Tired of just getting by

debtfreewallabe

Hi everyone,

I have been steadily racking up more and more debt since leaving university. I am from a low income background and at the end of my degree I didn't have the option of returning home as many of my cohort did. I was thrust straight into private renting with no understanding of council tax, income tax or anything like this. Immediately my outgoings were much higher than my income and my debt spiral begun. To top this off I then became unemployed unexpectedly, making everything much worse.

I managed to weather the storm and pay off over £900 in council tax arears in one year on £25k/year salary. However, by just focusing on this one debt, the others only grew.

Today my debt is:

Student overdraft: £1998.91

Credit Card 1: £773.98

Credit Card 2: £570.06

At the minute I only pay the minimum charges on each of these each month. I want nothing more than to pay this off and to have a fresh start. Having debt like this at a young age is incredibly isolating and I am finally in a position where I can start chipping away at this debt.

I already have a bank account where no debt is tied to and I have looked into getting a DMP with StepChange but I just would like some guidance from anyone who has been in a similar situation, before I sign up to the DMP.

Net Income/ month: £2131.00

Monthly outgoings (Exl debt repayments): £2,039.68

Thank you

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/6668832/tired-of-just-getting-by

Are you able to prepare a full Statement of Affairs and share for advice? The lemonfool template seems popular

sourcrates

Well your debts are pretty small, in comparison to most, and even without the minimum payments, it would not make much difference to your overall situation.

What else is taking all your money?

As I doubt debt management is going to make much difference here.

fatbelly

Have a look at this for ways to attack the overdraft

https://www.moneysavingexpert.com/banking/cut-overdraft-costs/

And balance transfer the cards to 0% interest.

Then anything you pay reduces the debt, like a dmp, but without the credit file marks

foxgloves

Agree that this is a pretty small level of debt & it could well be manageable by re-jigging your regular outgoings, cutting back, getting better deals, etc. Someone has already suggested that you fill in a Statement of Affairs, which you could post on here, as many do, to see if some fresh pairs of eyes can offer possible ways forward. No need to rush it, take your time & include accurate figures as they are now. Spend some time going over the last 3 months of bank/CC statements so that you can see what you are spending your money on.

My debt began when I was a student too, but so engrained was my overspending by the time I started work, that I continued to outspend my income until I was in my early 40s! It sounds as though you are very much set on getting your finances straight much earlier than that, & that's to be commended.

itsthelittlethings

You will find a lot of people here of the opinion that you can live on £1000 a month if you just tighten your belt. You can bet your bottom dollar many of them are not living on £1000 a month! If you feel that you are tired of just getting by I'd say that's a good sign you can't manage by just tightening your belt. Debt management or just carrying the debt for a bit and paying minimum payments until you get promoted and earn more (which may or may.not happen) could be for you.

I don't have much advice on how to move forward but I want to highlight that none of your debt is priority debt (well done for paying the council tax arrears off).

itsthelittlethings

Looking at the numbers I think fatbelly is right with his advice but I'm still not sure you can pay your debts off.

Brie

As others have said seeing your statement of accounts would be helpful as we can better direct advice on where you might find money in your budget. (see SOA in my signature below)

But as a starter I would suggest setting your direct debits on your cards to a set amount instead of the minimum. Assuming you aren't using these cards this will chip away at the debt just a bit faster.

So you appear to have about £91 a month for debt repayment.

For example - assuming you have a minimum payment of 2% a month on the cards this means you have to pay about £15.50 on the £773.98 & £11.40 on the 570.06. At this rate and assuming you are being charged 22% interest you are barely touching the actual debt and are mostly paying interest each month. In both cases you are actually only clearing £1 a month.

If you continue to pay the minimum (assuming you are slapping the rest on the overdraft every month) then it will take you until you retire to pay things off.

If instead you set your DDs at £20 & £15 respectively you would pay these both off in about 6 years. Basically that's what a DMP will do - give a set amount per month that needs to be paid. The thing to remember is that if you are paying above the minimum, no matter how little, it looks like you are more in control of your money and will ultimately make you a better credit risk.

And yes - follow fatbelly's advice about dealing with the overdraft. And yes as stated if you qualify for a 0% balance transfer card that will help greatly too.

Best of luck with it all!!!

RAS

Am assuming your OD is the most expensive debt, if the student period has stopped?

Check if you can qualify for an 0% or low card, there is a soft checker here on MSE. If not, do as Brie suggests. Algorithms spot people who only pay the minimum, a bit over and they may be more generous in 4 months.

Again, at these low levels, if you are eligible for a deal to switch bank, £150-200 can at least halt further increases. Again there's mentions here.

I totally get it with the isolation. It's incredibly hard living hand to mouth, particularly when you are solo. Planning when you can afford buy washing powder, for example. And planning for a half pint with mates, not an evening out.

If you use public transport, check out budget supermarkets and real markets close to places you travel to or through. And any deals that allow you to travel further on a day ticket if it's not more expensive than you necessary travel.

And check for free entertainment. Organ music or brass bands and street music may not be your gig but free live music can be uplifting. And check your local library, for videos, free audio books, magazines etc. And free internet and WiFi, useful to supplement your own deal.

And look through your stuff. What could you sell? What few items, often clothing or kitchen kit, would help you make better use of what you have? You may not need a soup maker but a second hand blender could help make scraps into a meal?

A couple of random you tube channels, try Atomic Shrimp for mad ideas, or WearyWolf Adventures (more family but some good solo ideas). You don't need to live that budget each week but one week a month could help make a dent in you debt.

P.S. Buy tuna in oil, more calories for the same money and you can use the oil to flavour things like pasta sauces, bean salads and veggies. However, sardines in tomato are pasta sauce in a tin.

13thlegion

Just want to say well done on recognising an issue long before many do. We don't mean to say your debts are not important by saying they are low in the experience of this forum. We mean congratulations on seeing it before life goes by and you're so much older.

You say you have a degree. How is the graduate job hunt going to try and raise your income?

honeybee1234

https://forums.moneysavingexpert.com/discussion/comment/82003982#Comment_82003982

This is such a valid point and I think it puts a completely different spin on things. Being proactive is a wonderful thing, and in the MSE environment, there's so much support to find that if you implement it, can make all the difference to your life.