I have masses of debt and have only just started dealing with it properly. I am a dunce. If I'd forced myself to do this 2 years ago, instead of sticking my head in the sand/underneath the duvets covers I wouldn't be in the mess I am now. So I strongly advise anyone who reads this blog, and is in debt that they cannot really get on top of, to have a butchers at the list.
1. Open a bank statement (Yes. Painful. But necessary). Add up how much you are paying to various cards/loans every month. Add rent/mortgage expenses. Add any insurance or travel costs. Add AT LEAST another £250 for food, prescriptions, everything else.
2. If this is more than your monthly wage (as it was in mine) follow the instructions below.
3. Dig out all hire purchase agreements/loan agreements/credit card agreements. Put in one file together.
4. Write to all companies from above file requesting an up-to-date balance.
5. Add balances together. Do not be alarmed by sum total. Anything below £20,000 is manageable. Anything below £30,000 is fixable.
6. Contact Payplan. Tell advisor sum total of debt. Advisor will call back within a week. Grab folder and tell them all accounts/balances. Advisor will tell you about available options.
7. If you have an overdraft open a basic bank account with a new bank. Cancel all DDs from old bank account.
8. A Debt Management Plan is the most advisable initial course of action. This is where Payplan work out how much you can afford to give towards your debts each month. You then make this payment to Payplan by DD every month. They work out what proportions of it they will give to which creditor. Some creditors accept, some do not. Offer a bit more, squeeze your budget.
9. If creditors do not accept they will eventually pass your debt onto a debt collection agency. Payplan work with these too. They are usually much easier to get to agree to debt management plans. So do not be afraid of letters threatening you with these.
10. Open all letters that come through your door. Every single stinking one. Force yourself if necessary. I do.
11. Be honest. Tell people you are in debt. Tell them how much if you want to. Do not keep it to yourself.
Money saving tips
1. If you live in London and own a car sell it immediately. Public transport is cheaper and much less stressful. Look into travelcards.
2. Join the library.
3. Do a fortnightly 'meat shop'. Buy all the 2 for £5 offers you can. Freeze.
4. Give up smoking.
5. Buy 6 packs of water bottles and take them to work. It comes to less than 25p each.
6. Always take a packed lunch.
7. Spend one lunchtime a week searching the internet for restaurant/shopping vouchers. Wagamama are usually quite good...
8. Only shop for everyday clothes in Primark.
9. Make shopping lists. Plan the meals in advance.
10. Beg old magazines from friends, being one month behind hardly makes any difference.
I usually end up with about £250 a month for food, clothes, prescriptions etc. This is ok if spent WISELY.
So how did I get in all this mess? Foolishness with spending and borrowing. Paying off debts with other debts. Buying too many clothes/shoes. Being bipolar has exacerbated the debt problem, but it's not entirely to blame. Most of my major purchases/financial decisions were made whilst euphoric, but I still accept 100% responsibility for them. Sometimes I feel I'm going to collapse from the weight of it all. I won't though. I'll just take it very slowly and very carefully.
And I'll be debt-free by the time I'm 30. Just in time to get a mortgage...