Please help me turn my life around, 24 year old with 15k debts

lupogti

Here’s my story:

I am 24 years old and I am consumed with depression due to the 15k of debt I have amassed. I still live at home with my parents and my miserable home life means I try and go out as much as possible, part of the reason why I have got in so much debt is my overspending each month for the last 4 years. Each month I reach my £950.00 overdraft limit.

I haven’t got very good job prospects – I haven’t got any a-levels or a degree. I currently work in finance as an admin representative. I have worked here for 3 years and my wages have gone up by around 1k. My wage is very poor in relation to my monthly outgoings all of which I will document in a few moments. I currently try and do 44 hours a month overtime = an extra hour a day and 6 on a Saturday. I am enrolling in a part-time evening plastering course which will take 2 years to complete and be qualified. I am doing this as I wanted to learn a trade and open up more options and earning power.

I know most of you have 5 year + plans and I am not wanting a quick fix it’s just the main things in life that are getting me low are my debt and my home life. But both are connected because while I’m in debt I cant move out.

Although I do so much overtime I am also thinking of getting a bar job for friday and Saturday nights. The reason being that I would still be out in the atmosphere of a busy friday and Saturday nite bar and earning/saving money at the same time?

I am working hard for my money although I know I will get shot down for my spending but there is one thing that I am dreading you all saying – GET RID OF YOUR CAR!! IF there is anyway around this I would be much appreciated. If you come up with ways for me to pay my debt off faster and be more efficient with my money without selling my car is what I need. I have the cheapest insurance I can find even though it’s still high. As sad as it sounds the car I have is my pride and joy and the only thing at moment that I have going for me and I enjoy driving.

I am really not proud of myself for getting in this situation and worry about my debt every single minute of every day. I feel like my life is on hold until the 5 year period of my loan re-payments is up and my other big worry is my credit card which is almost £100 a month makes it hard to ideally pay double the minimum repayment.

I also have a really poor credit rating as Egg card never accept me and online banks but my bank, HSBC seem to offer me everything! So I cant get 0% balance transfers etc.

Here’s my income breakdown and outgoings.

Yearly Wage £11,330 after tax £8837.40
Monthly Wage = £736.45 after tax n NI
Average Overtime hours per month = 44 x £7.89 (time n half) = £347.16

TOTAL monthly wage on average = £1083.61
Car worth £5,500

Outgoings =

£5000 loan with HSBC (13.9%) taken out in May 2003 (5 year) = £146.13 – monthly re-payments

£6000 loan with Norwich Union (9.9%) taken out in September 2003 (5 year) ( to pay off the HSBC loan but it never happened and I dwindled it away) = £162.42 – monthly repayments

£700 Flexi Loan with HSBC taken out in February 2005(interest calculated daily) (1 year) = £58.33 a month

Total Loan repayments = £366.88

£3100 HSBC credit card (14.9%) – minimum monthly currently at (approx) £98.00

Car insurance - £125.00 – ( had a crash last year, in my first year of driving which bumped my premiums up)

Board money to parents - £100

Petrol - £100.00

Going out and socializing - £100 a month – This seems excessive but I can’t stay in my house and fester away in my room and none of my mates have their own places or have girlfriends so can’t have cheap nights and stay at theirs.

Phone bill on average is my contract amount of £30.00 – (I get 200 free cross network minutes and 500 free texts and rarely go over either)

Food - £40.00 month

Gym membership - £18.00

Internet £16.00

Car Tax - £10 month

Total is approximately = £1,003.88 = £79.73 left over – these are approximate figures.


Am I a candidate for going to the citizens advice or national debtline or can I get out of this myself? I’m working a lot of hours so I have got a can do attitude I just need to channel it properly cause at the moment I work the extra hours and then think ‘ I deserve a nice pair of trainers’ when it could and should have gone on the credit card! I get very angry at myself. Should I be trying to do deals with the lenders and try and get them to freeze interest etc or will they just say sell the car ???

I really want to move out of home and the thought of waiting till my loan runs out in 2008 depresses me i.e the £308.55 is rent or mortgage money.


Any kind of help and advice would be really helpful. This is my own fault and I do accept the situation I am in ,I just can’t carry on like this.


