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Ways to get out of short term debt faster

(27 Posts)
luelle Tue 20-Feb-18 14:42:06

Hi all

Been a long time lurker on MN without an account but made one today so go easy it's my first post haha.

Myself and my DP are hoping to start TTC for our first. We are both financially ok, however I am still paying off short term debt. I say short term as it's a 7k loan but only 22 months on it. I also owe 4k On a credit card.

DP earns enough to support me through Mat leave but not enough to support my monthly repayments. My loan is £450 a month and I pay about £200 a month off CC.

We don't want to bring a child into the world in a struggle, so we agreed to wait until my monthly outgoings are virtually gone (both will be paid off in full in 22 months) but boy is it dragging..

I've been scrimping and saving like mad to continuously make overpayments. Would obviously never dream of defaulting or not paying loan back, I borrowed the money and of course I'll pay it back. Just looking for some advice on how I can get it shifted faster? Has anyone got rid of short term debt even faster and if so, how?!

I've got baby brain and the thought of another (nearly) 2 years waiting to even ttc is painful 😭

Bluebell9 Tue 20-Feb-18 15:03:58

Could you take on a second job and use all the money to pay off debt?

luelle Tue 20-Feb-18 15:18:37

@Bluebell9 I remember my mum used to say working 2 jobs you get taxed so much extra that you don't really benefit so I've always ruled it out. That might be really misinformed though so I'll look into it

Doik Tue 20-Feb-18 15:33:12

Unless you go into a higher tax bracket (over £45k I think) then you won't get taxed any more. The difference is that you don't get a second tax free allowance, so it may appear that you pay more on the other job when you're actually being taxed at the same rate.

Notreallyhappy Tue 20-Feb-18 17:13:41

That's a lot of debt repayment from your Pay. ...😐. is there any way you can add more.even £20 here and there off the cc can help... theres are debt thread on the credit crunch section that might be able to point you further to £0.
Can you get a 0% transfer card etc.
And is the loan set at that amount or have you upd the payment. It might be better to get rid of the card first.

ChessieFL Tue 20-Feb-18 17:15:56

Do you have anything you can sell? Also, have you looked whether you can transfer/consolidate the debts at a lower interest rate?

PancakeInMaBelly Tue 20-Feb-18 17:17:33

I have two jobs. Its definitely worth it financially, after tax.

ChessieFL Tue 20-Feb-18 17:20:16

You could look into switching bank accounts to get the bonus payments - you and your DH could both do it and get 2x the payments. Do this a couple of times and you can get a few hundred between you. You do get credit checked though so don’t do this if you will need other credit soon eg remortgaging.

luelle Tue 20-Feb-18 17:28:57

@Notreallyhappy It's a massive monthly outgoing but I did deliberately pick a high monthly payment just to get rid of the loan quicker, e.g gone in just over 2 years rather than 4+ years. However now I'm 7 months into the loan we've had a change in my partners finances meaning we'd be able to have a baby sooner than we thought, but I've already committed to the higher loan payments.

I do understand it's probably just a case of being patient and making as many overpayments as I can. I could refinance back to a longer loan with small repayments but long term that's not such a great idea.

Thanks all suggesting second jobs. Live in a village with several pubs so will see if I can get some evening and weekend work. I will become a Mum if it means working my fingers to the bone to get there!!!

PancakeInMaBelly Tue 20-Feb-18 17:31:10

Do everything on moneysavingexpert (switch utilities, claim refunds etc)

luelle Tue 20-Feb-18 17:38:35

I should mention I'm pretty lucky in that I don't pay any outgoings for living. My partner is a manager for a popular holiday resort chain and works crazy hours but is provided accommodation in the village for £100pm. It's only a small two bedroom flat but he has £100 deducted from his pay and that's it, we pay no water, gas, council tax or anything.

My money just goes on repaying my debts, food, running my car. I guess I just get so frustrated because we are so lucky with our living costs being so low we should be in a great situation to get out of debt and save up for mortgage etc, but just seem to constantly be putting extras on the credit card etc.

Made myself a budget plan to wise up and stop using credit card unless emergency, and everything I do buy on my debit card to only get if absolute necessity. But any other tips are appreciated hence this post.

