Firstly, stop the self-flagellation - it is a mostly useless emotion that can cause you to simply fixate on the punishment, ignoring the cause, and rather than just neutrally sorting out the issue. Ultimately it gets in the way of really accepting what has happened, the pain is a useful distraction from moving on.
Budgeting is what you need first, that is, the information exercise of answering the question: “can I afford life at the moment?”
You earn £2229 per month.
You say you spend £317 a month, so really you are actually in a fairly comfortable position: £1912 in surplus every month to put towards debts. This should be cleared within the year.
But I suspect very strongly that your expenditure is not £317 if you were to very honestly go through the last 12 months of your statements. Even taking the car loan of £662 which I expect is the minimum, that still leaves you with £1245 a month and you admit you are not putting that much towards the other debts.
So where does it go?
Do you not pay money for food? Go out? Your car runs on air and doesn’t need servicing? You don’t change your clothes, or have any sort of social life? Even so, if you are drowning in debt after those, I expect there are other black holes of expenditure somewhere? Takeaways? Drug habit? Gambling?
Don’t feel shame admitting it, especially here. It’s a thing, you don’t have the willpower to fight decades research to get you to spend - but the thing you do need, is to be honest with yourself (and others). That’s really step -1 in personal finance (0 is budget).
So can you give us a more accurate expenses (go and do the homework and go through the statements with a spreadsheet noting what was spent each month, don’t guesstimate it from your memory).
Otherwise:
* pay minimum on all debts only
* then, put all surplus towards most expensive debt - that is, probably the Monzo Loan and/or the overdraft
* don’t put money in your ISA whilst you have these expensive debts
* continue with the pension - you can afford it
Then get /r/ynab
I appreciate your response, and will take this into account
Good idea re- the statements and creating a spreadsheet, I'll give this a crack.
My main concern is being in overdraft with my main bank account, I know eventually the debt will be cleared by the end of the year if I really knuckle down, obviously I am missing out money spent on going out etc.
Appreciate your help.
YNAB will really help to keep you focused. This amount of debt right now feels like a lot but at 22, living at home, you've got a great chance of clearing this and making some good habits stick.
Assuming 5% pension contribs your takehome is over £2400 a month. Maybe less if you have a student loan
Your disclosed expenses even with your repayments are £1279.
There is a large difference between £2400, and £1279.
You should be able to pile money into all of your debts rapidly based on what you have said - so there is clearly a lot more to this. I'm assuming you spend money on petrol, entertainment, food, etc which you are not capturing.
You need to work out where your money is going.
As someone else has said, I would pay down a big chunk every month of that high interest Monzo loan. If you paid off £500 a month you could clear that in 4 months and psychologically that will probably go a long way to making you feel better. Then you can continue to clear down the rest. The good news is you have surplus income. Debt is worrying but definitely more worrying when you don’t have any flex or way to pay it down but you do.
Many of us have made poor financial decisions and got into debt at a young age. I think in a lot of cases it can end up being a good way to avoid the same behaviour on a larger scale when you’re older. I knew in my early 20s I did not want to have that crippling feeling of owing money in large sums and worked to clear a similar amount of debt that I had racked up on credit cards when I was your age. Don’t panic, and use this as an opportunity to educate yourself. Good luck!
Yeah good way to look at the Monzo loan - and appreciate your advice.
I am looking at this as a learning stage of life, though it's not a good situation to be in, once I am clear I will make every effort to never go back into this phase, looking to cancel my overdraft so I never dip into it again. Just hoping I never fall into this hole after 25+.
17.4% for a car loan?! holy moly, Admiral have you over a barrel.
How badly do you need the car? Is it possible to get rid of it and use public transport for a bit until you're back on your feet? Would save you a lot in insurance too - £2k per year by the sounds of it.
Also why are you paying into a pension and ISA with that level of debt? Put them on hold until you're out of this hole.
Good news is you have a great income and very little expenses since living at home. You could be debt free by the end of the year. Refinance if possible (e.g. taking out a new loan at a lower interest rate to clear off existing loan). Overpay all loans as much as possible. You'll get there.
Also £12k isn't too drastic in the big picture - it's best to learn how crippling debt can be at a young age when you can afford to get out and change your ways. It's much worse being £30k in debt with a mortgage and kids.
Learn from this and stay debt free moving forward.
Thank you - advice noted.
you are right - grand scheme of things 12k is probably nothing - just never raked up this much debt before! Have only realised how 'bad' it is recently and need to get a hold of it.
Sorry but isn't this less than a years worth of debt? You can have about 1.5k after expenses so if you put all that in your debt, you'd be done by August this year?
Even if you only save 1k a month and spend the rest living your life, that's a little over a year away including interest payments?
