If you paid off a large amount of debt (eg 10k+) how did you do it?

[mayaknew]

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 also need to list your outgoings.

But it looks very much like you can't afford your debt - it's roughly 6x you current annual income.

I'm afraid you need to face ip to this, rather than a knee-jerk loan. And I think you need to be realistic about retaining your credit rating, which might not be possible.

What is your and DH's earning potential over the next few years?

Can I make a comment about being shit with money? Don't sell yourself short, decide to be good with money and steal the habits of people that are. Fake it till you make it basically.

The habits I stole to do this

1. Cancel all direct debits you don't need - go through your bank account and justify or cancel.

1. Start savings pots for long term spending - start saving for the future, tiny amounts add up and you will then get to events like Christmas / car mot month with a pot to pay it from. These things are going to come and by not budgeting over the year they normally throw people into debt.

1. Write down everything you spend for a month - this allows you to see what you actually spend on things. From this you can work out a true budget you can stick to. Check your bank balance daily, out of mind is a dangerous position to be in! I used to fund it terrifying but now it's empowering.

1. Have no spend days - the more of these the better!

1. Never buy anything on impulse - plan / defer spending anything. Lists for shopping, present shopping in the sales and considering want vs need are crucial.

1. Use cash - freeze your credit card in a pot of water in the freezer. Take out cash from your bank account for spending at the beginning of the week. When it's gone it's gone, try not to go back.

Go and read debt forums, learn as much as you can amount managing finance and make yourself good at it. It'll take practice and it will not be easy, but going from someone always in the red to someone in the black is worth it. I have been there, it is scary and tiring and hard work, being the other side is such a relief. Good luck, step change and cab can be really helpful.

Outgoings

Bills
Rent £350
C/tax £110
Car payments £100
TV/Phone/broadband £70
Mobilex2 £50
Nursery £109
Utilities £80
Netflix £6

Other
Petrol £160
Food £200
DDs activities £72

Debt repayments
Loan £95
Catalogue £280
Credit card £95

I'd just like to say thank you to everyone who has taken the time to post on this thread it really is good advice . I just need to start believing I can do it .

So on paper you've got 706 excess each month.

But you've not accounted for car repair, servicing etc. gifts, Christmas, holidays etc.

You can do this OP. Get yourself a budget, prioritise the debts according to the interest rate you're paying on each and be very very strict about spending.

You really can do this!

Another one echoing don't take out a consolidation loan to pay off cards unless you look at your spending habits and change them first. Twice we've taken out loans to pay off our cards in the last 6 or 7 years and yet again we've run up the cards. We've now looked at our spending problems, I've taken on a weekend job and dh is blitzing every hour of overtime he can. We've £12k on cards and 2 loans. We know we can do it and pay it all off because wwe're both on board. I qualify in 2 years and am trying to get through uni without taking a loan as we've just too much debt already. I'm planning on keeping my weekend job once I qualify so we can throw my weekend earnings at the debt.

Best of luck and realising it's become a problem is a massive first step

OP I don't think you'll get a £10k loan unless you can access some kind of graduate loan?

My income is more than your joint income and outgoings roughly the same although my mortgage is about double your rent. I tried to get a loan for £7.5k from a high street bank who I bank with and I had to get my husband to make a joint application (so double income, but outgoings the same).

I think it's a good idea to consolidate if you can if the payments will be significantly lower but have a plan b for if you get knocked back.

That to me looks like a list of amounts you think / hope you spend. Do you have £700 left over at the end of the month?

Go through your bank statements and add it up line by line as to what you spend exactly. Add in all your annual expenses divided by 12, prescriptions, hair cuts, clothes (you will need to buy tights etc as a minimum), gifts (try and cut down who you give to, no adult gifts etc), holidays etc.. All those incidentals you have to pay for and will pay for make up a budget. I have got in trouble by having what I'd call a "hopeful budget", you need one that will work for a long time.

If you are a student nurse can't go get some bank shifts? Even as an HCA?

*Outgoings

Bills
Rent £350
C/tax £110
Car payments £100
TV/Phone/broadband £70
Mobilex2 £50
Nursery £109
Utilities £80
Netflix £6

Other
Petrol £160
Food £200
DDs activities £72

Debt repayments
Loan £95
Catalogue £280
Credit card £95*

I agree with a PP that you don't yet have a handle on what you spend. It's a great start, but I think if you really commit to tracking your spending every month, you will see that you have a lot less/spend a lot more than you think.

