Re: Advice on Debt Needed

Debt_Free_Chick

This is going to be tough ... I'm going to post a "no-nonsense" response as you seem to be in the "soft & smelly". Sorry, but that's how it seems.

You simply can't afford that car and should look at selling it & paying back the loan. Read the terms of the finance deal, as you sometimes need to involve the lender if you sell the vehicle. If you absolutely must have a car - and think very hard about that one - you'll need a runaround for about £500. An old Golf would be ideal

Look at your budget - there's nothing in there for petrol, maintenance, car insurance ... you can't afford it. Get rid and pay off the loan.

As you say, you have little for actual living expenses. It sounds like you don't have a budget. You have nothing listed for food, gas, electricity, Council Tax, water etc. Do you have those bills?

And does your girlfriend have no income at all? Not even benefits?

You need to relook at your finances and list absolutely everything that comes in and everything that goes out. Go back over your bank statements etc and see what you've been spending money on. This is absolutely vital. If you don't know where the money is going now, you're going to find it very difficult to spot any areas where you might make savings.

But a few suggestions to get you thinking

Broadband - why do you need it? Why not go back to dialup and save £10 per month.

Sky + Phone + Line Rental + Mobile + insurance = £94.99 Let's call it £100

Now think about that ..... £100 a month for the phone, essentially as you could get TV for free. You can't afford this. Ditch the phone insurance and be careful with the handset instead. I've had a mobile for 10 years and only had a claim once. If you lose or trash your phone there are plenty of free/cheap handsets on offer, so I think no insurance is worth the risk.

You could live with a basic BT line and use one of the cheaper telcos e.g. 18886

You can't afford £100 on phone bills. Get a PAYG and be ruthless with its use. Wait for others to phone you and use the cheap calls on the landline instead. And don't text unless you have a good deal e.g. a number of free texts allowed each month.

Cut up your Egg card. Cut it up now. If you don't have it, you can't increase your debt. It's just getting you into more trouble.

You need to get your current account in line to avoid paying £86 every month on the overdraft and charges.

These alone - ditch car loan (£212) ditch Sky/phone stuff (£100) switch to broadband (£10) and put discipline into current account (£86) will generate £400 a month! Think about that. Granted, you will have fund the phone from that but you will still have much more than you do now.

Call HSBC and see if you can cancel the loan insurance. Chances are you can't without taking a new loan so insist on getting anything they offer you in writing and read the terms very carefully. Very carefully.

Try and tell me I can live without using credit

Credit ... hhmmmm sounds like a friendly word doesn't it. But what you're actually doing is accumulating more debt. You feel your debt is bad now .. how does it feel to be adding to it?

With a hard look at your finances - and by that, I mean looking to cut out all unnecessary expenses, no matter how much you "enjoy" them - you might just manage. But it looks tough.

Start here

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

Read the whole article and don't just dive in without doing the budget FIRST.

Once you have a budget, you have somewhere to start. There a limited options for getting out of debt - basically, cut out all unnecessary expenses, pare back necessary expenses to the bare minimum and look to increase your income. As already said, is your girlfriend getting all benefits? Could you sell stuff on eBay? Could you take another job e.g. bar work for a few evenings each week.

If you really feel this is all unmanageable, consider debt counselling but only use the free services mentioned in the link above, for example

https://www.nationaldebtline.co.uk

Sorry if I sound heartless. I do feel for you, but you need practical help first, not a shoulder to cry on

Good luck and post back here if you want any suggestions or want to "road test" any ideas you have.

Spendless

"Any advice"
yes DON'T!!!!!!! Don't try and get out of debt by borrowing more. You can get free advice at places like National Debtline, CAB.
best of luck'

Also this is psychological. Picked it up on motley fool board don't saycredit say debt
ie it is not a credit card it is a debt card
you are not getting goods on credit, you are aquiring debt. Give it a go, see if it works

Jess_7477

My Dad calls them "rent a debt"!!

Jess_7477

Hi

You have to do what is right for you. I took out a loan over 7 years for my debts becasue it more than halved what I was paying a month on my debts and stoped me getting into more debt buy paying for food etc on credit cards. Everyone on here says not to do it, but I think it is whatever works for you and this is what has worked for me. I knew what I had to pay off each month and what I would have left. I know I will have paid loads in interest but its piece of mind at the end of the day. If you do borrow to clear debts don't take a bigger loan than you need and cut up your credit cards otherwise in a few years time you will be looking for a bigger loan to pay off more credit cards, been there done that too!