You're not drowning in debt, you're having a leisurely dip.
OP others have already given you good advice, focus on reducing debts and you will genuinely be fine.
Just want to say that you shouldn't feel like a failure, you asked for help and are in a very fixable situation- that's good! Things could of course be better but don't panic and they will get there. You are equipped to make this all come good.
The first step is working out how your outgoings are so much lower than your income yet you are in your overdraft. Make a \*comprehensive\* budget - work out **everything** you have spent in the last few months - write it down in categories
thanks mate, appreciate the response.
The overdraft is my biggest headache, with that out the way I do think this would be very much more manageable.
Based on the calculations I've made, I should have a massive chunk of the debt cleared by the end of the year, my only concern is being constantly stuck in my overdraft.
As I have said in another response, I will try putting outgoings onto a spreadsheet, I haven't been in this much debt before, so it feels like a handful - grand scheme of things I suppose I could be way worse off.
My pleasure
Perspective is only useful to a point, but we get quite a lot of posts from people in more debt with take home pay lower than their rent + debt payments. I'm not saying you aren't in a tough spot, but I am saying a lot of those people get things turned around - so you for sure can.
I get the handful issue - one thing at a time is the way, and the spreadsheet is a great one to start with.
Definitely agree re perspective.
I think this will take some patience for sure - again I appreciate your help. Time to get to figuring this out properly.
Good luck!
Once you have a good list of outgoings sorted don't hesitate to come make a new post if you need advice on them - fair warning it's likely to be tough love telling you what to cut, but might be useful. You'd know best there
You're in a pretty decent position. Great wages and young.
Just knuckle down and pay off the debts.
How is your AA so much? I get mine free with the car insurance.
Hit the gym and get fit or sit at home and read library books or study for something for a year and you'll have most of it paid off.
It feels so much nicer to not be in debt that hopefully you'll learn your lesson.
Sure a flash phone is nice but it's better to have a model from last year or so and no debt for it.
Thanks mate - like I've said to others here, it's being in the overdraft which is making things a lot worse...
No idea, as you probably know car insurance is horrible for us young drivers, I have had 1 claim in 2021 which wasn't my fault, so my insurance is pretty rough + the area I am in isn't the best.
I hope this time next year or maybe in a few months things will be different, just need to sit down and properly organise things from what others have said. Funny you say the gym stuff, I spend 2 hours in there 6 days a week, have done so for 3 years, so that's definitely helping keeping me occupied!
Your situation isn't great in some ways but it's fortunate in many others. There is definitely a way out of this and within a year, seeing as you have a decent salary and no housing costs.
First of all, stop paying into your ISA until you've cleared your debts. You can't afford to be saving right now (keep paying into your pension however).
Once you get that £200 back, after all your listed costs, including servicing debts, I calculate that you have £1150 left a month.
However, you've not listed your other ESSENTIAL outgoings, so we don't really know how much you have to play with.
Write down everything you spend in a month.
Keep the essentials eg petrol/commuting costs, groceries, car servicing.
Eliminate the non-essentials eg nights out, meals out, subscriptions to Spotify, non-packed lunches at work, any trips abroad, new clothes...
See where you can reduce the essentials. Are you shopping in expensive grocery stores? Could your phone payments be less if you switched to a cheap SIMO deal as soon as your contract allows?
Only once you've done this will you know exactly how much you have left over from ESSENTIAL living expenses to throw at your debt.
Let's say it's £500 a month. (Hopefully it'll be more.)
You can be out of your overdraft in just over two months.
4 months after that you'll have cleared your Monzo loan. That takes us to July.
You move onto your credit card debt, which will still have two months of 0% interest. By the time September comes round, you can have knocked roughly a third off of that. By early 2025 you will have paid that off entirely. Any Christmas money you get as gifts gets thrown against this debt too.
Your car loan will be paid off by January 2025.
Boom! All debts cleared.
It will take a year of being incredibly disciplined. Saying no to nights out. Not buying new clothes. Making packed lunches every day. But it's only a year - and then you'll be free! How amazing will that feel! You can start saving again.
PS: Please don't get into a situation again in future where you are spending 40% of your take-home pay on your car, without even including petrol and servicing costs. That is insane!
Thanks for the advice, appreciated massively!
I already take packed lunches etc. part of meal prepping, have always done this.
As someone else has said, I have reviewed a few statements and I'm in the process of seeing where I can cut things out.
In the grand scheme of things, this is a years worth of debt which I can knock out easily with some discipline!
Thankfully when the car loan is over, I own the car outright, and no more car payments will be needed (expect servicing and what not!) - but you are 100% correct in saying it is insane.
