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AskAsk

garmeg said:

AskAsk said:

mandb2014 said:

AskAsk said:

mandb2014 said:

AskAsk said:

quite a lot of numbers flying around in your original post OP. 

but to summarise, you now have a debt of 17k and you are wondering if you should use your 16k of redundancy pay to pay that off?

Sorry I wasn't very clear, the stress of it all is getting to me as not thinking clearly.
Basically I have 25k debt (both of us together). £16k redundancy and 1k in savings plus both still have jobs.  Is it best to side 3-6 months emergency funds and the rest on the debts?  What would be the best strategy? 
Appreciate usually its the debts are costing you money and usually it makes sense to pay as much as you can.  Im not sure in the uncertain world whether another redundancy isn't round the corner and I dont want to be left with absolutely nothing.

i see.  that makes more sense.

how much interest are you paying on the 25k debt?  and how much of that 16k are you thinking would be put aside for the emergency fund?

£1000 sofa 0%
£1200 car 37% (ridiculous but I was backed into a corner as old car broke and didn't have anything to get another and needed it for work, this is more than 50% through agreement so can be given back if needs be)
£15000 on two credit cards on 0% this is persistent debt where creditor has stopped the cards and wants its money back
£8000 on a loan at 19% 
As you can see we arent in a good place but the situation was much worse than this believe it or not a year ago.
I was hoping to put back 3-6k for emergencies but Im not sure whether to just pay off the full £17k and just hope for the best as it would clear up 75% of the above horrific mess.

sofa - don't pay off as it is 0%
12k car 37% - pay off (this is critical)

15k on credit cards - how come this is 0%?  what is the consequence of paying this back in a year's time?

8k loan 19% - pay off - the trade off is potentially here, where you keep the remaining 4k from your redundancy pay for emeergency or pay this loan off and take out another loan if it all goes wrong again.

I wonder if the car loan is £1200 as per original post (seems low) or £12000 as you state - OP how much is the car loan?

sorry, you are right.  i misread the OP's reply to be 12k when it is £1,200.  in that case then

sofa - don't pay off as it is 0%
£1,200 car 37% - pay off (this is critical)

15k on credit cards - how come this is 0%?  what is the consequence of paying this back in a year's time?

8k loan 19% - pay off

so that would leave enough from the redundancy pay as a buffer until further decisions are needed.  (still got the credit card debt in question of course).

getmore4less

The credit card debt has been explained already

MaiTai

As previously explained by OP the credit cards have been blocked and 0% applied as part of a persistent debt ruling.The expectation is that the debt will be cleared over 3-4 years.

AskAsk

MaiTai said:

As previously explained by OP the credit cards have been blocked and 0% applied as part of a persistent debt ruling.The expectation is that the debt will be cleared over 3-4 years.

i see.  then OP, you could pay 8k loan, 1.2k car loan and 5k off the credit card debt.  this leaves you with 3k as a buffer.

getmore4less

The redundancy payment is not for another 4 months, by then the debt should be very different  as there will have been at least £3,500 to put towards it.

What is the risk they may withdraw the redundancy and give you your job back or a suitable alternative?
If you don't have a settlement agreement they can do this at any time.

mandb2014

getmore4less said:

The redundancy payment is not for another 4 months, by then the debt should be very different  as there will have been at least £3,500 to put towards it.

What is the risk they may withdraw the redundancy and give you your job back or a suitable alternative?
If you don't have a settlement agreement they can do this at any time.

Thanks for all your help guys.  The whole company is closing down so the redundancy is definite and the money guaranteed.  Its a fair point you make though, I shouldn't assume however its as sure as it can be really.

Well I'm ceasing payments (other than minimums) in October so two lots of big payments.  November is to pay for xmas.
Ive had time to reflect and had one other thought.  My new job means I wont need a car and I have an option to give my current one back as its a PCP more than 50% through.  Im torn as it would be nice to keep the car in case I need it and pay it off but its probably a luxury I cant afford. That said I wouldn't get an equivalent or even a decent car for this small amount  (£1200) if I then needed one for whatever reason so not sure what to do. Any thoughts?

mandb2014

getmore4less said:

As you don't already have a budget/plan for the next 5 years start with the SOA format.
https://www.lemonfool.co.uk/financecalculators/soa.php
Get everything down, with a new job starting in Jan I would do a mini one till the end of the year then a full years for 2021 that can be used for a 5 year plan to pay off the debt and reclaim the life balance.

