What should I do?

A question about : What should I do?

Hi there,

Things are getting progressively worse and I am not sure what I should do.

I am currently Ј25,334.12 in debt and it just seems to be getting worse and worse. I have tried to stop but I just seem to fall back to reckless spending again.

I am smart to find 0% deals but then I just spend more.

I have Ј10,134.12 at 0% until June 2016 on Virgin credit card and I have Ј15,200.00 at 20% over 5 years Barclays loan.

I can also get around Ј2000 interest free 10 month loan from my employer.

What should I do? Should I cancel all my credit cards or what?

Best answers:

• Stop spending wrecklessly and stop borrowing money. There will come a day when you have amassed so much debt you'll no longer be given the 0% deals and then you'll be up !!!! creek without a paddle.
  The good news is, that a debt free life is possible.
  First thing is first, put together an honest statement of affairs. You need to know where you are so that you can work out how to move forward.
  https://www.stoozing.com/calculator/soa.php
  You also need to address why you spend wrecklessly. Is it just down to poor budgeting or do you spend money to make yourself feel better?
• 1. Cut spending on credit straight away on anything that isn't necessary.
  2. Post SOA and let helpful DFW elves make suggestions
  3. Make payments to the best of your ability, minimum if you can, more if you can, but don't take out any more credit to pay them unless you are advised to do so by a debt charity (unlikely)
  4. If it looks like you are going to be unable to make minimum payments or higher, speak to a debt charity (National Debtline, Stepchange, Payplan, CAP etc...) and they can advise the best way forward for you.
  5. Keep reading/asking questions on here - everyone only wants the best for everyone else and even if we post things that you disagree with, it's only advice, you don't have to pay any attention if you don't want (although it's worth saying that there are some very knowledgeable people around here!)
• I live in London as a lodger, so I don't have car or house hold bills. I did this to try and help myself get out of debt but I have just ended up spending more!
  The clothing and holidays is what I have spent YTD
  Statement of Affairs and Personal Balance Sheet
  Household Information
  Number of adults in household........... 1
  Number of children in household.........
  Number of cars owned....................
  Monthly Income Details
  Monthly income after tax................ 2670
  Partners monthly income after tax....... 0
  Benefits................................ 0
  Other income............................ 0
  Total monthly income.................... 2670
  Monthly Expense Details
  Mortgage................................ 0
  Secured/HP loan repayments.............. 0
  Rent.................................... 843
  Management charge (leasehold property).. 0
  Council tax............................. 0
  Electricity............................. 0
  Gas..................................... 0
  Oil..................................... 0
  Water rates............................. 0
  Telephone (land line)................... 0
  Mobile phone............................ 40
  TV Licence.............................. 0
  Satellite/Cable TV...................... 0
  Internet Services....................... 0
  Groceries etc. ......................... 200
  Clothing................................ 800
  Petrol/diesel........................... 0
  Road tax................................ 0
  Car Insurance........................... 0
  Car maintenance (including MOT)......... 0
  Car parking............................. 0
  Other travel............................ 90
  Childcare/nursery....................... 0
  Other child related expenses............ 0
  Medical (prescriptions, dentist etc).... 0
  Pet insurance/vet bills................. 0
  Buildings insurance..................... 0
  Contents insurance...................... 0
  Life assurance ......................... 0
  Other insurance......................... 0
  Presents (birthday, christmas etc)...... 0
  Haircuts................................ 0
  Entertainment........................... 300
  Holiday................................. 1300
  Emergency fund.......................... 0
  Business investing...................... 400
  (Unnamed monthly expense)............... 0
  Gym..................................... 12.99
  Google Drive............................ 1.44
  Skype................................... 1.83
  Total monthly expenses.................. 3989.26
  
  Assets
  Cash.................................... 0
  House value (Gross)..................... 0
  Shares and bonds........................ 0
  Car(s).................................. 0
  Other assets............................ 0
  Total Assets............................ 0
  
  No Secured nor Hire Purchase Debts
  Unsecured Debts
  Description....................Debt......Monthly.. .APR
  Credit card....................10134.....100.......0
  Personal loan..................15200.....456.......20.9
  Credit.........................1600......100...... .28
  Total unsecured debts..........26934.....656.......-
  
