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Advice/Tips on Debt Management
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CheerfulIntrovert
Posts: 9 Forumite

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:
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?
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)
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?
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Comments
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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.phpComplete 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.
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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........... 2Number of children in household......... 0Number of cars owned.................... 0[b]Monthly Income Details[/b]Monthly income after tax................ 2006Partners monthly income after tax....... 1800Benefits................................ 0Other income............................ 0[b]Total monthly income.................... 3806[/b][b]Monthly Expense Details[/b]Mortgage................................ 0Secured/HP loan repayments.............. 0Rent.................................... 1050Management charge (leasehold property).. 0Council tax............................. 191Electricity............................. 65Gas..................................... 50Oil..................................... 0Water rates............................. 0Telephone (land line)................... 0Mobile phone............................ 25TV Licence.............................. 26Satellite/Cable TV...................... 0Internet Services....................... 39Groceries etc. ......................... 600Clothing................................ 300Petrol/diesel........................... 0Road tax................................ 0Car Insurance........................... 0Car maintenance (including MOT)......... 0Car parking............................. 0Other travel............................ 100Childcare/nursery....................... 0Other child related expenses............ 0Medical (prescriptions, dentist etc).... 0Pet insurance/vet bills................. 0Buildings insurance..................... 0Contents insurance...................... 0Life assurance ......................... 0Other insurance......................... 0Presents (birthday, christmas etc)...... 0Haircuts................................ 0Entertainment........................... 0Holiday................................. 0Emergency fund.......................... 300[b]Total monthly expenses.................. 2746[/b][b]Assets[/b]Cash.................................... 1000House value (Gross)..................... 0Shares and bonds........................ 0Car(s).................................. 0Other assets............................ 0[b]Total Assets............................ 1000[/b][b]No Secured nor Hire Purchase Debts[/b][b]Unsecured Debts[/b]Description....................Debt......Monthly...APRCredit card....................12363.....900.......22.5Residence tax..................1806......0.........0Season ticket loan.............4500......500.......0[b]Total unsecured debts..........18669.....1400......- [/b][b]Monthly Budget Summary[/b]Total monthly income.................... 3,806Expenses (including HP & secured debts). 2,746Available for debt repayments........... 1,060Monthly 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)........... 1,000Total HP & Secured debt................. -0Total 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]0 -
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 SheetHousehold InformationNumber of adults in household........... 2Number of children in household......... 0Number of cars owned.................... 0Monthly Income DetailsMonthly income after tax................ 2006Partners monthly income after tax....... 1800Benefits................................ 0Other income............................ 0Total monthly income.................... 3806Monthly Expense DetailsMortgage................................ 0Secured/HP loan repayments.............. 0Rent.................................... 1050Management charge (leasehold property).. 0Council tax............................. 191Electricity............................. 65Gas..................................... 50Oil..................................... 0Water rates............................. 0Telephone (land line)................... 0Mobile phone............................ 25TV Licence.............................. 26Satellite/Cable TV...................... 0Internet Services....................... 39Groceries etc. ......................... 600Clothing................................ 300Petrol/diesel........................... 0Road tax................................ 0Car Insurance........................... 0Car maintenance (including MOT)......... 0Car parking............................. 0Other travel............................ 100Childcare/nursery....................... 0Other child related expenses............ 0Medical (prescriptions, dentist etc).... 0Pet insurance/vet bills................. 0Buildings insurance..................... 0Contents insurance...................... 0Life assurance ......................... 0Other insurance......................... 0Presents (birthday, christmas etc)...... 0Haircuts................................ 0Entertainment........................... 0Holiday................................. 0Emergency fund.......................... 300Total monthly expenses.................. 2746AssetsCash.................................... 1000House value (Gross)..................... 0Shares and bonds........................ 0Car(s).................................. 0Other assets............................ 0Total Assets............................ 1000No Secured nor Hire Purchase DebtsUnsecured DebtsDescription....................Debt......Monthly...APRCredit card....................12363.....900.......22.5Residence tax..................1806......0.........0Total unsecured debts..........14169.....900.......-Monthly Budget SummaryTotal monthly income.................... 3,806Expenses (including HP & secured debts). 2,746Available for debt repayments........... 1,060Monthly Unsecured debt repayments....... 900Amount left after debt repayments....... 160Personal Balance Sheet SummaryTotal assets (things you own)........... 1,000Total HP & Secured debt................. -0Total Unsecured debt.................... 14,169Net Assets.............................. -13,169Created using the SOA calculator at www.LemonFool.co.uk.Reproduced on Moneysavingexpert with permission, using other browser.0
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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 nothing0 -
Yes, it's the Japanese tax debt which I have yet to pay.0
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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 nothing1 -
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?0
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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-letter0 -
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...0 -
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 nothing0
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