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

Lopo

Clear the debts, whatever sacrifices it takes = regain esteem & true freedom and plenty of wisdom in the process!

Sell the car. It will actually make you feel better taking a serious wedge out of the debt. It really is as simple as that. No car = no petrol woes, no insurance woes, no maintenance woes, no road tax woes, not mot woes etc.......if someone were to steal your car or wreck it tomorrow.... you’d still have the much despised hated debt as the insurance cover would give you diddly squat to replace the it,..... and guess what.... you’d still then be without a car!

The car is simply devaluing with every day that passes, so what you think is making you happy, simply adds to your debt and adding to the misery you are in. Sell it while it retains its better resale value NOW. Do not dwindle on this.

Your credit file will improve rapidly if you manage to take off a sizeable chunk of your debt allowing you a little more flexibility & using your new wisdom to get smarter with playing with credit in a few months from now.

Do the college course - keep the gym training.... these will keep you busy and happier!

Get clever.... look for things you don’t need any longer, ebay them and sell away stuff you can part with. Heck, if you are skilled in some hidden talent you may have, make things and sell them too.

Have a reality check:
Your ambition truly is fantastic; your history is hindering that ambition.

Fix that history. Sort it out. You will be happier. You have the motivation. You can do it.

badmission

hi lupogti, not sure you should sell the car (at not least to get another small car)

Despite being the GTi, the lupo is a nice little car to run, should be good on fuel and I'm guessing pretty new and reliable. The only problem you have is the insurance group (group 12 is not the end of the world but it's a bit much if you're young). I have no doubt you have become pretty attached to the car. If you sell the car to replace it with another, you could end up with a nail that will cost you more.

If I was you I would concentrate on making savings on your financial arrangements. It sounds like you have not taken advantage of the best deals...

1. Dump the PPI on your loans, if no penalty for settling early move your debt to the cheapest possible. Between 0% and 6% (at most) - no need to pay 13-odd % these days. Pay 0% whereever possible. Use credit cards only for maintaining cheap manageable debt but DO NOT spend any more on them. You could use a second job to help to pay off your 15k debt. You DO need to get rid of this.
2. Check out your credit rating situation again, some lenders are more eager than others. It's likely that your credit rating is not bad as you think, just not that well established. Two years is a long time between applying. Don't worry about a few applications, credit scoring is not as scary as most people think.
3. Find cheaper insurance, don't pay more for paying monthly, in fact find cheaper everything inc. mobile phone - consider dumping gym membership unless you really love going.
4. Use the car less, to save petrol and wear and tear, if you can

I am not sure it's worth selling the car, unless you don't plan to replace it with anything else (and hence save the tax, insurance and petrol etc)

At the end of the day, if you want to keep the car, you're going to have to get viscious with your other finances:

There's no point in working hard, if you have nothing to show for it...

lupogti

Thanks for all your comments and motivation you have given.

Each point you have made is a valid one and although some I didn’t want to hear (Yes, selling the car) I am taking on board.

I have decided to give myself a new routine for the next 3 months and see if I can have any impact on my debts, mainly credit card at this time. However small that may be, it will show me the way forward i.e whether I need to sell my car or not. I know it’s easy for some to see that is the main thing that has to go but I’m determined to sacrifice a few a other things first and after 3 months I will know in my head that it has to go or not.

These are my aims for this week.
- Hand my CV into the bar, which I know are desperate for staff so hopefully will hire me quickly.
- Set up a new basic bank account for just my DD outgoings – Loan, CC, Insurance and telephone bills.
- Request my credit file.
- Ring up my Loan Lenders and see what stipulations they have on cancelling the Protection – am I better off, penalties.
- Once in receipt of credit file, make a decision to try a 0% balance transfer or not.



Will the lenders be honest with me about the payment protection or will they try and scare me into keeping it?

I’m hoping that 2 years of never missing a payment and aquiring so much debt will have improved my credit score with regards to transferring my CC Debt to 0%– is egg card a hard one to get credit with or is there one out there where you have found to be less harsh?

I want to start by paying double my minimum payment at the minute its approx £102.00 so I want to pay £200 + a month. The earnings from a bar job will all go on the CC and the socializing money that I save by working fri & sat nights will go towards it.

Keep posting as I am keen to hear what you think,
cheers G

ms_london

lupogti wrote:

Thanks for all your comments and motivation you have given.

