Is there a smarter way of me getting out of debt?

2

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  • BadDebtor
    BadDebtor Posts: 153 Forumite
    First Post First Anniversary Name Dropper Combo Breaker
    mcscoobs wrote: »
    I used to be in a mess financially, loads of little loans, store cards, high interest credit cards, a familiar story. I was finally able to get on top of things by getting a relatively big loan to consolidate the debt. I earn a decent wage. I should be able to clear the big loan in a year as of January, that's the plan anyway!

    The car loan is via a Salary Sacrifice scheme through my work, which I opted for as I needed a car asap (at the time), so took it even though the APR was higher than I liked. Need to get rid of this big loan!

    What you have not made clear is the WHY ?

    Why do you suddenly want to clear this debt?

    Do you plan to buy a house or start a business, or do a security related job?

    You clearly have the funds to service the debt and you say you can clear it in a year, so what is the urgency.

    7% is a lot in current climate but in a year or two it will be considered cheap.

    If you have that much disposable income to pay off £17k in a year then investing in FTSE top 100 or 500 in a mutual fund might exceed the 7%

    The 0% debt can certainly be used in this way, not that I recommend it.

    In your position I would get rid of all your debt, retain one card to get extra protection on purchases over £100 and start using your surplus money to invest. Do it through a company you setup because when you are old they will take it all anyway to pay for a care home where you will be abused regularly!
  • mcscoobs
    mcscoobs Posts: 77 Forumite
    SOA below:

    Statement of Affairs and Personal Balance Sheet

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

    Monthly Income Details
    Monthly income after tax................ 3000
    Partners monthly income after tax....... 600
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 3600

    Monthly Expense Details
    Mortgage................................ 0
    Secured/HP loan repayments.............. 0
    Rent.................................... 995
    Management charge (leasehold property).. 0
    Council tax............................. 0
    Electricity............................. 57
    Gas..................................... 17
    Oil..................................... 0
    Water rates............................. 0
    Telephone (land line)................... 0
    Mobile phone............................ 0
    TV Licence.............................. 0
    Satellite/Cable TV...................... 33.5
    Internet Services....................... 19
    Groceries etc. ......................... 300
    Clothing................................ 0
    Petrol/diesel........................... 200
    Road tax................................ 0
    Car Insurance........................... 36.03
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 76
    Other child related expenses............ 329.31
    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................................ 15
    Entertainment........................... 7.99
    Holiday................................. 0
    Emergency fund.......................... 30
    Total monthly expenses.................. 2115.83


    Assets
    Cash.................................... 0
    House value (Gross)..................... 0
    Shares and bonds........................ 0
    Car(s).................................. 4000
    Other assets............................ 0
    Total Assets............................ 4000

    No Secured nor Hire Purchase Debts

    Unsecured Debts
    Description....................Debt......Monthly...APR
    Sofology.......................1000......45.47.....0
    Car Loan.......................3700......138.5.....14.9
    Halifax Loan...................17000.....330.7.....7.9
    Barclaycard....................6300......120.......0
    Total unsecured debts..........28000.....634.67....-


    Monthly Budget Summary
    Total monthly income.................... 3,600
    Expenses (including HP & secured debts). 2,115.83
    Available for debt repayments........... 1,484.17
    Monthly UNsecured debt repayments....... 634.67
    Amount left after debt repayments....... 849.5

    Personal Balance Sheet Summary
    Total assets (things you own)........... 4,000
    Total HP & Secured debt................. -0
    Total Unsecured debt.................... -28,000
    Net Assets.............................. -24,000

    Created using the SOA calculator at https://www.stoozing.com.
    Reproduced on Moneysavingexpert with permission, using other browser.

    Usually have £500 left over as disposable income, but this is (currently) placed into a joint bank account with my partner, but thats another story I won't go into :)
  • heartbreak_star
    heartbreak_star Posts: 8,286 Forumite
    First Anniversary First Post Combo Breaker Rampant Recycler
    Nothing for birthday or Christmas presents despite 2 kids? Remember to budget for everything - that has always been my failing...

