# 22-year old looking for advice on clearing debt



## dmos87 (19 Dec 2009)

Hi All,

firstly, thanks for taking the time to read this, hopefully you will be able to offer me some valuable advice  

Im 22, Female, living with my partner of 3 years. About 3 years ago I stupidly made the mistake of taking out a loan through Finance without considering the repercussions. It was a spur of the moment decision to buy a new car from a dealership (that saw me coming a mile away and completely overpriced the car). At the time, I had a minor loan for my original car (which i traded in as part payment for the new car). This loan had approximately 1 year remaining on it and was variable. Not much, at most about 1200 euros remaining at the time. The Finance loan was originally for 8250 euros (or so I thought - completely forgot about interest). It actually works out at around 11,500 euros by the end of it with interest, maybe more. 

While on a gross salary of 18,000 P/A I had 2 loans in place - 239.80 per month for the new car loan, and 38.00 per week for the existing (1 year left). I had to move out of home at 18 on account of having a very large family as space was very limited, so I was also paying rent of 350 per month as well as bills, Insurance, etc. To top it off, I had a credit card maxed out by living beyond my means also - at 3000 euros. I have not nor will I ever ask my parents for money, I got myself into this mess and I will drag myself out of it. It was tough enough for them to raise 7 children.

So! I got an extra part time evening job waitressing, and used that money to clear the variable loan by August of that year, 6 months after I got the new car. Having that much less to pay was a big relief for me as I had a little extra each week, and working so much meant I had little time to spend.

3 years on, my debt has dramatically reduced. I finally feel (expecially after reading other posts) that I am on the right track to being debt free in 2010. So here's the status of things now;

Total debt as of right now: €6457.20


Monthly Income: 1902.33 (after tax - i.e. what goes into my bank acc)
(Occasional 70 euros from Part time job but as I work shifts I cannot be guaranteed this every week - I fit it in where I can)

Expenditures:

Rent: €225 Per Month (we negotiated with our landlord and have a 3rd tenant)
Car Loan: €239.80 Per Month (fixed)
Health Insurance: €55.00 Per Month (I'm not covered under my parents)
Pet Insurance (2 dogs): €22.00 Per Month
Sky Digital: €18 per Month
Household Bills are approx €60 per month at this time of year (Gas and Electricity)
Other car expenses (Petrol, tax, etc.) are approx €120.00 per month
Food bill is approx 50 euros per week each.

Savings: €100.00 per week by standing order to the Credit Union - only a recent move - currently has about 600 euros in it. The plan is to wait until it is large enough to wipe out the CC debt, and keep going that way as it builds. christmas this year is sorted, no further expense. 

I feel as if I have cut back in a lot of places - I quit smoking (saving approx 20 a week), I dont drink often at all and am a bit of a homebird - thats where Sky Digital comes in - Id much rather watch a film with my partner than go out on the town. On the occasions that warrant a night out, i.e. a friends birthday, I usually drive to avoid spending money. We used to pay 325 euros each on rent, but I negotiated the landlord down in cost which he was happy to do as we are good tenants. 

I have 2 pedigree dogs that were gifts whom I ADORE, so cutting out the insurance is not an option - it covers all vet fees so I never have to worry about an unexpected vet bill. I also buy their food in bulk and 3 months worth of pet food comes to less than 50 euros, which my partner and I buy together. At the moment, I have enough food for another 2 months. They are like babies to me and whatever they need they will get. I also have a fantastic vet who adores them (I think he has hopes to get a pup for his family) and he really does take care of us. 

I myself was in a car accident last year (someone ran me off the road) and suffered severe back and neck injuries - all of which I had to pay out of pocket for as at the time I had no health insurance, wasnt covered on my parents insurance and for some reason didnt qualify for a medical card. I placed a lot of my medical expenses on my Credit Card, which at one stage was over 4,000 euros. I am proud to have gotten that down to 2,200 currently and still going. As of yet, I have not received my expenses back from the insurance company - once that comes, it will go towards clearing any remaining debt. It seems to be taking forever though! 

I should also point out, any remaining monies at the end of the week automatically goes towards my credit card at the moment, or on to the ESB bill which I have added to my online banking (the last one was quite high so Im trying to plan ahead).