Spendless

Yeah I couldn't count the amount of times I've paid my debts and then ran them up higher

And do you trust yourself not to do it again, if you do go for another loan ???
All the best in sorting it out

westernpromise

philwales: as a matter of interest, if you already had two large loans, what made you think you could afford to buy a new car? I make about 3 times what you do, don't have any debts, and I don't reckon I can afford a new car.

you say "I can't cancel sky, I signed up for a year, there's a few months left at least, same with orange, same with insurance, same with broadband - No offense, but don't you think I would cancel them if I could?". Well, no, frankly. All these commitments postdate your loans, car, and ban; so why did you take them on?

you say you get free car insurance, but are you sure? you may very well have disqualified yourself from the free insurance by getting banned for 9 months. there are usually conditions attaching to such deals and not getting banned might well be one of them.

your position is not necessarily all that bad but your #1 goal must be to regain control of your spending. unless you do that forget it; you will end up bankrupt. at present, you cannot afford to buy anything other than essentials, i.e. food and water- that's as clear as I can make it.

PhilWales_2

Right I bought the car a year ago June. The loans I got this year to pay off other debts.

The other things I took out were stupid, but before there was a baby in the picture I was managing.

I am in control now and I have stopped spending - but I think it might be too late anyway.

Yes my free insurance still stands, they are aware of my ban.

The car I bought because it was £212 a month with 2 yrs insurance, 1 yrs tax and wouldn't need an MOT etc.... insurance at my age would've cost a minimum of £130+ a month anyway.

I don't mean to be funny but can anyone offer any advice instead of point up the things I've already !!!!!! up?

Spendless

Yes Phil
Go and get some advice at somewhere like the CAB? Listen to see what they have to say first before deciding to go ahead with another loan.

Spendless

Also Phil - just gone back and read your 1st post, notice you are paying £50 month overdraft- to pay it back you mean?
and £36 in charges? Any chance of talking to your bank about this situation.
What are you going to do once baby is born, live together? or live apart? if living apart will you not have to pay maintainance?
I agree it's no good goin on about what you've done in the past but the poster did make a point about realising you can't carry on in same way.
Please get some advice. I have Martins book and think there were about4 different organisations you could turn to, some have been put up here but if you want to know all of them send me a pm.

Tony_H_3

Yes Phil
Go and get some advice at somewhere like the CAB? Listen to see what they have to say first before deciding to go ahead with another loan.

Professional assistance would certainly be desirable in your case, you appreciate that there is no quick-fix and are prepared for the long ride.

After you have sort this help I would then look at how much you need to live, deduct this from your income. Next move onto the things you can't change such as the loan repayments, deduct this from the remaining income.

The next stage is to be brutal, look at the things that can be changed & change them, mobile, telephone, sky & insurances & such like. Make the necessary changes so that these items do not exceed the available funds.

This is what you have to do, and if it doesn't work you will have to look at making additional changes such as replacing your car. This alone could save you £'000's of pounds per year if you opted for say a Turbo Diesel.

Good Luck & keep us informed.

westernpromise

The car I bought because it was £212 a month with 2 yrs insurance, 1 yrs tax and wouldn't need an MOT  etc.... insurance at my age would've cost a minimum of £130+ a month anyway.

You're going to have to sell this car, as soon as the free insurance ends. If it would've been £130 a month before you got a driving ban, expect that to at least double once you're back to paying for it yourself. So you're looking at probably £250 to £300 a month, which you can't afford. What will selling the car do to your debt position? Will you be have to settle an HP deal before you can sell it?

When you say you are paying £50 a month "overdraft", is that the interest on a bank overdraft? That would work out at about a £4,000 overdraft, yes?

As I see it, you're on about £21,500 a year gross, hence the £1350 after tax you mention. Getting a consolidation loan for 100% of your gross salary isn't going to be easy.

Meanwhile you have to house yourself and you probably have to pay for a mobile phone. Nothing else on your outgoings is a need. You don't need broadband, Sky, or the landline - they all have to go as soon as possible.

That leaves you with £1175.

Take off your loans -

Bank charges £86
HSBC £180
Egg £100
Car £212

and you're left with £597.

A baby will get through about £2 a day of baby milk and about the same again probably in disposable nappies and related stuff. So I would budget for the baby costing you about £120 a month before clothing.

That leaves you with £477 - call it £500 including child benefit.

Out of that £500 you have to feed and clothe three of you. That can just about be done, but I can't see how you can then afford to repay your Egg card, your relative, or your catalogue.

Proper debt counselling is the way to go I think.