Financial help/planning for a simpleton
Discussion
Hi All,
Where would a simpleton get help/advice as to how to organise thier debts/improve credit worthiness/ pay less interest on things.
Let's just say we are talking about a "friend"
Said Friend has been an idiot most of his life. Has earned money, and seen big droughts too. Nothing ever stable. Not saved for a rainy day, but never really been skint either.
Mostly been self employed most of his life. Believe it or not, he's 35 now and got himself a proper job. Pension, salary, paid holidays etc. It's all new ish to him and he's done okay for himself, on a salary of £33k. Starting to take it all seriously now. (We all grow up one day)
However, said friend has racked up some credit card bills and high Apr loans because that's all he had access to, whilst he was studying for his new job.
In brief, -
£3k loan at 69.9% Apr over 2 years (23 months left). Roughly £200 a month.
Another £3k loan at 49.9% over 3 years (about 31 months left) roughly £141 a month.
Credit card 1 - £2500 owed.
Credit card 2 - £2000 owed
Credit card 3 - £750 owed
Credit card 4 - £200 owed
Credit card 5 - £115 owed
All credit cards are roughly same APR at 39.9%
Strategy so far is pay the loans at thier set figures,and pay credit cards at total sum of £100 per month, per card. Soon as one card clears, a different card then gets £200 per month until that clears. So every month it's always £500 towards credit cards until its all cleared.
Just to add,no longer needs any finance etc. Wages are decent enough to live on now just wondering what's the best strategy to tackle above debt, with the aim of being out of debt quick and with minimum interest paid.
Many thanks.
Where would a simpleton get help/advice as to how to organise thier debts/improve credit worthiness/ pay less interest on things.
Let's just say we are talking about a "friend"
Said Friend has been an idiot most of his life. Has earned money, and seen big droughts too. Nothing ever stable. Not saved for a rainy day, but never really been skint either.
Mostly been self employed most of his life. Believe it or not, he's 35 now and got himself a proper job. Pension, salary, paid holidays etc. It's all new ish to him and he's done okay for himself, on a salary of £33k. Starting to take it all seriously now. (We all grow up one day)
However, said friend has racked up some credit card bills and high Apr loans because that's all he had access to, whilst he was studying for his new job.
In brief, -
£3k loan at 69.9% Apr over 2 years (23 months left). Roughly £200 a month.
Another £3k loan at 49.9% over 3 years (about 31 months left) roughly £141 a month.
Credit card 1 - £2500 owed.
Credit card 2 - £2000 owed
Credit card 3 - £750 owed
Credit card 4 - £200 owed
Credit card 5 - £115 owed
All credit cards are roughly same APR at 39.9%
Strategy so far is pay the loans at thier set figures,and pay credit cards at total sum of £100 per month, per card. Soon as one card clears, a different card then gets £200 per month until that clears. So every month it's always £500 towards credit cards until its all cleared.
Just to add,no longer needs any finance etc. Wages are decent enough to live on now just wondering what's the best strategy to tackle above debt, with the aim of being out of debt quick and with minimum interest paid.
Many thanks.
Easy:
1) create a new, second identity with a better credit rating
2) get the original identity to attack the new identity
3) new identity kills the old identity in self defence
4) when debt collectors turn up, tell them, he ded - debts written off
5) enjoy new, lower APR
(this is not financial advice)
1) create a new, second identity with a better credit rating
2) get the original identity to attack the new identity
3) new identity kills the old identity in self defence
4) when debt collectors turn up, tell them, he ded - debts written off
5) enjoy new, lower APR
(this is not financial advice)
Sounds like you have had a change in attitude/approach and know this needs to be sorted. Don’t know how tempted you can be to use them again, but cut up the cards and throw them away. Once a card has been paid off close the account.
Perhaps see if you are able to consolidate the high APR loans into something more friendly if you can get it? Otherwise your approach seems sensible, use any bonus from work or pay rise to also pay off debt.
And stick with it! The more you commit the quicker it’s sorted. So if that means forgoing holidays etc so be it. I found that checking statements and credit reports helped, also tracking progress in a spreadsheet gave me control, rather than knowing but not looking.
As for advice, there is a forum over on money saving expert called ‘debt free wannabe’ or something like that where people with better knowledge may be able to suggest clever ways to approach this.
Good luck.
Perhaps see if you are able to consolidate the high APR loans into something more friendly if you can get it? Otherwise your approach seems sensible, use any bonus from work or pay rise to also pay off debt.
And stick with it! The more you commit the quicker it’s sorted. So if that means forgoing holidays etc so be it. I found that checking statements and credit reports helped, also tracking progress in a spreadsheet gave me control, rather than knowing but not looking.
As for advice, there is a forum over on money saving expert called ‘debt free wannabe’ or something like that where people with better knowledge may be able to suggest clever ways to approach this.