I do know that my case is nothing compared to what others are facing and I appreciate that. I have payment protection on my car payment in the event I loose my job and that eases my worry - my job isnt looking 100% certain at the moment (as is the same for almost everyone else in the country).

If anyone can give me some further advice I would really appreciate it. Am I on the right track or have I disillusioned myself?


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## Papercut (19 Dec 2009)

Hi dmos87
You are absolutely on the right track & not in the slightest way delusional! It looks as if growing up in a large family has taught you the value of money, the importance of paying your own way & of taking responsibility for your own actions. So good on you!

  There is very little else you can do as regards speeding up the debt free process or curtailing your expenses, as far as I can see, apart from maybe transferring your current credit card balance to a 0% interest transfer for a certain amount of time offer (I think MBNA are currently offering 0% balance transfers for 9 months).

  If you were to do that & continue to pay that off, you could reduce your Credit Union payments to €50 per week & pay the other €50 plus what you normally pay off your existing credit card into the new 0% one. The €50 a week for 9 months would be €1,800, so the possibility is you would have your credit card fully paid off fully within the 9 months anyway without the insurance claim payment having come through, which you would then have to lodge into the Credit Union.

Alternatively, you could instead of paying the €100 per week to the Credit Union you could pay most of it into your credit card & if your insurance claim payment came through during the 9 months, you could pay what you need to out of that off your credit card also, & lodge the balance into your Credit Union account.

Even if you do neither of the above you are still doing very well, & after your credit card is paid off you could explore the option of paying off your car loan early, either by using your Credit Union funds, or by taking out a Credit Union loan. Just make sure you watch out for penalty fees if & when paying off your car loan.


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## dmos87 (19 Dec 2009)

Thanks Papercut, thats very uplifting!!! Im quite young and dont know much about finances - and not having to worry my parents about this by talking about it helps. 

One question though - last year around the time of the accident, I missed a payment for my car loan. Because of the state I was in, it was 2 months before I realized I had missed it (I received a letter from them). I sent a cheque straight away and havent missed a payment since. As Im in debt and will hopefully be looking to get a mortgage in the next 2 years, I want to know how bad my credit is at the moment? I know if you miss a payment it reflects badly on you. Is there anyway of knowing this? If I ask my bank will they tell me? Or should I wait until my debt is cleared to query this?


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## Papercut (19 Dec 2009)

You can apply for a copy of your credit report for a €6 fee on the ICB site http://www.icb.ie/ 

  If your missed/late payment shows on that (which it _might_ not), you could approach your bank manager/customer relations officer in person, explain the situation & ask them if they would be kind enough to consider removing it from your ICB record. They are the only ones who could possibly do that.


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## dmos87 (19 Dec 2009)

Thank you so so much, I really cant thank you enough


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## Papercut (19 Dec 2009)

Not at all - I hope everything works out well for you!

Edit: One more thing - in the event that it does show on your ICB report & your bank refuse to remove it, make sure to ask if they will add a narrative to it, explaining that you had been in a road accident at the time or something to that effect.


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## pebbledash (19 Dec 2009)

Could you cut down on your food bill at all? My partner and I love our food and eat very well. Our monthly grocery shop is €180, topped up about €15 a week for fresh fruit and veg - about €240 total a month for both of us. We still buy a lot of branded food but shop around. We freeze meat portions and bread and try to avail of special offers. That food bill includes a couple of bottles of wine and the odd treat too.


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## Complainer (19 Dec 2009)

Congrats on cutting out the smokes and doing your best to get on top of things. I'd agree with the advice to put the €100 savings against the credit card instead of into the CU. This will save you significant interest on your credit card. 

You might be able to get a cheaper NTL package than your Sky deal. I'm presume the Sky package is shared, and so is costing you about €35 per month. The basic NTL digital deal is about €22 per month, and you'll get most of the same content, though maybe a few months later than the Sky premium channels.


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## chlipps (19 Dec 2009)

Good to see you are very focused on reducing debt and controlling your money.

You could go for the ''free to air'' channels only and as that is free, it gives you more savings per month

CU interest rates are low so you could look into a savings account which has slightly higher interest rate..see the best buys forum.

