Plan to clear £34k debt mountain

Bizzywizard

Hi,
I agree with the other posters about using your EF to pay down the interest incurring debt. Martin Lewis put up a post on the main site about his, about a month ago. Its well worth a read and might explain, where we are all coming from.  However, well done with paying off £3500, that's a great figure! When you do your ebay selling why not just put that money straight on the debt? It can become addictive, paying off the debt this way. Plus you won't miss the money. I also like rounding the figure to the nearest 99 or 49, so I would need o make my debt £7199 (this is just me  being weird I know). That would be my ebay goal by the end of this month, just a suggestion. 

jls85

Thanks Bizzywizard. I love the idea of aiming for round figures and I’ll definitely look at paying back the debt when the money comes in. I thought the bank might not like an onslaught of little payments but if it’s ok to do that I’m all for it.

Now for the bad news. I got told yesterday evening that my job no longer exists and I’m going to have to accept a demotion if I want to stay at the company. I’m not sure what that means for my wage as yet, but it’s likely to take me from £40k to £26k p/a. So I’m feeling pretty down and worried at the moment. I managed to make £11 from matched bets yesterday before it all kicked off though so at least that’s something.

IrishSean

jls85 said:

Thanks Bizzywizard. I love the idea of aiming for round figures and I’ll definitely look at paying back the debt when the money comes in. I thought the bank might not like an onslaught of little payments but if it’s ok to do that I’m all for it.

Now for the bad news. I got told yesterday evening that my job no longer exists and I’m going to have to accept a demotion if I want to stay at the company. I’m not sure what that means for my wage as yet, but it’s likely to take me from £40k to £26k p/a. So I’m feeling pretty down and worried at the moment. I managed to make £11 from matched bets yesterday before it all kicked off though so at least that’s something.

Hopefully it's only temporary; it's good you've freelance experience in other areas too. The two consolations are a) you've already started to pay down the debt & b) if you hadn't, the debt would be bigger & the stress from your LBM in more (potentially) extreme circumstances as this would be worse. 

You're well on the journey & have ideas on how to reduce monthly outgoings, reduce debt & have strong financial goals.

In short, any drop in income would have been much worse had you not started the DFW journey. 

You can always link with a debt charity if your salary drops & things get too tight. You've a mortgage & prob aren't planning further large purchases so if you had to take a DMP (or similar) hit to your credit rating it might be a necessary evil, so to speak. 

You'll still be able to live & keep a roof over your head👍👍👍

There's always another option from where you are at present.

Scloud

Sorry to hear your bad news! I totally agree with @IrishSean that at least you have already started on this journey and know that there will be loads of support here to help you figure it all out. Best wishes Xx

ditty1234

Hi just think about it - you have started your journey but before the s hit the fan and you have taken action. Working as a self employed or on a short term contract I think you could keep a higher EF, to allow for dips in income, or bumps in expenses. And while it is important to pay your debt and ideally not just pay the minimum every month, then probably the last thing you want at the moment is more credit and the best way to avoid that is through your EF. 
But well done for starting to pay off your debt quicker, don't worry too much there is always a way, and if the company want to keep you on, you will probably get a better paid role soon. Best

jls85

Thanks everyone. I know it could be a lot worse so I’m just going to keep focusing on the positives and hope it’ll all sort itself out in the end

In the meantime, to cheer myself up, I’m going to start adding a running total to my debts to all of my posts. I’ll add it to my signature later when I’m on my laptop, but in the meantime here it is: 

Starting total: £34,115
Current total: £30,615

enthusiasticsaver

Sorry to hear you are going to have to take a paycut in the short term.  On the plus side the debt is almost below £30k so good progress being made.  

IrishSean

Yup, 10%+ done, hit 20% and there's the first 5th gone💪💪💪

jls85

So it's been a crazy few days with work contract negotiations etc, so my £30 per day plan has fallen slightly behind. But that's ok. My thinking always was I'll aim for it as much as I can and whatever happens, I'll be closer to it in the long-run. I still made £4.75 from another eBay purchase so that can get added to the pot.

In other news, I received an letter yesterday from my bank offering me a £12k loan at 3.5%. I have no idea how or why, but I'm wondering if it would be worth taking them up on it to transfer some of the higher interest debt to a lower rate? Or is that a bad idea? I know consolidation is generally a bad idea, but this feels different as it would be the exact same amount, just on a lower interest rate.

I'm more than happy to yield to superior knowledge on this one, so any advice would be hugely appreciated.

IrishSean

A letter would suggest you've been soft scored by them...

What you need to weigh up, and I know its an unknown in this climate, is are you being offered balance transfers cheaper than the loan?

The other thing to be wary of is the idea you can borrow your way out of debt; that aside i'm a bit less bearish about a loan like that than others as things have changed somewhat; if ppl get it tight in coming months banks are likely to be sympathetic to relief such continued or personalised payment holidays for the likes of loans (interest still builds, debt payments get longer, its really only for those in unique circumstances). The danger too of course is you borrow more and rack up debt again on the card: if your LBM is strong & you're fully committed to clearing all balances at least the loan at that rate would give you a fixed payment but a BT is better.

In short i'd only do it if the alternative is a punishing apr on credit credits that causes interest to rack up rapidly. 

If you're being offered a loan (normally a LOT harder to get than a BT) you should exhaust all comparison sites & soft searches on mse credit club, clearscore etc. To see if you've BT offers (im guessing yes).

So if you're getting a loan offer like that you prob have better (read cheaper) BT offers...