a really handy money maker if people nearby buy into it. Could post an ad through letterboxes in my building to see if there is any interest I suppose. I'm sure a lot of people in my building resent the high car parking fees and do not have a car..but like me could do with having access to a car at short notice without paying a huge car hire premium.

[Deleted User]

fatbelly wrote: »

Well that's the first credit card to hit, then. You should throw all the surplus at that and just pay the min payment to the other two while they are at 0%.

Explore the cashback sites and plan to renew your car insurance at the 'sweet spot', which according to Martin is 20-26 days before the start date

If you don't need a tv licence go online and make a declaration. They will leave you alone for 2 years.

Symbio are good (well they're cheap which in this case is good)

And as for falling behind societal norms and expectations (and your financially comfortable friends!!) just stay focused on you. Your friends probably have worse finances than you. Don't be fooled by their houses and cars. You've got a job that you love and is well paid. If you want a goal, you could be solvent by the end of 2021 without any damage to your credit history, and be well positioned to get on the housing ladder

Yes you're right, Halifax CC has to be my priority. Once I've got through the long January (worried I'll run out of money having been paid so early this month!) I'll throw all my surplus at Halifax.

The TV license thing always confuses me - it's just BBC I need a license for? My TV has iPlayer preinstalled on it, and it can't be removed, won't the license people just assume I've been watching it? Happy to unplug my TV serial cable as I never really watch live TV anymore.

What you're saying in that last paragraph is so refreshing and actually what I need to keep reminding myself of. Thank you so so much for making that point, most people my age will be in some sort of debt, there is just so much stigma that people don't openly discuss it. I must remember I'm not alone..and the end of 2021 isn't that far away after all.

fatbelly

TV Licence

Have a look at this

https://www.tvlicensing.co.uk/check-if-you-need-one/topics/telling-us-you-dont-need-a-tv-licence