For instance, right up there in your OP, you say:
^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^

But 12K-3K = 9K, so you did sort of "know" that you owed more than £12K to begin with, but I think you've probably out your head in the sand.

Similarly, Netflix is £7 per month not £6 (£6.99, unless you know something I don't ) and I would bet you half that food budget that you spend more than £200 per month on food & "other groceries" e.g. toilet roll, shampoo, cleaning stuff etc.

You have to be brutally honest and round up rather than down. You might want to spend £50 per week on food, but if your main shop is £50 per week that's actually more per month than £200 (a month is 4.33 weeks, so £50 x 4.33 = £216.50) and then what about the odd corner shop stop for milk & bread etc.? It all adds up really quickly.

Again, petrol - is that £40 per week? That's actually £173.20 per month (not £160).

You need to figure out how much you spend on the following, and put some money aside for them every month. Make a guess if you're not sure - it might not be "right" but it will be a start:

Presents (birthdays & other celebrations)
Christmas
Haircuts
Clothes & shoes/school uniform
Insurances (car, house etc.)
Car repairs & maintenance (MOT, new tyres etc.)
Household "stuff" (garden, new bins, replacing batteries & lightbulbs etc.)
Pets? (annual boosters, vet treatment. toys etc.)
Entertainment (cinema, pub, days out etc.)
Eating out/takeaways/coffee habit etc (be honest!)
Emergency "oh shit" fund (boiler repair, tax credits stopped - anything you can't predict but might need some money put by to help with.)

In "utilities" have you accounted for just gas & electric, or have you got water rates in there too?

Once you have ABSOLUTELY EVERYTHING listed, you can start to see - is it worth it to pay £X per month if we could cut it down to £Y instead? Then you can make a plan.

The first step is the worst. You can get good at this, and the skills you'll learn will benefit not just you right now, but your DC in the future.

Good luck!

Sit down and write a list of your creditors, who you owe what to. Look at the interest rates. You need to be paying more per month to the higher ones. Ideally, choose maybe one small one to increase payments to (so it's paid off sooner) and then decrease payments to the others if you can (you'll need to speak to the lenders). Then pay more per month to the ones with higher interest. The bank will, if you ask, set your overdraft to automatically decrease by a set amount each month--even if that's£25, you are paying it off slowly so do that

The bank shiifts as nurse are good. I would concentrate on the second jobs for you both, the Saturdays worked all day in a bar, the Sunday nights you work in a care home all night, the Saturday night all night your other half does the same. That is often the best way to get more income to get on top of debt.

I have paid a huge amount of debt back in the last 10 years and mostly done it by working 6 or 7 days a week. I started work at 6am today. It does work.

Debt

Catalogue £6000
Credit card £3500
Store card £900
Catalogue £300
Overdraft1 £1800
Overdraft2 £1300
Loan remaining balance £770 last payment March 16
Outgoings

Bills
Rent £350
C/tax £110
Car payments £100
TV/Phone/broadband £70
Mobilex2 £50
Nursery £109
Utilities £80
Netflix £6

Other
Petrol £160
Food £200
DDs activities £72

Debt repayments
Loan £95
Catalogue £280
Credit card £95

If it were me, I'd be looking for a second job. And then throwing as much money as possible at my debt. I cleared about £9k a couple of years ago by basically not doing anything else but working.

Look at your creditors and their terms and conditions. Specifically interest. I paid off the lowest value debt first (to give me a kick start - so I could have one fully paid off) then looked at highest interest. I had a loan, store cards and credit cards.

I renegotiated my loan repayments. I wrote to the loan company told them my situation and asked if I could lower my payments. They agreed - and I focussed on repaying store and credit cards first. Every time I cleared one I cancelled it.

It was tough. But I did it by selling almost everything I had on eBay/local selling sites, working a second job - I had to get permission from my first job to do this at weekends and cancelling every unnecessary direct debit and activity. I ditched my gym membership which I wasn't using (£43pcm) for dog walking at a weekend - my new job - 7 hours walk over sat and sun kept me fitter than the gym and fresh air and I was being paid for it.

Looking at your list - id be paying off £300 catalogue first to kick start the process then trying to negotiate with other catalogue. I'd also ask them to stop sending it to you...

You've listed £72 as dd activities. Are these necessary? If not cut them. Do more free things as a family.
You're paying for TV/phone/broadband. And 2 mobiles. Assuming this is sky? And you have Netflix. Ditch Sky TV ditch home phone switch to basic broadband only. Keep Netflix. Can you move to a cheaper mobile tarrif?

