Help with debt please

021286

Hi there,
I've decided that 2020 is the year I'm going to tackle my debts properly. I have a bad credit rating due to a defaulted account a couple of years ago, and a breakup meant I was living beyond my means for a while and I got stuck in a cycle of borrowing to make it through to the next month and ending up with very high interest credit cards and payday loans. I've put off sorting it because it just feels like there's no way out, but I've been doing some research and I want some advice on whether snowballing or avalanching the debt would be the best approach for me. I have a bonus coming through work at the end of March of around £1500, and I would like to use this in the most productive way towards my debts. SOA below, please be kind as even posting this and finding out the exact amount of all my debts took a great deal of bravery for me! I just don't want to borrow any more, I can't go on like this, it's keeping me awake at night and I can't see a way out.

Any and all advice appreciated.
Thanks

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2033
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2033

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 20
Electricity............................. 30
Gas..................................... 30
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 20
Mobile phone............................ 12
TV Licence.............................. 20
Satellite/Cable TV...................... 8
Internet Services....................... 20
Groceries etc. ......................... 130
Clothing................................ 50
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 10
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 15
Haircuts................................ 20
Entertainment........................... 400
Holiday................................. 170
Emergency fund.......................... 0
Total monthly expenses.................. 1285


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

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
118118.........................800.......100.......44.9
Aqua...........................425.......10........39.9
Bamboo.........................1129......113.......79.9
Very...........................1600......80........39.9
Vanquis........................196.......6.........69.9
Monzo..........................500.......50........10
Metro..........................450.......50........10
Likely.........................347.......57........89.9
Dot Dot........................785.......130.......738.8
Capital One....................180.......6.........34.9
Capital One....................1495......79........34.9
Total unsecured debts..........7907......681.......-


Monthly Budget Summary
Total monthly income.................... 2,033
Expenses (including HP & secured debts). 1,285
Available for debt repayments........... 748
Monthly UNsecured debt repayments....... 681
Amount left after debt repayments....... 67

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -7,907
Net Assets.............................. -7,907

RAS

Welcome

Do you actually have £67 left at the end of the month?

Do check a couple of things, because with loans you need to know whether there are early repayment penalties. Hunt out the paperwork or ring and ask them.

021286 wrote: »

Any and all advice appreciated.
Thanks

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2033
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2033

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 20
Electricity............................. 30
Gas..................................... 30
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 20
Mobile phone............................ 12
TV Licence.............................. 20
Satellite/Cable TV...................... 8
Internet Services....................... 20
Groceries etc. ......................... 130
Clothing................................ 50
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 10
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 15
Haircuts................................ 20
Entertainment........................... 400 this is where you need to make savings now
Holiday................................. 170 when is this booked for? Can you use the amount to pay off some more debt after you've been away
Emergency fund.......................... 0 Stick something in here, even if only enough to get you to a family emergency if needed
Total monthly expenses.................. 1285


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

No Secured nor Hire Purchase Debts

With respect to the debts below, can you list your limits on any cards? I know this sounds daft but if you've got £20 spare capacity on Cap One, use that to pay for £20 of groceries and then pay £20 off Likely or Bamboo.

That way you can slowly reduce your average APR.


Unsecured Debts
Description....................Debt......Monthly...APR
118118.........................800.......100.......44.9
Aqua...........................425.......10........39.9
Bamboo.........................1129......113.......79.9
Very...........................1600......80........39.9
Vanquis........................196.......6.........69.9
Monzo..........................500.......50........10
Metro..........................450.......50........10
Likely.........................347.......57........89.9 - pay this off first
Dot Dot........................785.......130.......738.8 is this correct
Capital One....................180.......6.........34.9
Capital One....................1495......79........34.9
Total unsecured debts..........7907......681.......-


Monthly Budget Summary
Total monthly income.................... 2,033
Expenses (including HP & secured debts). 1,285
Available for debt repayments........... 748
Monthly UNsecured debt repayments....... 681
Amount left after debt repayments....... 67

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -7,907
Net Assets.............................. -7,907

021286

Thanks so much for your reply. I will call and find out what the early repayment charges would be.

