Deep in Debt

Irishrover

Hello. I would be grateful if someone could give me some advice please.
I am 22,500 in debt.
I owe 14,000 to Bank of Scotland & pay 242.00 monthly
I owe 6,000 to other loan company repaying 108.00 monthly. (both loans unsecured/no payment protection.
My credit card is owed 2.500 and I am trying to pay it off, but keep using it at the end of the month for food and petrol. I can never catch up with the debt.
I am in despair, I will be paying these debts off for about 6 years. Would I be better getting out a consolidation loan ?

Debt_Free_Chick

Would I be better getting out a consolidation loan ?

Doubtful. You'll just be swapping one lot of debt for another. And loans are terribly inflexible - you pay a fixed amount, for a fixed period. The interest rate is fixed at outset so if rates go down you don't benefit. The alternative is a "flexible" loan, which works more like an overdraft, but it's still debt.

Your options are

Reduce your outgoings, by cutting out all non-essential expenditure e.g. gym, takeaways, Sky TV - that sort of stuff. Then reduce all your essential expenditure to the minimum - switch utility suppliers, if necessary, to get the best deal. Shop in Lidl/Aldi not Sainsbury, Waitrose etc. Learn to buy thrifty food not instant meals.

And increase your income. Could you work overtime? Take a part time job? Sell unwanted stuff on eBay?

There are good tips for all the above on this site, but first you need a firm handle on your budget. Have you got one? Thought not

Start here and be ruthless. You probably don't know where every penny of your money goes. Once you do, you can see where to make cut backs.

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1094132767,59163,

Read the whole article and start with the budget - don't just dive in.

And if you prefer to talk to someone, call the National Debtline. It's free and confidential. A charity to help folk like you. They will give you loads of practical advice.

It's a freephone number

0808 808 4000

https://www.nationaldebtline.co.uk

Good luck

StratApproach

The post above is spot on.

I will say that you are at a point in time.

Its so important looking at the cause.

For what its worth a few years ago.... my income dropped (redundancy - but a very nice pay-off), continued my fast lifestyle (flying planes and helicopter (qualified) - at £XXX per hour, nice cars and 3 fantastic holidays a year, rolex etc) oh.... and had no income for 6 months. This is someone who was also studying for an MBA at a top school (major cash).

Over the years I spent the majority of my monthly income, no real savings other than house, cars and personal possessions, so lived life on full tilt for years. (Don't get me wrong, it did feel good at the time). And after chomping through a fair amount of my redundancy with a great belief of everyone wanting me to work for them and paying me stacks of cash... (Real world hit me hard). Only regret.... wish I paid off the mortgage (could have easily have done).

So my position was one of spend getting way out of control when I had a feeling of security. It was easy for me to do.

Today..... working as a consultant so hit and miss with the income and still studying. Still have all assets intact but to be honest they don't have the brag factor like they used too, b'cause at the end of the day I'm much happier cutting back and seeing pennies going further.

I was in despair (you may think ... get real .... but it was a fact) over my future and didn't know where to go and I had no loans or credit card debts and even still had enough cash in the bank to live off for 6 months plus.

Please don't despair. there is always somone else worse off and at the end of the day you are taking the right steps to getting back on an even keel and sensibly address your current position. Top marks to you!!!

I've some study mates who owe 45-60K and no job yet. Granted when they do get them they should be able to pay it off fairly quickly. But the job market isn't like it used to be.

I can't advise you on what to do about you current debts. This site is full of fantastic info on looking for 0% cards, which debt to pay-off first, negotiating etc.

Just don't panic into the first thing that comes up. You've got a lot of support from this site.

Regards

StratApproach

Debt_Free_Chick

The post above is spot on

I'm flattered, thank you

Your post mentioned something I didn't and that is to take a hard look at what you've spending money on in the past.

Keeping up with the Jones's? Don't bother - drag 'em down to your own level

And look at what you've got for your debt ... a lot of ... errm ... stuff, eh? Would you do the same again simply to own the same "stuff"? No, and most of us wouldn't, either. I'm only "debt free" cos I had to pay off my debt, the hard way. I averaged about £30k of credit card debt between the ages of 18 & 35. I lost two jobs in that period, paid off the debt with the payoff, got another job straightaway and still racked up the debt. Just for a wardrobe of so-called designer clothes, a Golf GTi and a cupboard full of Harvey Nicks food (I kid you not!).

StratApproach
Your post struck a real chord with me. I've recently started my own consultancy and it's really made me focus on how I spend my money - not least as I have no regular monthly income to rely on. So I don't buy what I don't need and what I do need, I source at the cheapest price. And we live well. I work from home and cook all our meals from scratch. I freeze everything - even left over gravy (made from scratch - LOL!

I was in despair (you may think ... get real .... but it was a fact) over my future and didn't know where to go and I had no loans or credit card debts and even still had enough cash in the bank to live off for 6 months plus.

Yep - I'm still like that. I have 6 months money in savings accounts but I still panic when I do my budget. I see the savings accounts as ... well ... savings, and though I have instant access to them, I am loathe to dip into them for day to day expenses, so I go without a lot of "stuff". I even read my paper on the web, for free

I am turning into my mother (aarrgghhhh!!!!) bartering with the meat man in the market to reduce the price. Who cares? Well ... me actually. I ain't gonna chuck my money just at anything.

Great post StratApproach - a personal experience often gives others the encouragement they need.

