My escalating debt is crippling me!

[Jamjam]

Hi everyone,
This is my story....please advise if you can...
i am 800 in to my overdraft. I owe 5000 to cu (uni loan), 11000 to boi (car), 2600 to MBNA (balance transfer for 6 months and have just started this), 360 on visa.

I earn 2300 pm (more recently it has been 2700 pm due to temp position, this stops in june)

I am getting 3000euro in July for extra work that i have done. What is my best use of this? I mean i know its small but should I use some of it to pay CU loan?

In september I am taking on extra work which will mean approx 500euro extra pm.

I can not sleep at night worrying about my escalating debt. The following are my main out goings

Loan BOI=259pm
CU loan with 33euro savings=110euro
savings with BOI investment thingy=105pm
life assurance=30pm
Car insurance=40pm
rent=325pm
landline=50 pm
mobile =100 pm (I need this for work and thats why its a bit high ..sometimes its 200euro)

Then there is petrol= 30 pw,
electricy 50pm
food ...200/150 pm

Anyway ....can anyone advise me? I am at my wits end and really am not seeing light at the end of the tunnel

Any advise would be appreciated.

* note mispelling in title! Sorry ...

 

[gordongekko]

Re: My escaling debt is crippling me!

You should contact MABS . Would you be able to sell the car or at least trade down a bit .

 

[Jamjam]

Re: My escaling debt is crippling me!

Don't think trading down is an option as its 2002 206. i will contact mabs though. Hopefully they will be able to advise. i can't tolerate the worry. I'm making myself sick but I just can't catch up with myself. Thanks for your reply

 

[ClubMan]

Re: My escaling debt is crippling me!

Some obvious savings that can be used to contribute towards reducing your debts:

savings with BOI investment thingy=105pm

Unless this is an SSIA you should probably stop it and redirect the money towards reducing your debt. Saving/investing while you have significant outstanding debts (other than a mortgage perhaps) simply does not make sense.

life assurance=30pm

Why do you have life assurance? If you have no dependents then you should probably also stop this.

landline=50 pm

€24 line rental + €26 in calls? Cut down and/or switch to another cheaper provider.

mobile =100 pm (I need this for work and thats why its a bit high ..sometimes its 200euro)

If you are an employee and need it for work then they should be reimbursing you for work calls. Otherwise cut down and/or change to a cheaper provider.

rent=325pm

Are you claiming rent tax relief and other common reliefs/credits?

Common PAYE tax credits and reliefs

CU loan with 33euro savings

How much do you have in the CU? Would you be better off using that money to clear/reduce debt? You certainly should not be saving money like this while encumbered with debt.

I earn 2300 pm

I am getting 3000euro in July for extra work that i have done.

Gross or net of tax/PRSI?

What is my best use of this? I mean i know its small but should I use some of it to pay CU loan?

Use it to clear/reduce the most expensive debt first.

If you haven't done so already then stop using the credit card(s?).

 

[gordongekko]

Re: My escaling debt is crippling me!

If it was me i would cancel the saving policy . You are unlikely to be earning a rate of return that is more than the loan rates and the credit cards rates that you are paying. In reality you are borrowing at credit card rates to save at a much lower rate.

 

[askalot]

Re: My escaling debt is crippling me!

Do you need the car for work or would public transport do? If you could sell the car and clear most of the BOI loan then use the surplus 259pm + 40pm(insurance) + 130pm(petrol @30pw) to start on the credit card balance. Getting rid of the car would give you an extra 429pm.

Obviously you have the bus/train fare to pay and the odd taxi but it should be nothing like the expense of the car.

Do you need life assurance?

Is your 100pm spent on mobile calls a bill pay contract? If so, I would recommend switching to pay-as-you-go, also have a look to see whether you would benefit from switching providers. I cut my bills from about 150pm to less than 20pm though I now rarely have any long chats on the mobile and always try to call from a landline. Mobiles are a great way to waste your hard earned cash. Are you self-employed or can you get your employer to pay some of the cost of the mobile?

You say that you can hardly sleep because of worries so if I was you I would stop/reduce the 105pm savings with BOI.

