I've got so much debt and I don't know how to sort it!
Discussion
Hi,
Ever since I've been old enough to get a loan/credit card etc I've been in debt. Usually borrowing money to buy cars and bikes and just general crap! About 2 years ago I managed to get the debt level down to about £6-7k which was perfectly manageable and I was well on my way to getting it paid off. However because I'm stupid I got another 2 credit cards and managed to max them both out on crap again! This took me up to over £20k in debt
Not long after this me and my G/f split up and I had to move back in with my Mum. This also meant not living with my Daughter anymore which was difficult.
Move on a couple more months and I was missing payments every month. Work had stopped opening Saturdays so the bit of extra money I'd been earning was gone. It got to the point where I was getting constant letters from credit card and loan companies asking for the missed payments.
I started to panic and ended up setting up a debt management plan to take the pressure off. It worked and things got a bit easier. I still didn't have any money by the end of each month but at least the companies were getting there money back (very) slowly but surely. That was a year ago and in that time I've got myself a new, better paid job. I've managed to cut down what I spend each month and I want to get the debt paid off ASAP and start saving a house deposit.
Ideally what I wanted to do was get a loan for the total balance owed and try to pay it off over about 18 months, which realistically is the quickest it's going to happen. Unfortunately because my credit score is now zero nobody will even consider me for a loan It's put me on a real downer as I don't really know what to do. I can't afford to pay each debt off in the same time period as the additional pavements for each debt would reduce the lump sum every month.
Has anyone else been faced with this and what did they do? I don't want to hear how stupid it all is and that I shouldn't of borrowed the money in the first place. I know that now and I'm trying to sort it out. So any help or advice would be greatly appreciated!
Thanks,
Samfromsurrey
Ever since I've been old enough to get a loan/credit card etc I've been in debt. Usually borrowing money to buy cars and bikes and just general crap! About 2 years ago I managed to get the debt level down to about £6-7k which was perfectly manageable and I was well on my way to getting it paid off. However because I'm stupid I got another 2 credit cards and managed to max them both out on crap again! This took me up to over £20k in debt
Not long after this me and my G/f split up and I had to move back in with my Mum. This also meant not living with my Daughter anymore which was difficult. Move on a couple more months and I was missing payments every month. Work had stopped opening Saturdays so the bit of extra money I'd been earning was gone. It got to the point where I was getting constant letters from credit card and loan companies asking for the missed payments.
I started to panic and ended up setting up a debt management plan to take the pressure off. It worked and things got a bit easier. I still didn't have any money by the end of each month but at least the companies were getting there money back (very) slowly but surely. That was a year ago and in that time I've got myself a new, better paid job. I've managed to cut down what I spend each month and I want to get the debt paid off ASAP and start saving a house deposit.
Ideally what I wanted to do was get a loan for the total balance owed and try to pay it off over about 18 months, which realistically is the quickest it's going to happen. Unfortunately because my credit score is now zero nobody will even consider me for a loan
It's put me on a real downer as I don't really know what to do. I can't afford to pay each debt off in the same time period as the additional pavements for each debt would reduce the lump sum every month. Has anyone else been faced with this and what did they do? I don't want to hear how stupid it all is and that I shouldn't of borrowed the money in the first place. I know that now and I'm trying to sort it out. So any help or advice would be greatly appreciated!
Thanks,
Samfromsurrey
Get brutal with your outgoings. Cut everything you don't NEED. Sky TV (et al) isn't a need!
After cutting expense will you still have more going out each month than your have coming in? If so, then speak to the lenders, t tell them your problem and rearrange new payment plans - pay something each month. Ignoring debts or missing payments will not help.
Speak to a family member or a debt counselor of you can't get your head around things.
After cutting expense will you still have more going out each month than your have coming in? If so, then speak to the lenders, t tell them your problem and rearrange new payment plans - pay something each month. Ignoring debts or missing payments will not help.
Speak to a family member or a debt counselor of you can't get your head around things.
When i was dealing with my debt i read this forum and found it very helpful http://boards.fool.co.uk/dealing-with-debt-50079.a...