Irishrover - join us!

Irishrover

Thanks for your replies. I am going to make a huge effort to sort myself out. As for the "things" (stuff) that got me into debt, I have nothing to show for it, mostly the money went on basic living expenses going through University as a single parent with 4 children. (madness) Anyway, I am going to do Martin's budget and really cut back on everything. thanks again.

Debt_Free_Chick

Irishrover

Your situation is so different to mine, you may have found my post about "stuff" insulting - I'm sorry for being thoughtless and making assumptions about your debt.

Four children and Uni is quite an achievement, on the time front, let alone the money front.

If I can offer one suggestion, it's food/shopping. I have made massive savings on this front by shopping & cooking like my mother (in her 70s, from a very modest family - she says a "poor" family).

Meat
Buy only at the market or butcher. Never from the supermarket. They only have expensive cuts of meat and they're ... expensive. Learn about thrifty meat e.g. brisket, oxtail, neck of lamb - make warming winter stews & casseroles.

Vegetables
Again, buy only from the market/greengrocer. If you have a local farm shop, even better. But make sure they are selling what they grow, not buying in from the wholesaler, which is more expensive.

Learn what's in season as this veg is generally cheapest - and freshest too. Aim for 2/3 of the meal from veg, the rest from meat & potatoes/rice/pasta whatever.

Store Cupboard
Lidl or Aldi - Asda at a push, but I'm not impressed with Asda's quality. It's cheap for a reason!

I'm hugely impressed with Lidl & Aldi. Continental quality. I only shop at the supermarket once a month and always have a list. I don't have children so don't buy crisps, sweets, chocolate, bisuits or nibbles. I do make my own bread, biscuits & cakes, usually over a bottle of wine on a wet Winter Sunday afternoon

household & cleaning stuff
Lidl is also excellent for this. Ignore expensive brand names - they all contain varying amounts & combinations of chemicals and you only wash the stuff down the sink/drain/loo! Same for soap & shampoo. No Lidl don't sell Pantene at £3 a bottle but they do sell a very nice tea tree oil shampoo for 70p!

Have a list of stuff you need and when you shop, only buy what's on the list. As soon as you come back from the supermarket, start a new list. Keep your store cupboard stocked (not overly so) with pasta, rice, pulses, flour & tins of tomatoes, sweetcorn, baked beans and other thrifies.

A word of warning with Lidl & Aldi. They usually have some great priced stuff - clothes, nik-naks, gardening equipment. So great is the price that you can be tempted into buying something you don't really need. Remember, a bargain is only a bargain if you were going to buy in the first place and you get a cheaper price.

Our housekeeping - all of the above - costs us less than £100 per month and we eat very, very well. I throw nothing away everything gets turned into a different dish the next day. Or frozen. Even a chicken carcass is used to make a stock then frozen ready to re-emerge as the base for a sauce, soup or casserole.

If you can sell anything on eBay that could give you some breathing space for a month or so. Take a hard look at what you have. I've recently sold 3 of those trays with little cushions underneath. A great idea but we NEVER used them in 3 years. I've also sold small decorative shelf unit (Ikea), a spare computer keyboard and some CDs (make sure that P&P is in addition to the bid price. You can get a quote for P&P from the Post Office).

Once you've done your budget, if your debt repayments are still unmanageable, call the National Debtline. They may be able to help e.g. reduce your repayments and/or get the interest frozen. It depends on how your repayments stack up as part of your budget.

Wishing you the very best of luck

DFC

Spendless

Also have a look at some of the other boards on this site. The marriage/relationship and moneysavingoldstyle is great for tips and ideas on making your money go further.

StratApproach

100% admiration for you studying and bringing up 4 children. What a challenge - well done!

I have a problem studying (and 12 more months to go) and it's only me and the wife at home. You don't mention if you obtained your degree or not - A really good achievement either way.

I take every day as it comes financially, and try to balance income with expenditure, especially as I only get paid for one or two days work a week at the mo (barely gets us through each month without dipping into the savings).

Don't allow this one aspect to take over you life. (Remember that point in time because thats all it is).

You seem sensible, so your half way there, now all you need to do is control the controllables. Identify what you can change and do it to improve the 'feeling' you have about your current situation. If you are able pay your debts, albeit a small amount at a time and still live, then its just down to time - simply that - and the harder you try to control the quicker things will change.

I even planned to sell up and live like a hobbit because I could not cope with spending anymore on luxuries. Now that's madness.

I'm a man who used to buy £80 to £120 shoes.... with the Platinum Amex coming out whenever I had the chance. My last two pairs were from Asda for £12 so they don't have leather bottoms or the name... but they are shoes and work very well. Just want me money to go further nowadays. Still buy or do the odd nice thing but do I appreciate how much its worth now.

I tell what's really funny I now brag to my mates about what a bargain I've had on something, rather than saying look at this, and it's worth.

Still got mates who are going for it though... what goes through my mind is .... point in time... and all it takes is a change in their circumstances.

Need to get back to the books.... exam soon

Good luck with your plans, I'm sure it will work out, just may take some time that's all. Assuming you are able to reduce you debt.. have an idea when you want to reach the 'satisfaction' points. ie 1K reduced in x months etc. You'll feel so proud.

Regards

StratApproach

Irishrover

It is good to hear how other people manage. It is easy to feel isolated when you are struggling with debts.
I did complete the degree course. thanks for asking.