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If you paid off a large amount of debt (eg 10k+) how did you do it?(51 Posts)
really really need to get out finances in order we are in financial chaos . I've recently had an account go into default and have now been passed on to a debt collection agency
We have about 12k in debt but about 3k of that is a loan and car finance that is due to be paid off spring next year .
So we have about 10k we need to tackle . I honestly don't know where to start . dh and I are like the perfect storm with money we are just both shit with it
You need to get back to the basics - what money comes in each month, and what goes out, what's left over to pay off the debts.
1) Get all your paperwork about debts together in one place.
2) Find all your income details - payslips, benefit letters, tax credits, anything else.
3) Work out what you spend each month. Star with the essentials - e.g. rent/mortgage, gas, electricity, water, TV licence, Council Tax, car HP agreement, insurance, car insurance, car tax, MOT/maintenance, petrol, phone costs (landline/mobile), food shopping. Then look at what non-essentials you are spending on and whether you can reduce these.
There are loads of budget sheets you can print off from the web - & Citizens Advice have an online budget tool, as do the Money Advice Service, & StepChange.
If you need to see someone face to face then get an appointment at your local CAB, & go armed with all your income and outgoing information. They can then look at your options and explain what you can do next. For example some creditors might agree to a short hold on your accounts, you could set up token payments to give you some breathing space, or you could look at insolvency options (bankruptcy or Debt Relief Order). You might be able to reduce the payments on your car finance for a time (but this might mean you end up paying more in the long run).
Good luck - it's an amazing feeling when you get back in control, and you CAN do it!
I got into a muddle not taking credit cards seriously enough, I would think I was ok to always have 0% deals and diarise to shift them when the deals were coming to an end so I never paid interest, this made me feel too relaxed to keep using them, every time my -shit- car broke down, every time I was invited to something I couldn't afford, killing maternity leave boredom going for lunches and outings I wouldn't have chosen myself but went along anyway to get out of the house. I knew I was over spending but stuck my head in the sand because I didn't have spare money to address the issues.
I had just over £12,000 total when I finally added the balances together last july, I now have just over £6000.
The main differences for me were:
Getting rid of my car
Moving somewhere cheaper (compromised on area, I'm in a bit of a shit hole area now but I love my flat and I'm very happy)
Only ever eating meals made at home, and shopping in Aldi, if I want to take ds out for an eat out treat now we will have dinner at home then go out for a lovely pudding it feels just as special but costs about £3.
Not buying ANYTHING extra, I dont need things, I'm not convinced I needed most of the shit that got me into debt in the first place.
The smaller changes are:
Getting rid of sky
Being economical with gas and elec
Selling on ebay
Household habits you read all over this site and others like snapping the dishwasher tablets because you don't need a whole one, using half washing powder dosage and topping up a bit with soda crystals, batch cook and freeze in portions, using alot of frozen veg rather than fresh (and eating more veg than fruit) taking water out with us so we never buy a bottle out.
Going to some lovely places which cost nothing or only a very small amount, no soft play, swimming as a treat every few weeks rather than a weekly commitment. I am very lucky to live near a Salvation army farm which only costs £3 a visit, a beech and lots of lovely parks and woods.
I have been honest with friends that I'm in debt rather than making excuses not to do things so no one now invites me to expensive things and I think my fiends have enjoyed having the budget play days too, last weekend we had a brilliant camp out in my friends garden with our dc.
I am very lucky that my ds is only just 3 so he doesn't look around at what anyone else has or what they are doing.
I got a DRO to clear my £11k of debt, there was just no way it was ever going to be paid off (was on benefits). Cost £90 and I didn't have to make any other repayments. Agree with pp you should get some qualified advice from Stepchange or CAB as it can reduce the amount you have to pay, if you can't manage to get it written off then you might be able to offer a reduced lump sum or at least freeze the interest. Definitely get all your paperwork together - if you're having trouble finding everything, get hold of your credit reports and it should list all your accounts.
I found the www.moneysavingexpert.com/ very helpful. There is a budget planner which I used and loads of advice forums about getting out of debt. Tbh we are only at the start of the journey and have about five years of careful budgeting to go before we will have paid off our debt. We owe about £19000.
The thing is though does a debt relief order not damage your credit rating ? I'm hoping to repair mine I really don't want to damage it any further . Is there no hope ?
I took a second job and threw every spare penny at the debt to get rid of it (£10k), it has meant no holidays for the past year, no take aways, no new clothes for me or DC (unless absolutely necessary i.e school shoes), no alcohol......BUT I've now not got a debt and am £400 better off a month
Yes but tbh my credit rating was already bad by that stage. Although I have a credit card now to rebuild it and it's going well.
I got a second job.
Cut down my standard of living so that I was able to live completely from job no1 and have a little left over.