In a post above a 0% credit card was suggested... if you cannot get a 0% interest credit card, then you may wish to consider a loan from the CU as the interest rate on a loan from them should be lower than the interest rate for the credit card

Best of luck


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## UFC (20 Dec 2009)

You're doing well dmos87.

I agree with the other posters that you should put the €100 savings towards your CC each month, and definitely look into moving to a 0% interest CC.

I was once in debt myself, so I know how you feel. I assure you if you keep doing what you're doing, you will soon be debt free and you will have trained yourself to be an excellent saver -- getting in and out of debt is an excellent way to learn some serious money management skills!


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## burmo (20 Dec 2009)

Hi dmos,

First off I'd like to say that it's great to see how determined you are in resolving your debt. Believe me from reading some other peoples problems here this couldn't be the cheapest lesson in your life! ;-)

I agree with the general advice, you're very much heading in the right direction. I'd also try to move the CC to a 0% one or take out a much cheaper personal loan and pay off the credit card now as it will cost you less in interest.  Also agree with saving your money in a high interest savings account in the future - see the best buys thread.

At 22, to get a scare and planning to be debt free in the next twelve months means you are in a very positive mindset that will serve you very well going forward!

Best of luck,
Burmo.


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## jambo.ie (21 Dec 2009)

Wouldn't paying the savings directly into the credit card reduce the monthly interest bill? If the OP does a 0% balance transfer this wouldn't be an issue.


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## dmos87 (21 Dec 2009)

Thanks everyone - step one after Xmas is to talk to my bank about switching cards. I called them yesterday and the interest levels I am paying are over 20%, I couldnt believe it. She advised me on two new cards they are doing but neither of them are 0%, not even close. The lowest was around 9%. I think I'll shop around first and see what can be done.

At the moment, I have been working around the clock doing double shifts at both my full time job and my part-time work (they are manic over Xmas) so the moneys rolling in this month - a nice change for December!! Everything extra I earn plus the usual is going off the CC which hasnt been used in about 3 months (last time was online Car Tax) so hopefully the interest they charge at the end of the month will be low again. The last 3 months I have easily exceeded their minimum payment.

As my Credit Union savings are done by S.O. weekly, I'll also speak to them about making that payment 50 per week so an aditional 50 can go on the CC. 

Re: the Sky Bill - its actually split between 3 people (a total of 55 euros per month). We took on an extra tenant and got the landlord to reduce the rent, so all round we cut down our rent costs and bills. Shes lovely and we seem to be falling into a really good meal plan - I cook one night, she the next, then my partner, etc. When I gave the approx. food budget, I was giving a guess really - I would imagine its much less and with our new room mate being quite healthy we are cooking far more instead of getting convenience foods. I tend to do the majority of my shopping in Aldi's, apart from meats which I go elsewhere for. 

I have to admit I was quite surprised how well I've done in the last year getting my debt down, especially since the accident and all the expense involved with getting better. When I totted up my total debt figure it was smaller than I had thought - showing what a dent I had made last year. I know I can do it, I just need to be strict on myself. And theres so much more I have learned; never go to a car dealerships alone when 18 and a little bit ditzy. They really did see me coming! Always read the paperwork to what you are signing. Watch your Direct debits, take note of the dates. etc. etc. the list is endless. I've spent the last 3 years of my life trying to get out of debt and it finally feels completely do-able. 

I read an article recently in the Sunday Tribune about living on €10 a week (apart from rent, bills, food, etc.). And I tried it. It really opened my eyes to the little unnecessary things I buy each week without even thinking and I saved a lot that week. I didnt last under the tenner FYI, but I came close 

Thanks to everyone posting. I'm reading every comment and taking the advice on board. I really do appreciate ye taking the time to reply


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## PaddyBloggit (21 Dec 2009)

The €10 a week challenge sounds great .... was this for entertainment?


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## dmos87 (21 Dec 2009)

It was more to highlight where my money was going, and actually accounting for what I spent. In the end, buying a lightbulb pushed me over my limit, just barely  but it was necessary, my entire kitchen was in darkness and I didnt have many candles!! 

I'd wholeheartedly recommend it to anyone, it really opened my eyes. Keep in mind, any taxi / bus fares, drink, cigarettes, clothing, etc. that you purchase must all come from the €10 euros. 