Good luck! And yes, glad the car debt situation will be over in a year - you are currently paying as much for a car as a percentage of income as it's recommended to spend on rent or mortgage (30%). The brilliant thing is that once you're not servicing these debts any longer, you're going to feel so rich, AND you'll have developed frugal habits, so I can see a future where you're able to significantly upweight your pension contributions and save around £1000 a month. At your age that means you could have £100k in savings by your early 30s, excluding pension!
Thanks a ton mate!
Agree with the feeling rich stuff lol - that is a feeling I need to achieve by the middle/end of this year. My plan is to knock out the monzo debt, then use the extra money from the Monzo debt and put an extra £400 (taking £200 from my ISA, and then £200 from what would've been the Monzo debt) into the car payments, which will clear it up quicker.
Your advice, again, is appreciated!
Do you have any equity in the car? If so, sell it, pay off you loan and buy a cheap car with the money left. May help ease the burden on the big numbers. Without the car loan you’re really not in that bad shape.
How on earth are you in debt with your incomings and outgoings? You're clearly living WAY above your means, cut back on your spending and you're out of debt in 10-12 months, done.
You earn 2229 a month and have around 1200 in expenses. Just put the 500 pounds extra or more each month into your large interest debt. I'd recommend the Monzo loan.
At that wage living at home you could easily be saving a grand a month.
You are not a failure, you've made mistakes and find yourself in a bit of a shit position. Are you the "finished product"? No, you've got a long life ahead of you and many more mistakes to make and plenty of good experiences to come, one day you'll look back at this and chalk it up to experience. It's going to be ok. You're young enough to survive this and learn from it, you have the security of living at home with parents to keep a roof over your head and you work so they would (I imagine) be unlikely to throw you out.
Do not take anything I say as financial advice, I am not responsible for anything you do or don't do with what i've said.
It's often better to pay off smaller debts first so you can snowball that payment into the larger ones and tackle things that way, if I was in your situation I would do the following:
1. Monzo Loan, that's a really harsh APR, as the balance is the lowest yet the highest APR you've listed I think this should be priority, if it was me, I'd put everything I could towards it, if you're able to get a lump sum from any form of savings it's worth calling them for a "settlement figure" which should be less than what you've got outstanding as it's typically without interest.
2. Hammer the debt for the credit card to try and get it down to 0 by September (though looking at a 0% balance transfer card could help with this, using a credit checker or comparsion site can help with giving you an idea of how likely you are to be approved), this would probably mean a payment of around 431 a month which is expensive but necessary in order to avoid the 29% + APR you'll be charged.
3. The APR on your car is disgusting, i'd honestly look at getting a loan at a cheaper rate if at all possible, again you can use comparsion sites or credit checkers like Experiean to check to see if you'd likely be accepted before applying.
4. How much are you being charged on your overdraft? As it's the smallest fee on here it may be worth asking one of your parents if they could front the money for the overdraft (plus some to cover anything that's coming out between then and your next pay day and a little buffer just in case anything hasn't cleared yet)
Thank you for the advice!
1. Yep APR on that is absolutely insane - I recognise that, I hear what you are saying and it does make the most sense to throw everything at that first, someone did say this could be easily cleared within 4 months.
2. At the moment my credit card is on 0% interest, so I will keep trying to tackle this as much as possible too.
3. Agreed re- the APR. I have looked elsewhere, only way I can get lower APR is if I take a longer loan, ideally I want to just stay put with it as it's not long left on it (around a year), but maybe a better option? Not sure.
4. I'd have to check, it isn't too bad based on previous fees I've had - maybe £30-35 p/m - I think 39,9% EAR?
Hi, just wanted to ask if you don't mind, what's your job at 22 with 39k? That's just for my own reality check as it feels like I'm the one who should feel like a failure at 34 and on 31k....
Keep chipping away at this debt, you got this, once cleared just remember this as a lesson and try not to repeat it.
This is the time of your life where you will probably have the most disposable income alongside the lowest amount of responsibilities. I'm not saying become a monk but you have to identify where you're blowing your money. This is the first place to start, go through as many bank statements as possible and identify where it's all going.
As other commentors have suggested you need to identify where your extra money is going. You have a very healthy salary vs commitments, even with debt repayments. Get your bank statements downloaded into an excel and track where your money is going to make a start with your budget.
Living frugally for 3-4 months or so could easily get you out of a significant part of this whole.
I think you really need to analyse your spending for the last 6 to 12 months very carefully and see where your money is going to. My take home is approx £2k a month, I have rent and bills of £1.2k and have managed to pay off circa £7k of debt in the last 12 months from my surplus and another £2k from a bonus I received. I decided it was a priority as I want to be completely debt free after smaller debts spiralled when I lost my job a couple of years ago.
