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Debt Repayments

Discussion in 'The Lounge - Off Topic' started by Fergal1982, Aug 10, 2007.

  1. Fergal1982

    Fergal1982 Petabyte Poster

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    I've noticed that a few people on here have mentioned debts catching up with them, or getting on top of them, so I thought I'd start this thread. Basically, I'll tell a little about my situation and offer some advice on how to deal with debts. You can all comment on methods you have had to use that work (or dont work, those are important to).

    There is just one rule on this thread - no comments on someone elses financial situation and/or how they got into it. Many of us get into debt these days, and for quite a few of us (myself included), its down to stupid decisions made by ourselves, but that doesnt mean we deserve to get slagged off for it.

    So here goes:

    I've never been great with money. Even today im rubbish. Back at Uni I filled one overdraft, then moved onto another bank and did the same. As a result I ended up with several debts im still trying to pay off today (certain bills have also been added to this mix).

    For a little while they did nothing about it, but then they started demanding money off me. When I made agreements and didnt keep them, I was defaulted. Several times.

    Im now getting on top of things here now that Im in my new job (especially helped by getting paid weekly), and expect to pay off the majority of my debts within a few months, leaving less for me to worry about.

    So, my advice for dealing with debts is as follows:

    1. Keep in contact with your debtors. If you cant afford to make a payment, call them in advance and apprise them of the situation. Most of the time they are likely to permit the odd lapse of this nature.

    2. Should you find that you are unable to keep up the payments that you agreed, again, contact them and tell them. They would much rather you were making agreed payments that you can afford than not paying anything at all.

    3. If you want help with your debts, talk to the Citizens Advice Bureau. They will help you fill out a debt pack, detailing all your debts, your incomings and your outgoings. Be totally honest in this. They will then contact the debtors on your behalf and arrange payments with them that allow you to continue living and paying them off.

    4. Try to avoid debt consolidation. These companies tend to lump quite large interest rates into their loans. So you may well have a lower (single) monthly payment to worry about, but you will be paying out much more in the long term.

    5. Dont ignore your debts. Doing so is liable to make you get defaults (hurting your credit), and worse.

    6. Got a new job? Big spanky payrise? Work out how much extra you are getting every payday. Then take this extra money (calculated after tax), and direct this to your debtors. Its best to take the extra and focus it on a single debt. This will pay that debt faster, and you can then redirect the extra money (and the money you were paying to that debt) onto the next debt in line (You should likely prioritise your debts for this too). To calculate take home pay, I used This Site. You may also wish to inform your other debtors that you are doing this, and that you will be increasing your payments to them at a later time, since this will likely keep them happy too.

    7. Arrange for your payments to be made on the day of/day after your paycheck arrives in your account. Doing so will stop you spending it (Like I used to do).

    I cant think of any more right now, But if I do ill add them to this thread.
     
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  2. greenbrucelee
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    Good advice, but a little too late for me.

    I ended up with a ccj (county court judgment) from only one of my debts, which was for a loan of £1500 I tried with this bank to come to an agreement as I told them almost immediatley I was in trouble with the repayments.

    They closed the loan down and I was served with a CCJ for £10500 this was the loan + intrest + letters sent out tome + court fees. This was because I didnt tell them untill I had missed 4 payments.

    I currently have about £5800 left to pay on the CCJ which will take me a while to pay

    As for my other debts my mother was kind enough to take out a loan to pay my other debts off (£15000) which I am paying back and will have paid her back by March 2008

    Then hopfully I can start getting things in order.

    My advice to anyone in debt is dont bury your head in the sand like I did because it'll ruin a few years of your life. If youre in trouble contact your creditors ASAP and come to an agreement.
     
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  3. BosonMichael
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    Good advice.

    I got into heavy debt back around 1994-1995, when I attempted to start a game store with an old friend. We had no storefront - just worked online and at sci-fi/fantasy conventions. We were making good money, so we decided to expand. I'd put the inventory on my credit cards, and since I was going to college, my unemployed friend would sell the inventory. The thought was that we'd pay off the debt with the items we sold. $40K in credit card debt later, I found that he wasn't selling the inventory... he was gaming, chatting it up online, and not doing much else.

