Advice - unsecured debt

[Drysdale]

Hello all.

 

I am 20 years old with a monthly income (after tax and pension) of approx £1280.

 

I have the following unsecured debt:

 

MBNA Platinum CC: £1490

IF unsecured loan: £8950

Black Horse Car Finance: £4500

Total: £14940

 

Total Monthly income: £1280

Total Monthly outgoings: £650

 

Currently living with parents. Selling the car is out of the question as travel daily for 20 miles.

 

I do not want to go into any 'special measures' i.e. CCJs, bankruptcy or anything that will majorly affect my credit rating.

 

Does anyone have any advice or anything that could help make this debt more manageable or even reduce it?

[gizmo111]

What are the monthly payments on these loans - how long have they to run?

[Drysdale]

Thanks for the prompt reply..

 

FYI

 

MBNA Platinum CC - minimum repayments at the moment (approx £34)

IF unsecured loan - 65 months (£197.80 pcm, 84 month contract)

Black Horse finance - 24 months remaining (£134 pcm, 36 month contract)

 

My total monthly outgoings are made up of these payments as well as a direct debit for car insurance (£90 pcm), gym (£30), rent (£250).

[Drysdale]

It's probably worth mentioning I have yet to miss a payment and am comfortable with these payments - I would just like to know how I could reduce this debt and make myself in a better situation.

[CAGisforME]

Hi,

 

Well, in my opinion I can't see how you can REDUCE the debt, (unless I'm missing something here) but I would think it would be possible to reduce your outgoings.

 

You have £14k of unsecured debt and are paying £365.80. I would look to your bank, or another lender to lend you enough to cover the unsecured debt in it's entirity at a monthly rate that is less than that you are already paying. Thet way it is over a fixed term and you will know exactly what interest rate you are paying for the term of the loan.

 

The trick (with my ex-Bank Manager head on here) is to NOT continue to spend on the cards etc once the debts are covered by the consolidation loan.

 

If you have never missed a payment you should have too much of a problem finding a decent rate over a fixed term.

 

 

I honestly can't see how you can REDUCE the debt and you are already in a decent position as you have over £600 disposable income every month.

 

Normally I would never advise consolidation on this site, but in your position you will take a VERY long time to pay off the Credit Card and the IF loan.

 

I hope that I've helped.

[Golden Dragon]

Hello

 

This might not be the conventional debt advice method but it sure does work

 

Rank your debts No1 smallest MBNA No 2 Black horse No 3 IF

 

start by focusing on the debt with the smallest balance (which you are making minimum repayments at moment) work out how much you can increase the payment by call this your HEADSTART payment say £50- £100 extra - repay the smallest debt quicker.

 

continue making minimum payments ( or reasonable offers if you are really struggling) on the other debts.

When debt no 1 is repaid in approx 12 to 14 months instead of 50 months at the current rate of repayment

add what you were paying to MBNA to debt no2 black horse reduce the time to repay and claim a rebate of interest then do the same for the final debt rolling all your repayment onto the final IF secured loan will again reduce the time that you repay and in a matter of months you will now "own your own pay cheque"

 

hope this makes sense

[CAGisforME]

Nice Plan Dragon!

 

Excellent advice! Have a tip on me!

[gemspan]

Yes, that is very good advice. I think its called snowballing. There is a site that will work it out for you. I cant remember what it is called off-hand but if you enter snowballing debts into google it should bring it up.

 

They work out exactly what you should be paying to each creditor each month and give you a plan to work to and the length of time it will take you to pay off the debts.

 

While its quite worrying to hear that somebody as young as 20 years old has this amount of debt, it is refreshing to hear that they want to do something about it so that they wont be burdened with debt for the rest of their days.

 

Good luck. I wish you all the best.

Gemspan

[Drysdale]

Gemspan and Goldendragon - thankyou for the replies. Sounds like a good idea - I've certainly got some spare 'leftover' cash this month which will make a good start on paying off that credit card. The IF loan and Black horse are certainly more manageable with the fixed amount I'm paying, so getting rid of the credit card as quickly as possible sounds good!

 

Thanks again.

[yaffsimone1]

Do you really need the gym? Running is free:D