Debt

[Bingo-Player]

Anyone here got any experience in being in heavy personal debt and getting out of it ?

I’ve managed to accumulate just over 10K in 2 years ......how ? i couldn’t tell you

i certainly don’t have much to show for it , i suspect ive probably drunk around 4Ks worth bought 2Ks worth of designer clothes and gambled the rest

a stupid and foolish move you won’t hear me arguing, but hey your only young once

Clearly got a serious spending and gambling problem which I’m in the process of dealing with

My number one priority now is clearing this chunk and getting on with the my life , at the moment it feels as though i have a ball and chain around my ankles

I have around 2K’s worth of assets (including my car) and around £1200 on the stock market invested in oil and insurance

My bills on a good month come in at around £750 ( including £200 loan repayment) i take home £1150

I think i could probably pay another £200 max off my credit cards per month , whilst living on the bread line with the remaining £200

My debts break down as follows

3250 – credit card 17.9% apr

2750 – credit card 17.9% apr

500 – overdraft 16.9%

3769 – left on personal loan ( repayments are fixed at £190 per month and is included in my monthly bills last payment date is 30/08/16 )

Totals - £10,269

There is some good news ........

I’m due a 5K inheritance lump sum around may time

I’m assuming it would be wise to clear the majority of the cards with this ? or the loan ?

Once i can see some light at the end of the tunnel i know i can clear this lot pretty quickly cut the cards up and then never take finance out on anything ever again

Any advice would be appreciated

 

[SeymourCake]

I'm currently in debt as well. The only advice I can offer is to pay your credit cards in large amounts. Do not pay by minimum payments. Also, keep track on how much money you earn. Be sure to know how much you're able to use on a credit card before being dragged into debt again.

Personally, after I pay off my credit cards, I'm just going to use it for automatic payments for utility bills and emergency only.

I also have loan debt. I took out loans for college, and I ended up screwing around. I'm back on track in classes so I'm working on my degree first so then when I start my career, I'll just pay it off.

Don't apply for every credit card offer. Banks are notoriously known for giving out credit cards to those who have good credit to put them in debt.

Another advice I can offer for credit cards is that you should not pay off the credit card off completely. Just pay off 90% of it. This will translate into your credit score and make it better because it looks like you're still using it instead of paying it off completely and letting it collect dust.

 

[Bible_Belt]

Pay off the cards, then ask the bank to raise your credit limits on them. I'm assuming credit scoring is the same in the UK as the US, but if you do that it will raise your score. Then obviously don't run them up again without having the money to pay the bill.

 

[Mike32ct]

Make sure you have some liquid cash savings as well.

If not, start regularly putting some percentage of your pay into savings even if if means a slower debt payoff.

Without liquid funds, you may end up going into debt again.

 

[Mike32ct]

But more specifically, I would take the 5k and pay the 500 and the 3250 and put the 1250 into savings. Then work on the others over time, probably the last credit card first.

Then, in the long run, your debt goes down and savings goes up.

 

[Tenacity]

$10,000 is a heavy debt load? Lol, compared to the people paying off $120,000 student loans or $45,000 car loans along with a host of other high debt, you technically HAVE no debt.

Debt isn't bad, mis-manage of it is bad. A student loan isn't bad, taking out a student loan for an education that WILL NOT increase your earning potential and that is also a higher price than you could have found cheaper, is bad management.

You get out of debt by having a strong BUDGET in place as well as a strong INCOME production plan in place. You want to make sure you are optimizing how much income you are bringing in a year, try to get to at least $50,000 a year in a low cost of living area as if you are just one guy, that's considered solid middle class. Then keep a budget in place where you are living below what you could be living.

When you use Debt, make sure that it's strategically managed.

 

[guru1000]

If you consider 10k in debt a problem, you have bigger issues at play than your debt.

Seven years ago, I was insolvent, owing Uncles Sam over $500,000 in back taxes, and I hardly considered that a conundrum. Accordingly, what you perceive as no issue becomes no issue insofar as your increasing your earning/wealth thinking paradigms and constructive actions toward them.

 

[SeymourCake]

My sister is in $250,000+ debt from student loans. 10k can be paid off from a year minimum wage job.

 

[Bingo-Player]

thanks for the input guys

i don't consider it a problem lol , i have the means to pay it slowly but surely

but i am only 22 its a lot of money for someone my age and i would be lying if i said it wasn't adversely affecting my life at the moment

I'm severely restricted to where i can go for the next 2 -3 years whilst i pay this off and considering I'm not exactly jumping for joy with my life at the moment its pretty depressing

anyway hopefully things will start to improve in the next couple months, god knows I'm due some kind of luck !

this would have taught me a hard lesson about credit at the very least!