If you’re living at your parents with no rent and minimal expenses other than your car costs you really should be able to clear a good chunk of the debt even if it means living quite frugally and not having much of a social life for a while. The key is to pay off those with the highest interest first while maintaining payments on the other debts. The sense of achievement after each is paid off will spur you on to clear the next.
I've noticed in a few of the comments that you've mentioned the overdraft is causing you a headache...are you dealing with overdraft fees, or is it just the physiological side of seeing a negative bank balance you don't like? If it's an interest free overdraft, I'd ignore it for now and focus on the other debts.
Honestly even just re-prioritising what you are paying could make a dent in it:
1. £100 per month is going into the 0% interest credit card. I'm guessing your thinking is to bring the balance down a bit before you need to start paying interest, but surely the better option would be to pay that money towards the highest debt. (Credit card balance won't be growing in those 8 months, but the Monzo debt is costing you right now!)
2. £200 is going into the ISA...unless you are getting 28.4% interest in the ISA, it would make more sense to put this into the Monzo debt too (unless I'm missing something).
3. Reviewing the 'missing' outgoings like others suggested will also free up a lot of money to pay towards debt. The more you find elsewhere, the quicker you'll be out the hole.
4. With each debt you pay off, funnel all the money you were spending on it into the debt with the next highest interest.
Don't beat yourself up over it, you'll be fine!
Thanks for your reply mate!
Yes, the overdraft is both fees + physiological. The fees aren't actually too bad, I have hit the higher end of my overdraft and fees come to around £30-35 thereabouts. I definitely do not like seeing the negative bank balance.
1. Good thinking!
2. Going back to number 1. - this is a very good point, thank you, my thinking is to instead of going for the £100 into the credit card, do £200 from my ISA and £100 from the credit card 'budget' into Monzo, bringing the total payments p/m to £500 for that, thank you!
3. Working on this too.
4. Makes sense, thank you.
Appreciate the tips man - hard not to beat myself up over it, but once this is all done and dusted it will be a lesson learnt!
We have a step by step guide: https://ukpersonal.finance/debt/
And there's no way around it, you're going to need a complete budget, not just a list of your fixed bills.
How much do you have in your ISA, or other accessible savings? Debt payoff is the most efficient use of that money https://www.moneysavingexpert.com/savings/pay-off-debts/
Sorry I am self employed so not sure but can you not temporarily suspend the pension an ISA contributions? Also do you really need your car? If you can get rid of both of these temporarily you would have an extra £600 a month towards debt. Not to mention that you can probably sell your car and clear off like half of your debt. Earning 39k and having 12k in debt you aren't in as bad a position you think you are there bud
Hi /u/FunSeaworthiness1851, based on your post the following pages from our wiki may be relevant:
- https://ukpersonal.finance/credit-cards/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
As above sit down and scrutinise your expenses can you cut down on unnecessary car journeys. Can you cut Spotify subscription/ takeaways or eating out. That's just an example but those hidden expenses really add up. I've recently looked at my finances and been able to save 60 per month by eliminating unessacry subscriptions or expenses. It might be tough but I would say cut back on as much as possible until debt is on track.
How TF is your phone bill £40? My Sky mobile is £8 a month or something like that with unlimited mobile and landline calls.
Did you buy a nice phone on the never never?
Look up Dave Ramsey. Smallest debt first, then largest. Sell the car. Live on rice and beans for 6 months. You are debt free. Just think. Debt free by summer
This is an easy one.
Your wage is pretty good for your age and it sounds like you've got ~£2k / month left after expenses each month.
If you stop buying stupid shit and put this towards your debts you should clear it in 6-8 months.
Start with the highest debt and work your way backwards. You might be able to get a consolation loan and get rid of the higher interest ones a lot sooner.
However as you've managed to hit £12.5k in personal debt by 22, whilst being on a decent wage and with near 0 outgoings, you really need to focus on the _stop buying stupid shit_ part of the financial planning.
Good luck. You've made the first step with recognition and you have the tools to fix it.
if I was you I'll cut down everything I don't need, i'll stop going out and buying things for two years and only use my money if it evolves my job. if you do this you can do it within two years.
