Starting my mission to become debt free - Snowballing advice

ryanm8655 · 14 June 2020 at 4:35PM

Agree with the above.

The way you’re working out your finances with the partner seems complicated and can easily see you paying a lot more (your comment about needing to give your partner a good lifestyle so she doesn’t leave also suggest this could be the case). I’ve had that mentality in the past and it’s just led to me being in masses of debt for no real reason, they weren’t with me for the lifestyle and things didn’t work out anyway. I’d be paying for date nights when I didn’t need to and they had no idea I was in debt. Likewise with family, if you’re buying their shopping but don’t know how much of the bill is yours then how are you getting what is owed? Again, it’s nice to help people out but you’re in a shedload of debt. You can’t afford to. I’ve been like this in the past, so speak from experience and it’s a big part of why I am in so much debt.

It’s good that you can avoid a debt management plan.

First thing you need to do is set up a direct debit on all of your cards which rounds up the minimum payments to the nearest £. This’ll make it much easier to budget and ensure the debt goes down more quickly (every little helps). You can do that now. It was the first step I made and it has helped massively.

Then target one of the debts and throw everything else at that. I’d work your way through the credit cards. Usually I’d advise targeting highest interest card first but in your case I’d probably go for the lowest balance and get it gone. Motivation is going to be tough and that should be a big help. While you’ve got some loans on stupidly high APRs, it sounds like they’re quite complicated to pay back early and that is just going to be a barrier and potentially lead you to falling off the wagon.

I’d also cut out the cable/satellite tv. Not needed and that’s another £50/month. Why is your car insurance so high?

You mention you get commission - is that monthly? How much is it on average? Every time you get it, chuck it at a debt.

Likewise, as soon as you pay off a card I’d close it down. That’s what I’ve been doing. On bigger balances I also reduced the credit limits as I made progress.

Does your partner know you’re in debt? I’d tell them if not. It helps to have the accountability and hopefully they’d be supportive about it...

KeysMcK · 15 June 2020 at 9:57AM

RecentPost said:

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.

Hi,

would that be “front loaded interest”? I was under the impression that was now illegal, so that’s quite disheartening. Especially as I just made my first £100 snowball overpayment to bamboo this morning, extra salt in the wound.

I’ve contacted bamboo to ask their stance! If it is front loaded is there a complaints process as they have been outlawed due to being unfair to consumers?

KeysMcK · 15 June 2020 at 10:00AM

enthusiasticsaver said:

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.

Thanks for this, I’ll look into it!

The problem with putting in the full payment figures (inclusive of interest) into the calculator is that it then added an additional 60% / 40% interest on top of the figure I gave them, which was the full cost of the loan including interest.

I don’t expect to be able to pay it off in 2 years if I’m honest with myself, but hopefully in the next 3/4 I can manage. I suppose it all depends on if I can actually save on interest or not!

very confused.

KeysMcK · 15 June 2020 at 10:24AM

ryanm8655 said:

Agree with the above.

The way you’re working out your finances with the partner seems complicated and can easily see you paying a lot more (your comment about needing to give your partner a good lifestyle so she doesn’t leave also suggest this could be the case). I’ve had that mentality in the past and it’s just led to me being in masses of debt for no real reason, they weren’t with me for the lifestyle and things didn’t work out anyway. I’d be paying for date nights when I didn’t need to and they had no idea I was in debt. Likewise with family, if you’re buying their shopping but don’t know how much of the bill is yours then how are you getting what is owed? Again, it’s nice to help people out but you’re in a shedload of debt. You can’t afford to. I’ve been like this in the past, so speak from experience and it’s a big part of why I am in so much debt.

It’s good that you can avoid a debt management plan.

First thing you need to do is set up a direct debit on all of your cards which rounds up the minimum payments to the nearest £. This’ll make it much easier to budget and ensure the debt goes down more quickly (every little helps). You can do that now. It was the first step I made and it has helped massively.

Then target one of the debts and throw everything else at that. I’d work your way through the credit cards. Usually I’d advise targeting highest interest card first but in your case I’d probably go for the lowest balance and get it gone. Motivation is going to be tough and that should be a big help. While you’ve got some loans on stupidly high APRs, it sounds like they’re quite complicated to pay back early and that is just going to be a barrier and potentially lead you to falling off the wagon.

I’d also cut out the cable/satellite tv. Not needed and that’s another £50/month. Why is your car insurance so high?

You mention you get commission - is that monthly? How much is it on average? Every time you get it, chuck it at a debt.

Likewise, as soon as you pay off a card I’d close it down. That’s what I’ve been doing. On bigger balances I also reduced the credit limits as I made progress.

Does your partner know you’re in debt? I’d tell them if not. It helps to have the accountability and hopefully they’d be supportive about it...

Hi Ryan,

Don’t worry the leaving me comment was tongue in cheek! As mentioned above she pays a top up of the rent (difference between the bills and rent payment) and I’ve just added that as extra income. I get paid from from her mid-month so it’s actually quite handy.