I worked out the monthly amount for holidays based on what I'd normally spend in a year, I don't have anything booked yet for this year and don't intend to- paying down debts is my priority for 2020. So I understand that I could remove that going forward, but I think that having £67 left at the end of the month is about right with the way things have been at the moment/up until now.

Regarding the Dot Dot loan, my agreement document says that the daily rate of interest is 0.65% and my APR is 738.88%, so unfortunately I believe that is correct.

D_M_E

1. Dot Dot
2. Bamboo
3. Likely
4. Vanquis

If it were me, I would live like a hermit for the next year and pay the minimum payment to all cards/loans and pay every spare penny to one of the above until it's gone then move on to the next one and so on.

When those 4 are gone then work on the others until they are gone as well.

EDIT agree you need to cut entertainment, chop it down to £100 but would take the holiday if it's already booked and your £170 includes spending money.

Meanwhile, no more borrowing or spending which cannot be justified.

RAS

In which case put every last penny, literally, to clearing the Dot dot debt.

It's one of the few occasions I would recommend using any spare capacity on your credits cards to buy your essentials and then pay off at least a much off the dot dot debt immediately. Not tomorrow, immediately.

021286

Thank you- I do have some available credit on my cards but I cut them all up at the end of last year thinking this was a sensible move to stop me using them. It did worked as now I don't just use credit cards to buy stupid things, but means I can't log into my online accounts so I think I'm going to have to call and get them to send out new ones, which makes me feel a bit silly but nevermind.

I will pay some off the Dot Dot loan as soon as I can, and use my bonus to pay as much of this off as possible (hopefully all of it) when I get it.

RAS

One old trick with credit cards is that you put them in a bowl of water and freeze them.

By the time you've defrosted them, the urge has gone. In practice the idea of thawing them out is often too much bother.

But in a real emergency, you have a back-up.

What I would suggest is that you use any capacity on the cards and then consider cutting up everything with an APR over 40%.

EssexHebridean

well done on facing up to things and wanting to fix them - comments in red as usual!

021286 wrote: »

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2033
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2033

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 20 This seems very low - is this definitely right?
Electricity............................. 30 Check yhou're on the best tariff for this and the gas
Gas..................................... 30
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 20
Mobile phone............................ 12 Is this SIM only? If so, if you're not still in an initial contracted period, call your supplier and haggle a bit - I currently pay £8 a month for unlimited calls and texts and 10gb data with EE
TV Licence.............................. 20 Is this so high because you are in the first few months of payments?
Satellite/Cable TV...................... 8
Internet Services....................... 20 Looks to me like you're overpaying a little on TV, Broadband and landline - Sky do a basic package for around £31 a month - you have to find it in their advertising though and then repeatedly quote the offer at them until they put it through manually as their systems are set up to force people into the upsell of added bundles etc!
Groceries etc. ......................... 130 With work you could probably reduce this assuming just for one person?
Clothing................................ 50 This is quite high 0- for now cut that back to essentials only
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0 No travel at all, ever?
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 10
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 15
Haircuts................................ 20
Entertainment........................... 400 At the moment I'm afraid I'm going to be brutal and say you need to cut this back quite a lot - cut back hard - use the money to get rid of the expensive debt, and then you can ease up a little
Holiday................................. 170 Again, allowing that you don't currently have anything booked for this year I'd say this money is best thrown at the debt. Re-evaluate next year re a holiday in 2021.
Emergency fund.......................... 0 You need to start budgeting here but NOT until the DotDot debt has gone.
Total monthly expenses.................. 1285


Assets
Cash.................................... 0 If you're saving £170 a month for holidays, where is that going allowing that there is a zero showing here?
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
118118.........................800.......100.......44.9
Aqua...........................425.......10........39.9
Bamboo.........................1129......113.......79.9 Ouch
Very...........................1600......80........39.9
Vanquis........................196.......6.........69.9 Nearly as ouch
Monzo..........................500.......50........10
Metro..........................450.......50........10
Likely.........................347.......57........89.9 Big fat ouchy ouch!
Dot Dot........................785.......130.......738.8 THROW EVERYTHING YOU CAN AT THIS!
Capital One....................180.......6.........34.9
Capital One....................1495......79........34.9
Total unsecured debts..........7907......681.......-