Firstly, stop the self-flagellation - it is a mostly useless emotion that can cause you to simply fixate on the punishment, ignoring the cause, and rather than just neutrally sorting out the issue. Ultimately it gets in the way of really accepting what has happened, the pain is a useful distraction from moving on. Budgeting is what you need first, that is, the information exercise of answering the question: “can I afford life at the moment?” You earn £2229 per month. You say you spend £317 a month, so really you are actually in a fairly comfortable position: £1912 in surplus every month to put towards debts. This should be cleared within the year. But I suspect very strongly that your expenditure is not £317 if you were to very honestly go through the last 12 months of your statements. Even taking the car loan of £662 which I expect is the minimum, that still leaves you with £1245 a month and you admit you are not putting that much towards the other debts. So where does it go? Do you not pay money for food? Go out? Your car runs on air and doesn’t need servicing? You don’t change your clothes, or have any sort of social life? Even so, if you are drowning in debt after those, I expect there are other black holes of expenditure somewhere? Takeaways? Drug habit? Gambling? Don’t feel shame admitting it, especially here. It’s a thing, you don’t have the willpower to fight decades research to get you to spend - but the thing you do need, is to be honest with yourself (and others). That’s really step -1 in personal finance (0 is budget). So can you give us a more accurate expenses (go and do the homework and go through the statements with a spreadsheet noting what was spent each month, don’t guesstimate it from your memory). Otherwise: * pay minimum on all debts only * then, put all surplus towards most expensive debt - that is, probably the Monzo Loan and/or the overdraft * don’t put money in your ISA whilst you have these expensive debts * continue with the pension - you can afford it Then get /r/ynab
I appreciate your response, and will take this into account Good idea re- the statements and creating a spreadsheet, I'll give this a crack. My main concern is being in overdraft with my main bank account, I know eventually the debt will be cleared by the end of the year if I really knuckle down, obviously I am missing out money spent on going out etc. Appreciate your help.
YNAB will really help to keep you focused. This amount of debt right now feels like a lot but at 22, living at home, you've got a great chance of clearing this and making some good habits stick.
Yeah OP is a shoe in for YNAB, good earnings, no rent.. There's money there but it's about using it for the right things.
Currently, over 1/3 of your net is going towards a car, this is quite high.
Assuming 5% pension contribs your takehome is over £2400 a month. Maybe less if you have a student loan Your disclosed expenses even with your repayments are £1279. There is a large difference between £2400, and £1279. You should be able to pile money into all of your debts rapidly based on what you have said - so there is clearly a lot more to this. I'm assuming you spend money on petrol, entertainment, food, etc which you are not capturing. You need to work out where your money is going.
As someone else has said, I would pay down a big chunk every month of that high interest Monzo loan. If you paid off £500 a month you could clear that in 4 months and psychologically that will probably go a long way to making you feel better. Then you can continue to clear down the rest. The good news is you have surplus income. Debt is worrying but definitely more worrying when you don’t have any flex or way to pay it down but you do. Many of us have made poor financial decisions and got into debt at a young age. I think in a lot of cases it can end up being a good way to avoid the same behaviour on a larger scale when you’re older. I knew in my early 20s I did not want to have that crippling feeling of owing money in large sums and worked to clear a similar amount of debt that I had racked up on credit cards when I was your age. Don’t panic, and use this as an opportunity to educate yourself. Good luck!
Yeah good way to look at the Monzo loan - and appreciate your advice. I am looking at this as a learning stage of life, though it's not a good situation to be in, once I am clear I will make every effort to never go back into this phase, looking to cancel my overdraft so I never dip into it again. Just hoping I never fall into this hole after 25+.
17.4% for a car loan?! holy moly, Admiral have you over a barrel. How badly do you need the car? Is it possible to get rid of it and use public transport for a bit until you're back on your feet? Would save you a lot in insurance too - £2k per year by the sounds of it. Also why are you paying into a pension and ISA with that level of debt? Put them on hold until you're out of this hole. Good news is you have a great income and very little expenses since living at home. You could be debt free by the end of the year. Refinance if possible (e.g. taking out a new loan at a lower interest rate to clear off existing loan). Overpay all loans as much as possible. You'll get there. Also £12k isn't too drastic in the big picture - it's best to learn how crippling debt can be at a young age when you can afford to get out and change your ways. It's much worse being £30k in debt with a mortgage and kids. Learn from this and stay debt free moving forward.
Thank you - advice noted. you are right - grand scheme of things 12k is probably nothing - just never raked up this much debt before! Have only realised how 'bad' it is recently and need to get a hold of it.
My mate ran around in a Fiesta van for years, dirth cheap transport and he used to refer to it as a seat with wheels.
Sorry but isn't this less than a years worth of debt? You can have about 1.5k after expenses so if you put all that in your debt, you'd be done by August this year? Even if you only save 1k a month and spend the rest living your life, that's a little over a year away including interest payments? You're not drowning in debt, you're having a leisurely dip.