You've probably already thought all these options through during the dark hours but I hope they are of some use to you.

 

[Trish1]

I would use 3k to clear visa and mbna even tho you have a few months free of interest, get rid! Check the value of the car and if it is close to 11k outstanding balance sell and clear. Talk to your credit union they are all ears when it comes to troubles and they can negotiate with you about setting up a loan to cover remainder of your debts and possibly buying a cheap little run around. Get rid of savings plan, insurance and cut down phone expenses. Dont worry, it can be solved speaking as one who knows!! Now you have started looking for the solution, it will come. Just be ruthless with yourself.

 

[nelly]

speaking as a driver of a 96 micra, trading down makes a lot of sense.

Also, in addition to others i would suggest you look at your credit card bills and see where that money went to and try to curb your spending in the future, if you don't trust yourself then chop the card. I would use your 3k coming to you to get rid of the CC debt as it will begin to hurt in no time - 6 months will fly.

When i was in your shoes i recorded every cent going out and got tough with my spending habits, - Eddie Hobbs would be so proud... and i noticed simple changes freed up cash - like I stppped getting take out food because i noticed i could spend a fortune in a month on it.

 

[abbie]

I calculate that you have approximately 1,000 euros left over based on the 2,300 you earn or 1,400 based on the 2,700 you earn - I don't understand why you are getting so worried - some people live on 1,000 a month (including their bills)

 

[Thrifty]

I agree with the advise you have had above. I would look at the savings and cancel if not an SSIA related. i would use your €3000 to clear the MBNA and the CC and then start reducing your overdraft. I was unsure whether your credit union amount was €110 pw or pm. There seems alot going on to your shares and i would talk to them about reducing this. Even if it is €110pw that still appears to add up to expenditure of approx 1670 per month covering food, rent, loans, travel etc if you stop the savings and pay off the CC and MBNA loan. €632 left - limit your social life and other costs a bit and try to use €100 of this each month to get rid of the overdraft. I think its just a case of working out a budget and sticking to it.

 

[purplealien]

I calculate that you have approximately 1,000 euros left over based on the 2,300 you earn or 1,400 based on the 2,700 you earn - I don't understand why you are getting so worried - some people live on 1,000 a month (including their bills)

I don't understand it either - i certainly wouldn't be worrying myself sick if i were in your situation. Lots of good advice - take it and don't ever get into the situation again because you're too much of a worrier and it's bad for your health!

 

[Hel_n]

I would back up the advice given by previous posters. Use the €3000 you are receiving in July to clear MBNA and Visa debt. You should also work on clearing your overdraft - maybe by cashing in your BOI savings policy? (unless this is an SSIA). By cancelling this policy and your life assurance you will have an additional €145 pm. You didn't say how much your CU savings are but you could look at using them to reduce your loan and maybe even use some of the €145pm you are saving to repay it faster.

The main thing is that for now you work on reducing your debt. You say that you will be earning an extra €500 pm from september, you shoud then be in a better position to start saving but for now you should clear as much of your debt as possible.

 

[jhegarty]

CU loan with 33euro savings=110euro
savings with BOI investment thingy=105pm

how much is in these saving account ?


to be honest , I don't think things are that bad , we get people on here in far worse shape.... a bit of good planning and moving money around will do you the world of good.....

 

[oysterman]

Jamjam,

By all means have a chat with mabs but I think they'll be a little underwhelmed by the extent of your difficulties!

You have negligible overdraft/cc debt - which the €3k you're about to get will nearly eradicate.

The car loan is hardly excessive if the car improves your quality of life and is important for work.

There is probably some scope for you cut back on phone expenditure - other posters have mentioned that you should be passing on some of this cost to your employer if you are using it for work. Do this - no worker should subsidise their employer.

The €5k you owe the CU for what you describe as a "uni loan" - your university education is a massive asset that will reward you handsomely financially (and otherwise) throughout your life so €5k is a tiny amount to have left to pay for this huge benefit to you.

What I'm getting at here is that you should not be worrying about your level of indebtedness and it should certainly not be coming between you and your sleep as it is at the moment. You are in great shape and your debt is well under control.