Monthly Budget Summary
Total monthly income.................... 2,033
Expenses (including HP & secured debts). 1,285
Available for debt repayments........... 748
Monthly UNsecured debt repayments....... 681
Amount left after debt repayments....... 67

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -7,907
Net Assets.............................. -7,907

OK - first job - everything you have set for "minimum payment" and you are NOT spending on (that bit is important) change the payment to a monthly direct debit very slightly above this month's minimum payment, then just leave them alone. (The reason for this is that monthly minimums fall each month - leaving you with extra in your bank account which often gets frittered. Setting it to a known amount slightly above the minimum means you know it will be being paid, and you continue to make slightly more impact to the capital outstanding than the minimum would, while still paying out a set amount that you have budgeted. "Stealth debt repayment" if you like.)

Second job - this month, resign yourself to two things - that you're not going o holiday this year and that you're not going out much this month (and probably the next few, as well). revisit DVD's you already have, invite friends over for a film and a pizza (get them to bring pudding and you make the pizzas), go out for walks - whatever you like so long as it is near as damnit free. Then throw your holiday AND entertainment money at DotDot. That, along with the monthly payment should knock it right down and hammer next month's interest back pretty thoroughly. If you can make any savings elsewhere then all the better. Just before payday throw this month's surplus at it as well.

Third job - sign up to the MSE credit club and see if you are eligible for any 0% Balance Transfers that might help with CC's.

You shouldn't need the plastic cards to log in to online accounts? Check back over correspondence you've had - you will likely have had to (or still need to) set up online access - if you need the card number for anything that will appear on statements.

021286

Thank you this is incredibly useful.

I have got my bills in a bit of a muddle I think in terms of council tax etc, but the upshot is I pay £470 a month for my rent and bills all together so however that is broken down (I flat share and pay that lump sum each month which covers everything).

No travel costs in the breakdown as I have a season ticket loan so that money comes out of my pay before I get it, I have accounted for this in my monthly income.

I will definitely be cutting down on the entertainment and clothing amounts, and indeed I have already made quite good strides in this area since the start of 2020- I haven't bought any clothes nor have I had any big nights out- it's been relatively easy to do this through January as everyone is tightening their belts, but I am going to attempt to keep this going and as you say throw this money at the debts! I only put the amounts in the SOA like that as that is how I have honestly been spending until about five weeks ago, so it seems like that is the most accurate depiction of my finances.

With regards to paying more than the minimum amounts- this definitely makes sense and I would like to do this, however how much extra do I work out to pay? I understand that the minimum amounts decrease month on month as the balance goes down, how do I pay enough extra to ensure this is covered (if that makes sense)?

I seriously doubt I will be eligible for any credit cards at all, but I will sign up to credit club as you've suggested just incase.

Thank you all for your help so far, I am learning a lot here and it's very useful to get advice from real people as well as reading all the articles I can.

SusieT

With those horrible interest rates, next time you do a SOA its worth entering them in interest rate order, so that you know the top one is the one that needs everything possible throwing at it. Hopefully your bonus will clear off the crazy interest rate, and possibly another as well.
The good news is (without allowing for a bonus and if you do as suggested above and set a standing order to pay a set amount that will start to bring them down), you are already paying Dot dot £130 so cut out holiday, entertaining and clothing the next 2 months and add that to it to give you £650 which you put to it asap to reduce the daily interest rate. Then next month you could get rid of it totally and also Bamboo, then you can start an emergency fund with £50 a month, and give yourself £50 for treats while you pay down Bamboo and Vanquis, which leaves only high interest rather than crazy interest rates.
This time next year you could be free of debt and have a good start on an emergency fund, so you are in a good frame of mind to get rid of this. If you can be really enthusiastic with others at work or socially who are also in the January cutback mode, you may find that you could get together and they will join you in getting rid of interest for a while even though they may get bored and not go as far as being debt free and earning interest rather than paying it.

021286

Ah that is lovely to think this could all be sorted in a year! I am feeling very motivated to knuckle down and get this done. I'm going to up the direct debits on all my minimum payments today, and budget what money I have left for the month- anything not necessary will go towards Dot Dot. Thanks all!

Any other advice still gratefully received