Climbing Out Of This £45,000 debt

Jophi2b

So much debt! I am hoping this is as bad as it gets. It's time for me to sort this mess out.
My finances have completely spiralled out of control over the past few years (especially in the last 12 months) and as I sit here today, I owe a staggering £45,362.67, mostly on credit cards. In order of highest to lowest interest rate, they are –

Overdraft - £2,665

Credit card 1 - £15,015.67

Credit card 2 - £4,000

Credit card 3 - £4,550

Credit card 4 - £5,290

Credit account - £1,462

Credit card 5 - £12,380

None of my friends or family have any idea that I am in this amount of debt, and figuring that part of the start of this mammoth task of climbing out of this debt starts with acknowledging that I have a problem, here I am, hopefully in a safe space, to declare my debts and to help me to feel like I am taking control of what feels like an overwhelming situation to be in at times.

A few things to note - 
I am a single parent to 2, living in rented house. No assets other than a car (owned outright and essential)
I have never defaulted on a payment and am able to cover minimum payments at least, with extra and have started to pay extra off my debt with the highest interest.

I have successfully stopped spending on all non-essentials.

I have set up some (hopefully effective) ways of stopping myself impulse spending (e.g. blocked my ‘favourite’ online stores, ordered a new credit card so I can’t mindlessly enter the memorised details, put my credit cards out of easy reach so it is a chore to retrieve them, etc)
I have swapped the cheapest, barest minimum I can live with (e.g. no tv licence, the cheapest phone and utility deals, no takeaways, food shopping budget of £30 a week, etc).

The Aim – Is to be completely debt free as quickly as possible and to emerge with a good credit score (Having always been Good, in the last year it has slipped to Low Fair, presumably due to the amount of debt I am carrying). Then I can save for a house deposit and get out of the rental market.

The Plan –

1 – reduce every day outgoings as much as possible (done)

2 – living as frugally as possible (this is something I am going to have to constantly monitor so I don’t fall back into spiralling behaviour)

3 – maximise incomings (with all spare cash going to pay off debt)

4 – snowballing debts starting with my overdraft (most expensive debt)

Now –

I need to work out ways of adding to my monthly income, to increase the amount I can pay off every month. I already have a few ideas, but also some limitations on what I can do (mostly linked to childcare), so I will be having a good look at the posts on here about what others have done to get some extra cash.

My credit cards have little room on them and so the 0% transfer offers have disappeared/not currently possible on the cards I have (if any are actually doing these at this unsettled time) and I am paying interest/about to start paying interest on all of my balances. So I need to work out how to reduce the amount of interest I am paying every month (without taking on another credit account!). I am hoping that by reducing the balance on credit cards, transfer offers might reappear and I can do a bit of a shuffle to relieve the pressure for a while, but obviously there is no guarantee of this, so will be looking at what I can do here too. 

Anyway, this is my starting position for this diary, Any suggestions/advice gratefully received!

Thanks!

Jophi2b

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household          1
Number of children in household       2
Number of cars owned                      1

Monthly Income Details

Monthly income after tax                   2681
Partners monthly income after tax          0
Benefits                                               140
Other income                                          0
Total monthly income.                       2821

Monthly Expense Details

Mortgage.                                               0
Secured/HP loan repayments                0
Rent                                                   750 * payable 6 monthly (June + Dec)
Management charge (leasehold)           0
Council tax                                           70
Electricity                                             35
Gas                                                      30
Oil                                                          0
Water rates                                          20
Mobile, landline & internet                   56
TV Licence                                            0
Satellite/Cable TV                                 0
Groceries etc                                    120
Clothing                                                0
Petrol/diesel                                       50
Road tax                                            12
Car Insurance                                    30
Car maintenance (including MOT)     10
Car parking                                          0
Other travel                                          0
Childcare/nursery                                0
Other child related expenses              0
Medical (prescriptions, dentist etc)   20
Pet insurance/vet bills                        0
Buildings insurance                            0
Contents insurance                            5
Life assurance                                   0
Other insurance                                 0
Presents (birthday, christmas etc)   20
Haircuts                                             5
Entertainment                                  20
Holiday                                              0
Emergency fund                                0
Monthly savings                               50
Total monthly expenses               1293

