Help with debt please

EssexHebridean

A bit more commenting in red...

021286 wrote: »

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). OK - that makes sense.

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. Excellent - well organised there!

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. Absolutely right to do an accurate SOA - well done on that.

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)? when I set up the one for my 0% card I simply looked at the amount going out on the minimum payment in that month - which in my case was £101.XX - and then rounded up to the nearest £5 - so £105 has been going out each month. The 2 caveats to this are that you absolutely MUST NOT spend on a card you paying off like this, and that you must pay attention to any correspondence from the card provider about changes of minimum payments as there has been the odd occasion when these can increase unexpectedly.

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. Yep - you might not now, but as the picture improves that might change. I suspect getting rid of that wallopingly high interest debt might see quite the shift in your credit file a few months after!

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.

This is a brilliant resource I think - so much help and advice available from those who have "been there done that" and you can't underestimate how much more effective it is to read real practical experience over just theory!

monetxchange

It's nice to see an honest SOA on here for once! All the commenters above have given great tips and you know where you can cut back. You can absolutely do this.

You're in a great position to cut spending in your current living situation. Are you friendly with your housemates? Any chance for doing the odd meal exchange or going in on a frugal cooking thing together? It would mean a few nights off from cooking and the economies of cooking in bulk.

You'll be surprised how many people will be relieved to hear you suggest a cheaper night in/out, even beyond January. There's always this pressure to spend loads and make it the 'best' night out ever, when in reality friends might appreciate having a quiet one, or even a good old-fashioned house party where you spend a fraction you would on drinks, no need for fancy clothes or expensive travel. Maybe make it a regular thing?

Do you have anything you can sell bought with the debt you've accumulated, or was that more spending that frittered? You'd be surprised what even non-branded secondhand clothes and gadgets could bring on any of the online selling sites. Good luck!

021286

I'm ashamed to say most of it was frittered- my husband and I split up and I didn't take it very well, and was very depressed for a long time. Not an excuse at all, but definitely the reason, and definitely why I buried my head in the sand for so long. Now I'm in a much better place and feel like I'm mentally equipped to tackle this. Will definitely think about some low cost social things I can do with friends, you're right that many are probably grateful for the suggestion! Thanks again all, and I really appreciate people being so kind.

RAS

Well done so far. Get rind of Dot Dot and then things will start to improve rapidly.

enthusiasticsaver

021286 said:

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

You are in a great position to clear this as you have the bonus in March and scope to cut down on entertainment and holidays. Clothing could also be cut as undoubtedly you probably have enough to last all year. I think if you could find around £800 to £1k a month you could be debt free by the end of the year.

I would allocate £50 a month to emergency savings but given you don't have a house or a car or a pet or children this is not as much a priority as it may be for others.

Throw everything initially at Dot Dot to clear this then Likely. After that Bamboo, Vanquis and 118118. Finally Aqua, Very, Capital one then Monzo and Metro. Resolve never to use these loan sharks again. 

enthusiasticsaver

I have just worked out the interest on that Dot Dot loan and it is £483 a month or £15 a day?? Has the debt been rising on that?  That is criminal. I would throw everything at that before overpaying minimums on the other debt. 

021286

Basically the amount I borrowed was £400, the total amount to repay over 6 months is £783.71- at a payment of £130.63 per month for six months. 
Thanks again for everyone's help, I have slept properly for three nights in a row for the first time in months. Just figuring out exactly what I owe and drawing up a plan to do it, and hearing from other people who don't make me feel ashamed or stupid, is such a massive help! It's been really impacting my mental heath so I know I need to get it sorted. Thanks all again, I really appreciate it.

MallyGirl

Good luck.
Make the next few months an economy drive and get your friends on board. They will probably all have issues they are keeping quiet about.
Frugal February then Minimal March then Absolutely no extra spending April and so on. You will get into a good habit and appreciate the odd blowout all the more.

Muggle1000

Hello, just wanted to add that you could join in some of the challenges on the challenges board which can really help keep you focussed and give you ideas on saving and making extra money to throw at the debts. X 

021286

Ooh I definitely will thank you! I’ve been trying to do one spend free day a week (just completed one today) but I’d like to do more stuff like this.