Advice for clearing £800 debt

jetfighter

A colleague of mine is looking for advice to get out of a relatively small amount of debt.

He is a young lad, only 19 and living at home. He says he can't ask his parents for financial help but has managed to get into about £800 worth of debt.

He doesn't have many outgoings, only his car insurance and mobile phone bill, however these are set up on direct debit and the companies try to collect this money each month. Every time it fails, incurring a £30 NatWest bank charge each time - so he is sinking further into debt and is soon going to start getting penalty charges from the insurance company, too.

He can't get a credit card as his credit rating is not up to much.

He works in our department as a temporary contractor and gets paid peanuts compared to what us full-timers get, due to so much of his pay getting swallowed up in agency fees. He is not making enough money in a month to clear his debt, so whatever he gets paid is eaten up by debt - then he starts geting the bank charges again.

He is desperate for help but I have no experience of debt, so thought I would post on here on his behalf. Do any of you have any suggestions? What would be best? A small loan, possibly? (If he could get one?) I have no idea, really.

Any help would be appreciated.

~Beanie~

What is the debt? I'm guessing by the fact that his DD's keep bouncing that it is an overdraft?

He needs to cancel his direct debits for starters, this will stop the £30 charges when NatWest bounce them.

He needs to open another bank account elsewhere and get his salary paid into that and his direct debits set up on it. Then make an arrangement with NatWest to pay off the overdraft at an affordable amount each month.

jetfighter

Yes - he has a £600 overdraft. It's crazy really that he is only a tiny bit over this yet is paying for it excessively due to these bank charges!

Thank you for the advice.

CLAPTON

as he has an income but virtually no essential outgoing what is he spending his money on?

get him to write out exactly where every penny goes and cut out non essential spending ... I'm sure then he will be able to clear his OD within a couple of months

bargainbetty

Another option is that he gets a part-time 2nd job until the debt is clear (bar work or the like), or , and possibly more importantly, focuses on getting a permanent contract.

Clapton has it right though - a spending diary will help him focus on non-essential spending.

Persolv0

Hello
Im with the above posters suggestions but id also suggest he prepares a full statement of affairs also and treats his debt burden just as anyone with 30 k debt would ......

for example you mention he has car insurance and mobile phone as his only real outgoings but then of course there will be car tax,petrol,mot costs and servicing.

Im not trying to be harsh on the lad but a positive is its a great opportunity for him to learn now about money management before hes on here posting 30 k of debt plus the SOA will show him exactly where his money goes and give him a way out of his current debt problems

good luck to him and its nice you looked out info for him:beer:

jetfighter

I forgot I posted this thread. Whoops! Sorry.

Thank you all for your advice - I will pass this on to him. I have been lucky enough to never have debt problems myself so even a tiny amount of debt seems a little frightening to me - I know it's only a small amount but he's earning something daft like £3.40 an hour at the moment so it's big to him!

I have already made him cancel his direct debits and get a new bank account - luckily he was accepted by another bank! We've sorted him out with an ISA too, as he would like to start putting some money away every month once his debt is clear.

Thanks everyone. :T