Zero-interest loans can be a problem in themselves, as you'll often start to fool yourself that it won't do any harm to build a bit of the debt back up since you're not paying any interest, and then you'll find yourself sinking back down the old road.
The whole point of a DMP is that you pay back your debts in a way that it manageable. If you're finding that you've now got more money, then it may be time to review the DMP and negotiate some small repayment increases with the companies you owe money to. Alternatively; open a savings account and start setting aside the extra money in that, so you can then offer to pay off the remainder of certain loans once you've got enough saved.
Who did you do your DMP with? It might be worth phoning them again to ask their advice, as they may be able to make a few alternative suggestions that you may not find mentioned on PH. You can also check out the Debt-Free Wannabe forum on MSE, where again you may find people who were in the same boat as you who found ways of paying things off quicker.
The whole point of a DMP is that you pay back your debts in a way that it manageable. If you're finding that you've now got more money, then it may be time to review the DMP and negotiate some small repayment increases with the companies you owe money to. Alternatively; open a savings account and start setting aside the extra money in that, so you can then offer to pay off the remainder of certain loans once you've got enough saved.
Who did you do your DMP with? It might be worth phoning them again to ask their advice, as they may be able to make a few alternative suggestions that you may not find mentioned on PH. You can also check out the Debt-Free Wannabe forum on MSE, where again you may find people who were in the same boat as you who found ways of paying things off quicker.
SamFromSurrey said:
I started to panic and ended up setting up a debt management plan to take the pressure off. It worked and things got a bit easier. I still didn't have any money by the end of each month but at least the companies were getting there money back (very) slowly but surely. That was a year ago and in that time I've got myself a new, better paid job. I've managed to cut down what I spend each month...
Good stuff. So surely the answer is to keep going as you are until the debt is gone, no? (and stop trying to borrow money)You need to create a budget
1. The bare minimum to survive and get you to and from work
2. Realistically how many months in a row could you do that/just surviving and using the savings you'll make to dump into overlaying the debts
3. Take the debt and divide it by the maximum you could possibly pay off each month you'll then know how many months it will take to clear it.
4. Can you do any overtime? Or a weekend casual work.
5. Do you have Gym membership? If so cancel it you can do press ups pull ups sit ups etc at zero cost in your house your parents or even a patch of grass in the recreational ground you could do burpees and bleep test all for free
6. Your going to have to eek out the life of shoes and clothes (if anyone still buys you gifts for xmas and birthdays ask them for clothes job done).
7. Internet what does it cost you? Ditto mobile. / might not be possible to cancel or downgrade as your potentially in contract but you can sort out for when you can change it
8. No holidays - well go camping instead it's peanuts to camp anywhere and buying a tent is £20 - plus it's really good fun so your not missing out
9. No take away's no meals out.
10. Make your own lunch every day instead of buying made sandwiches etc - this makes a massive difference and zero downgrade to you.
11. No beer nights out - or say if you currently do twice a week every week cut it down to one every two weeks or try to get it to once a month (buy booze if you wish and have it at home - dead cheap and I get it that giving it up entirely is hard especially given the other issues)
12. Downgrade the food ie say you only buy branded goods now switch to own label you'll save a lot and may find they are all just as good. The ones which are not go back to the brands.
Try the discounted Aldi/Lidl these appear to genuinely cut shopping costs by 40% +
Good luck it's going to be hard no question but your going to do it and this time don't fall off the wagon again as it might not be possible to recover from the next one.
1. The bare minimum to survive and get you to and from work
2. Realistically how many months in a row could you do that/just surviving and using the savings you'll make to dump into overlaying the debts
3. Take the debt and divide it by the maximum you could possibly pay off each month you'll then know how many months it will take to clear it.
4. Can you do any overtime? Or a weekend casual work.
5. Do you have Gym membership? If so cancel it you can do press ups pull ups sit ups etc at zero cost in your house your parents or even a patch of grass in the recreational ground you could do burpees and bleep test all for free
6. Your going to have to eek out the life of shoes and clothes (if anyone still buys you gifts for xmas and birthdays ask them for clothes job done).