How do you round up DDs?

Cable I’m in a contract but plan to leave. I had sky internet that was poor service; but not poor enough to get out of my contract for free. We made a deal that I would not cancel my account all together but instead transfer over to a TV plan. We enjoy it, but don’t necessarily need it.

Car insurance is high because I’m in my 20s with one crash 4 years ago, living in a city. I do shop the market for insurance but it’s the lowest I’ve been able to get :-(

Commission paid monthly but I don’t get it every month. I got about £10k before tax last year. My plan this year is to plow this into my debts.

My partner knows about the debts, but I’m not sure she quite grasps the magnitude. I’m very open with her about it, but as someone with only a £500 overdraft and a £600 low interest credit card I don’t think she understands how crippling it can be.

Thanks for your help here. Everything appreciated.

KeysMcK · 15 June 2020 at 10:26AM

IrishSean said:

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%).

I’ll get straight on the overdraft thing! Will it last indefinitely or only until this is over?

ryanm8655 · 15 June 2020 at 10:35AM

KeysMcK said:

ryanm8655 said:

Agree with the above.

The way you’re working out your finances with the partner seems complicated and can easily see you paying a lot more (your comment about needing to give your partner a good lifestyle so she doesn’t leave also suggest this could be the case). I’ve had that mentality in the past and it’s just led to me being in masses of debt for no real reason, they weren’t with me for the lifestyle and things didn’t work out anyway. I’d be paying for date nights when I didn’t need to and they had no idea I was in debt. Likewise with family, if you’re buying their shopping but don’t know how much of the bill is yours then how are you getting what is owed? Again, it’s nice to help people out but you’re in a shedload of debt. You can’t afford to. I’ve been like this in the past, so speak from experience and it’s a big part of why I am in so much debt.

It’s good that you can avoid a debt management plan.

First thing you need to do is set up a direct debit on all of your cards which rounds up the minimum payments to the nearest £. This’ll make it much easier to budget and ensure the debt goes down more quickly (every little helps). You can do that now. It was the first step I made and it has helped massively.

Then target one of the debts and throw everything else at that. I’d work your way through the credit cards. Usually I’d advise targeting highest interest card first but in your case I’d probably go for the lowest balance and get it gone. Motivation is going to be tough and that should be a big help. While you’ve got some loans on stupidly high APRs, it sounds like they’re quite complicated to pay back early and that is just going to be a barrier and potentially lead you to falling off the wagon.

I’d also cut out the cable/satellite tv. Not needed and that’s another £50/month. Why is your car insurance so high?

You mention you get commission - is that monthly? How much is it on average? Every time you get it, chuck it at a debt.

Likewise, as soon as you pay off a card I’d close it down. That’s what I’ve been doing. On bigger balances I also reduced the credit limits as I made progress.

Does your partner know you’re in debt? I’d tell them if not. It helps to have the accountability and hopefully they’d be supportive about it...

Hi Ryan,

Don’t worry the leaving me comment was tongue in cheek! As mentioned above she pays a top up of the rent (difference between the bills and rent payment) and I’ve just added that as extra income. I get paid from from her mid-month so it’s actually quite handy.

Cable I’m in a contract but plan to leave. I had sky internet that was poor service; but not poor enough to get out of my contract for free. We made a deal that I would not cancel my account all together but instead transfer over to a TV plan. We enjoy it, but don’t necessarily need it.

Car insurance is high because I’m in my 20s with one crash 4 years ago, living in a city. I do shop the market for insurance but it’s the lowest I’ve been able to get :-(

Commission paid monthly but I don’t get it every month. I got about £10k before tax last year. My plan this year is to plow this into my debts.

My partner knows about the debts, but I’m not sure she quite grasps the magnitude. I’m very open with her about it, but as someone with only a £500 overdraft and a £600 low interest credit card I don’t think she understands how crippling it can be.

Thanks for your help here. Everything appreciated.

That all sounds fair enough and thought it was tongue in cheek ha. Hopefully your insurance comes down a chunk once the accident drops off and I assume you must be under 25 and driving something sporty.

The commission will be a big help and with that you should be able to hit your target dates By chucking that at those loans.

It’s good that you’ve started making inroads into the bamboo loan already. Once you’ve shaved a few £k off you may well find you are able to get 0% offers which will help.

Start yourself a diary in the diaries section. Helps a lot with motivation.

KeysMcK · 15 June 2020 at 11:57AM

Spoke to Bamboo today as I was worried about wasting my overpayments. They said that overpayments do go towards the principal of the loan, which is a relief. You have to make 3x your usual payment and they process a partial settlement. Obviously there will be delays to that and you’ll still pay interest, but it’s a step in the right direction.

Original loan was £1000 In december (to buy furniture as we had to move house without warning) and current settlement figure is £1100 or something, so they must have front loaded the interest.

