Starting my mission to become debt free - Snowballing advice

IrishSean

You are well on the way; the obvious ones to tackle are the 40%+ 

Pick one, e.g. bamboo loan, take from now until the end of the year to drive it down & clear.

Put what you can into an emergency fund, even 50 p/m. By Christmas you'd have £300 in case one of your appliances need replaced. 

You've no energy bills? Would be good to get info on your rental arrangement, as if it's all inclusive for £750 p/m it's a cracking deal, anywhere in the country: a further incentive to stay solvent & protect the rent.

Eventually you want to look at a small amount, even £5 a month towards insurance (contents in case post lockdown the 'less savory' in society go back to work). £5 a month towards life ins. would protect your partner a bit financially (would cover the debt in the event of the worst happening either of you). 

Please consider setting up a diary; with your APRs and continued budget I think the forum could really assist with ongoing advice & support

You can do it all though, will just take time💪😀

KeysMcK

IrishSean said:

You are well on the way; the obvious ones to tackle are the 40%+ 

Pick one, e.g. bamboo loan, take from now until the end of the year to drive it down & clear.

Put what you can into an emergency fund, even 50 p/m. By Christmas you'd have £300 in case one of your appliances need replaced. 

You've no energy bills? Would be good to get info on your rental arrangement, as if it's all inclusive for £750 p/m it's a cracking deal, anywhere in the country: a further incentive to stay solvent & protect the rent.

Eventually you want to look at a small amount, even £5 a month towards insurance (contents in case post lockdown the 'less savory' in society go back to work). £5 a month towards life ins. would protect your partner a bit financially (would cover the debt in the event of the worst happening either of you). 

Please consider setting up a diary; with your APRs and continued budget I think the forum could really assist with ongoing advice & support

You can do it all though, will just take time💪😀

I really appreciate the support! Bamboo is first on my list, then I think I’ll start on the Monzo overdraft. The overdrafts I’m most wary of because it is TOO easy just to spend the money again, but at the same time I’m reluctant to get rid of them because they’re a good emergency safety net and they also can help my credit file when I finally come around to buying a house. It’s frustrating. 

Sorry if I didn’t make it clear enough, we do have bills but I pay the rent in full and my Mrs pays the bills. Then she gives me a contribution towards the rent to even us out. I’ve just added that as extra income. 

If I follow this right I could be debt free by my 30th Birthday which would be nice to aim for. I just know myself a little too well and I think I have to deal with my on mentality and changing the way I think as much as anything else! 

IrishSean

👍👍👍

Apologies if I missed that bill info, so many posts, I sometimes skim-read through 😉

Yeah, you've a good plan: a lot of people want to avoid IVAs and the like as they feel, yes, they reduce the amount to pay back but have a similar credit report impact (certainly in duration) to bankruptcy.

Being in control of your own payments is great, especially if you can clear it all in a given time. I remember having an awkward convo with a financial advisor (free initial chat) about my £30k debt including mortgage and he said 'you're not in financial crisis, just pay it back'. It was a initial LBM (I had a few, lol). 

I'm aiming for strong financial position by my 50th.. Have a well paid down buy-to-let to replace my pension (which in a roundabout way went to a Casino Owner's pension fund somewhere off-shore😕), & stay debt free. 

IrishSean

Also get creative, overtime, promotion, evening & weekend work, comping, surveys, selling stuff online etc. It all adds up. Every pound extra is a pound less accruing interest in your debt mound.

👍👍👍

KeysMcK

I’ve not included commission in my income because it’s not something I can budget around. My idea was to use this as savings/surplus, and to make sure my Mrs doesn’t leave me because I give her a crap quality of life lol. 

Surveys? Do they actually pay? I’ve always assumed they were data collection scams. Where should I start? 

This whole process has made me feel much better already. When I posted on here I’d just done the step change Calculator and it recommended I go bankrupt so I was in a bit of a panic. I think I’d put my loan debts into that spreadsheet as full cost plus interest, rather than current settlement figure plus interest and that painted a much gloomier picture. 

I really appreciate your comments! Thank you. 

IrishSean

It might be useful to have a review every 6 months; as with anyone paying it down, it should be fairly manageable; if your circumstances changed at all definitely call one of the 3 main debt charities so you don't feel like you're 'drowning' in anyway (apologies if any of that seems obvious😉). 

If it was me i'd forward project on those APRs; are there pinch points when you're falling off 0% slowing the capital repayment? 0% card offers are slow coming in for most of us but the more your debt ratio comes down the better (hopefully) the offers will be. Even being able to shift £1200 at a time makes a massive difference (as interest is halted). 

IMHO Overdrafts are a scandal: all providers just deciding 40% flat rate? I'm calling BS on that, I can see the ombudsman feeling ain few bank collars, especially now more people will be hurt by the rate. Have you applied for a 0% overdraft? Available on at least £500; it might be extended. Very few being turned down, doesn't hurt credit rating, you don't need to 'prove' Coronavirus impact.