Take a couple of the steps suggested by other posters and you'll feel more in control of things.

And then get on with enjoying yourself. Life is good.

 

[Jamjam]

Re: My escaling debt is crippling me!

HAvE STOPPED CREDIT CARD! Thats why im in my overdraft.

Thanks everyone for your replies. I can not sell my car. I live in the middle of nowhere. No public transport and drive 50 miles to and from work each day. In addition i also do alot of travelling with my job and require a car as could not be carrying what i carry on public transport. Its a 1.1 and its 2002 I don't think I could down size it anymore!
I have life assurance beacuse I felt I was pushing on (33) and was advised to get it. Is this of no use to me?
My cu savings isn't worth talking about. very little 100euro!
I have the tax relief on my rent.

i have been doing the smart choice savings with BOI with 15months only because I never saved before. Here is a bit about it. If you think I should give it up I will. [broken link removed]
I consider my landline to be cheap enough. I am with imagine.ie and have limited net access which is what i require.

My mobile is with 02 and is under the business plan.

So should I cancel all savings and pay off loans immedicately? I was given a mortage of 265k on my own. Obviously i'm not foolish to take this up!!! I will be renting until my loans are paid

I guess I could always start saving again once my debts are paid off. As for the 3000euro....this is after tax ...so I was thinking of putting 1000 in to MBNA and 1000 in to CU and the rest for my overdraft.

Any other ideas? Seriously guys thanks a million for your replies. i really thought I would be ridiculed for screwing up my finances so badly. I swear i am so thankful for all the advice

J x

 

[Jamjam]

how much is in these saving account ?


to be honest , I don't think things are that bad , we get people on here in far worse shape.... a bit of good planning and moving money around will do you the world of good.....

Thanks a million ....I hope so. Just that I'm sick with worry over it. Constant debt and I can't get out of it. Mabs here I come.

 

[ClubMan]

Re: My escaling debt is crippling me!

I have life assurance beacuse I felt I was pushing on (33) and was advised to get it. Is this of no use to me?

Most likely not if you have no dependents or mortgage. See this thread:

Life Insurance/assurance difference

My cu savings isn't worth talking about. very little 100euro!

Are you sure? It's very unusual to have €5K in CU borrowings on the back of €100 in shares/deposits.

i have been doing the smart choice savings with BOI with 15months only because I never saved before. Here is a bit about it. If you think I should give it up I will.

Why are you saving €33 p.m. in the CU and €105 p.m. with BOI when reducing your debts seems to be more of a priority to you? That doesn't make sense. As mentioned above this means that you are effectively borrowing (at credit cards rates) to invest. It's not an issue of whether or not the BOI fund is good/bad but more whether or not it's appropriate for you to be saving/investing when you want to clear/reduce your debts.

So should I cancel all savings and pay off loans immedicately?

As long as you have significant and expensive debts it makes sense to prioritise reducing/clearing these over any other savings/investments (other than SSIA).

I guess I could always start saving again once my debts are paid off.

Yes.

As for the 3000euro....this is after tax ...so I was thinking of putting 1000 in to MBNA and 1000 in to CU and the rest for my overdraft.

Most expensive debts first.

Any other ideas?

There is a wealth of other useful debt/money management advice in the key topics pinned at the top of this forum.

 

[Jamjam]

Thanks a million Clubman. Very much appreciated.

 

[jhegarty]

Re: My escaling debt is crippling me!

So should I cancel all savings and pay off loans immedicately? I was given a mortage of 265k on my own. Obviously i'm not foolish to take this up!!! I will be renting until my loans are paid

unless you saving are marking more than the loans are costing you (they won't be) then stop them and pay off...


write down all the debts with apr...

i.e

credit card €xxx @ xx.x apr
bank load €xxx @ xx.x apr

then rank them in order of apr , and use the extra money to pay them off first...

 

[Noor77]

Definitely get rid of the credit card - or at least stop using it and racking up more debt. I used to be a financial disaster zone but got my act together over the last year, and one big step was saying adios to the Visa

Good luck!