To ask for debt advice - really worried

[Aloevera20]

My total debt at the moment is around £3k shudders it’s REALLY bothering me this week - I would really appreciate any advice on how to get on top of things. I’m trying to work out how to best budget to pay off the debt, while actually leaving enough money for us to live on.

For background, It’s built up because I had to move unexpectedly during lockdown (private rent). I’m self employed, with DS off school for months my net wage was actually in the negative as I still had to pay work outgoings but had no money coming in. I also ended my abusive relationship - my ex partner is currently withholding money to try and punish/control me. (CMS haven’t achieved anything so far sadly.)

The breakdown of debt is £1,400 on a very low interest credit card - current interest is around £5 per month.

I’m £650 in my overdraft which I hate.

I also have around £1k on a student overdraft - has no interest for at least the next year or two - so I’m not hugely worried about that at the moment.

I’m feeling quite down about it this week - it feels like a dark cloud following me around.. please can anyone advise how to get on top of things? should I focus on paying off the overdraft first while making minimum repayments to the credit card - or should I pay them all off gradually at the same rate?

Thanks in advance.

Pay off the highest interest rate first, but try and pay off the credit card before the rate goes up, if that's going to happen, as it could end up being the bigger issue.

Have you been on moneysavingexpert.com? You'll get great advice there to look at your outgoings and try to make savings, so you can pay things off quicker.

I'm no expert, but if it was me I would definitely concentrate on clearing the overdraft. That will be quite a high rate of interest. Maybe using the card? Then try switch it to a 0% interest card. I had to do that once. Took a while, but gradually paid it off.
Is there someone who offers advice, some organisation? Have a look on money saving expert website. There may be good advice on there.
Good luck.. I'm sure you'll be fine.

First of all, please, please try and not worry too much about this, it's a smallish debt and it hasn't gone into arrears, worrying about it won't help anything but make you feel a million times worse and you don't deserve to beat yourself up like this about it. This manageable and you are prepared to tackle it which is amazing! It would probably be best if you could let us know how much spare money you have a month to throw at it?

By the sounds of things you have used some of this credit to get your son away from your awful ex, well done for having the strength to that, you sound like such a strong person and will totally boss getting this repaid!

Google snowball debt calculator. Work out how much you have each month to throw at the debts. Basically pay the most of the debt that is costing you the most or is the biggest debt first, and pay the minimum off the rest. Once you've paid the first one, you start paying what you were paying off that debt on the next one and so on. It can cut months or even years off the payment timescale as opposed to just paying the minimum every month.

£5 a month isn’t brilliant on that level of debt. I’d look into transferring that debt to a 0% balance transfer card (if your credit score allows)

You may even be able to knock both on the head by getting a 0% money transfer to clear the overdraft at the same time and put it all together.

If you can’t get another credit card then I’d focus on whichever debt has the highest interest. Try and make larger payments than the minimum to bring it down as quickly as you possibly can.

But make sure you pay at lease the minimum payments on everything.

First, take a deep breath! Debt sucks but what you have definitely isn't the end of the world, and you can absolutely clear it in a fairly short amount of time. I would concentrate more on the overdraft and credit card at first, I think. I would also look at your outgoings and for at least the next 6 months or so, but back as much as possible on everything. Meal planning, no new clothes, shoes, travel, etc. Do you have anything you could sell like clothing you no longer wear, etc?

What’s your total income per year? 3k doesn’t sound like a lot if it’s affordable and you are getting a cheep interest rate!

Thank you for the replies! 💐

After rent and bills, I usually have around £600 left each month, not including food - but for just me and DS now, we don’t have a huge food bill! it can fluctuate a bit because I’m self employed, but that’s a ballpark figure. It sounds like a reasonable amount, I’m not sure what it goes on - I am going to cut down on anything non essential, I have cancelled a few subscriptions (Disney plus etc) and I’ve booked in to have a water meter fitted which should reduce that bill 🤞🏼

My credit card interest won’t change, my overdraft definitely has a higher interest rate. Would it be a good idea to focus on paying that off by £200 ish each month until it’s cleared - then focus on the credit card? Or a balance transfer for the overdraft and credit card, where I can just set up a standing order and know it’ll be cleared in time? I will definitely look up balance transfers a bit more!

I didn’t actually realise you could do a balance transfer for an overdraft it would feel better having it all in one place, at the moment it’s spread over 3 accounts (current, student and credit card) which isn’t nice to keep track of!

I haven’t missed any payments so far - I have a good credit score at the moment which I really want to keep!