Can you switch utility companies for a cheaper one?

Cut down the amount you use your car. I went from using it every day to 5 days a week initially. this helped loads.

Cut down your food spend/grocery spend. Meal plan and only buy what you need.

Have a goal you want to reach - ie all credit cards repaid by Christmas 2016. And really work towards it. Depending on what area of the country you're in there will be loads of free activities or cheap activities you can do as a family so you don't have to feel as though you're missing out.

It is hard. But you will get through it.

I would echo everything ememem has said. Plus, my cousin is a student nurse and she earnt loads doing bank work when she wasn't working. She didn't have a child to also look after, but would it be possible for you to do say 1 shift a week and dedicate that to which ever debt you pay off first?

Have a look at the moneysaving expert snowballing tool - it will show you how once you start making a dent in things, it will snowball for the better - so as soon as you've paid off the loan that's £95 per month you'll have to go on your next debt.

I would definitely try and clear the £300 catologue first, get it out of the way. You need to find out what the interest rates are on your other debts too - this is key.

Take little steps - if you haven't already sweep your whole house for every copper, 5p, 10p and add it all up. Pay it in to your bank and use it to pay a bit more off a balance. Every overpayment will help - even just £10 more a month will prevent interest accruing quite so agressively.

I also agree with whatabout don't label yourself as 'shit with money'. You're training to be a nurse, you clearly are intelligent and good with numbers (working out dosages, timings etc). That is more than the numeracy you need. Get on the moneysavingexpert website and educate yourself, and change your mindset, every penny spent on something else is a penny not off your debt for the time being. Once your debt free you could potentially have a nice surplus to save, or use for nice things, but the same rules apply. I don't have debt now (other than a mortgage) but wasting even 1p pisses me off as it's 1p I could have paid off the mortgage, or given to charity or used for something I wanted. Small changes add up - It's hard to find a way to singularly save £1000 off bills, but many people can find 100 ways to save £10 over a year which adds up to £1000.

Worked seven days a week at three jobs. But that was pre-DC do no childcare or children's expenses. Track every penny. Cut all extraneous costs. Syphon off savings even if it's ?5 a month - when you're debt free that's your starter pot.
Good luck- loads of really good advice on here. It is doable, really, but you have to cut that CC spend.

If you can get disciplined, then consolidating your debt into one loan can make things better, as you may find interest rates are lower now than when you took the loan out. Investigate that and check what the monthly payment would be on a consolidated loan. (There is no guarantee that anyone will give you a loan but it's worth investigating.)

BUT IF YOU DO THIS YOU NEED DISCIPLINE. As you pay off your credit card, reduce the limit so you can't spend on it. However, a limit of £1K will affect your credit rating negatively so once you are clear of debt and have learned how to be disciplined, set the limit higher.

I have a spreadsheet which has all the monthly outgoings on, and I do a mealplann and an online shop for food so that I dont' get tempted by "bargains". That allows me to control exactly what gets spent on food. Even though I do this, DH sometimes decides he wants some crisps/snacks for a Saturday evening and it's scary how much you can spend when you just go to the supermarket for a packet of crisps, so you may want to allow yourself some treats in the weekly shop. You can always take them out of the basket at the end of the shop is money is going to be too tight that week.

Good luck.

Yes, I've cleared £10,000 worth of debt (12 actually). It took five years.

I sat down with my bank statements, credit card statements, loan statements and did a budget.

I then looked at ways of saving money (not going out and not buying shit) and ways of making more money (got a better day time job with much higher pay and a weekend/evening job).

I then used an app (DebtTracker) to keep tabs on payments and dates (meaning I never missed any and was alerted when 0% deals were coming to an end). Debt Tracker also uses the 'snowball' system.

It was really hard (lost a lot of friends due to lack of socialising) but it was worth it and enabled me to buy my first house.

The key is to set aside a couple of hours per month to review your finances (put a reminder on your phone).

also, always use a broker/comparison websites for deals. It all adds up. This year alone, I've saved nearly £1,000 by shopping around on mortgage deals, car and home insurance.

Sadly it wont get better simply by not dealing with it. I know it's terrifying but the alternative is even worse.

Don't ever risk your financial health just to buy a new dress, better car, designer shoes, flash holiday (they are not assets - even the car is a depreciating asset which you won't make money on) just to keep up with the Joneses.

Good luck.

