I can do this...step by step

Rdpncp

Hi all, 

I've been lurking on the forums on and off (mostly off) for sometime now and had "that moment" when I have come to realise I'm really over my head and hiding behind yet more loans and further debt won't help.

I feel I have got to this stage by each time taking a new loan to consolidate the last while spending more than I can afford and also doing up the house.

So my starting point is pretty high and has really been building for about 8-10 years now.

I'm about £45k in debt in addition to £69k mortgage, £114k in total.

I actually have a fairly decent salary and I  guess the mortgage shouldn't count, at least not yet so a whole years salary on other debt. I realise this is huge and having read alot of diaries over the past few days haven't found as high a starting point yet.

Also having had a chat with the bank who have declined giving me a consolidation loan that would group everything together into a higher interest loan over a longer time has helped realise how bad off I am.

So, after feeling rubbish for the last few years I'm going to actually do something more than make the minimum payments each month and get in control of my spending.

So the starting point is I earn less each month than my outgoings.
I've stripped down my outgoings, which was quite an eye opener for what I was actually spending each month and made a list of all that has to be spent, mortgage, utilities, insurance, etc.

I've set a goal for groceries each month and plan to stick to it.
I've joined a few challenges, sealed pot 14 to save lose change for Christmas 2021, £2 2021 to go towards an emergency fund, debt free 2021....with this challenge I'm aiming high with £15k to reduce this year. 

Now the time to be realistic about the outgoings, after the basics come out I'm left with £750 a month (£500 shy of my target challenge).
My current debts are as of 02.01.2021;
Student loan = £700 (£188 a month DD)
Bank loan 1 = £13,001.76 (£270.87 monthly  DD)
Bank loan 2 = £15,413.22 (£285.43 monthly DD)
(Other) Bank loan 3 = £8750 (£250.09 monthly DD)
Credit Card = £4250 (£112.03 monthly DD and min payment)
Overdraft = £900 (£62 approx interest per month)
This adds up to a shocking £1168.44 DD every month.
A deficit of £418.14 per month and likely a big part of how I've spiralled into debt (this is after working out big cut backs on my current monthly spend).

So, whats next?

I'm applying for a 3 month holiday on all 3 loans...possibly not the best option but this is a small breathing space to further come up with a plan.
Student loan clears in April and that is £188 a month less outgoings.
I have some overtime pay of approx £350 a month I should be getting from end of January for approx 5 months.
In addition to this and it feels like I'm cheating, my dad has a pot for my inheritance that he was going to take £5k out to my brother and myself each in April.

If I'm successful with applying for payment holiday on loans my outgoings will cover what I need to do until April at which point I feel I need to dump the cash from dad into credit card as its the worst interest rates, in addition at that point I shouldn't be overdrawn either.

This leaves £806.39 monthly repayments on my loans.
Which I'll be still short on unless I can continue with some overtime which for about £100 is possible.

I realise this all sounds great and very likely over ambitious but I have to give it a try.
The other thing is being honest with my dad for how bad things have gotten and he may take a larger amount out of that pot to help me clear a bit more, but I don't want to count on this and I absolutely dont want to get to the same situation I'm in now.

Other things I'm going to do is have a home clear out and eBay a fair bit of things I'll never use. 

Right, so reading that back I feel better getting it off my chest, but know I'm in this for a long slog.

Saving and repaykng starts today.

Feel free to point anything out I'm obviously missing or any errors you spot.

I don't seem to have permissions to create a signature on my account, perhaps I need to have posted x amounts of posts first? U couldn't see anything in the forum rules or FAQ.

Karonher

Firstly, good luck and well done with coming up with a plan. Its hard to say what you are missing without knowing all the information. Are you living alone/with a partner/with children and what do you spend during the month? Despite having made cut backs there could still be areas where you can make further savings.

Rdpncp

Well it turns out my first loan was almost 3k less than I thought it was,  this is how much I was hiding/ignoring my problems, not actually knowing exactly what was what.
I've applied for a 0% balance transfer card for 24 months to shift current credit card debt, saving about £100 a month in interest at least for 2 years. I will aim to put £100 a month back onto this which will be 4x the min payment and about half what needs to be done to clear it, but as soon as student loan is gone and I start selling things on ebay I intend to top this up.
Feeling so much more positive that I've put this all down in writing. 

stokegal

Glad you’re feeling more positive. The first step is always the scariest but once you know where you stand things will get easier.