Each point you have made is a valid one and although some I didn’t want to hear (Yes, selling the car) I am taking on board.

I have decided to give myself a new routine for the next 3 months and see if I can have any impact on my debts, mainly credit card at this time. However small that may be, it will show me the way forward i.e whether I need to sell my car or not. I know it’s easy for some to see that is the main thing that has to go but I’m determined to sacrifice a few a other things first and after 3 months I will know in my head that it has to go or not.

These are my aims for this week.
- Hand my CV into the bar, which I know are desperate for staff so hopefully will hire me quickly.
- Set up a new basic bank account for just my DD outgoings – Loan, CC, Insurance and telephone bills.
- Request my credit file.
- Ring up my Loan Lenders and see what stipulations they have on cancelling the Protection – am I better off, penalties.
- Once in receipt of credit file, make a decision to try a 0% balance transfer or not.



Will the lenders be honest with me about the payment protection or will they try and scare me into keeping it?

I’m hoping that 2 years of never missing a payment and aquiring so much debt will have improved my credit score with regards to transferring my CC Debt to 0%– is egg card a hard one to get credit with or is there one out there where you have found to be less harsh?

I want to start by paying double my minimum payment at the minute its approx £102.00 so I want to pay £200 + a month. The earnings from a bar job will all go on the CC and the socializing money that I save by working fri & sat nights will go towards it.

Keep posting as I am keen to hear what you think,
cheers G

Thats great news, you sound really positive - just keep up the good work.

Even if as a first step you initially stop spending on your credit cards/using your overdraft, this is a big break through. To go from spending way over your means each month (im talking generally here) to only spending what you have available is a big step in itself, so just take tiny steps - it takes a while to tackle the debt, start off with small payments, and as things get easier you can tackle them in larger chunks.

You could always keep the same bank account for your outgoings, but change your DD's so that they all get taken out on the same day, i.e 2 days after payday, that way, after they have all been taken out, whatever you have left you know has to last you the month. The easiest way is to divide that amount by how many weeks you have left until your next payday.

Your lenders will try their best to make you keep the Payment Protection, some lenders might not be able to alter the loan at this stage, see what they say (I know that Lloyds wouldnt when i asked them - my loan). Do you have PP on your credit cards too? Cancel this also. Just be firm & see what they say - let us know.

Get a credit report from Experian & Equifax - they do online 30 day free trials i believe, but make sure you cancel before the 30 days are up, otherwise its pretty expensive.

You say that you havent applied for a credit card in a few years - have you kept up your repayments? If you have then your credit rating should be ok. If i were you i would apply for one anyway, and if you get declined, then wait a while. I dont think that i'll be able to get credit for another 6 years (i have a default or two on my credit file), i dont really want credit apart from when i go travelling (just for emergencies) - so im not too bothered, but it was just for when i go away.

Anyway, im babbling on.

Well done & let us know if you get the bar job - there will be others around if you do not get it, so keep your positive attitude & try not to let it depress you (i know easier said than done, ive been there and felt the same) but you are doing the right thing.

Take care,

Ms_London

badmission

Will the lenders be honest with me about the payment protection or will they try and scare me into keeping it?

Who cares if they're honest or not? You're the customer. Unless it's legally unchangable, then change it!

I’m hoping that 2 years of never missing a payment and aquiring so much debt will have improved my credit score with regards to transferring my CC Debt to 0%– is egg card a hard one to get credit with or is there one out there where you have found to be less harsh?

If you can find a Capital One offer in magazines etc (hint: scan the shelves of WHSmith) you might be onto a winner.

Here is a list of no-fee 0% cards I'm using...

Co-Op Travel (7 Months)
Intelligent Finance (IF) (9 Months)
RBS Platinum (6 Months)
MoreThan (6 months)
Marks & Spencers (9 months)
Capital One (various offers)
HSBC (6 months)
Nationwide (6 months)
Lloyds TSB (6 months)
Virgin Card (9 months, check T&Cs closely)

PS - you might want also want to consider selling anything that you don't need anymore. Easy to make cash this way

Good luck with it all

lupogti

Here’s a breakdown of my protection on my loans and CC which I am going to ring up about this afternoon but don’t want to be given fodder by the lenders and ultimately bamboozled into keeping them!