Assets
Cash Savings                               525
House value (Gross)                         0
Shares and bonds                             0
Car(s)                                          6000
Other assets                                      0
Total Assets                                 6525

No Secured nor Hire Purchase Debts

Unsecured Debts

Description         Debt     Monthly    Monthly Interest
Overdraft            2665           0             2.92%
Credit card 1     15015       349            2.22%
Credit card 2       4000         80            2.01%
Credit card 3       4550       125            1.702%
Credit card 4       5290       144            1.6%
Credit card 5     12380       252            1.094%
Credit Acc 1        1462         33            0%
Tot unsecured    45362      983

Monthly Budget Summary

Total monthly income                                   2,821
Expenses (including HP & secured debts). 1,293
Available for debt repayments                     1,528
Monthly UNsecured debt repayments            983
Amount left after debt repayments                 595

Personal Balance Sheet Summary

Total assets (things you own)                      6,525
Total HP & Secured debt                                   -0
Total Unsecured debt                               -45,362
Net Assets                                                -38,837

[i]Created using the SOA calculator at www.stoozing.com. 

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

* Note regarding my rent (£750) which I pay every 6 months (£4500). I don't regularly put £750 aside every month, but tend to use all my income to pay off debts in first few months, then start putting aside in the 3 or months before it is due, so the amount of money I have to pay towards debts every month varies. 

Kitten868

Well the good news is that its the easiest time ever to give excuses for not going out as much. The hardest bit is your a mum and kids never stop needing stuff so I would definitely add a column for that... new school uniform is looming yet again. 
I think going extreme for a bit is a good shout as you make the most difference to your balances and it really bouys you to keep going. Don't stay too strict though otherwise it's too hard to keep going. 
Have you got stuff you could sell to give you extra income? I've seen people posting on tiktok about websites you can do writing for or website testing for more income? 

You can definitely do this. Keep posting xxxx

Jophi2b

Thanks for the words of encouragement Kitten868! I am great at making plans. Sticking to them can be a problem, so we will see how I get on! I have got loads of stuff I plan to sell (mostly kids stuff - clothes and toys) so I really need to get moving on that. I am hoping that once I start to see positive movement in my numbers I will stick to the plan!

Pink_Butterfly

Hi there! You have a good SOA! I’m guessing you do not receive child maintenance? I know joining a MLM isn’t for everyone but they’re a good way of boosting your income, and no need to pay for childcare. Selling bits & bobs around the house is also a good way of getting cash - I have sold half empty bottles of perfume before!!! People will buy anything

Good luck on your journey!!!

Jophi2b

So, for the last few weeks I have not been able to start with my extra money making plans as we unexpectedly had to go to look after my poorly Mum. But, it meant that we spent less and had more space to run around in! It has meant that although I have not made any extra to pay off some of my debt, I have been able to use most of my monthly income towards it.
Which means that the (nearly) end of the month looks like this...
Overdraft - WAS £2,665                NOW £1210

Credit card 1 - WAS £15,015.67   NOW  £15,146 (I am aware this has gone up, see below)