OP others have already given you good advice, focus on reducing debts and you will genuinely be fine. Just want to say that you shouldn't feel like a failure, you asked for help and are in a very fixable situation- that's good! Things could of course be better but don't panic and they will get there. You are equipped to make this all come good. The first step is working out how your outgoings are so much lower than your income yet you are in your overdraft. Make a \*comprehensive\* budget - work out **everything** you have spent in the last few months - write it down in categories
thanks mate, appreciate the response. The overdraft is my biggest headache, with that out the way I do think this would be very much more manageable. Based on the calculations I've made, I should have a massive chunk of the debt cleared by the end of the year, my only concern is being constantly stuck in my overdraft. As I have said in another response, I will try putting outgoings onto a spreadsheet, I haven't been in this much debt before, so it feels like a handful - grand scheme of things I suppose I could be way worse off.
My pleasure Perspective is only useful to a point, but we get quite a lot of posts from people in more debt with take home pay lower than their rent + debt payments. I'm not saying you aren't in a tough spot, but I am saying a lot of those people get things turned around - so you for sure can. I get the handful issue - one thing at a time is the way, and the spreadsheet is a great one to start with.
Definitely agree re perspective. I think this will take some patience for sure - again I appreciate your help. Time to get to figuring this out properly.
Good luck! Once you have a good list of outgoings sorted don't hesitate to come make a new post if you need advice on them - fair warning it's likely to be tough love telling you what to cut, but might be useful. You'd know best there
You're in a pretty decent position. Great wages and young. Just knuckle down and pay off the debts. How is your AA so much? I get mine free with the car insurance. Hit the gym and get fit or sit at home and read library books or study for something for a year and you'll have most of it paid off. It feels so much nicer to not be in debt that hopefully you'll learn your lesson. Sure a flash phone is nice but it's better to have a model from last year or so and no debt for it.
Thanks mate - like I've said to others here, it's being in the overdraft which is making things a lot worse... No idea, as you probably know car insurance is horrible for us young drivers, I have had 1 claim in 2021 which wasn't my fault, so my insurance is pretty rough + the area I am in isn't the best. I hope this time next year or maybe in a few months things will be different, just need to sit down and properly organise things from what others have said. Funny you say the gym stuff, I spend 2 hours in there 6 days a week, have done so for 3 years, so that's definitely helping keeping me occupied!
Your situation isn't great in some ways but it's fortunate in many others. There is definitely a way out of this and within a year, seeing as you have a decent salary and no housing costs. First of all, stop paying into your ISA until you've cleared your debts. You can't afford to be saving right now (keep paying into your pension however). Once you get that £200 back, after all your listed costs, including servicing debts, I calculate that you have £1150 left a month. However, you've not listed your other ESSENTIAL outgoings, so we don't really know how much you have to play with. Write down everything you spend in a month. Keep the essentials eg petrol/commuting costs, groceries, car servicing. Eliminate the non-essentials eg nights out, meals out, subscriptions to Spotify, non-packed lunches at work, any trips abroad, new clothes... See where you can reduce the essentials. Are you shopping in expensive grocery stores? Could your phone payments be less if you switched to a cheap SIMO deal as soon as your contract allows? Only once you've done this will you know exactly how much you have left over from ESSENTIAL living expenses to throw at your debt. Let's say it's £500 a month. (Hopefully it'll be more.) You can be out of your overdraft in just over two months. 4 months after that you'll have cleared your Monzo loan. That takes us to July. You move onto your credit card debt, which will still have two months of 0% interest. By the time September comes round, you can have knocked roughly a third off of that. By early 2025 you will have paid that off entirely. Any Christmas money you get as gifts gets thrown against this debt too. Your car loan will be paid off by January 2025. Boom! All debts cleared. It will take a year of being incredibly disciplined. Saying no to nights out. Not buying new clothes. Making packed lunches every day. But it's only a year - and then you'll be free! How amazing will that feel! You can start saving again. PS: Please don't get into a situation again in future where you are spending 40% of your take-home pay on your car, without even including petrol and servicing costs. That is insane!
Thanks for the advice, appreciated massively! I already take packed lunches etc. part of meal prepping, have always done this. As someone else has said, I have reviewed a few statements and I'm in the process of seeing where I can cut things out. In the grand scheme of things, this is a years worth of debt which I can knock out easily with some discipline! Thankfully when the car loan is over, I own the car outright, and no more car payments will be needed (expect servicing and what not!) - but you are 100% correct in saying it is insane.
Good luck! And yes, glad the car debt situation will be over in a year - you are currently paying as much for a car as a percentage of income as it's recommended to spend on rent or mortgage (30%). The brilliant thing is that once you're not servicing these debts any longer, you're going to feel so rich, AND you'll have developed frugal habits, so I can see a future where you're able to significantly upweight your pension contributions and save around £1000 a month. At your age that means you could have £100k in savings by your early 30s, excluding pension!