7. Internet what does it cost you? Ditto mobile. / might not be possible to cancel or downgrade as your potentially in contract but you can sort out for when you can change it
8. No holidays - well go camping instead it's peanuts to camp anywhere and buying a tent is £20 - plus it's really good fun so your not missing out
9. No take away's no meals out.
10. Make your own lunch every day instead of buying made sandwiches etc - this makes a massive difference and zero downgrade to you.
11. No beer nights out - or say if you currently do twice a week every week cut it down to one every two weeks or try to get it to once a month (buy booze if you wish and have it at home - dead cheap and I get it that giving it up entirely is hard especially given the other issues)
12. Downgrade the food ie say you only buy branded goods now switch to own label you'll save a lot and may find they are all just as good. The ones which are not go back to the brands.
Try the discounted Aldi/Lidl these appear to genuinely cut shopping costs by 40% +
Good luck it's going to be hard no question but your going to do it and this time don't fall off the wagon again as it might not be possible to recover from the next one.
Good points from Welsh above.
Do you currently have access to your credit history? This motivates to keep on top of payments, as you can see it having a visible effect on your score and drives progress. Set yourself a goal (in this case, a mortgage) and stick to it.
Clearscore give a basic summary of your credit rating for free, although I'd recommend checkmyfile for much more detail and accuracy (this is on 30 day free trial at the minute - sign up to it, then cancel it before you need to pay if you'd prefer).
Do you currently have access to your credit history? This motivates to keep on top of payments, as you can see it having a visible effect on your score and drives progress. Set yourself a goal (in this case, a mortgage) and stick to it.
Clearscore give a basic summary of your credit rating for free, although I'd recommend checkmyfile for much more detail and accuracy (this is on 30 day free trial at the minute - sign up to it, then cancel it before you need to pay if you'd prefer).
AdamFX said:
Good points from Welsh above.
Do you currently have access to your credit history? This motivates to keep on top of payments, as you can see it having a visible effect on your score and drives progress. Set yourself a goal (in this case, a mortgage) and stick to it.
Clearscore give a basic summary of your credit rating for free, although I'd recommend checkmyfile for much more detail and accuracy (this is on 30 day free trial at the minute - sign up to it, then cancel it before you need to pay if you'd prefer).
Or Experian - but same rules apply cancel within 30 days and you have to call them to cancelDo you currently have access to your credit history? This motivates to keep on top of payments, as you can see it having a visible effect on your score and drives progress. Set yourself a goal (in this case, a mortgage) and stick to it.
Clearscore give a basic summary of your credit rating for free, although I'd recommend checkmyfile for much more detail and accuracy (this is on 30 day free trial at the minute - sign up to it, then cancel it before you need to pay if you'd prefer).
SamFromSurrey said:
Hi,
Ever since I've been old enough to get a loan/credit card etc I've been in debt. Usually borrowing money to buy cars and bikes and just general crap! About 2 years ago I managed to get the debt level down to about £6-7k which was perfectly manageable
No it wasn't, because you didn't manage it, sorry to sound harsh.Ever since I've been old enough to get a loan/credit card etc I've been in debt. Usually borrowing money to buy cars and bikes and just general crap! About 2 years ago I managed to get the debt level down to about £6-7k which was perfectly manageable
There's no easy answer other than maybe try to get a second job if you have the time, and cut your expenses to the bone, as previously mentioned, even if it means living on a baked potato and a tin of beans for two years.
Don't be flash if you haven't got the cash.
There are thousands of people in your position, you are certainly not alone.
Good luck.
OP- Get straight on the Money Saving Expert forums.
Post in the Debt-free wannabe section
http://forums.moneysavingexpert.com/forumdisplay.p...
The process usually starts by you posting a statement of affairs listing all of your monthly outgoings.
Post in the Debt-free wannabe section
http://forums.moneysavingexpert.com/forumdisplay.p...
The process usually starts by you posting a statement of affairs listing all of your monthly outgoings.