Good luck.
Hello,
For me, sometimes, seeing smaller successes helps focus my resolve for the longer term. If your friend is the same, I would recommend suggesting the pay off order in smallest outstanding balance first. This ought to give the feel good factor of being able to scratch off CC5 in a couple of months followed by 4 and then 3. I think this might help game the feeling of paying off the boss level 2 & 1.
Good luck
FV
For me, sometimes, seeing smaller successes helps focus my resolve for the longer term. If your friend is the same, I would recommend suggesting the pay off order in smallest outstanding balance first. This ought to give the feel good factor of being able to scratch off CC5 in a couple of months followed by 4 and then 3. I think this might help game the feeling of paying off the boss level 2 & 1.
Good luck
FV
You don’t sound like a simpleton to me. I’ve researched consumer behaviours with money in the past and can assure you that knowing what you know, you’re more on top of your finances than most of the population.
I would investigate Debt Consolidation Loans. You can search on MoneySuperMarket for providers. If they offer a lower APR (there may be a fee to take into account too) then it could cost you less to pay off the other loans with a new cheaper one than just sticking to what you’ve got.
Worth downloading the ClearScore app and joining too. It’s free and gives a load of information on your credit score etc and recommends products based on your situation (although not advice, they are marketing).
I would investigate Debt Consolidation Loans. You can search on MoneySuperMarket for providers. If they offer a lower APR (there may be a fee to take into account too) then it could cost you less to pay off the other loans with a new cheaper one than just sticking to what you’ve got.
Worth downloading the ClearScore app and joining too. It’s free and gives a load of information on your credit score etc and recommends products based on your situation (although not advice, they are marketing).
MuddyK said:
Hi All,
Where would a simpleton get help/advice as to how to organise thier debts/improve credit worthiness/ pay less interest on things.
Let's just say we are talking about a "friend"
Said Friend has been an idiot most of his life. Has earned money, and seen big droughts too. Nothing ever stable. Not saved for a rainy day, but never really been skint either.
Mostly been self employed most of his life. Believe it or not, he's 35 now and got himself a proper job. Pension, salary, paid holidays etc. It's all new ish to him and he's done okay for himself, on a salary of £33k. Starting to take it all seriously now. (We all grow up one day)
However, said friend has racked up some credit card bills and high Apr loans because that's all he had access to, whilst he was studying for his new job.
In brief, -
£3k loan at 69.9% Apr over 2 years (23 months left). Roughly £200 a month.
Another £3k loan at 49.9% over 3 years (about 31 months left) roughly £141 a month.
Credit card 1 - £2500 owed.
Credit card 2 - £2000 owed
Credit card 3 - £750 owed
Credit card 4 - £200 owed
Credit card 5 - £115 owed
All credit cards are roughly same APR at 39.9%
Strategy so far is pay the loans at thier set figures,and pay credit cards at total sum of £100 per month, per card. Soon as one card clears, a different card then gets £200 per month until that clears. So every month it's always £500 towards credit cards until its all cleared.
Just to add,no longer needs any finance etc. Wages are decent enough to live on now just wondering what's the best strategy to tackle above debt, with the aim of being out of debt quick and with minimum interest paid.
Many thanks.
As per other suggestions vital he keeps up on time monthly payments on all loans / cards, focus on paying off smaller credit card balances and cancelling so they don’t just get used again.Where would a simpleton get help/advice as to how to organise thier debts/improve credit worthiness/ pay less interest on things.
Let's just say we are talking about a "friend"
Said Friend has been an idiot most of his life. Has earned money, and seen big droughts too. Nothing ever stable. Not saved for a rainy day, but never really been skint either.
Mostly been self employed most of his life. Believe it or not, he's 35 now and got himself a proper job. Pension, salary, paid holidays etc. It's all new ish to him and he's done okay for himself, on a salary of £33k. Starting to take it all seriously now. (We all grow up one day)
However, said friend has racked up some credit card bills and high Apr loans because that's all he had access to, whilst he was studying for his new job.
In brief, -
£3k loan at 69.9% Apr over 2 years (23 months left). Roughly £200 a month.
Another £3k loan at 49.9% over 3 years (about 31 months left) roughly £141 a month.
Credit card 1 - £2500 owed.
Credit card 2 - £2000 owed
Credit card 3 - £750 owed
Credit card 4 - £200 owed
Credit card 5 - £115 owed
All credit cards are roughly same APR at 39.9%
Strategy so far is pay the loans at thier set figures,and pay credit cards at total sum of £100 per month, per card. Soon as one card clears, a different card then gets £200 per month until that clears. So every month it's always £500 towards credit cards until its all cleared.
Just to add,no longer needs any finance etc. Wages are decent enough to live on now just wondering what's the best strategy to tackle above debt, with the aim of being out of debt quick and with minimum interest paid.