Also if you work 6 or 7 days a week you don't have time for TV. I have about 10 years of films to watch because I was working whilst other people were on netflix or at cinemas watching them. Also if you're working you're not shopping so that tends to save money too.

I agree with that lotus- long hours means no shopping time. It's actually really good to curb spending.

all the previous advice is excellent advice. the other thing that no one has mentioned is look at paying off your most expensive debt quicker than the rest of it - its the debt that will cost you the most in the long run.

as others have said don't even think about a consolidation loan at this time - given you don't really understand your spending habits you will end up with a loan and credit cards to pay off and you will end up much worse off.

I agree with breaking it down too - 10k debt seems like it'll never be reduced,
break it down into chunks of say £100. I have mine on a spreadsheet - every time I pay off £100 I colour a section in, it's great watching the coloured sections increase and the blank ones reduce. 1 section = £100.
2nd job for me, lots of overtime for dp, everything moved to 0% interest cards for both of us - and every spare penny thrown at it. both would take £50 each out of the bank on a monday, that would have to last until the next monday, anything left would reduce what was taken out (always a max of £50 in my purse at any one time) debit card stopped coming out with me.
it takes discipline but if you know what's in your hand is all you have then you stop buying a coffee and a sandwich, or a magazine, as you think to yourself the money is better spent elsewhere.
definitely agree with reducing bills too - we just removed a 2nd box and sky sports to get out virgin bill down from £82 a month to £40. the difference is set to go straight into the mortgage account so we can over pay that now instead. those little changes really do add up - and before you know it you're in control.
I would contact the catalogue people and ask them to close the accounts so you can't add to the amounts owed. also there are usually quite high interest rates, can you see if you could get a 0% spends cards and put the balance from the catalogues onto there? don't even open the pin number letter, just shred it so you can't use the card - only pay it off.

Breaking into chunks is good.
On the shopping thing yes my daughter said the same when she was working 8am to 10pm for weeks and weeks. no time to shop at all.

Agree. When you're working all the time the only stuff you have time for is sleep (and eating...)

We cut out everything. Although it was my debt dh budgeted with me and saved (I'm pretty sure he would have given me money to pay off my debt if I'd asked but it was my problem iyswim). So we now have a chunky chunk stashed away for a deposit on a proper house.

Agree re credit card limits and also overdrafts as soon as you've paid some off reduce. I'd consider leaving a buffer overdraft on your accounts (mine is about £250) just in case.

But every spare penny, throw it at your debt. It's actually quite satisfying watching it shrink. And it's so good knowing you're making that final payment! And even better once it's gone.

I would suggest also squirrelling £5 away a month/week if you can. Just so you have some savings at the end. But maybe not right away. The trick to it is to pay down the debt before you think about saving. Interest rates for savers are crap at the moment. Interest rates on debt are great (for the lender..)

Good luck.

Can you claim any PPI back from any of credit cards? I made a claim on a card I no longer had (and haven't had for about 8 years), the amount I got back cleared a card debt I had at the time. Moneyexpert.com is a good place for guidance. Do fill in the forms yourself though, they're not as daunting as they look.

You have to completely re-think what you regard as essentials, when you're in a lot of debt.

Shelter, warmth, food and clothing are essentials. Very little else is. A car is very convenient, but do you really need it? How much do you truly spend on it - not just on fuel but also insurance, servicing/repairs, road tax, depreciation? Could you use a combination of public transport / walking / cycling / taxis for less money?

Turn down the heating. Turn off - completely off, ideally unplug - every electrical appliance when it's not in use. Think very hard about whether you need to use them at all. Turn off lights when you leave a room. Do your studying in libraries, using their heat and light instead of at home or in cafes.

If you smoke, give up. Economise on food and drink. Takeaways, coffee from coffee shops etc. are not essentials. No days / nights out, unless it's a free event - look out for these in your local area so at least you can feel you're doing something enjoyable but it's not cost anything. No frittering money away on booze. Don't buy any new clothes until yours are literally dropping in holes (or outgrown by DC.) Then buy second hand. Learn to make do and mend.

TV / broadband / netflix / mobile phones are not essentials. Or if a mobile phone really is essential for you, cut it down to the most basic, SIM-only contract.

Sell things you have but don't really need. Be ruthless when deciding what you really need. Join freecycle to source things that you do need.

If it all sounds like not much fun, that's because it isn't much fun. But you're in a lot of debt and if you're serious about getting out of it, you have to completely change your mindset. Try to put a positive spin on it - it's not about denying yourself things, it's about making a secure future for yourselves and the children.