    At the time, I was making $9/hr. :blink

    Over the next couple of years, creditors would call, and I didn't have anything to pay them. Somehow, I still managed to work a full-time job and go to school full-time, all while keeping the grades up. It was incredibly stressful to even look at the bills. Finally, two creditors cancelled me and jacked my interest rate up. After I graduated, I moved out of my apartment and back into my parents' house. In early '98, I got my first "real" tech job, and started climbing the career ladder. In early '99, I met my wife to be, and married her in '99. She brought along more than $10K of college loan debt and a few thousand in credit card debt.

    Together, in our 809 square foot house, we made ends meet. With two salaries, it was easier to get by. We slowly started chipping away at the debt.

    Karen became pregnant, and we had our first son in 2002. Karen had always been a career woman (she was making more than I was!), and planned to get back to work as soon as her maternity leave was over. After her first day back (October '02), she was in tears, saying that she wanted to stay home with Hayden... having a child flipped a switch in her. Problem is, we still had about $30K in credit card debt, $10K in student loan debt, and two car payments (total $24K). I ran some budget numbers and told her that if she'd give me a year and a half (till May '04), we could pay off enough debt so that she could be a stay-at-home mom.

    Karen worked while Nana (her mom) kept Hayden. We built a budget and stuck to it. We didn't charge *anything*. We drove our same old cars (one of which we STILL have). We threw as much money at the debt as we could, paying off the credit cards one at a time. And it worked: by May '04, we had paid off ALL the credit cards, ALL of the student loan debt, and all but one of the cars... certainly enough to survive on one salary after paying for the mortgage and necessary expenses.

    We now live in a MUCH larger house, and we have one car payment - we got a used 2004 minivan (Toyota Sienna) so we can carry the kids everywhere. And it gets great gas mileage - even better than my mid-sized 1999 Nissan Altima. Other than the mortgage and minivan, we have no other debts.

    My advice is this:

    Stick to a budget. Allocate yourself a specific amount each month or each paycheck for housing, food, clothing, medical, car, gas (petrol), phone, electricity, cable, Internet, computers, entertainment, daycare, and any other expense categories. Then, whatever's left, throw at the debts. Spend EVERY dollar on paper before you even get the paycheck. Know where your money is going BEFORE you even get it. And stick to it.

    If you can do with out the "unnecessary" expenses, such as entertainment, do so if at all possible. At least, while you're in debt. What? That's crazy... everyone has a new car... everyone has an XBox... everyone goes out to eat. Do you want to be in debt like "everyone else"? As Dave Ramsey says, live like nobody else now so you can start living like nobody else later! (If you haven't heard of Dave Ramsey, I'd encourage you to check him out.)

    If you have a spouse, it's *critical* to get him/her on board with the plan, because you BOTH have to agree to the budget, and you BOTH have to stick to it to make it work.

    This might seem obvious, but it bears stating because I know it happens... I did it myself: don't put things on credit if you're trying to get out of debt. Don't buy things you don't need, even if it's a "good deal". Don't go on vacation/holiday if you can't afford it. Don't upgrade your car every couple of years - drive it until the wheels fall off and it's not worth repairing. Then, buy a used car (couple years old) and drive it the same way.

    You don't have to take bankruptcy. You can dig your own way out of debt. But it takes determination and requires sacrifice. You can do it... but you have to want it bad enough to attack it with a vengeance.

    Live like no one else, so you can start living like no one else. It absolutely works.
     
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  4. greenbrucelee
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    greenbrucelee Zettabyte Poster

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    Good advice BM the only thing is in the UK if you have a car you have to get an MOT check every year and if your car doesnt pass the MOT then its illegal to drive. I understand you dont have this in the US.

    An MOT costs about £44.15 at the mo and thats before you buy parts if you need them.

    Most people also get their car service once a year which can be hundreds of pounds depending on what you drive.

    We also have to pay road tax price is dependant on age and engine size my BMW is 8 year old car and my road tax is £200

    So in the UK we are sort of screwed if we have a car and debt becaues its law to keep your car roadworthy
     
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  5. BosonMichael
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    Some locations have something similar to the MOT. In Tennessee, we have to have an emissions test, which costs only $10. If your car fails, you can't renew your license plate; thus, you can't drive it.

