40k Debt

[Howdoigetoutofthis]

How can I pay off 40k of debt quickly?

Car £10,400
Credit cards £3,000
£500 catalogue
Mobiles £1000
Furniture £2,000
Loan £7,000
Hmrc £? Around 10k
Council tax £? Around 6k

Money.matters.

What's that

Is it worth talking to a debt charity such as stepchange? The council tax and hmrc debts are the priorities legally I would say?

even if not a struggle i would call around and renegotiate interest rate on many of those.
i agree that hmrc and council tax should be a priority as they most likely will incur hefty fines and interest.
i'm a fan of the snowball method for bills but this might not be the best option for your particular situation.

even if not using that method long term i would pay off the catalog bill first to have one less bill on the list.

Thanks for the advice. Another night of not sleeping due to worrying about this. What's the snowball method. Will put hmrc and council tax and catalogue top of my list.

We have 2 cars. One is paid in full would it be a good idea to sell a car think it might fetch around 7k and pat off the other car loan and then start paying the other debt.

Sell the car you don’t need and use it to pay off some debt. Seek the advice of a debt charity.

snowball method involves paying the smallest bills first then taking the money previously used to pay that bill and applying it to the next higher bill. Once that paid off take the money you were spending on the two paid off bills and applying it to the third etc.
It does NOT take into consideration interest rate charges and is NOT financially the best option. However it is very motivating and helps keep many people focused on the long slow process of debt repayment.

Lookup: Dave Ramsey Debt Snowball

HMRC and Council Tax are priority debts so those are first. Depending on amount owed they may agree a repayment plan but if they do you MUST stick to that plan.

Other debts pay off in order of size. Yes paying off based on on interest rate is mathematically correct but it has been found not to be a method people stick with, whereas smallest to largest works.

https://meaningfulmoney.tv/2022/01/31/ultimate-guide-to-paying-off-debt-debt-snowball-or-debt-avalanche/

To help with motivation, here are some Debt Free Screams from those who have been through the process. This is a long journey.

https://m.youtube.com/playlist?list=PLN4yoAI6teRO_vPRzFxsaEYrx9f1-nE6i

No-one can advise without more information about your circumstances.

Income, expenses, disposable income
Homeowner vs renting
Credit history - your options will be different depending on whether you have missed payments.
Household size, any scope to downsize to release equity/reduce living expenses

But the large amount of taxes outstanding is a huge red flag, must be at least two years' worth of unpaid council tax and a lot of tax too.

Have a look at Money Saving Expert, put together an income/expenditure list, which should be sustainable without borrowing and include annual and irregular expenses like car servicing, school uniforms etc but not your debt repayments and then seek further advice, probably from MSE rather than Mumsnet, which isn't great for anything debt related and go from there.

www.moneysavingexpert.com/loans/debt-help-plan/

Snowball is often used for interest rates largest to smallest in the UK, which is the most cost effective way to do it, but in this case, the priority would be the HMRC and council tax bills as these are priority debts, with serious consequences for non payment.

I recommending Dave ramseys the total money makeover and watching some of his videos on you tube.

Money Saving Expert has a whole section in their forum with loads of advice and support.
it’s definitely worth a look.

Will look into all the help you guys have given me. Some of hmrc is from covid times when I claimed universal credit and then they said we owed it back. We live in social housing and haven't missed any credit payments. Our credit history is good. Our income can vary from month to month as we both are self employed.

Definitely head to moneysavingexpert - there is a debt free wannabe forum and they are a great help on there.

@iamnotalemon will check it out today. Been burying my head in this for too long just want it sorted and gone now.

I totally get the burying your head in the sand. I ended up in about £20,000 of debt many years ago.

I would definitely prioritise the council tax and HMRC bill and see if you can work out an affordable payment plan. Also check the terms and the interest rates of your other debts as it makes sense to prioritise the highest rates first.

Moneysavingexpert really helped me when I was in debt. Practical useful advice and it was nice to know I wasn’t alone and the only one in debt.

It is tough facing up to it but it’s also better taking control of it now before it gets worse. (Speaking as someone who never used to open any statements etc!)

I've contacted hmrc and council tax and set up payment plans. I was so nervous but they were really nice and understanding. @iamnotalemon that's exactly what I want control over it before everything spirals out of control.

Me and dh just sitting down now to see how we can make more income fast.

It sounds like you’re on top of it and if you are in it together, that helps.

If you join Moneysaving expert there’s lots of people with advice in the debt free bit.

I'm guessing your situation has changed recently to enable you to start paying back some of that debt??

If you've got stuff you don't need then sell it...you mention a car - if you can manage with one vehicle then definitely sell that and use the money to pay whatever is incurring the highest interest - however be certain before selling it that you can manage with one vehicle and don't sell it and get another on finance in a few months time as you'll just be adding to the matter.

You seem to be taking some of the right steps already in trying to get some sort of debt consolidation sorted.

How are you going with debt pay off plan?