Many thanks.
Those APR’s are vicious, it might be worth looking at a Loan to consolidate - easier if a homeowner, if not then after 12 months of consistent payments if he can’t get a consolidation loan now he might be able to then.
Friend needs to live economically get this paid off, it’s awful that apr’s of 40-50% can be legltimately charged.
MuddyK said:
Just to add,no longer needs any finance etc. Wages are decent enough to live on now just wondering what's the best strategy to tackle above debt, with the aim of being out of debt quick and with minimum interest paid.
What are the rules for early/fast loan repayment? If it is an option, then concentrate on the highest APR debt first and work your way down, although mentally this will be tougher than starting with the smallest debt and working your way up the size of debt (which sees the no of debts reduce fastest).If there are punitive fees for early repayment of the loans then work your way through the credit cards (I'd go smallest first to reduce the no of debts more quickly as the rates are about the same but FFS check that is true).
If you can pay the loans off early consider a consolidation loan, but depending on credit rating it may be hard to get one with a low enough APR to save you much.
You may find https://flowchart.ukpersonal.finance/ helpful more generally, and as a bonus it answers this question.
https://www.stepchange.org/
Tell them to speak to stepchange. I’d be cautious of setting up a management plan with them as it involves defaulting on all your loans, so whilst they can irradiate interest it’ll show on your credit profile for 5 years. Without interest they’ve only got a years worth of debt at £11,500 total with the ability to pay back £1000 p/m. It could be worse!
Tell them to speak to stepchange. I’d be cautious of setting up a management plan with them as it involves defaulting on all your loans, so whilst they can irradiate interest it’ll show on your credit profile for 5 years. Without interest they’ve only got a years worth of debt at £11,500 total with the ability to pay back £1000 p/m. It could be worse!
https://en.wikipedia.org/wiki/Debt-snowball_method
Couple of ways to approach. I used the debt snowball to get myself into a better place when I needed to
Couple of ways to approach. I used the debt snowball to get myself into a better place when I needed to
How good is your friends credit rating? Does he/she have access to any additional credit?
If this was me I would consolidate everything into a single loan @4%apr (if available) and pay that off over 5 years but make overpayments to clear it sooner.
If this was me I would consolidate everything into a single loan @4%apr (if available) and pay that off over 5 years but make overpayments to clear it sooner.
Edited by Ransoman on Wednesday 1st June 09:34
Hold on a sec, you say you are getting sorted and can live off current salary but er per this
"£3k loan at 69.9% Apr over 2 years (23 months left). Roughly £200 a month."
You took out a loan a month or so ago that's going to mean you pay £4,800 roughly so it's cost you £900 a year just to have £3000 now? Why did you need the £3K?
Current repayments are £850/month, a significant portion of which is interest
£11500 total outstanding balance
For comparison if you could get a loan at 20% you would have paid it all off in 2 years, at £580/month. If you overpaid at your current payment level it would be gone in 14/15 months.
I’d put maximum effort into trying to get a loan to consolidate the balances at the lowest possible rate. Credit union maybe? Can you get loans where the payments are deducted straight from your wages to lower the risk?
£11500 total outstanding balance
For comparison if you could get a loan at 20% you would have paid it all off in 2 years, at £580/month. If you overpaid at your current payment level it would be gone in 14/15 months.
I’d put maximum effort into trying to get a loan to consolidate the balances at the lowest possible rate. Credit union maybe? Can you get loans where the payments are deducted straight from your wages to lower the risk?
Others have already mentioned trying to consolidate the debts to cheaper interest rates.
Another big thing you need to do is get a handle on what you’re spending on, and reduce that in order to aggressively pay down the debt. For a month, write down everything you spend in an excel spreadsheet and categorise it into a broad category. You can then manage it down once you see where the leakage is.
This may mean living like a monk for a few months.
Good luck!
Another big thing you need to do is get a handle on what you’re spending on, and reduce that in order to aggressively pay down the debt. For a month, write down everything you spend in an excel spreadsheet and categorise it into a broad category. You can then manage it down once you see where the leakage is.
This may mean living like a monk for a few months.
Good luck!
Can't understand why anyone would take a loan out at 69.9% APR, but it's done now. 
Firstly, tell your "friend" not to panic.
Concentrate on paying as much as he can off the two biggest ones, this is just common sense.
Personally, I would tell him to live a very frugal life for the next couple of years, no stupid expenditure, whilst it's a lot of money many people owe much much more than that on their cards.
Has he got any assets he can offload?
Firstly, tell your "friend" not to panic.
Concentrate on paying as much as he can off the two biggest ones, this is just common sense.
Personally, I would tell him to live a very frugal life for the next couple of years, no stupid expenditure, whilst it's a lot of money many people owe much much more than that on their cards.
Has he got any assets he can offload?
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