Credit card 2 - WAS £4,000          NOW  £3753

Credit card 3 - WAS £4,550           NOW £4496

Credit card 4 - WAS £5,290           NOW  £4936

Credit account - WAS £1,462         NOW  £1,430

Credit card 5 - WAS £12,380          NOW £12,205.
Starting debt WAS £45,362.67        NOW £43,176
I did pay off some money from Credit Card 1, but then had to use it for petrol and food whilst we were away at Mums, which is why it has gone up slightly! I will not do this next month as I am hoping to clear my overdraft (£1210) next month so I can at least not have to use credit for petrol and food from now on. 
Now we are back home, I am going to spend the rest of the summer holidays whilst the kids are at home, sorting stuff and selling it (I have LOADS of kids toys, clothes, unused craft stuff, unwanted gifts, etc, that I need to get rid of) and I plan to use all money I raise straight towards my debt repayments.  I think I might have to use Ebay and Facebook selling groups as our local car boot sites are still not open.
Anyhow, I am now planning on posting more frequently, but I am pleased to see my huge debt numbers starting to creep down!

Jophi2b

MY AUGUST GOALS

• Clear my overdraft (£1210) Now the interest rate right gone up, it is my most expensive debt, so this is my 1st priority.
• Find cheapest (fully comp) car insurance I can. It is not due for renewal until mid September, but I recently read an article that said that insurance premiums go up as your renewal date approaches so I want to sort this early, as I am normally a last minute type of person/tend to be rather disorganised! 
• Sort and sell stuff. I am a complete hoarder, so this should be easy. I am giving myself a goal of making £30 a week, which will go straight towards paying off debt.
• My electricity tariff is coming to an end so I need to find another good deal and get signed up.

Jophi2b

Oh my goodness! I have started working my way through reading some of the diaries on here and it is clear that I have SO MUCH to learn! What have I been doing?! I intend to learn from everyone on here and will start to look at the other money saving areas on this site too.
Things I have done today towards saving/making money - 

• Joined 3 survey sites. £4.60 earned so far.
• Secured a Magic Bag of food to collect tomorrow.
• Started a food budget spreadsheet. I think I can really make some savings here.
• Gained 2 jars of homemade beetroot and 4 huge courgettes from Dad's garden. Can't knock free food!
• Done some research on the best times to try for yellow sticker food at my local supermarkets. Might have a look tomorrow.
• Had a look at the Comping stuff on here with a view to giving it a go later tonight. I am not sure if this will actually be a way of saving/making money, but am willing to try it.
• Put some toys up on Ebay, Fingers crossed something sells! 
• Joined the Credit Club I found on here - looks like it might be useful.
• Started to collect some budget recipes to try out.

Doing these little things is really helping me to feel like I am a bit more in control of my situation and finding a way out of this mess. 

Scloud

I find the credit club such a brilliant resource. It can look bleak at times as it's so in depth but I think it really helps me. I'm look forward to my score creeping up each month. It's currently slow progress as I have a similar amount of debt to you that I am just starting to climb out of. Good luck with everything! I too started by paying off my overdraft - it feels so good once it's gone. 

thriftyish

Hello! Good luck with your debt busting journey! Your SOA looks good, just maybe a bit too restrictive? I second what @Kitten868 says, it might be worth allowing extra in separate pots, and having a small emergency fund because there is nothing more frustrating than an unexpected car repair/bill or finding that you need extra school uniform or school donations/trip money. Maybe set a clothes budget & keep it in a savings 'pot' so it's available if you need it, and if not you can always overpay once you have a good amount? Same with the medical budget. 

I know exactly where you are coming from keeping them at 0, more to throw at the debt, I was exactly the same! I found that my budget being sustainable really helps me stay on track in the long term, otherwise it's really disheartening taking money from other places & you feel like you keep stepping backwards instead of forwards iyswim. 

I find that keeping posting here too keeps me on track & motivated too. You look like you have made some good progress already even with a bit of an unexpected month. Sending love to your mum, I hope she is feeling better now. Car insurance is definitely cheaper the earlier you arrange it, don't forget the cashback websites for both insurance and utilities

lynneee

Hi, sounds like you are off to a good start! Perhaps try looking at the monthly grocery challenge, there are lots of cheap recipes and ideas on there, if you think this is a way you could save some money. Good luck on your journey to sorting your debts 😊