IrishSean

Sry forgot to say, i've not done many surveys / market research, I mentioned it as I saw a market reserach link paying £50 - £150 on Martin Lewis twitter feed below (few hours ago) 👇

Also, is that a credit union loan @36%? Seems very high; credit unions are stand alone (with own board etc.) but tend to be super approachable. Talk to them, tell them how you'd a new repayment plan in place, basically everything you've done, can they lower APR or give you a replacement loan at much lower rate to pay that one off. 

You've 2 overdrafts i'd look about switching to 0% on both asap! (Could be worth £1000+ @ 0%).

RecentPost

Just a quick addition, when I was snowballing Bamboo loans they said I could only make advance payments to reduce the overall interest term if I told them that was the payment was for prior to making it. I choose to save the amount up and until I had it and got a early repayment settlement from them.

RecentPost

Also just back to a previous point, I have 1000 in payouts from swagbucks mainly on surveys, but also cashback and promotions,

enthusiasticsaver

KeysMcK said:

Hi,

Please see my SOA below. An explanation, I pay the rent, my girlfriend pays the other household bills (hence some sections being empty). 

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 0

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 2550

Partners monthly income after tax....... 0

Benefits................................ 0

Other income............................ 0[b]

Total monthly income.................... 2550[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 211

Rent.................................... 750

Management charge (leasehold property).. 0

Council tax............................. 0

Electricity............................. 0

Gas..................................... 0

Oil..................................... 0

Water rates............................. 0

Telephone (land line)................... 0

Mobile phone............................ 5

TV Licence.............................. 0

Satellite/Cable TV...................... 35

Internet Services....................... 26

Groceries etc. ......................... 150

Clothing................................ 30

Petrol/diesel........................... 100

Road tax................................ 17

Car Insurance........................... 80

Car maintenance (including MOT)......... 30

Car parking............................. 30

Other travel............................ 50

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)...... 30

Haircuts................................ 8

Entertainment........................... 50

Holiday................................. 0

Emergency fund.......................... 0[b]

Total monthly expenses.................. 1611[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 0

Other assets............................ 0[b]

Total Assets............................ 0[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 0........(0)........0

Hire Purchase (HP) debt ...... 2623.....(211)......16[b]

Total secured & HP debts...... 2623......-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Barclays overdraft ............1500......50........35

Monzo overdraft ...............1000......50........39

Barclaycard ...................800.......50........32

Active securities .............290.......10........0

Sll (default)..................1200......10........0

Manchester credit uni..........700.......80........36

Bamboo loans...................3019......52........60

Likely loans ..................6210......295.......40

Aqua card......................2950......80........24

Capital one ...................900.......50........26[b]

Total unsecured debts..........18569.....727.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,550

Expenses (including HP & secured debts). 1,611

Available for debt repayments........... 939

Monthly UNsecured debt repayments....... 727[b]

Amount left after debt repayments....... 212[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 0

Total HP & Secured debt................. -2,623

Total Unsecured debt.................... -18,569[b]

Net Assets.............................. -21,192[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

I have used the soa with the current balances of the Bamboo Loan and likely loans as the settlement figure is irrelevant as you are not in a position to clear them in full.  You have to work with the figures as they stand today. You do not have £1000 to pay it off in full now  so you will need to work on repaying at current figures.  Having said that the interest rate is awful so if you do not want to go down the DMP route you will need to throw every spare penny at it to get rid of it asap. 

If you have a problem with budgeting and impulse buying, as it appears you do then the only way you will get to grips with the debt is to go cold turkey on credit cards and budget monthly for things like groceries, entertainment.  I do not see the point of you using a credit card to buy these things when you are not in a position to clear it monthly.  You are paying more for everything because you have to pay interest as well as the actual price. 

 Can you cancel the cable tv and just make do with Netflix or amazon prime or even freeview? Can you stop buying clothes for the next six months or so and just make do with what you have? Your soa shows car costs but no value in the asset column.  Are you leasing a car or buying on PCP? Is that the HP debt?  That is an expensive way of buying a car so my suggestion would be to get out of that as quickly as possible. The insurance on the car is horrendous so are you using comparison sites to get it cheaper?  Paying for it annually rather than monthly saves you loads.  You need some savings if you have a car so putting away the car maintenance money and emergency savings every month is crucial. 
 
Are you sure that it is an equitable split if you are paying £750 rent and your partner is paying bills?  Surely utilities and council tax do not come up to £750? You would be better working out all expenses, rent, utilities, council tax and splitting it between you and your partner and then split the groceries.  If you are buying for others make sure they repay you.  Do your family and partner know you are so heavily in debt? 
 
I would suggest you open a savings account and put your car maintenance money in there so you have cash sitting there if your car needs work and £50 emergency savings money.  You could also put the presents money in there to cover things like birthdays and christmas. That is the key to getting out of debt.  Savings means you are not adding to your debt if you have an unavoidable expense.  

It will be tough as you have left it so long before dealing with the debt and I think 2 years is optimistic but if you can get rid of Bamboo, Likely loans and the two overdrafts that would be a great start.  Stop using the credit cards altogether and just let the two defaulted debts run on at £10 per month.  


Another way of dealing with this is the Dave Ramsey way of paying off smallest to  largest so you would get rid of the credit cards.  This helps if you have a spending behaviour problem which you obviously do as you see progress very quickly in getting rid of the debts.  There are loads of videos on youtube.  He is American.