I started a thread like this a few months back. I was in about 5-6k debt so wasn't as bad as yours, but my issue was the debt was spread across different cards meaning I could only pay off the minimum each month.
Like you, I also wound up getting it low down but then built it back up due to excessive pointless spending, then when I posted the topic here I got some really encouraging support and managed to flip it around pretty quickly.
You need to change your mindset. The current mindset you have means that you'll lower your debt but then when you see something you like/want, you will go buy it on finance again as it is your "easy way". Until this mindset changes, you will not be debt free. I speak from first hand experience.
I cut down all outgoings, I was spending donkeys money on going out to pointless things and spending money here and there and I found that in the long run, the only one suffering was me. People say that live within your means, and I think it is time you did that OP.
Also, what helped me most was splitting my money up. My salary goes into current account 1, then I take out ALL the money from it EXCEPT from the total amount of direct debits going out. In account 2 goes my monthly fuel money (fixed). In account 3 goes my daily expenditure money which is roughly £200 - This includes EVERYTHING I spend. All remaining money is put into my highest interest credit card at the end of the month.
You also need to cut out the "little things" - E.G. Buying coffee from costa/starbucks on your way to work. Take it from home. Buying lunches from tesco/canteen? Take it from home. Believe me, every penny helps.
Since I posted, I have got one CC down to £0 and one other one down to £200 - So that is £1200 of debt cleared in under 3 months.
If I can do it, you can too.
Good luck OP
Like you, I also wound up getting it low down but then built it back up due to excessive pointless spending, then when I posted the topic here I got some really encouraging support and managed to flip it around pretty quickly.
You need to change your mindset. The current mindset you have means that you'll lower your debt but then when you see something you like/want, you will go buy it on finance again as it is your "easy way". Until this mindset changes, you will not be debt free. I speak from first hand experience.
I cut down all outgoings, I was spending donkeys money on going out to pointless things and spending money here and there and I found that in the long run, the only one suffering was me. People say that live within your means, and I think it is time you did that OP.
Also, what helped me most was splitting my money up. My salary goes into current account 1, then I take out ALL the money from it EXCEPT from the total amount of direct debits going out. In account 2 goes my monthly fuel money (fixed). In account 3 goes my daily expenditure money which is roughly £200 - This includes EVERYTHING I spend. All remaining money is put into my highest interest credit card at the end of the month.
You also need to cut out the "little things" - E.G. Buying coffee from costa/starbucks on your way to work. Take it from home. Buying lunches from tesco/canteen? Take it from home. Believe me, every penny helps.
Since I posted, I have got one CC down to £0 and one other one down to £200 - So that is £1200 of debt cleared in under 3 months.
If I can do it, you can too.
Good luck OP
SamFromSurrey said:
Hi,
Ever since I've been old enough to get a loan/credit card etc I've been in debt. Usually borrowing money to buy cars and bikes and just general crap! About 2 years ago I managed to get the debt level down to about £6-7k which was perfectly manageable and I was well on my way to getting it paid off. However because I'm stupid I got another 2 credit cards and managed to max them both out on crap again! This took me up to over £20k in debt Not long after this me and my G/f split up and I had to move back in with my Mum. This also meant not living with my Daughter anymore which was difficult.
Move on a couple more months and I was missing payments every month. Work had stopped opening Saturdays so the bit of extra money I'd been earning was gone. It got to the point where I was getting constant letters from credit card and loan companies asking for the missed payments.
I started to panic and ended up setting up a debt management plan to take the pressure off. It worked and things got a bit easier. I still didn't have any money by the end of each month but at least the companies were getting there money back (very) slowly but surely. That was a year ago and in that time I've got myself a new, better paid job. I've managed to cut down what I spend each month and I want to get the debt paid off ASAP and start saving a house deposit.
Ideally what I wanted to do was get a loan for the total balance owed and try to pay it off over about 18 months, which realistically is the quickest it's going to happen. Unfortunately because my credit score is now zero nobody will even consider me for a loan It's put me on a real downer as I don't really know what to do. I can't afford to pay each debt off in the same time period as the additional pavements for each debt would reduce the lump sum every month.