Thanks

G

mrcow

£5000 loan with HSBC (13.9%) taken out in May 2003 (5 year) = £146.13 – monthly re-payments

£6000 loan with Norwich Union (9.9%) taken out in September 2003 (5 year) ( to pay off the HSBC loan but it never happened and I dwindled it away) = £162.42 – monthly repayments

It looks to me like you are paying loan protection on both of these loans which is costing you a fortune? You'll have to check your paperwork.

A 5k 5 year loan at 13.9% APR should be costing you £114 per month (Total repayment amount is £6839) where your total repayment is £8760. So you are overpaying by £1921 (I'm assuming on PPI?)

A 6k 5 year loan at 9.9% APR should be costing you £125 per month (Total repayment amount is £7557) where your total repayment is £9720. So you are overpaying by £2163 (again is that PPI).

So that's over £4000 over the 5 years of extra payments on these two loans, possibly on insurance policies that you are not even aware that you have? I would recommend taking a good look at the original paperwork for both of these loans and find out if you did sign up for Payment Protection Insurance on these, and if so, find out if you can save money by cancelling this as IMO it's costing you a small fortune.

It may be too late (and it probably is to make an real difference now?), as sometimes they add the cost of the insurance to the loan at the beginning (and then charge interest on the total amount!).

At least try to get settlement figures on both of these loans and see if you'd be penalised for cancelling at this stage? At least then you'll be aware of what your options are with these.

seese

Reading you letter two things seem very important to you,getting away from home and keeping your car.You want a quick fix so you have to be ruthless with yourself.
Is there somewhere you could keep the car off road for the time being and take out a sorn notice.
Saving 10 car tax 100 petrol 125 car insurance.Use the bus or walk.Give up the gym temporariliy(you can always re enrol)18 Give up the internet for the time being,you can use it free at the local library.16.
£269 so far.You are obviously young and have your whole life ahead of you.Give up "going out" for 3 months and concentrate on your new plastering course.Get a punchbag and exercise at home if you feel gym deprived.or take up jogging.100=£369 a month.Enough to rent somewhere of your own so you can invite your mates to you.
Save the 100 a month you pay to your parents for board.=£469 add the 40 you say you spend on extra food=£509 a month.
=£509 for a place of your own(to hang you punchbag,eat drink and be merry with your mates)sorted,cut up all your cards ask the bank to change you to a basic account and arrange to pay all yours debts by direct debit from that account.Pay everything the day your wage goes in and you know what is yours.Look forward to getting your pride and joy back on the raod when you have sorted your life out.
Best of luck whatever you do.

Sylvia

mummytofour

:T :T :T :T :T :T :T :T



Well done for writing all that down.
First off, your car, do you need to use it to get to work? Would it be cheper to get the bus or walk and save money on pertol and parking? Also save wear and tear on your car?
Car insurance, i was in the same boat a few years back, please try elephant.co.uk they are still beating tesco for me but £200 per year.

Cut up the credit card you really dont need it!

Loose the gym membership, be come a volentear instead http://www.yearofthevolunteer.org/

It Will save you money as you will not be down the pub all the time, it will make you focus on other things in your life and make you relize that money and debts are not all there is too life, also it will look great on your cv, choose something you will enjoy,

As for the the gym exercise, walk more and run round the park, every penny you save you will closer to moving out!

Thats a start anyway...
Vxx

mummytofour

seese wrote:

Reading you letter two things seem very important to you,getting away from home and keeping your car.You want a quick fix so you have to be ruthless with yourself.
Is there somewhere you could keep the car off road for the time being and take out a sorn notice.
Saving 10 car tax 100 petrol 125 car insurance.Use the bus or walk.Give up the gym temporariliy(you can always re enrol)18 Give up the internet for the time being,you can use it free at the local library.16.
£269 so far.You are obviously young and have your whole life ahead of you.Give up "going out" for 3 months and concentrate on your new plastering course.Get a punchbag and exercise at home if you feel gym deprived.or take up jogging.100=£369 a month.Enough to rent somewhere of your own so you can invite your mates to you.
Save the 100 a month you pay to your parents for board.=£469 add the 40 you say you spend on extra food=£509 a month.
=£509 for a place of your own(to hang you punchbag,eat drink and be merry with your mates)sorted,cut up all your cards ask the bank to change you to a basic account and arrange to pay all yours debts by direct debit from that account.Pay everything the day your wage goes in and you know what is yours.Look forward to getting your pride and joy back on the raod when you have sorted your life out.
Best of luck whatever you do.