HSBC Credit Card - £0.76 per £100 on the balance

£3500 = £26.60 a month I am paying!

HSBC Loan – PP = £1682.39 initial payment of £28.03 in August 2003 and 59 further payments of £28.04. (this is how it is set out on my docs)

NU Loan - PP = £1841.40 : 60 months at £30.69

Set out like this
A) advance £6000
NU PP £1841.40
C) Amount of credit (A+B) = £7841.40
D) Total charge for credit = £1882.20
E) Total amount payable (C+D) = £9723.60

Does cancelling your PP affect your credit Rating?
What are the usual penalties? – is it usually that you don’t get any protection back that you have already paid?
The way the HSBC loan is set out on my documents it looks like I am still paying that on a monthly basis? because there was mentioned that with some loans you pay the interest and PP first and so you cant get any back. The NU loan though doesn’t separate the PP and Loan so I’m worried bout that one?

One big question is none of the documents I have with both loans mention anything about what to do if you wish to cancel your PP – is this just to keep that hidden that you could do that?

This would free up around £85.33 which I would deffinately put towards my debts and help make a monthly impact?

Thanks G

mrcow

Hi lupogti,

CALL THEM!!.......

And ask what the process is for cancelling. It will vary from policy to policy, so no one can really advise on what they are going to say, only once you've done this can you work out whether it's worth cancelling at this stage.

BTW, from the looks of your post you are paying interest on the NU PPI, as they've added it to your loan.

They may just let you cancel the PPI, or they may insist that you have to reapply for your loans without PPI this time round (in which case get a settlement figure so you know what you're dealing with). It may not be worth cancelling, as sometimes the repayments go towards paying the PPI policy off first or the cancellation penalties are so high, that it's worth just keeping it until the end of loan period.

With the credit card, you may just be able to cancel it on request? But you need to phon and ask them.

Let us know how you get on.

mrcow

Lucie_2

They will probably give you some guff about how you should really keep the policies....blah...blah....blah, but stick to your guns. Write down exactly the questions you have & then you won't forget what you have to ask.

badmission

I think you have do to your sums...

You have to work out what the saving/penalty trade off in each case will be.

Same goes for both cancelling the PPI, and repaying them early.

You might find that (as with a lot of finance) you pay off most of their profit early, which leaves you with just the capital to pay off later. e.g. Rule of 78

When this is the case, it's not as advantagous

If it was me, I would be looking to cancel all the PPI you can, and move the 13% debt as I think you have 3 years left to run and the rate is far too high.

But, you have nothing to loose - I would recommend you use a spreadsheet to work out the savings.

lupogti

* Update regarding removal of payment protection.


Credit card – all I have to do is send a letter off to the bank – so that is £26.00 a month saving.

HSBC Loan – They said that if I cancel my protection I would have to start a new loan! They even had cheek to offer me another 5 year one. I explain I only had three left on this one and didn’t want to be in debt for another 5. She said I had paid off 1k off my original 5k loan. Obviously she then offered me a 4k loan over 3 years.

(At the moment I am paying £142.00 a month with protection and have paid into the loan for 2 years. I worked out protection was £28.04 a month.) A new 3 year loan without PP worked out at £139.73 month!!!! So I would only be saving £2.00 a month, I may aswell stay with my protection for £2.00 a month.

I am so annoyed with myself for taking out the protection. I explained I never really wanted/needed it , advised I could cancel any time and was mis-sold etc but she just lectured me and said she couldn’t really comment! I said who could and she just said write to her manager etc Think that would be a losing battle?

Not even phoned up NU because I’m sure ile get the same response! What a fool I am. I really hated talking to the woman from HSBC , she was lecturing me on how interest and PP is calculated. I just kept saying ive paid almost 3k into my loan so far and most of that is interest so why should I start a new loan and pay interest all over again. Ive paid 3k and only knocked off 1k of my 5k loan, so if I start a new 3 year loan at 14.9% at 139.73 a month is another £5100,00 ..sorry if my figures are a bit off.

So if I took out 3 year loan it would save me £2 a month over next 3 years =£72.00
At least my credit card was simple and will save me £26.00 a month.

This has put me on a downer! Still got to hear about job interview for bar job, need to get credit file, apply for a 0% card and set up a basic bank account.

Cheers G