Has anyone else been faced with this and what did they do? I don't want to hear how stupid it all is and that I shouldn't of borrowed the money in the first place. I know that now and I'm trying to sort it out. So any help or advice would be greatly appreciated!
Thanks,
Samfromsurrey
I'd recommend attacking this with a system in mind, and here's one explained that should do the job. Its very straight forward.Ever since I've been old enough to get a loan/credit card etc I've been in debt. Usually borrowing money to buy cars and bikes and just general crap! About 2 years ago I managed to get the debt level down to about £6-7k which was perfectly manageable and I was well on my way to getting it paid off. However because I'm stupid I got another 2 credit cards and managed to max them both out on crap again! This took me up to over £20k in debt
Not long after this me and my G/f split up and I had to move back in with my Mum. This also meant not living with my Daughter anymore which was difficult. Move on a couple more months and I was missing payments every month. Work had stopped opening Saturdays so the bit of extra money I'd been earning was gone. It got to the point where I was getting constant letters from credit card and loan companies asking for the missed payments.
I started to panic and ended up setting up a debt management plan to take the pressure off. It worked and things got a bit easier. I still didn't have any money by the end of each month but at least the companies were getting there money back (very) slowly but surely. That was a year ago and in that time I've got myself a new, better paid job. I've managed to cut down what I spend each month and I want to get the debt paid off ASAP and start saving a house deposit.
Ideally what I wanted to do was get a loan for the total balance owed and try to pay it off over about 18 months, which realistically is the quickest it's going to happen. Unfortunately because my credit score is now zero nobody will even consider me for a loan
It's put me on a real downer as I don't really know what to do. I can't afford to pay each debt off in the same time period as the additional pavements for each debt would reduce the lump sum every month. Has anyone else been faced with this and what did they do? I don't want to hear how stupid it all is and that I shouldn't of borrowed the money in the first place. I know that now and I'm trying to sort it out. So any help or advice would be greatly appreciated!
Thanks,
Samfromsurrey
https://www.youtube.com/watch?v=PWF-zpgS5YA
OP's said that they're in a debt management plan. The easiest thing to do is stick with the DMP. It's already been negotiated and you've probably got a debt free date.
I can see what they've done. They're written a budget out on one salary and now on a better one, so there's more cashflow around. The best way to sort this out is to go back to the DMP and do another budget.
If you suddenly have an extra £300 a month, that really should be getting allocated to your debtors, which guess what, brings your debt down quicker than you're paying off now.
You can pay more to your creditors, just not in the way that you want to. A loan is a really bad idea, you're paying around 50p on the pound right now, stick with that instead of 114p on the pound
Also, to tackle this
Anything that's tied in to a fixed term contract has to be paid, so something like Sky - if you're 6 months into an 18 month contract that gets paid before the credit card and the loan does. Same with a mobile phone contract. Housing, food and council tax are the top 3 priorities, then contracts then debts
I can see what they've done. They're written a budget out on one salary and now on a better one, so there's more cashflow around. The best way to sort this out is to go back to the DMP and do another budget.
If you suddenly have an extra £300 a month, that really should be getting allocated to your debtors, which guess what, brings your debt down quicker than you're paying off now.
You can pay more to your creditors, just not in the way that you want to. A loan is a really bad idea, you're paying around 50p on the pound right now, stick with that instead of 114p on the pound
Also, to tackle this
DuraAce said:
Get brutal with your outgoings. Cut everything you don't NEED. Sky TV (et al) isn't a need!
I'd take a guess that the OP already knows about it, but for everyone else....when you set up a DMP they ask you what your basic outgoings are. Anything that's tied in to a fixed term contract has to be paid, so something like Sky - if you're 6 months into an 18 month contract that gets paid before the credit card and the loan does. Same with a mobile phone contract. Housing, food and council tax are the top 3 priorities, then contracts then debts
Edited by andy-xr on Thursday 19th November 10:28
Gassing Station | Finance | Top of Page | What's New | My Stuff