    Each state has their own form of licensing and/or road tax, and each county and/or city adds their own fees. I think we pay $60-70 per year per vehicle, and is the same for every car regardless of vehicle age/cost. However, some states/counties/cities do charge based on vehicle age/cost.

    In any case, all these expenses are wrapped up in your car expenses for budgetary purposes, as is car insurance (which is required by law in most places in the US, and costs FAR more than the emissions and licensing and taxes added together!).
     
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  6. greenbrucelee
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    Cheers for the info

    We also pay a lot more than the US for fuel in our cars at the moment where I live petrol is 94.9pence per litre for normal unleaded but over £1.04 for super unleaded which I thinks probably around the $2 dollar mark for you guys

    Unfortnatley most of us British people seem to accept this fact where as I know in the US your people would be petitioning your local governor/senetor if you had a $2 price tag. And his/her position could become unstable if that occurred.

    We had a petrol protest the last time petrol got really high but we seem to have accepted this now for some reason :rolleyes:
     
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  7. Theprof

    Theprof Petabyte Poster Forum Leader

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    Excellent advise guys, I am sure it will help people out. My self I am very picky with spendings, I current bought a car for around 17K so within the next year I am working hard to pay it off because over the long run it will cost me more with interest, hopefully within a year or two it will be paid off.
     
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  8. drum_dude

    drum_dude Gigabyte Poster

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    The reason for that is because the US Govt don't use fuel as an excuse to raise funds for state services.
     
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  9. greenbrucelee
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    were taxed on everything it pisses me of :x
     
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  10. Arroryn
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    Arroryn we're all dooooooomed

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    At least we're taxed for a reason. Yeah, I know a shedload of it gets wasted. But a lot of countries don't have an NHS, prescriptions, free doctor's appointments, subsidised dentists, maintained roads, state pensions (no matter how rubbish), rubbish collections... the list isn't endless, but it's long.

    As for debt... yeah, I'm in debt, and have been for 4 years.

    I don't mind saying how I got in debt, too. To summarise - I was young, stupid, and thought I was in love.

    When I split up from my fiance at the time, and went back to live with my parents, I struggled. I only worked as a supervisor for Asda at the time, and had planned on going back to full time studying. Scratch that.

    I never truly looked at the whole 'range' of what I owed back then. Aside from getting in debt in the first place, that was my first, and biggest, mistake.

    Looking back now, I've done the math, and it was around £25k.

    The first thing I did was quit my job, and shelve the study plans. I took a job as a manual labourer and forklift driver; one woman working with nigh on 200 men. It was grubby, and it was shift work, but man, did it do a lot of the leg work on the debts.

    But after a year of doing that, I realised I wanted a career again. I got offered a job doing sales for the company I was doing the manual labour for. It was a 30% pay drop, taking me well below £20k a year. I balanced the books, and on paper, it could work.

    At this time I was renting a room in a shared house. Bills were inclusive, which helped. I split my accounts to the wire. I had £50 a month to spend on food, £50 on fuel, then the bills I had to pay including rent. I allowed myself £120 a month for toiletries, clothes, and going out with friends. Needless to say, I started spending a lot of time on the net, as it was significantly cheaper!

    I started studying, to keep my career going too, to get where I wanted - IT.

    To resist the temptation to spend more than I had budgeted, I simply cut myself off from my current account. The £120 I had given myself as spending money, was a standing order into a separate bank account with a debit card. I used that card, and that card only. I cut up the card to my current account, where my bills and so forth came from.

    Now, the 24K is 6K. My first two debts are finished in six months; by October next year at the latest, I will be debt free.

    The biggest advice I can give anyone, is hold your head high. Debt happens to many people these days, and I can't thank Fergal enough for starting this thread, to show people they're not alone. I had to work hard to get in the position I am now. I wouldn't have wished my labouring job on any man, let alone a woman.

    But when it's paid - when I, or anyone, can look back and see how hard they struggled and work to be able to say 'I repaid it' - that's going to fill me with a lot of pride :)
     
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  11. noelg24

    noelg24 Terabyte Poster

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    First off, I wana say thanks to Fergal for starting this thread...took some guts mate.

