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  • FIRST POST
    • prodigalson
    • By prodigalson 29th Aug 18, 4:45 PM
    • 22Posts
    • 12Thanks
    prodigalson
    228,000 debt at the age of 23
    • #1
    • 29th Aug 18, 4:45 PM
    228,000 debt at the age of 23 29th Aug 18 at 4:45 PM
    My goal right now is to get out of this hole I'm in as soon as possible.

    Goal is eliminate all this debt by the end of 2018. I make good money but my expenses and my management of my resources has went out of control. So I am keeping this log to keep be accountable, hopefully some of you guys will comment and motivate me along the way.

    I also aim to build a small emergency fund of 5,000 just in case I have future problems weather they be work related of health.

    Monthly Income Details[/b]
    Monthly income after tax................ 8000
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 8000


    Monthly Expense Details

    Mortgage................................ 906
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 125
    Electricity............................. 100
    Gas..................................... 0
    Oil..................................... 0
    Water rates............................. 22
    Telephone (land line)................... 0
    Mobile phone............................ 60
    TV Licence.............................. 0
    Satellite/Cable TV...................... 0
    Internet Services....................... 40
    Groceries etc. ......................... 600
    Clothing................................ 0
    Petrol/diesel........................... 0
    Road tax................................ 0
    Car Insurance........................... 0
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 29
    Contents insurance...................... 0
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0
    Haircuts................................ 50
    Entertainment........................... 400
    Holiday................................. 0
    Emergency fund.......................... 0
    Total monthly expenses.................. 2332



    Assets

    Cash.................................... 3000
    House value (Gross)..................... 600000
    Shares and bonds........................ 0
    Car(s).................................. 0
    Other assets............................ 5000
    Total Assets............................ 608000



    Secured & HP Debts

    Description....................Debt......Monthly.. .APR
    Mortgage...................... 150000...(906)......1.69
    Total secured & HP debts...... 150000....-.........-


    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    Personal Loan..................60000.....1250......6
    Credit Card 1..................1000......0.........19.7
    Credit Card 2..................1200......0.........19.7
    Bank 3 overdraft...............2500......0.........0
    Bank 2 overdraft...............1500......0.........0
    Bank 1 overdraft...............2000......0.........0
    Family Loan....................5000......0.........0
    Credit Card 3..................1800......0.........9.7
    Total unsecured debts..........75000.....1250......-



    Monthly Budget Summary

    Total monthly income.................... 8,000
    Expenses (including HP & secured debts). 2,332
    Available for debt repayments........... 5,668
    Monthly UNsecured debt repayments....... 1,250
    Amount left after debt repayments....... 4,418


    Personal Balance Sheet Summary
    Total assets (things you own)........... 608,000
    Total HP & Secured debt................. -150,000
    Total Unsecured debt.................... -75,000
    Net Assets.............................. 383,000
    Last edited by prodigalson; 29-08-2018 at 5:33 PM.
Page 3
    • billy2shots
    • By billy2shots 10th Sep 18, 1:58 PM
    • 110 Posts
    • 117 Thanks
    billy2shots
    Not sure if this is genuine but anyway.


    Why are you paying yourself 8k a month (and paying tax) from your business and then putting your own (taxed) money back into the business?

    Pay yourself less, leave more in the business and take more in dividends a couple of times a year when you have a better idea of how much money you need to leave in your business account (plus contingency).

    Presumably this is a way of paying off personal debts quicker?
    Not very tax efficient though and make sure you don't carry on this way after things are sorted.
    • enthusiasticsaver
    • By enthusiasticsaver 10th Sep 18, 11:18 PM
    • 7,280 Posts
    • 15,964 Thanks
    enthusiasticsaver
    Good start on getting rid of two debts.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • prodigalson
    • By prodigalson 11th Sep 18, 1:00 PM
    • 22 Posts
    • 12 Thanks
    prodigalson
    @billy2shots

    Not sure if this is genuine but anyway.


    Why are you paying yourself 8k a month (and paying tax) from your business and then putting your own (taxed) money back into the business?

    Pay yourself less, leave more in the business and take more in dividends a couple of times a year when you have a better idea of how much money you need to leave in your business account (plus contingency).

    Presumably this is a way of paying off personal debts quicker?
    Not very tax efficient though and make sure you don't carry on this way after things are sorted.
    Originally posted by billy2shots

    Initially I was a sole trader so paid only income tax at the highest rate (40-45%), and my business requires a significant amount of working capital.

    My accountant has structured everything in the following way:
    I have loaned money to the company that has been incorporated.
    I draw from the loan initially given to the company till I as a creditor have been repaid. The loan given to the company is 84,000 (working capital)
    After being repaid I can take a dividends or salary. My accountant has told me to put aside money to pay taxes, he sends me an email every month regarding how much I will need to put aside. And you are correct in saying taking dividends would be more tax efficient (38% tax rate).

    I haven't given out all these details before as this is an online forum, if anyone requires more information, I would be happy to answer.
    Last edited by prodigalson; 11-09-2018 at 1:03 PM.
    Emergency Fund: 1000/1000
    • prodigalson
    • By prodigalson 14th Sep 18, 4:47 PM
    • 22 Posts
    • 12 Thanks
    prodigalson
    14-09-18 Updates:
    Personal Loan 58,200
    Bank 1 overdraft 2,500
    Bank 2 overdraft 1,500
    Bank 3 overdraft 2,000
    Family Loan 3,000 (to be paid 17/09/18)
    CC1 1,100
    CC2 1,200
    CC3 1,800
    Emergency Fund: 1,000/1,000 (+500)

    Its been a rough week so far. Was looking forward to paying off two debts today but this was not possible due to unexpected expenses. I helped a family member pay for her masters degree, which has put my plans back about a week. But if I can help someone improve their life, especially a family member than I should help even if I have to make a few sacrifices.

    I have upped my emergency fund, which now has 1,000. This will only cover one months mortgage payment as I pay ~910 per month. So I hope to have at least 5,000 put aside to cover my expenses and payments for 3 months.

    If anyone has any ideas or advice to help get rid of this debt faster, I would appreciate it. Thanks for the input so far guys.
    Emergency Fund: 1000/1000
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