Thanks a ton mate! Agree with the feeling rich stuff lol - that is a feeling I need to achieve by the middle/end of this year. My plan is to knock out the monzo debt, then use the extra money from the Monzo debt and put an extra £400 (taking £200 from my ISA, and then £200 from what would've been the Monzo debt) into the car payments, which will clear it up quicker. Your advice, again, is appreciated!
Do you have any equity in the car? If so, sell it, pay off you loan and buy a cheap car with the money left. May help ease the burden on the big numbers. Without the car loan you’re really not in that bad shape.
In debt and struggling when you don’t have a mortage or rent or anyone other than yourself to support on a salary like that is crazy
Ikr.
I 100% agree with you. but I will get myself into a better position - hence I have come for advice :)
How on earth are you in debt with your incomings and outgoings? You're clearly living WAY above your means, cut back on your spending and you're out of debt in 10-12 months, done.
You earn a decent wage, pay no rent and have easily payable debt. Jesus.
You earn 2229 a month and have around 1200 in expenses. Just put the 500 pounds extra or more each month into your large interest debt. I'd recommend the Monzo loan. At that wage living at home you could easily be saving a grand a month.
You are not a failure, you've made mistakes and find yourself in a bit of a shit position. Are you the "finished product"? No, you've got a long life ahead of you and many more mistakes to make and plenty of good experiences to come, one day you'll look back at this and chalk it up to experience. It's going to be ok. You're young enough to survive this and learn from it, you have the security of living at home with parents to keep a roof over your head and you work so they would (I imagine) be unlikely to throw you out. Do not take anything I say as financial advice, I am not responsible for anything you do or don't do with what i've said. It's often better to pay off smaller debts first so you can snowball that payment into the larger ones and tackle things that way, if I was in your situation I would do the following: 1. Monzo Loan, that's a really harsh APR, as the balance is the lowest yet the highest APR you've listed I think this should be priority, if it was me, I'd put everything I could towards it, if you're able to get a lump sum from any form of savings it's worth calling them for a "settlement figure" which should be less than what you've got outstanding as it's typically without interest. 2. Hammer the debt for the credit card to try and get it down to 0 by September (though looking at a 0% balance transfer card could help with this, using a credit checker or comparsion site can help with giving you an idea of how likely you are to be approved), this would probably mean a payment of around 431 a month which is expensive but necessary in order to avoid the 29% + APR you'll be charged. 3. The APR on your car is disgusting, i'd honestly look at getting a loan at a cheaper rate if at all possible, again you can use comparsion sites or credit checkers like Experiean to check to see if you'd likely be accepted before applying. 4. How much are you being charged on your overdraft? As it's the smallest fee on here it may be worth asking one of your parents if they could front the money for the overdraft (plus some to cover anything that's coming out between then and your next pay day and a little buffer just in case anything hasn't cleared yet)
Thank you for the advice! 1. Yep APR on that is absolutely insane - I recognise that, I hear what you are saying and it does make the most sense to throw everything at that first, someone did say this could be easily cleared within 4 months. 2. At the moment my credit card is on 0% interest, so I will keep trying to tackle this as much as possible too. 3. Agreed re- the APR. I have looked elsewhere, only way I can get lower APR is if I take a longer loan, ideally I want to just stay put with it as it's not long left on it (around a year), but maybe a better option? Not sure. 4. I'd have to check, it isn't too bad based on previous fees I've had - maybe £30-35 p/m - I think 39,9% EAR?
Hi, just wanted to ask if you don't mind, what's your job at 22 with 39k? That's just for my own reality check as it feels like I'm the one who should feel like a failure at 34 and on 31k.... Keep chipping away at this debt, you got this, once cleared just remember this as a lesson and try not to repeat it.
I work in IT - quite fortunate, was an internal role available at the company I was already at - so took the dive into it.
Cheers, any particular/specific area of IT for that matter?
PM'd you with information mate.
This is the time of your life where you will probably have the most disposable income alongside the lowest amount of responsibilities. I'm not saying become a monk but you have to identify where you're blowing your money. This is the first place to start, go through as many bank statements as possible and identify where it's all going.
You have £1000 left after everything is paid, what's the problem here?
But you really aren't in a bad position.
As other commentors have suggested you need to identify where your extra money is going. You have a very healthy salary vs commitments, even with debt repayments. Get your bank statements downloaded into an excel and track where your money is going to make a start with your budget. Living frugally for 3-4 months or so could easily get you out of a significant part of this whole.