 

[Albatross953]

I'm going to go against the grain. The inheritance is WEALTH not income. I say invest it for retirement out of principle and spend the next year cleaning up your balance sheet the old fashioned way.

I also say cancel all but one card. Pay cash. Google debt snowflake, debt snowball. Mr money moustache.

You're young, you can be a huge financial success if you learn now. Don't increase your limits and don't take the easy way out.

 

[Tenacity]

Bingo,

I would say that the amount of your debt isn't so much the problem as the interest rate. You have it all on credit cards and at the REGULAR APR rate, not the special promo APR rates.

I have almost $90,000 in total line of credit availability between my credit cards, with the lowest Regular APR at 12.5% and highest around 26.9%, but I NEVER pay the Regular APR rate. If I don't pay the credit card off before the Grace Period, I will use it with a special promo of 0% APR for 12 months or something, with a 1% - 3% upfront fee of the amount on the promo.

That means my actual APR comes out to 1% - 3% on average for the year, when I add in my cashback bonuses and spending reward rebates it comes out even lower.

 

[zekko]

$10,000 is a heavy debt load? Lol, compared to the people paying off $120,000 student loans or $45,000 car loans along with a host of other high debt, you technically HAVE no debt.

$10,000 of mostly credit card debt is not good, though. The OP is right to want to get a handle on this.

Bingo, I'd suggest you start reading some Dave Ramsey or listening to his radio show. He gives very practical economic advice for average people. First, he recommends getting an emergency fund together (enough cash to make through 3-6 months living expenses). Then he talks about eliminating one debt at a time - focus on paying off one card fully first, then the other, for instance. I can't remember if he advises paying off the biggest debt or the smallest debt first. But in any case, I'd suggest you check him out.

 

[Mike32ct]

$10,000 of mostly credit card debt is not good, though. The OP is right to want to get a handle on this.

Bingo, I'd suggest you start reading some Dave Ramsey or listening to his radio show. He gives very practical economic advice for average people. First, he recommends getting an emergency fund together (enough cash to make through 3-6 months living expenses). Then he talks about eliminating one debt at a time - focus on paying off one card fully first, then the other, for instance. I can't remember if he advises paying off the biggest debt or the smallest debt first. But in any case, I'd suggest you check him out.

Agreed. Dave gives good advice. I think he suggests that people start with the smallest debt and work up to the largest as a confidence booster and momentum builder.

Some people will nitpick and say that you should pay the highest interest rate balance first, but you need to start somewhere. Pay off a $500 balance first, pat yourself on the back, and then move on to the say two grand balance. People can get discouraged if they start with too large a balance.

 

[Bingo-Player]

thanks for the input guys , working on a budget and repayment plan as we speak

will keep you posted

 

[Tenacity]

$10,000 of mostly credit card debt is not good, though. The OP is right to want to get a handle on this.

Bingo, I'd suggest you start reading some Dave Ramsey or listening to his radio show. He gives very practical economic advice for average people. First, he recommends getting an emergency fund together (enough cash to make through 3-6 months living expenses). Then he talks about eliminating one debt at a time - focus on paying off one card fully first, then the other, for instance. I can't remember if he advises paying off the biggest debt or the smallest debt first. But in any case, I'd suggest you check him out.

I like some of Ramsey's rants but I can't stand most of these personal finance gurus as really that's all they are......A BUNCH OF RANTS.

Ramsey is extreme as hell and actually doesn't believe you should utilize debt at all, all because he made a stupid decision in his 20's I believe by over-leveraging debt in a Real Estate Development business.

Debt is an excellent tool if properly managed. People coming from NOTHING with no equity, no trust fund...nothing.....should utilize Debt efficiently to be able to climb into the Middle Class. When I say efficiently I'm talking about:

- Fix your credit and monitor your credit

- Get a mixture of credit types such as installment and revolving.

- Installment can be a low interest Federal Student Loan, pay it off on time.

- Revolving is just a regular credit card, pay it off before the grace period and there's no interest charged but you can get the reward monies. Keep this going and you would qualify for those good no interest for 12-18 month promo deals that come with a 1% - 3% upfront fee. It's basically a 12-18 month loan that only costs 1% - 3% in interest, if you are efficient with running a small business you could take $5,000 and flip it to $10,000 in 8 months using the capital from these sources.