Sylvia

Wise words.

Malestrom

Ok, lets try to keep this simple.

Gym membership - ditch it. If you want to keep fit, go out jogging or buy a cheap mountain bike out of the paper.

Monthly Food - what does this account for? Do you pay it to your parents on top of your board or is it money you spend when out with your mates at burger stands and chip shops? Is it for lunch at work? If so, you can probably save a bit here.

Going out & Socializing - Too much. Go out less, you should be able to halve this easily, find cheaper things to do.

Car Insurance - Simply ridiculous, £1500 a year! It may be the cheapest quote for your car but what about if you had a different car of a lower value? Worth doing some phoning around for quotes on something a little less extravagant.

Car - You have a lot of money sitting here doing nothing other looking nice. You know what you have to do, sell it and buy something cheaper. Buy something for £1000-£1500 that looks half tidy (and there are lots of cars about that fit the bill) and pay off the HSBC credit card with the rest. If you have enough left over, you could even pay off your overdraft too.

Loans - Do you realise that you still owe more on both the Norwich Union and HSBC loans than you actually borrowed in the first place? You need to find out if you can overpay these loans without being penalised by early repayment charges so read your documentation or give them a call. Also, refer to the post up there ^^^^ about PPI, well spotted by the poster and I shouldn't have missed that!

There are no easy solutions, and I think you know that already. Even doing some of the things above will help you out but any extra cash must go into the HSBC card first as thats the most expensive debt. You haven't listed an APR for your overdraft so if thats higher then it takes priority.

If you really want to move out and get your own place then you're going to have to make sacrifices i'm afraid. With 15k debts you're not really in much of a position to do so at the moment. I don't think that going for a DMP is really an option as you are meeting the minimum payments and you have enough disposable income to increase those payments but you're wasting it.

On another note, the plastering course. Good idea but my advice is this. See if your college does the 10 week DIY plastering course. I did it last year, it was actually over 5 weeks, two nights a week and cost £140. I learnt the techniques I needed to know to plaster walls and ceilings to a good standard, the rest comes with experience. I suggest this because its BLOODY HARD WORK, very physical and you may decide its not for you as a career move. Nothing wrong with that, I certainly wouldn't want to do it as a career and the people that do certainly earn their money! However, if you do enjoy it and want to take it up, then you have a good grounding to go into the 2-year course and you'll already have enough skill to take on small jobs to earn some extra money.

Note to any professional plasterers: I am not suggesting that we can learn your trade in 5 weeks, thats not what I'm saying. I am merely saying that after a 5-week course I felt confident to tackle the smaller jobs around my own home and have so far successfully plastered 6 walls. I am however considering getting in a pro to do the stairwell as its too big a job for me.

So much for keeping it simple, eh! :rolleyes:

Smudge32

Hi

Firstly well done for writing it all down. There are loads of things you can do and it's amazing how much you can save when you start analysing things.

I'll second all the advice above, but the only thing I'll add is definitely ditch the gym membership and go running or swimming. For the next two months at least, you'll have really long summer nights to run and it's a great confidence booster. Swimming will also build all muscle groups up rather than just doing weights say at the gym. This may cost though - my friend swims in the local river at 6am, but I wouldn't recommend that!!

Lucie_2

lupogti wrote:

Total is approximately = £1,003.88 = £79.73 left over – these are approximate figures.

What do you do with the "leftover" £79.73? That could be put towards debt -repayment. It might mean not buying any new trainers for a few months, but you can live without them. You need to do a strict expenditure budget for a few months & stick to it.

You KNOW that you have to get rid of that car................ You have years ahead of you for driving nice cars - the insurance will be a bit cheaper by then too.

ms_london

Could you get a 0% credit card to transfer the HSBC card onto. I suggest you use the surplus of £79.73 to throw at this first, so along with your £98 minimum payment, this will mean you are paying £177.73 a month back, if you could make it up to £200.00 (means you will need to find £22.27 from your budget, but should be easy enough), it will take you approx 15 months to pay this off (not taking into account the interest). Just over a year, so not so bad (sooner if you can get it onto a 0% card or overdraft) – alternatively Barclaycard do a 5.9% on balances for life, but not sure if you have to be a current customer.