Have you done a full SOA to see if there is anywhere else that you can be making savings to increase your debt repayment amount from £750?

savingholmes

Good luck on your journey. Payment holidays aren't looked on favourably by lenders and could hurt your credit score and your chances of repaying debt at more favourable interest rates. I agree with stokegal - if you post an SOA on the DFW board - people on here can advise you on where to cut back. We owed over £70K at one point and are now down closer to £15K - so it can be done but it does require long term grit and determination - and most of all changed habits.

Sarahwithlove

Are the student loan payments voluntary? Could they be reduced? I'd try and clear the overdraft with the money your dad gives you. Maybe ask him if he could loan you some money to cover the credit cards that charge you interest. At least then you would reduce the amount going on interest. What were the loans for? Do you have anything you can sale? Have you looked to see if there is any other areas you can cut back? Do you have a spare room you could rent out? Could you pick up more overtime? 

Rdpncp

Hi,

Update time.
Firstly, thank you all for advice so far, I've spent some time getting help going through an SOA and think there's an extra £80 a month to put towards debt.
I'm getting my unpaid overtime at the end of Feb and my work (nhs) are offering staff to sell annual leave, which I'm taking up a weeks leave to be paid. This works out for me and also the Trust as its cheaper to pay me to be in for a week as I would have been sat at home, compared to getting someone else on overtime or going through an agency to cover my shifts.
This should total about £1000 extra at end of Feb which will go straight off credit card one, my highest interest debt at present.
My dad has confirmed a £10,000 that he will give me in April from his untouched pension pot that goes to myself and my brother. We will both get £10,000 each which I'm very grateful for.
This will go to clear cc 1 and loan 1. Cc2 is 0% interest until Jan 2022 so any left over (approx £800) will go onto that and I'll up my monthly payments into it from this May to ensure it clears by Christmas. 
My student loan also ends in April, which is a direct debit as I'm at the end of the payment plan and commit be deferred/shortened due to my earning above fresh hold. But I'm actually happy it will be done as seeing it on my wage slip as a deduction for the past 16 years has been depressing.
The remaining debt has a set amount on direct debit each month so my focus is cc then onto overpaying loan 2.
I'm also going to restart paying £50 a month extra onto mortgage from May as I need to see that dropping. I'm currently paying £115-ish a month on interest on that and it feels good seeing that dropping.
Overall I'm feeling more positive and definitely couldn't do this without dad's help.
Hopefully work will offer selling leave next financial year also which I'll do another week early on and some more overtime shifts when I can get them for another £1,000 that I should get in June.
Haven't started sorting items to go onto ebay yet but hopeful to get about £250 from items to declutter house.
Roughly calculated in my head I think I'll have about £24,000 remaining debt at the end of June (1 cc and 2 loans) with around £850 a month going into clearing them. In addition if I can get a few shifts a month I can expect an additional £150 onto this. So debt free by July 2023??? That feels like ages away but I'm feeling so positive about it. 
No doubt realistically it will be 6-12 months longer due to Christmas, birthdays, lapses in spending control, etc. But I'm in a good place thinking about it.
Sorry for such a long post.

savingholmes

Glad you are making progress in the right direction.

Sarahwithlove

Sounds like a good plan and your money from your dad is gonna help. Do you have an emergency fund or any sinking Fund for one off yearly expenses? Might be worth using the overtime money for these as that helps to stop you slipping back into bad habits. 

Rdpncp

I've heard of emergency funds before, what is a sinking fund?
Letter today from bank that a annual saver matures in feb which I'll close and transfer into my bank. This will either go toward an EF or onto cc. Cant help but think everything extra I get should go onto debt before saving as I can fall back onto overdraft if desperate...

Sarahwithlove

A sinking Fund is a pot that you top up for one off expenses such as car insurance etc some people do individual pots some just do an overall fund that gets used. I've tried both and found having individual pots works best for me.