Once you know your finances you can plan better.

A realistic plan will work better than one that is too aggressive.
Once you have the SOA you can see how much is available for the debt payments
With help from the debt board you can address any outgoings than can be reduced, most can find something even when there are no more savings to be made. 

With £50k net £3k+  
if you take the £25k debt before interest it is 
1y £2,084pm
2y £1,042pm
3y £695pm
4y £521pm

You said you have done about £8k since Oct  that's  around £800pm(+interest) that means there after the mortgage there is £2kpm going somewhere(some on interest) the SOA will help identify where it is all going

Add the £50pm going into the kids funds a 3 year plan is going to be comfortable, with the redundancy money  2 years should be doable maybe even with a push and more saving found end of 2021.

Once the debts are paid off a couple of extra months saving will have topped up the £600py currently going to the kids fund

With the 4 months left this year that should nail the car and start on the loan and have got the £25k total down by around £3000

£4k kept back will see you through 6 months on loss of of one salary, to cover both for 6 months you are looking at nearer £13k.
A SOA will help identify what that can be got down to with some of the debts paid off and the other on min payment plans.

If you just look at the £15 CC debt on the assumption you can pay of all interest bearing debt by Jan
12m £1,250
18m £834
24m £625
36m £417
48m £313
With a 24 month plan for that you have some wiggle room with the current £850pm to build up savings
There is a trade off here committing to a higher payment to get it paid off or keeping money back in case the income drops
With it on 0% doing a bit of both target 3-4 years but save as if it was 18 months then you can pay off bits when you feel comfortable.

Looking further ahead guessing the mortgage is say £38k  2% £230pm 16years 
In a couple of years that will be down to £34k with 14y to go
With the debt paid off then a new payment of £630pm( add 1/2 the £800 going to the debt) you will have that paid off in under 5 more years(should be done in conjunction with retirement planning and potential house moves).

After 5 years using that money for the kids savings you have £7.5k+ in 12month  that's the £10k saved for the kid 5 years ahead of the current schedule. 

It looks and feels a lot worse than it is as you don't have a plan yet and the job loss risk can be quite worrying. 
With a grip on where all you money is going a workable plan that has a safety net, a vision with goals for the future  life will be back on track fairly soon. 






 
 

Some fantastic advice here its much appreciated.  General consensus is its bad at the moment but it could be worse and its possible to rectify in a reasonable amount of time.  I was at the point of giving up as recently as a few weeks ago.  
In terms of the mortgage theres an interesting question, once the debts costing interest are paid off at that point would it make sense to over pay the mortgage when Im back on my feet?  Bearing in mind its 2.5% which is low but still higher than the 0% on debts that are left.  Not sure if its counter productive or not.

getmore4less

mandb2014 said:

getmore4less said:

The redundancy payment is not for another 4 months, by then the debt should be very different  as there will have been at least £3,500 to put towards it.

What is the risk they may withdraw the redundancy and give you your job back or a suitable alternative?
If you don't have a settlement agreement they can do this at any time.

Thanks for all your help guys.  The whole company is closing down so the redundancy is definite and the money guaranteed.  Its a fair point you make though, I shouldn't assume however its as sure as it can be really.

Well I'm ceasing payments (other than minimums) in October so two lots of big payments.  November is to pay for xmas.
Ive had time to reflect and had one other thought.  My new job means I wont need a car and I have an option to give my current one back as its a PCP more than 50% through.  Im torn as it would be nice to keep the car in case I need it and pay it off but its probably a luxury I cant afford. That said I wouldn't get an equivalent or even a decent car for this small amount  (£1200) if I then needed one for whatever reason so not sure what to do. Any thoughts?

No chance of a take over or TUPE?

On the car if it is a decent motor you know then  with 2 adults and a kid a car although it may not be essential is a great convenience and running costs can be kept down,

The key here though is just pay the £1200 37% debt off ASAP everything else is min payment till that is done.

mandb2014

Sorry to bump this thread just a big thank you to all the amazing advice I got at the time almost 4 years ago. Re-reading the mess we were in at the time and the kindness and advice I was greeted with was amazing. Well I heeded the advice given and am pleased to say I am now debt free bar the mortgage. Emergency fund built up and increased pension contributions.

Don't get me wrong it was blood sweat and tears and alot of hard work but I read others stories of people in a bad mess and it's just to inspire them it can be done if you work hard enough.

Anyway many thanks guys.