  Monthly Budget Summary
  Total monthly income.................... 2,670
  Expenses (including HP & secured debts). 3,989.26
  Available for debt repayments........... -1,319.26
  Monthly UNsecured debt repayments....... 656
  Amount short for making debt repayments. -1,975.26
  Personal Balance Sheet Summary
  Total assets (things you own)........... 0
  Total HP & Secured debt................. -0
  Total Unsecured debt.................... -26,934
  Net Assets.............................. -26,934
  Created using the SOA calculator at www.stoozing.com.
  Reproduced on Moneysavingexpert with permission, using other browser.
• Why is there nothing in the holiday section of the SOA? You've said you spend an awful lot on holidays (which will need to be cut down or cut out completely - most DFW's don't holiday because its just an unnecessary expense that makes the road to DFdom even longer) so this needs to be declared as a monthly amount.
  If you absolutely have to meet up with friends and go out for socialising it would be cheaper to go for coffee or drinks rather than a meal. I know you are a lodger so it may be difficult but could you take turns in hosting something - would your landlord be willing for you to have a few people round maybe once every month/once every 6 weeks? Even if you did this and all contributed one plate of home made food it is a lot cheaper than eating out all the time.
  I know it's all the 'nice' things that I'm encouraging should be reduced or scrapped, but if you're wanting the shortest possible debt journey then it is these things that need gone. This year I'll be going on my first holiday abroad since 2007. It's not been nice not going away but I'm paying for it without credit and I'm REALLY looking forward to it. You'll find others on here who have gone for much longer without even a weekend away somewhere.
  Also if you've spent as much on clothing as you say then you're likely to have a substantial wardrobe! You shouldn't need Ј100 a month for clothes continuously. Just enough so that you could replace one or two items if you needed to. It might be worth going through all of your clothes and anything that hasn't been worn or has only been worn once either see if you can sell it on (or even return it if its still with tags or a recent purchase!) and use the money you make to pay off debts. Alternatively, keep everything you've bought recently. You said that you spent around Ј500 over Christmas on clothes. That's easily 6 months worth of clothes budget - maybe challenge yourself not to buy any for at least that long?
  You also mentioned that most of your spending comes out of boredom. I spotted a gym membership...if you are tied into the gym membership why don't you use that as an outlet when you are bored instead of hitting the shops or the internet for new purchases?
• Hi
  It sounds like you have a flickering bulb!
  You don't have to not see your friends to save money! I went to the cinema with some friends on Saturday but took a drink in my bag and didn't have popcorn - instant saving Ј5. If you go for dinner, don't have a starter/dessert and drink water (I have actually gone for "lunch" but eaten before so not actually eaten out and drunk water i.e. not spent a penny!) I don't feel like I'm missing out on anything as I still get a good old gossip and a giggle with my friends.
  Be honest with your friends - if they're actually "friends" they wont care. This way you don't need to spend money to keep up appearances.
  Clothes - do you really need new clothes every month?! Why not sell your old clothes on e of the bay? Buy new clothes on e of the bay? If you spend that amount each month you probably have lots that you don't wear and have forgotten you have and so wont miss if you sell!
  Holidays - I don't think you shouldn't have holidays but it does sound like you have A LOT more than you should for your financial situation. You should save for one as I assume you've paid on credit - think of it this way, how long after you've been and had your lovely relaxing holiday will you still be paying for it? Probably long after your tan/memories have faded and you feel like you need a holiday again! I knew I had 2 of my friends hen dos June/July next year so I started saving in November! By July this year one will be paid off (week in Portugal).
  It's not about missing out necessarily (although some people do completely cut out all luxuries) it's about being sensible and planning.
  An area which I have found quite easy to cut back on is groceries. This month (5 weeks as per my budget month) I've spent just under Ј230 for 2 people and a dog including dog food, cleaning products, toiletries etc and I still want to get this down lower. So I definitely think you could save something here. Do you meal plan, write a list, check your cupboards? Have an actual food budget? I have an envelop in my bag with my food budget in so I can clearly see what I'm spending and what I've got left.
  Hope you find something useful in my ramblings! Good luck!
• Ј700 on "entertainment and business investments" ?
  You don't really have that sort of cash available given how much debt you're in!
• As you are a lodger, can you lodge anywhere cheaper?
• Problem we have today is this, banks and financial institutions like to keep us all in debt, fact.