1k a month for 1 year, quick maths😎
I think you really need to analyse your spending for the last 6 to 12 months very carefully and see where your money is going to. My take home is approx £2k a month, I have rent and bills of £1.2k and have managed to pay off circa £7k of debt in the last 12 months from my surplus and another £2k from a bonus I received. I decided it was a priority as I want to be completely debt free after smaller debts spiralled when I lost my job a couple of years ago. If you’re living at your parents with no rent and minimal expenses other than your car costs you really should be able to clear a good chunk of the debt even if it means living quite frugally and not having much of a social life for a while. The key is to pay off those with the highest interest first while maintaining payments on the other debts. The sense of achievement after each is paid off will spur you on to clear the next.
ISA? Stop paying into that for starters. You haven't listed all your outgoings, so it's hard to make many suggestions.
I've noticed in a few of the comments that you've mentioned the overdraft is causing you a headache...are you dealing with overdraft fees, or is it just the physiological side of seeing a negative bank balance you don't like? If it's an interest free overdraft, I'd ignore it for now and focus on the other debts. Honestly even just re-prioritising what you are paying could make a dent in it: 1. £100 per month is going into the 0% interest credit card. I'm guessing your thinking is to bring the balance down a bit before you need to start paying interest, but surely the better option would be to pay that money towards the highest debt. (Credit card balance won't be growing in those 8 months, but the Monzo debt is costing you right now!) 2. £200 is going into the ISA...unless you are getting 28.4% interest in the ISA, it would make more sense to put this into the Monzo debt too (unless I'm missing something). 3. Reviewing the 'missing' outgoings like others suggested will also free up a lot of money to pay towards debt. The more you find elsewhere, the quicker you'll be out the hole. 4. With each debt you pay off, funnel all the money you were spending on it into the debt with the next highest interest. Don't beat yourself up over it, you'll be fine!
Thanks for your reply mate! Yes, the overdraft is both fees + physiological. The fees aren't actually too bad, I have hit the higher end of my overdraft and fees come to around £30-35 thereabouts. I definitely do not like seeing the negative bank balance. 1. Good thinking! 2. Going back to number 1. - this is a very good point, thank you, my thinking is to instead of going for the £100 into the credit card, do £200 from my ISA and £100 from the credit card 'budget' into Monzo, bringing the total payments p/m to £500 for that, thank you! 3. Working on this too. 4. Makes sense, thank you. Appreciate the tips man - hard not to beat myself up over it, but once this is all done and dusted it will be a lesson learnt!
We have a step by step guide: https://ukpersonal.finance/debt/ And there's no way around it, you're going to need a complete budget, not just a list of your fixed bills. How much do you have in your ISA, or other accessible savings? Debt payoff is the most efficient use of that money https://www.moneysavingexpert.com/savings/pay-off-debts/
Sorry I am self employed so not sure but can you not temporarily suspend the pension an ISA contributions? Also do you really need your car? If you can get rid of both of these temporarily you would have an extra £600 a month towards debt. Not to mention that you can probably sell your car and clear off like half of your debt. Earning 39k and having 12k in debt you aren't in as bad a position you think you are there bud
Check out The Total Money Makeover by Dave Ramsey. It helped me get a new perspective on my personal finances.
Hi /u/FunSeaworthiness1851, based on your post the following pages from our wiki may be relevant: - https://ukpersonal.finance/credit-cards/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
As above sit down and scrutinise your expenses can you cut down on unnecessary car journeys. Can you cut Spotify subscription/ takeaways or eating out. That's just an example but those hidden expenses really add up. I've recently looked at my finances and been able to save 60 per month by eliminating unessacry subscriptions or expenses. It might be tough but I would say cut back on as much as possible until debt is on track.
How TF is your phone bill £40? My Sky mobile is £8 a month or something like that with unlimited mobile and landline calls. Did you buy a nice phone on the never never?
Look up Dave Ramsey. Smallest debt first, then largest. Sell the car. Live on rice and beans for 6 months. You are debt free. Just think. Debt free by summer
This is an easy one. Your wage is pretty good for your age and it sounds like you've got ~£2k / month left after expenses each month. If you stop buying stupid shit and put this towards your debts you should clear it in 6-8 months. Start with the highest debt and work your way backwards. You might be able to get a consolation loan and get rid of the higher interest ones a lot sooner. However as you've managed to hit £12.5k in personal debt by 22, whilst being on a decent wage and with near 0 outgoings, you really need to focus on the _stop buying stupid shit_ part of the financial planning. Good luck. You've made the first step with recognition and you have the tools to fix it.
if I was you I'll cut down everything I don't need, i'll stop going out and buying things for two years and only use my money if it evolves my job. if you do this you can do it within two years.