Every single penny from job no 2 went on the debt. It took 3 yrs but I cleared it all
IVA for me! yes my credit is fucked but I don't want credit ever again.. I can now sleep at night..ahhh so I haven't paid off 10k but my 20k debt will pan out at 7800 in repayment. I'm not proud after all I lived beyond my means. But my circumstances changed far more than I ever thought they would.
Set yourself a budget and track your spending. There is a good money supermarket app called on trees that you can use if you have online banking. It lets you categorise your spending from your bank account and helps to track it. Cut down on non essential purchases like magazines, take aways, fancy coffees, Sky TV etc. Check your energy suppliers are giving you the best deal. Use quidco or topcashback when buying anything online, change insurers or energy suppliers.
Debt repayment plan with PayPlan. Took 6 years to get rid of over 18k of debt.
Does a debt repayment plan affect your credit rating ? I'm going to look payplan up actually .
Ok so I've just had a look and it is more than I thought it's about 14k . If I post a breakdown of what I owe to who will that help ? Would you be able to advise where to go from here ? I think I would rather tackle it myself rather than get a repayment plan I don't want to negatively affect my credit rating any more than I have to .
I may need to get finance on a car next year as hours may not last much longer plus we are expecting dc3 so might need a bigger one (will see how it goes when they arrive) and if like to keep my credit card once it's paid off for emergencies .
If you have a mortgage can you get a loan on that? Our mortgage was £188 and to get £10k and pay off 2 credit cards and our overdraft it only went up to £287.
The increase in mortgage was much less than we were paying cards and overdraft and it's just one payment a month.
We now have a strict budget and even manage to put £100 into savings each month
What is your income and what are your spending commitments? Rent, bills etc. do you have any areas you can immediately cut down?
Our income is a bit all over the place just now I'm a student nurse so I get a bursary . Dh works reduced hours and goes to college but he's just finished up so losing his student loan over the summer but hopefully he will be able to do some more hours over the summer so we have enough money to at least pay the essential bills .
I have just started to get my finances in order too OP. I too have about 14k (on credit cards) and also a 7k loan. It all got on top of me a bit, so have just made a budget and probably have the option to do more hours at work then pay any extra off credit cards. I feel really really really stupid and sad about it, but we had such an expensive couple of years that it has really wiped us out!
I've got two kids (1 and 3) so they will enjoy budget days out as much as expensive ones but I want to plan for the future!
I do have a good pension though so that does help me to feel a bit better....
The problem I had, if I am completely honest, is that my husband has a very good income. So I considered us to be well off. But it hasn't worked out that way.
I have allowed myself one day of feeling really sad and now I'm going to crack on and get this shit sorted out!!
Good luck OP. We can do this
Whether you can repay it without resorting to debt management plans or the like will depend on your income and whether you can afford the repayments. Is the debt because you've been spending too much generally or is it because you're struggling to pay for essentials? If you don't know the answer you need to find out fast. Work out your bills, cut what you can cut. We ditched sky for Netflix which saved at least £30 a month. Check your gas and electric. But don't put it off do it today.
I think I will make an appointment with citizens advice . I think I probably could pay it off myself with careful planning but I couldn't do that myself I really don't have a mind for money at all . I'm fairly educated yet money makes me feel completely thick
I think I might look into a bank loan . I think if I got a 10k bank loan and pay it over 5 years . I could clear my credit and store cards with that then reduce my overdraft by a small amount per month . I know that is paying credit with credit but I think that might be the best way to do it and try to salvage my credit rating ? Is it ?
that's if the bank will even give me a loan
I paid a lot of debt back. Things that helped were as people are saying above a lot of very hard work, second jobs, evening jobs, weekend jobs. Both of us working full time plus the second jobs. it is not fun but it does clear debt.
Please don't get a loan before you've worked out what you need to pay for over a year. Because otherwise you could end up with a loan to pay AND running up the credit cards again.
You need to understand what got you into this position in the first place. Usually it's because people forget to put money side for the "unknown unknowns" - you know your car will break down sometime, you just don't know when - and don't budget every mobth for the "known unknowns" - Christmas comes every year, so you need to pay for it, you know you'll need to tax the car annually with an MOT etc.
Moneysavingexpert linked above is great - very detailed advice, some very supportive forums of people in the same situation. It's been many years now since my then-DP (now DH) and I paid off a lot of debt, but the lessons we learned have seen us through some lean times.
I also use YNAB -software that takes budgeting. It's great, but you do need to commit to learning and understanding it. But you can do it.
You're not terrible with money - you just need to make it work for you. You can do it.
If you want to post your income & outgoings & your debts (with interest rates) you'll get some good advice. It's hard to know if you need a DMP or can do it yourself without a full picture of where the money needs to go.
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