Thanks again for the kind words and advise. I’m trying to focus on coming up with a plan rather than worrying about it.

Thank you @Cheesecakejar tbh I knew I’d struggle for a few months after ending things with my ex - he always threatened to withhold money, his tactic is to stop seeing DS and then tell me ‘I’m not paying money for a child I don’t even see’ when it’s HIS choice not to see him! he knows I’m more than happy to discuss contact with him. Hopefully he does start giving money for him again at some point or CMS manage to get it from him, but I’m trying to plan to pay this off without putting that currently non existent money into the picture too much.

Well done for addressing this before it becomes a serious problem and spirals out of control. So many people don't and bury their heads in the sand until it becomes an insurmountable problem. You can sort this! 😊

Loads of good advice on the forums of moneysavingexpert.com. x

Look on The Budget Mom website. She gives some good ideas

You've totally got this, op. You are clearly intelligent and aware of this relatively minor hiccup, so I'm sure you'll have it sorted in short order. Do try to relax and not worry too much! This is by no means a insurmountable problem.

OP I had a similar amount of debt (on my overdraft ) and I cleared it using an MBNA 0% balance transfer, then paid that off over about a year or so - I just threw as much onto it as I could each month until it was paid off. Don't worry, you're doing the right thing by seeking advice and it possible, consolidating the debts onto one 0% credit card may make it easier to keep on top of repayments. Also second a PPs advice about MoneySavingExpert, definitely worth checking out their site and I think there's a budget planning tool as well. Good luck, you got this!

Contact Citizens Advice, StepChange or PayPlan. All three organisations can provide free and impartial advice on dealing with your debts.

Well done for starting to sort things, OP, that's often the hardest bit. If you use the money saved by cancelling some things to clear the debt, you'll be off to a great start. It might be worth looking at switching utilities in case you can get a better deal, and your internet, phone etc when you reach the end of current contracts.

Paying off the overdraft would probably be best, as that's the one that's likely to be racking up the most interest. Once that's done, you could start paying down the credit card, which will be even quicker if you can transfer the balance to a 0% card.

If there's no interest to pay on the student debt for a couple of years, you could leave that till last and maybe save up so you have the funds to clear it when the interest kicks in.

£600 for 2 people after rent and bills is manageable if you're careful imo. It'll be dull, but every £5 you don't spend on treats or save by eating Jack Monroe's £1 a head meals for a couple of days is another £5 off the debt.

And your debts are small, by most standards. I've worked with clients on benefits who'd managed to rack up debt of £30k between them and most of it on high interest cards, because that was all they could get.

I really hope CMS come good for you. I also wonder if your income might be low enough to get some help from Universal Credit towards your rent. It means uploading your work income and outgoings every month when you're self-employed, but it would help even out the peaks and troughs while you're getting back on your feet. Any of the online benefit calculators will show you if you may be eligible.

May I ask what occupation you are in? It may help to know as some MNetters might be in a similar position and might be able to offer some advice.

Make sure you keep up with all minimum repayments unless you really start to struggle as this will preserve your good credit rating, which gives you more options.

Don't worry about the student loan until it starts costing interest, just make the minimum payment if there is one.

Definitely try for an interest free balance transfer for the credit card. You can also prioritise your overdraft over your credit card by spending on the credit card instead of from your bank account. Only do this with normal spending, eg grocery shopping, not extras, but it transfers debt from your expensive overdraft to cheaper credit card so costs you less in the long run. Once you've got rid of the overdraft, or got it down to the interest free buffer if there is one, cut the limit right down and pretend the facility doesn't exist.

Then concentrate on the credit card. If you keep your good credit rating, and don't pay it off before the rate goes up, apply for another one and transfer the balance to continue paying it off.

Also keep snow eye on moneysavingexpert, especially if you start to struggle with paying your debt off while paying all your normal bills as you might then need a more formal solution.

Good luck.

Hi @Aloevera20

You've already had some great advice here. Are you claiming your 25% single occupier council tax discount? You should be able to claim online on your local council's website.

Also do check you are getting all the benefits you are entitled to: www.entitledto.co.uk or www.turn2us.org.uk. As another PP mentioned, Citizens Advice would be a good source of information. Check with your utilities suppliers that you are in their best package, either direct, or through Moneysupermarket.com and switch if necessary. Also having one supplier for both your gas and electricity can sometimes save more money. Also check you are on the best mobile phone package.

Good luck OP! 🌹

If you are s/e and income was affected, did you apply for and receive the 2x grants?