Singlespeeder · 15 June 2020 at 4:28PM

KeysMcK said:

Spoke to Bamboo today as I was worried about wasting my overpayments. They said that overpayments do go towards the principal of the loan, which is a relief. You have to make 3x your usual payment and they process a partial settlement. Obviously there will be delays to that and you’ll still pay interest, but it’s a step in the right direction.

Original loan was £1000 In december (to buy furniture as we had to move house without warning) and current settlement figure is £1100 or something, so they must have front loaded the interest.

A loan to buy furniture sounds like a joint debt .... or maybe not?
Do you talk openly with your partner about the hefty debt you're in? I appreciate it's not always easy but as you share bills it is pertinent. Maybe sit down with your partner and the SOA and talk about your plan of action. Your partner may be able to offer joint cost cutting if she knows the dire straights you're in. If she isn't aware of it she may be accustomed to a life style you patently can't afford, but is willing to trim the lifestyle to alleviate the debt. Not sure that makes sense !
Talking, an Emergency Fund, working out your Annual costs and budgeting for them, open a Starling or Monzo account form Annuals (Car costs, presents etc) , these all help.
I'm shocked by the Credit Union charging 36% .... I personally think that's disgraceful.

Betharooni · 15 June 2020 at 7:44PM

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]

Hi KeysMcK

Hope you don’t mind but I wanted to make a few suggestions in light of your SOA.

The first thing I would do would be to have a frank and honest conversation with your OH about the debt you’re in, showing her your SOA. Although you say that you have told her about your debts, she may not have understood the full extent of them and how much pressure they are putting your finances under. Also if you intend to buy a house or have children together in the near future, your finances will hugely affect her.
As others have suggested, reduce your satellite package as much as you are able.
Look round for cheaper internet - £26 per month seems a bit steep
Groceries etc - I would advise tracking your grocery spending, checking where you are wasting food and monitoring your spending and eating so you have as little wastage as possible, batch cooking food so you don’t need takeaways etc. Maybe have a look at the monthly grocery challenges in the Old-style board.
Reduce your clothes spending as much as you are able.
Review car and other travel expenses, e.g. you can compare petrol prices locally so you can go to the cheapest petrol station. What do your “other travel” expenses relate to?
Medical - I’m assuming that the £9 per month relates to a prescription. If so, look at getting a prescription prepayment certificate - it’s £105.90 outright for the year or £10.59 by direct debit for 10 months. It would save you a couple of quid and, if you had to have further medication for any reason, you would not have to pay any extra.
Presents - think about Martin’s “No Unnecessary Presents” suggestion. Do you buy for people just to reciprocate? Do you just give each other money or vouchers for Xmas/birthdays? Look at stopping any unnecessary presents and reduce the value you spend on presents, or try doing some handmade presents.
Entertainment - am unsure exactly what you will have included in this. If going out with friends, maybe tell them you are trying to clear your debts (you can be as vague as you want, but you’ll likely find they will bend over backwards to accommodate your lower cost requirements) so would prefer to go to each others houses/flats for meals, movie night, etc, rather than going out. Alternatively if going clubbing, buy some cheap alcohol and drink before you go out so you don’t have to pay the club’s extortionate drinks prices while you’re out. If doing things with your OH, sit down together and think of free or low cost things to do together. If it’s buying DVDs, books, etc, maybe look in your local library (when it opens), borrow from friends or relatives, look in charity shops (when they open).
Making money - there is a whole section of the forum on ways to make additional money, with ideas such as using cash back sites to get money back for making purchases you were going to do anyway, doing surveys, scanning receipts to apps, selling stuff on eBay - the options are endless. You can get paid in vouchers from some of these things which you could put towards your presents and/or entertainment budgets. Also have a look at this guide, which is a full of suggestions - https://www.moneysavingexpert.com/family/make-money/
As you pay off your credit cards, I would advise cutting them up and closing the accounts. If you feel that you need the safety net of keeping one, put it on ice-literally. Put in a bowl of water and freeze - in the time it takes to defrost the card, you’ll probably decide it’s not a need after all.
If you have card details saved on any shopping sites, delete them off so you have to put them in manually each time - you may decide it’s not worth the bother.

Hope this helps.

B x

Betharooni · 15 June 2020 at 7:55PM

KeysMcK said:

Spoke to Bamboo today as I was worried about wasting my overpayments. They said that overpayments do go towards the principal of the loan, which is a relief. You have to make 3x your usual payment and they process a partial settlement. Obviously there will be delays to that and you’ll still pay interest, but it’s a step in the right direction.

Original loan was £1000 In december (to buy furniture as we had to move house without warning) and current settlement figure is £1100 or something, so they must have front loaded the interest.

Sorry, me again. Just wanted to clarify, did Bamboo say that they will only apply an overpayment to your loan if it’s 3 x your usual payment? Do you intend to make payments of that value or less? If less, I would keep hold of the money in a savings account or similar until you have that value otherwise Bamboo are gaining interest from holding the money and also charging you interest as it’s not applied to the loan. Better that you gain interest than the loan company...

Starting my mission to become debt free - Snowballing advice

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