    I my self am also in debt and like Arroryn, I was young, stupid and thought I was in love.

    I was that bad, I didnt care how much debt I ran up I just spent money I didnt have.

    I have now gotten in control of things and I now only have about £5K to pay (compared to about £10K 6yrs ago). Lucky for me, my parents have just sold their house in London for a very huge sum. So I told my mother about the situation I am in and she said she will be throwing a few thousand my way very soon. I am still paying the debts off tho in the meantime so once I get the money from her I shall be debt free at long last.

    In the end we have no one to blame but ourselves and yes we are paying for it now, but hey if it does one thing, its that we certainly learn big time from this. I dont have credit cards anymore (had 3 at one point and all maxed out rather quickly).

    I do have an overdraft with me bank but its only £250 and that gets paid off every week I get paid but I just want to pay it off and not use it again.

    But I do have another bank account of which I am now going to use to save some money and also move my rent into that each week I get paid (£100 a week). That way I know whats left for bills and myself to play with. I have both a maestro and solo card and thats all I need.

    In the end once all is paid off I will be looking back in a years time and thinking: "yep, that was then and this is now. Happy days" :biggrin
     
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  12. drum_dude

    drum_dude Gigabyte Poster

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    Great thread!!! Well done to you guys/gals for whooping that debt monster's behind!
     
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  13. Beerbaron

    Beerbaron Megabyte Poster

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    its quite interesting how each person has got in to debt differently.
    i managed to get through uni without owing nothing apart from my student loan. the only loan i have is for my car as thankfully im fairly good with my money.
     
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  14. wizard

    wizard Petabyte Poster

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    With my situation I'm not earning enough to dent the debts, so bankruptcy I feel is the only way to go for me. Other wise it is going to take 10+ years to get out of debt.

    Sure I might loose a lot of my possessions, but I can always buy the stuff I need again at a later date.
     
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  15. BosonMichael
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    Where I live, we're at about $2.70/gallon for normal unleaded, though it's higher in many other places. We've been as high as $3.10 or so... and people have been pretty upset since we've been above $2.50.

    That said, it's still a lot less than you guys pay... doing the conversions, $3/gal is approximately equal to £1.50/gal, which is approximately equal to 40 pence/litre.
     
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  16. BosonMichael
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    Took me 10 years to pay mine off... and it was totally worth doing. Otherwise, I might not have been able to qualify for a good, low-rate home mortgage.
     
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  17. BosonMichael
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    No... but Tennessee certainly does! ouch ouch ouch...

    Well... at least the funds (supposedly) go to road improvements...
     
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  18. wizard

    wizard Petabyte Poster

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    Even so, were you earning enough to actually chip away at your debts?
     
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  19. BosonMichael
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    From someone who has already hit the "other side", more or less... you don't know how right you are. Just wait... it's such a good feeling. Writing that last check... and knowing that you're free... I can't begin to describe it well enough. :)
     
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  20. BosonMichael
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    At the beginning, I wasn't, so I moved in with my parents, into a converted garage. Then, I was just treading water. Most of my money was going to that, since I was just making $9/hr. I didn't see ANY improvement until two things happened, nearly simultaneously:

    - I got my 2nd job in IT, which raised me to $35,000/yr, and
    - I got married to someone who was also in debt, but was also in a similarly salaried position.

    Afterwards, I was able to chip away at my debt.

    Trust me, it wasn't easy. I sacrificed doing a lot of things I wanted to do. Moving back in with my parents was not easy, nor did I want to do so... but I had to. If I hadn't had parents to turn to, I'd have found roommates. Anything to stay afloat until I could advance up the IT career ladder and make more money. And it worked - I got a better job, I moved out of my parents house, I continued to sacrifice, and I paid the debts.

    We still have to budget even today since I'm the only one bringing in income for the family. We could probably buy anything we wanted if we'd downsize the house... but we're not at the point where we need to do so yet. I'm glad that I went through the process to pay off those debts - in retrospect, my debts prepared me for this situation. Otherwise, I'd NOT know how to budget today... I'd probably continue to spend past my means and get myself into debt trouble like most people do.
     
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