PancakeInMaBelly Tue 20-Feb-18 17:43:00

You may still be overpaying for things like phones, insurances and banking fees.

Go through every tab on moneysavingexpert and do every single thing on there that applies to you.

gassylady Tue 20-Feb-18 17:46:48

Check budget through carefully, the money must go somewhere. What was the loan for? If your other half lost his job and your home how would you manage then?!

luelle Tue 20-Feb-18 17:53:30

@PancakeInMaBelly will do just that,Thanks!

PancakeInMaBelly Tue 20-Feb-18 17:53:46

Agree. Its a bit like dieting. You think youre doing okay until you actually track your calaries to see where theyre all coming from.

Track every penny for a few weeks. Itll reveal your issues

luelle Tue 20-Feb-18 18:00:22

@gassylady The loan was for a £6k car when I turned 18. Also took out £6k for a nose job when I was 19 blush (please don't judge.. was very self conscious back then) Anyway the debt is down to £7k now, and I've refinanced the 2 together and pay a large monthly sum and have 22 months left.

I'm only 24 and due to holiday park residencies being a bit of nightmare I am still registered as living with my parents (only 40 mins away) and I know if anything drastic happened they would of course let me move back in. My DP is 28 but has been in this industry since he was 18 so 10 years straight he's had live in accommodation at his work (started out as just a caravan and now he's progressed we get a flat) I don't have any rights to it but from as far as what we can predict it and judging from past 10 years of progression, a recent promotion and the company doing well it shouldn't change

PancakeInMaBelly Tue 20-Feb-18 18:28:10

Sometimes if you pay things like car or contents insurance monthly you are charged interest. If you can manage to pay annually its cheaper.

PancakeInMaBelly Tue 20-Feb-18 18:30:05

Can you switch all your debt to 0% apr credit cards? Most only apply to balance transfers so you would need to transfer the loan to one cc first. Then balance transfer from that to another 0%cc.

Beware overpayment fees and balance transfer fees though

Blueroses99 Tue 20-Feb-18 20:06:15

To reduce debt, you can try to increase income or reduce outgoings, or both!

A second job or selling unwanted items will help with the income and pp is correct that if the additional wage keeps you in the same tax band, it won’t stop it being worthwhile taking it on.

Some ideas already to reduce your outgoings. Do you currently pay interest on your debt? Only consider a 0% credit card if the interest rates are high.

luelle Tue 20-Feb-18 20:21:01

19.9% interest.. which is a lot but before I refinanced the loan it was 37% so a big decrease! Will definitely look into the 0% cards thanks all, and thanks @PancakeInMaBelly for all the various advice. Looking into it as we speak

PancakeInMaBelly Tue 20-Feb-18 20:28:51

What APR is your credit card?

What penalties are on the loan for early repayment?

There would be no point in balance transfer (in 2 steps to make it a balance transfer) if early loan repayment has a clause that has you paying equivalent of full term interest.

Transfering balances isnt usually free, its usually worthwhile, but not always.

JoJoSM2 Tue 20-Feb-18 20:59:10

Don't you have joined finances with your partner? By the sound of it, he should have considerable savings? Given that you have such horrendous interest on your debt, could he pay it off and you'd carry on setting the £650 aside for your future until the baby arrives? That would add up to a whopping £7800 in a year.

Snowman123 Tue 20-Feb-18 21:25:18

Check out Dave Ramsey on You tube for motivation smile

PancakeInMaBelly Tue 20-Feb-18 21:37:23

I was wondering same as Jojo

Has your OH saved?
Or is he too used to having extra "pocket money"?

Do you split food/household stuff/outtings fairly or do you get left with paying for more of the sensible stuff?

luelle Tue 20-Feb-18 23:15:07

@JoJoSM2 @PancakeInMaBelly My DP doesn't have savings, he was very silly with credit back in his early 20s and defaulted on lots of payments. He's nearly done paying his own debts off, and although would have enough to support me through Mat leave and a little one he wouldn't have enough to cover my debt, and I wouldnt want him to. I borrowed the money and I want to pay it back. He's a good guy just made some bad financial choices, I'm really just looking for little ways I can help end my loan faster on my own accord I.e 0% cards or even an extra job

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