    HBS x
    "I believe in ordinary acts of bravery, in the courage that drives one person to stand up for another."

    "It's easy to know what you're against, quite another to know what you're for."

    #Bremainer
  • mcscoobs
    mcscoobs Posts: 77 Forumite
    What we currently put into joint account each month caters for any events we have that month, whether it be birthdays/anniversaries etc, so that's covered off :)
  • Willing2Learn
    Willing2Learn Posts: 6,294 Forumite
    First Anniversary Name Dropper First Post Photogenic
    edited 9 November 2018 at 6:22PM
    mcscoobs wrote: »
    What we currently put into joint account each month caters for any events we have that month, whether it be birthdays/anniversaries etc, so that's covered off :)
    But the money you are putting aside into the joint account each month needs to be budgeted for. Every penny that you receive as income needs to be budgeted. That is the only way I know of, that will reduce debt :)

    Edit:
    Why is there no water rates?
    Why is there no telephone or mobile bills?
    Why is there no TV license bill?
    How much do you budget monthly for clothes for all of you?
    Why is there no road tax bill?
    Why is there nothing budgeted for car parking?
    Is £7.99 a realistic amount for monthly entertainment costs?
    Why is there no insurance for home contents?

    Edit 2: Sorry if I am a pain in the butt, but, realistic monthly budgeting is essential... :)
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    :smiley:
  • mcscoobs
    mcscoobs Posts: 77 Forumite
    Oh I agree. Like I've mentioned earlier, as of January, circumstances are changing, so i'll have this £500 plus an additional £1000 to put towards clearing debt
  • Willing2Learn
    Willing2Learn Posts: 6,294 Forumite
    First Anniversary Name Dropper First Post Photogenic
    mcscoobs wrote: »
    Oh I agree. Like I've mentioned earlier, as of January, circumstances are changing, so i'll have this £500 plus an additional £1000 to put towards clearing debt
    Did you get my edits lol?
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    :smiley:
  • mcscoobs
    mcscoobs Posts: 77 Forumite
    Just saw the edits! Currently my partner pays for Water, TV Licence, Council tax. I pay for netflix for £7.99. I get my mobile phone contract for free and parking is free for me (at work). Contents and road tax was paid in full when it was taken out. I literally listed all my current outgoings and put it above. I'm not the best "planner" to be fair!
  • Willing2Learn
    Willing2Learn Posts: 6,294 Forumite
    First Anniversary Name Dropper First Post Photogenic
    mcscoobs wrote: »
    Just saw the edits! Currently my partner pays for Water, TV Licence, Council tax. I pay for netflix for £7.99. I get my mobile phone contract for free and parking is free for me (at work). Contents and road tax was paid in full when it was taken out. I literally listed all my current outgoings and put it above. I'm not the best "planner" to be fair!
    You still need to budget for things like contents insurance and road tax. How will you pay for these things in the future, if they are not within your budget? I think we have identified a fundamental flaw in your budgeting methodology. I recommend it is addressed asap :)
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    :smiley:
  • redux
    redux Posts: 22,976 Forumite
    Name Dropper First Anniversary First Post
    edited 9 November 2018 at 7:37PM
    natlie wrote: »
    I'd pay minimum on Barclaycard for now and throw cash at Sofology just to get rid, then the car finance.

    The Barclaycard payment should be transferrable to another 0% offer if your credit rating is good

    I would let the loan tick along until you have the extra cash from paying the sofa and car off

    I don't understand that. The Sofology loan is at 0% interest, so there's no point in speeding it up.

    I'd spend a few quid a month on the Tesco, paying the spent amount in full each time, to keep it trickling along, hoping for balance or money transfer offers. After the initial offer on opening, they seem to repeat 12 month span offers fairly regularly, 3% fee on balance transfer, 4% on money transfer.

    That could be useful towards part of the car loan now, and towards the remaining BC balance when its 0% offer expires.
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