Are these calculations based on your income WITH your overtime? Are you always guaranteed overtime? (it would be a bit risky if you are basing your calculations on getting overtime, but one month it suddenly stops.)

Could you temporarily stop paying board to your parents? (but not take advantage of this, help more around the house etc). Do they know about your debt? If you used this money to throw at your HSBC credit card also, you could clear it in 10 months (rather than the 15 I quoted above – again not taking into account interest).

Car – fair enough. This is a necessity (it used to be for me, as I lived in the middle of nowhere & it was essential to get to work). Could you cut down on petrol though, or perhaps use your car to its advantage, do takeaway deliveries a few evening a week?

Going out and socializing - £100 a month – I appreciate that you do need some “me” money, but combined with £30.00 phonebill, £40.00 on food, £18.00 for gym & £16.00 on internet – that’s a total of £204.00

Do you use the gym enough to get your moneys worth? Could you cut the internet cost at all? If you are working overtime, surely you cant take full advantage of the gym, internet, talking on the phone & going out, and if you are going to be studying part time soon – one of them needs to go, it doesn’t sound as though you’ll have the time. (and I think you are doing a fab thing by studying part time, its an excellent choice – will you have to pay for course fees/materials etc?)

Food – I presume this is for the odd takeaway/lunch?? Take lunch into work, don’t go out to eat, if you are at home with your parents then you shouldn’t need to.

If you could trip the social aspects, again, even by £50, your HSBC card could be paid in NOW 8 MONTHS. See how this has reduced, it could be clear by February!!

Call & cancel your PPI on your loans, you may not be able to do this, but it is worth asking – check the small print on your agreement – say to your bank/the provider that you are struggling financially and need it cancelled. Do you have this on your credit cards too? Cancel it, its not worth anything. Keep paying the minimum payments, and once you have cleared your CC, then you can think about clearing the loan.

Don’t feel depressed about it, I totally understand what you mean & how you feel (I’ve been there, and occasionally still feel like it), but you’re not the only one in this situation and not alone, come here if you need to moan or whinge – we’ll all listen.

Ms_London

skye

If you really want to get a place of your own, find out about council/ housing association flats etc in your area (after a period of time you sometimes have option of buying them at a discount). I have a gorgeous housing association flat (it's only about 5 years only) and only pay £55.79 a week (the amount some of my friends pay on rent they might as well buy). After 2 years of renting it, if I wanted to purchase it I would get £9000 off the valuation, so it's kind of like saving up a deposit.

Or if you wanted to stay at home, is there any way of explaining that you are in debt to your parents (maybe only pay them £50 and do more chores around the house) and putting the other £50 to your debts.

On working in a bar, I have worked both in pubs evenings & weekends and the office in the week (and a night club for a short period of time). After two years I had to give it up as I was fed up and constantly shattered, although it can be fun if you get on with the people that you work with. However make sure you actually pay off your debts with the money you earn (my pub job was to get rid of my debts and I ended up with more). I sometimes found myself going out after work (hence nightclub was better as there is no where open that sells alcohol to go after work), or having drinks after work which can add up.

Is there anyway your employer could let you go day release (and pay for it) to go to college to and do an NVQ/HNC in business admin or a finance qualification? Or could you ask for a pay rise?

Might also be worth checking your credit report. Are you on the electoral roll? This helps when applying for credit.

I find that having something to look forward to helps slight depression. At the moment I am trying not to go out as much, instead I will look forward to going to creamfields. Hopefully saving me money. (I have around £12,000 of debt to get rid of, and it does get me down sometimes).

chickencow

I've noticed a lot of people have said that you should give up the gym.

It all depends what you do there - if it's cardio-vascular work then there are much better and cheaper methods of getting fit (who wants to run on a treadmill). However I think that if you are doing it for bodybuilding you are going to find that you won't be able to find anything that replicates it.

I would say if you go 3 times a week it's probably worth it, but if it's anything less than that, I think you would be better off served looking at the rest of your life.

For instance, can you cut down on the amount you spend when you go out? Most towns / cities have quids in nights (£1 in, £1 a drink) albeit usually midweek. Is this an option for you? You could still get out of the house whilst spending much less.

As for your car, I presume you drive a VW Lupo GTI. Drop the GTI badge for a few years, get something like a Saxo until you have paid your debts off and may have your plastering qualifications, and then get a better car. :beer: