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Advice/Tips on Debt Management

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CheerfulIntrovert
CheerfulIntrovert Posts: 9 Forumite
First Post
in Debt-free wannabe
Hi all, I'm here to ask for any advice/tips on how I can manage my debt better. I was initially planning to apply for a debt consolidation loan, but was told it was a bad idea, and indeed after deliberate consideration, I decided not to pursue down that road. 

For starters, a brief summary of my current condition. My partner & I moved to the UK 5 months ago from Japan and accrued quite a huge sum of initial expenses (visas, NHS surcharges, moving expenses). Currently our net income is around £3.8K monthly and our debts are as follows: 
  • £12.3K - credit card (Japan)
  • £2K - taxes (Japan)
  • £4.5K - season ticket loan from employer (UK)
As of end of July, we are currently paying roughly £900 per month into our credit card debt while £500 was deducted monthly from my salary (the net income above is after deduction) for the season ticket loan. We haven't started on paying the taxes and we just barely made it through every month with close-to-none savings for the past 5 months. 

I felt that this debt could take ages to repay with the high interest rates charged by credit cards and now we have additional payments to make for our taxes (taxes for 2022 which is charged this year). 

Any advice / methods I could use to tackle and better manage our debt? 
«1

Comments

  • CliveOfIndia
    CliveOfIndia Posts: 2,517 Forumite
    1,000 Posts Second Anniversary Name Dropper
    Well done for discounting the consolidation option - it's very rarely a good idea in the long run.
    The first step is to complete an accurate and honest SOA - this is the one that most people tend to use: https://www.lemonfool.co.uk/financecalculators/soa.php
    Complete it as accurately as possible, select the "Format for MSE" option and paste the results back here.  This will allow others to get a clear picture of your financial situation, from which we can offer some constructive and non-judgemental advice.

  • CheerfulIntrovert
    CheerfulIntrovert Posts: 9 Forumite
    First Post
    Thanks CliveOfIndia! 
    Here's my SOA: 

    [font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

    Household Information[/b]
    Number of adults in household........... 2
    Number of children in household......... 0
    Number of cars owned.................... 0[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 2006
    Partners monthly income after tax....... 1800
    Benefits................................ 0
    Other income............................ 0[b]
    Total monthly income.................... 3806[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 0
    Secured/HP loan repayments.............. 0
    Rent.................................... 1050
    Management charge (leasehold property).. 0
    Council tax............................. 191
    Electricity............................. 65
    Gas..................................... 50
    Oil..................................... 0
    Water rates............................. 0
    Telephone (land line)................... 0
    Mobile phone............................ 25
    TV Licence.............................. 26
    Satellite/Cable TV...................... 0
    Internet Services....................... 39
    Groceries etc. ......................... 600
    Clothing................................ 300
    Petrol/diesel........................... 0
    Road tax................................ 0
    Car Insurance........................... 0
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 100
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 0
    Contents insurance...................... 0
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0
    Haircuts................................ 0
    Entertainment........................... 0
    Holiday................................. 0
    Emergency fund.......................... 300[b]
    Total monthly expenses.................. 2746[/b]
    [b]

    Assets[/b]
    Cash.................................... 1000
    House value (Gross)..................... 0
    Shares and bonds........................ 0
    Car(s).................................. 0
    Other assets............................ 0[b]
    Total Assets............................ 1000[/b]
    [b]
    No Secured nor Hire Purchase Debts[/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Credit card....................12363.....900.......22.5
    Residence tax..................1806......0.........0
    Season ticket loan.............4500......500.......0[b]
    Total unsecured debts..........18669.....1400......-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 3,806
    Expenses (including HP & secured debts). 2,746
    Available for debt repayments........... 1,060
    Monthly UNsecured debt repayments....... 1,400[b]
    Amount short for making debt repayments. -340[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 1,000
    Total HP & Secured debt................. -0
    Total Unsecured debt.................... -18,669[b]
    Net Assets.............................. -17,669[/b]

    [i]Created using the SOA calculator at www.LemonFool.co.uk.
    Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]
  • CheerfulIntrovert
    CheerfulIntrovert Posts: 9 Forumite
    First Post
    I just realised I shouldn't include the season ticket loan as part of my debt as the amount is deducted directly from my salary before I receive it (my net salary is after deduction). I redid the SOA and here's the latest one:

    Statement of Affairs and Personal Balance Sheet

    Household Information
    Number of adults in household........... 2
    Number of children in household......... 0
    Number of cars owned.................... 0

    Monthly Income Details
    Monthly income after tax................ 2006
    Partners monthly income after tax....... 1800
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 3806

    Monthly Expense Details
    Mortgage................................ 0
    Secured/HP loan repayments.............. 0
    Rent.................................... 1050
    Management charge (leasehold property).. 0
    Council tax............................. 191
    Electricity............................. 65
    Gas..................................... 50
    Oil..................................... 0
    Water rates............................. 0
    Telephone (land line)................... 0
    Mobile phone............................ 25
    TV Licence.............................. 26
    Satellite/Cable TV...................... 0
    Internet Services....................... 39
    Groceries etc. ......................... 600
    Clothing................................ 300
    Petrol/diesel........................... 0
    Road tax................................ 0
    Car Insurance........................... 0
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 100
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 0
    Contents insurance...................... 0
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0
    Haircuts................................ 0
    Entertainment........................... 0
    Holiday................................. 0
    Emergency fund.......................... 300
    Total monthly expenses.................. 2746

    Assets
    Cash.................................... 1000
    House value (Gross)..................... 0
    Shares and bonds........................ 0
    Car(s).................................. 0
    Other assets............................ 0
    Total Assets............................ 1000

    No Secured nor Hire Purchase Debts

    Unsecured Debts
    Description....................Debt......Monthly...APR
    Credit card....................12363.....900.......22.5
    Residence tax..................1806......0.........0
    Total unsecured debts..........14169.....900.......-  

    Monthly Budget Summary
    Total monthly income.................... 3,806
    Expenses (including HP & secured debts). 2,746
    Available for debt repayments........... 1,060
    Monthly Unsecured debt repayments....... 900
    Amount left after debt repayments....... 160

    Personal Balance Sheet Summary
    Total assets (things you own)........... 1,000
    Total HP & Secured debt................. -0
    Total Unsecured debt.................... 14,169
    Net Assets.............................. -13,169

    Created using the SOA calculator at www.LemonFool.co.uk.
    Reproduced on Moneysavingexpert with permission, using other browser.
  • RAS
    RAS Posts: 35,564 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Can you explain why the residence tax is listed as a debt?

    Is this the same as the Japanese tax debt?
    If you've have not made a mistake, you've made nothing
  • CheerfulIntrovert
    CheerfulIntrovert Posts: 9 Forumite
    First Post
    Yes, it's the Japanese tax debt which I have yet to pay.
  • RAS
    RAS Posts: 35,564 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Ok, what is the deadline to pay the Japanese tax? 

    Looking at your SOA, your grocery and clothing allowance are horrendous. Are you really planning on spending £3,600 on clothing in the next year?

    I suspect that some of your groceries are international goods that are more expensive than European ones? It would be a good idea to check reasonably local supermarkets international aisles and compare prices. I know one store I visited recently has some items that are difficult to source elsewhere but also has stuff that can be bought in mainstream supermarkets at half to a third of the price. And some stuff that is cheaper or comparable.  
    If you've have not made a mistake, you've made nothing
  • CliveOfIndia
    CliveOfIndia Posts: 2,517 Forumite
    1,000 Posts Second Anniversary Name Dropper
    I have to agree with RAS - for starters, the grocery and clothing figures can be slashed massively.

    You have nothing for contents insurance - I assume buildings insurance is covered by the rent, but you really need contents insurance (unless it's also covered in the rent, though this is not normally the case).
    Presents and entertainment - yes, if you're on a strict budget then these need to be pared down to the bone, but do you genuinely spend nothing at all on these?
  • sourcrates
    sourcrates Posts: 31,530 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    edited 2 August 2023 at 4:49PM
    The credit card debt was accrued in Japan, and is a Japanese debt, am I correct ?

    Is it a worldwide card provider or a local one to that country ?

    How are you currently paying that bill, I would assume bank transfer or some other money transfer option ?

    Any unsecured borrowing is what we term "non priority debt" which basically means its not a priority for payment, and can be ignored or underpaid (debt management) if circumstances dictate it necessary.

    International debts are rarely enforced or chased abroad, especially consumer credit debts, so if its unaffordable, you can try and come to an arrangement with your lender, I don`t know how things work in Japan in this regard though.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • CheerfulIntrovert
    CheerfulIntrovert Posts: 9 Forumite
    First Post
    The tax is to be paid in 4x 2-monthly installments with the first one due end of August.

    Groceries - yes, it's slightly high but it also includes eating out (currently we only do so like 4x max per month). We do shop a bit more for Asian food, so the higher budget, but we're hoping to cut down there moving forward...

    For the clothes, I should have mentioned it earlier. That amount also include presents & entertainment as I'm not really sure how to allocate them monthly budgets. We don't drink, so no pub visits; don't smoke either; and rarely visit cinemas (so far only once in the past 5 months). But we do occasionally buy some trinkets or small items, so there's some unexpected expenses there sometimes...

    Yes, it is a Japanese debt from a large bank (not sure internationally, but locally it's 1 of the biggest - SMBC bank). I'm currently transferring funds monthly to my local Japanese bank account where the bank would then take the repayment from. Well, it's against my principle to not repay debts & I am still hoping to visit Japan in the future, so I don't want to jeopardize my records & being denied entry or detained at customs... :#
  • RAS
    RAS Posts: 35,564 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Given the amount of debt and the interest rate, you need to buckle down exactly what you are paying out. No "unexpected" items.

    That means breaking down exactly where you spend your "clothes" allowance into realistic pots for each category and reducing your eating out for the next few months.

    Are you on the electoral roll in the UK, do you have utility bills? Once you are here for 6 months, it might be worth a soft search for a credit builder credit card costing less than 22% and using it lightly and repaying before the month end. 

    With stable employment and a good credit history, you may be able to convert some that Japanese debt into 0% UK debt.  
    If you've have not made a mistake, you've made nothing
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