  Why is this you ask ?, well, if people were not in debt, banks could not exist in there current form, they would make less profit, and the shareholders would not be happy, oh dear i hear you say.
  How to get out of this spiral then ?
  There is a moment in time, when all the stars in the universe align, the birds stop singing, the sun moves behind the moon, and you realize you are spending much, much more, than you actually have coming in, and you think to yourself, "this situation cannot continue".
  This, this perfect moment in time, is called your Light bulb moment.
  For here on in, you know things need to change, you need to reign in your spending, your borrowing, things you spend money on, that you simply dont need, and can easily live without, numerous options are available, it depends on your own personal circumstances, cut up that credit card, no more loans, plan, and stick to a budget.
  Theirs lots of good advise available on here, from people who have been through very similar circumstances, this does need nipping in the bud, because if it continues, and you don't stop unnecessary spending/borrowing, then its a fast downhill slope to Bankruptcy make no mistake.
  I led a very similar lifestyle almost entirely funded by credit for many years until my LBM, you need to take positive action now, to avoid getting into much deeper trouble.
• Ј843 a month is a lot for lodgings, even in London. Can you move into the suburbs and find somewhere cheaper. You are investing Ј300 a month in your home business but it does not seem viable yet. Does it involve lifestyle products/selling that are doing the rounds these days?
• Given that you're lodging, what is your secured debt secured against?
• I know it's all down to different areas etc.. but I pay Ј210 per month on rent for a 2 bedroom house! Ј843 per month is staggering! Also with a 4 year old, a 7 month old and two adults in my house, we spend Ј160 per month on groceries, including cleaning materials etc... These were the two figures that jumped out to me.
• Hi there,
  Things are getting progressively worse and I am not sure what I should do.
  I am currently Ј25,334.12 in debt and it just seems to be getting worse and worse. I have tried to stop but I just seem to fall back to reckless spending again.
  I am smart to find 0% deals but then I just spend more.
  I have Ј10,134.12 at 0% until June 2016 on Virgin credit card and I have Ј15,200.00 at 20% over 5 years Barclays loan.
  I can also get around Ј2000 interest free 10 month loan from my employer.
  What should I do? Should I cancel all my credit cards or what?
  Ok...so I think the first thing would be damage control. Try your best to transfer the debts into 0% interest where you can. That's the easy part.
  Take a serious look at your finances. If you do online banking, this is easiest. Look month by month and see what you have spent your hard earned cash on in the past year. Put each necessity into categories 1)Car/Public transport, 2) Debts, 3) Savings, 4) Home (mortgage/rent, gas and electricity, water, council tax), 5) Entertainment (everything that is not vital...i.e. internet, phone, netflix, TV license, line rental, cable) 6) Food, 7) Buffer.
  This is the easiest way to see if you are massively over spending in one category. If you are serious about reducing your debt, maybe it's time to question whether you need to spend Ј100 a month on a Sky package for example.
  At the very least, don't make your debt any worse. Do you need to downsize your apartment/home? Do you have a spare room you could rent out to make some extra money?
  If there is a way to do something cheaper...you need to be the one who knows. Treat this as a challenge, something you are going to become an expert about. Make paying off this debt your priority. This means....every day...ask yourself....am I working towards my goal.
• Hi All,
  Thanks for your response all, much appreciated.
  I am going to update the diagram because its not secured debt its all unsecured debt. Also I have not included my holiday spendings but to be honest I spend hundreds on holidays all on credit cards. I will look what I have spent this year on holidays alone I guess.
  The business investing IS in selling lifestyle products but I haven't managed to see an income yet but I am working hard at it. I have put aside Ј400 a month for this as I believe this could get me out of my career rut as I am not happy in my career because I think the root cause of my spending is immense unhappiness with career.
  In terms of clothing, I absolutely do not need anymore clothes I have everything I could possibly need, I mean I have 4 winter coats alone so I think I could definitely draw the line here - maybe for a year!
  In terms of holidays, I have booked all the flights but I have not booked the accommodation yet - the flights thus far have cost around Ј1000 all on credit. The actually holidays and accommodation will cost around Ј2000.
  I can definitely cut down on going out for expensive dinners and rather have friends over.
  In terms of accommodation I have a very good deal because I am a lodger in central London however I could move out and maybe bring down the rent by max Ј300 but I am not sure its worth it as it would massively reduce my quality of life and substantially increase my travel costs by about Ј100 so I would only save Ј200. I don't even pay bills here!