Plan to clear £34k debt mountain

enthusiasticsaver

Keeping some of the savings back for emergencies is sensible.  The usual amount if you are in debt is £1k.  I guess much depends on whether you will get any redundancy pay out and what your plan is if you do lose your job. As the payments resume in July though anyway there is little that can be done about that now. 

jls85

I won't get any redundancy pay unfortunately. I'm on a rolling 6 month contract which is due for renewal in August, so they'll likely just let it lapse if they are not keeping anyone on. With regards to another job, I am happy to do anything at all to make ends meet, I'm just very aware that I will not be able to cover my current outgoings on a lower paid job as I was struggling as it is and i am paid well (all self inflicted I know). This is one of the main reasons I want to get my finances sorted out finally, as I am tired of the stress and anxiety that comes with being in debt

enthusiasticsaver

Hopefully a way will be found then to finish your project whilst complying with restrictions so the funding isn't pulled. The creative arts industry must have been badly affected by all this. Good luck with getting on top of the debt and just spend as little as possible. It must be stressful so if a savings buffer gives you peace of mind then just make the contracted payments.

 Remember if you do lose your job and aren't able to meet debt repayments give priority to your mortgage. There is very little unsecured lenders can do if you are on a low income apart from trash your credit record. They won't take you to court or anything so priority payments are mortgage, utilities and food. Is the car loan HP or a personal loan? Hopefully it won't come to that. 

MidsHollie

Hey, welcome to the forum! 

Your goal of making £30 a day is great! A big goal, but great. It’s amazing how those little extras really add up. 

It makes sense why you wanted to stop the payments and build up some savings.... but..... Dave Ramsey (I think someone else mentioned him?) talks about a feeling of fear helping you to achieve freedom from debt. I have always been in safe roles with a fair salary. I never felt fear around money because I knew I always had a good pay check coming in, or credit available. When I switched my mindset to budgeting, and pay towards my debt on the first day after payday, you really do get a sense of fear. For example, I only have £135 left til the end of the month, because that’s what my budget (and monzo account) says. In reality I have money in my emergency fund, my annual savings pots and available credit. But I’m not going to use them. With only £135 left, my money decisions are very different than if I considered the whole picture. I hope that makes sense and isn’t a total ramble! 

IrishSean

Leave yourself a small amount as Hollie said, it helps with grocery budgeting; in one sense I can see why you suspended loan repayments as any money saved could be used to pay minimums in later months should the worst happen. That aside, loans, ccs are unsecured so you wouldn't be forced into immediate strife as ES said, providing you mortgage is paid. 

Nows the time to go hard and fast at your highest aprs or smallest debt: keep the £1k  emergency fund. As the debt mountain falls you should see more 0% balance transfer & perhaps money transfer offers come in, when it's more a debt hill.

Few years with job still in place you'll see a big difference. C-19 has prompted the lightbulb moment for so many of us. Maybe you'll get more hours or can freelance a bit for extra income to pay off debt: better a year of that than more economic strife leading to unforseen redundancies with yourself included.  

You can totally do this
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jls85

Thanks for the support everyone, I really appreciate it. 

Enthusiasticsaver, it has been hard but I am still hopeful that things will work out ok in the end. I'm just a worrier, especially when things are outwith my control, but I am working on getting better at that. Thanks for your advice on the loans as well, I wasn't aware that there is little they can do apart from damage my credit record. Obviously I hope it doesn't come to that, but I feel a lot better about paying into my loans and leaving less of a buffer. So I will look to pay £4000 into my first loan today and keep the remaining £1k as an emergency fund.

MidsHollie, that makes perfect sense thank you. And I agree actually, as it has been the fear that has prompted me to sort this out finally. I just need to find the right balance between fear and sleepless nights I think!

And IrishSean, thanks for your advice too. As above, I didn't realise that about the loans so I feel a lot happier knowing they can't take all my stuff from me if I get into trouble so it has definitely changed my mindset. And as for freelancing, that is something i am definitely looking into. In a previous life I used to be a marketing copywriter so I'm hopeful that could be something to fall back on if need be.

As for today's update, I am just about to go on and place a few matched bets on my lunch hour. Please don't try this at home if you've not fully worked out how though people!

enthusiasticsaver

Hope the matched betting was successful.  I know a few on here are quite successful at it but I have never tried it.  I think it is a good idea to pay a proportion of your loan off from your savings buffer.  It makes economic sense but I do understand that it is probably a bit of a security blanket for you.  Getting the debt down and controllable will also do that for you I think though and while you are being paid it makes sense to carry on paying it down. Definitely keep your £1k emergency fund and if it helps continue to add to it while you are still getting your salary.  If you do lose your contract then rethink things then but as I say we are all hoping it does not come to that but if it does hopefully you will manage to get something else quickly. Having another string to your bow will help if the TV industry takes a while to recover. I heard on the news today many of the theatres are planning on staying shut until the end of the year.  Awful for the actors and the backstage crews/musicians etc and for us who love going to the theatre. 

You might want to do a soa (statement of account) just to see what outgoings you do have and whether they can be brought down further?  

jls85

Thanks Enthusiasticsaver. It is awful for those working in theatre, I'm really hopeful we can come out of this soon otherwise I'm not sure some of them will survive I'll definitely try to do a SOA this week so I can start looking at making additional savings there. In the meantime, I made £31 from bets yesterday and today I sold a dress on eBay for £26.50. So pretty much still on track with my £30 per day goal so far!

savingholmes

Have you worked out what the minimum amount of money you need to live each month - and what help you would be eligible for. While I hate high interest debt - I do understand the desire to retain cashflow if possible to buy yourself some time. My DS is 22 and has found freelance work paying £20 per hour done at home during lockdown. There is more around than you think if you are prepared to be flexible... 

jls85

Thanks savingholmes. My minimum outgoings per month, including all debts, bills, travel and food, comes to £1800 per month. That doesn't include any clothes, emergencies, haircuts or anything like that. But I could live on that if I had to without any negative effect on my credit rating. If I don't factor in the debt repayments (if the worst came to it) that takes it down to £1050 per month.

I am going to find some time to do my SOA asap to see if I can bring that down any further, and I am looking at selling my house and moving in with my boyfriend once all of this is over so that should both free up some more money each month and hopefully allow me to pay back some of the debt too (depending on how much the housing market is affected by COVID). I'd ideally like to pay back as much of my debt as I can without relying on money from the house sale though, as we do want to buy our own house in 12-18 months so it would be good to have as much as I can left to put towards the deposit. But at least I have it there in case I need it.

As I earn £40k per year at the moment I am not eligible for any help, and I don't have time just now to commit to any additional work as my work is pretty full on trying to problem solve for COVID. But that's reassuring to hear that there is worj out there if I do need to look for something should the worst happen with my job.

With regards to today's update, I paid £3500 from my savings into the NW loan so that takes that balance down to £7287. That leaves me with a slightly higher buffer of £1500 in my savings account for emergencies. I think once I get used to the fear I can start to leave a smaller buffer, but this feels like a big enough step at the moment.

As usual, my plan is to place a few more MBs at lunchtime and put another few items up on eBay after the success of the first one.

Savings goal tally as at day 3: £93.50/£3060