I found the link, and apologies, I made a mistake - it was actually the Independant I read it in 

http://www.independent.ie/business/...e-836410-a-week--well-just-about-1783070.html


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## WaterSprite (22 Dec 2009)

Fair dues to you dmos - you're an inspiration!  Well done you.


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## dmos87 (22 Dec 2009)

Well I wouldnt go that far, after all I am the one in debt lol


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## dmos87 (23 Dec 2009)

Just to update you all  

I've changed my weekly SO to the credit union to 50 euros a week, and an additional 50 euros will be placed on the CC. At the rate I'm going, in just under 3 months the CC debt should be gone. I had considered using the CU savings to clear the car loan first but when I enquired about doing so on the dfixed loan, they were going to charge me a lot extra to finish the loan early. At least there is only 1 year left on this and I have payment protection so its not so bad - Im now going to focus on the CC first. 

A question on getting my Credit rating: I mentioned this to my partner the other night and he said he was told each time you request it, your rating is further effected. Sounds a bit off, can anyone confirm this for sure?


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## dereko1969 (23 Dec 2009)

Ditch the medical insurance.


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## fiatmoney (23 Dec 2009)

dmos87 said:


> Just to update you all
> 
> 
> 
> A question on getting my Credit rating: I mentioned this to my partner the other night and he said he was told each time you request it, your rating is further effected. Sounds a bit off, can anyone confirm this for sure?



Your rating is only effected by defaulting on loans and HP's

Great to see someone your age so dedicated to controlling their finance. Before you know it you should be posting for advice on the investment threads. Best of luck


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## UFC (23 Dec 2009)

dereko1969 said:


> Ditch the medical insurance.


 
I don't know, I just had surgery and my medical insurance meant I could go to a top plastic surgeon in a private hospital.

Worth it in my opinion.


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## Mpsox (23 Dec 2009)

Firstly I'm impressed by a 22 year old with her head screwed on as well as you. Well done, in the long term, I'd say you'll work out fine

Some practical things that may also help

Start a change jar, I've had one for the last few years, usually clear it out before Xmas and had around €150 in it this year. It's amazing how quickly it adds up

Secondly, do a full root and branch on your tax position. Have you claimed tax relief for everything you can, for example, your medical expenses, even if your health insurance covered a fair whack of them, likewise, bin charges, union membership, there is a long list of things which many people don't claim for and which will increase you take home pay. Dont just look at this for the future, have you historically claimed for all you should have claimed for?

Thirdly, pay cash for things, it really does help cut down on spending when you are not flashing a debit/credit card 

Lastly, it's time to look to the future, your debt is coming under control, what can you now do to increase your income in the future,? might be time to start considering night classes, further education and training


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## jambo.ie (23 Dec 2009)

dmos87 said:


> I had considered using the CU savings to clear the car loan first but when I enquired about doing so on the dfixed loan, they were going to charge me a lot extra to finish the loan early.


At the moment I'm paying down my car loan in a big way, it's my only debt and it's seriously expensive. The intention is to get the loan principal way down to reduce the interest bill. When it's nearly paid off I'll reduce the repayment down to 10 euro or so to avoid the early termination penalty. Check your loan contract to see if this is possible for you.


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## dmos87 (27 Dec 2009)

dereko1969 - not a hope. I was run off the road last year and no med insurance and no Medical card. Also low savings and it crippled me. I won't make the same mistake again. I see it as a necessity, more so than most others. This year is my first year having insurance of any kind so hopefully next year the cost might reduce. 

fiatmoney - apologies if this is a silly question - what are HP's?


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## dmos87 (27 Dec 2009)

jambo.ie - thanks for that. I'll definitely speak with the bank about doing this - it could work


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## fiatmoney (27 Dec 2009)

fiatmoney - apologies if this is a silly question - what are HP's?[/QUOTE]

Hired purchases.


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## dmos87 (27 Dec 2009)

None of those TG


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## dmos87 (27 Dec 2009)

Lastly, it's time to look to the future, your debt is coming under control, what can you now do to increase your income in the future,? might be time to start considering night classes, further education and training


-Already doing this  Have been doing night classes locally to improve a skill that has a high earnings prospect and is also fun for me. The aim of the game is to get rid of my debt, and focus on possibly enrolling back in college as a Mature student - at the moment I'm too young for this but next year I am eligible.


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