21 Years old - £4000 In debt (Not student loans)

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Hey,

I'm £4000 in debt. It's it the form of a £2800 Overdraft and a £750 loan. With interest and fees, the amount is £4000.

I earn enough to cover it but only just. I've done a projection using excel and found that I'm due to be out of debt by July/August 2013 assuming I stick to my tight budget and my income remains the same. I just feel trapped though. I cant explain how guttered I am to be in this much debt. I know it's not "a lot", and It's not debt that can run away too much - but It's still bad for my age and I really shouldn't be in it.

I've tried geting a £5k/4k bank loan (Which I could easily afford and would take off so much stress due to the relatively fair interest rate) to refinance all of this but they won't do it. Computer says no.

Most of it is caused through gambling and frivolous overindulgence (Which I have now reigned in substantially). £550 of it is money I've lent out to help close family out which I will get back eventually.

Anyone have any experience of being in debt? How do you get over these feelings of discomfort and vulnerability? Is it the end of the world?

I borrowed a lot of money years ago to help fend off an unfriendly takeover of a company. I ended up being something like the fourth largest stockholder in the company. In the end, the company went under anyway and I lost everything I had in it.

It took me several years at a regular job to pay off the debts.

Its more the nature of my debt that worries me.

The loan is manageable at £100 a month. And the overdraft only has an interest fee of £36 a month (when maxed out). The fact It's an overdraft is what's the problem though. According to the terms and conditions of Overdrafts, they are repayable on demand, and what with the credit crunch etc - banks are calling them in if the risk is there. I nearly max out on my O/D most weeks. I'm basically living on the banks money.

I would have to go into a Debt Management Plan or (at worst) file limited insolvency if they demanded this money back on the spot. I simply could not afford to pay it all at once, or even in large increments.

If I could lend £5k at 15-30% over 36 months, I'd be sorted. But they wont do it probably due to my current financial situation (Despite the fact that the loan would nullify said financial situation)

It's ok. Don't panic.
It's better than having student loan debt.

I'm 21 and have $16,000.
I have a friend who has over 40,000.

You're cool.

Isn't Student debt a bit different though?

Firstly, you don't have to repay until you earn over "x" amount. Further, you (theoretically) have access to higher tier incomes (Though certainly not universally the case, it's still "defacto") as graduates. I only studied up to A-Level.

As it stands I owe £3k to the bank in which my wages are paid in, and £750 to a sub-prime loan company.

Stick to your plan and you will survive.

When my marriage imploded, in order to avoid a nasty divorce fight I took all of the debt with me, around $12000. Making big payments, I managed to pay it all off in roughly 18 months while renting a room and living close to work and basically eating lite (albeit healthy too though after the bad marriage my stomach was too wrecked to eat large meals, even to this day).

Yes unlike most people, debt "hangs over your head", but is that not normal? I think all debt should be looked at that way and if everybody felt that way, we would not have the moral hazard of easy money. Why should a car, for example, cost so much that you have to take a loan out to get one? It's because you can get a loan, or most people can get it, and do so without questioning or thinking twice, there is NO MARKET PRESSURE for the prices to come down.

The same thing happens with houses. Low interest rates and loose lending policies created the housing price boom seen from around 2004 to 2007. Easy money creates moral hazard, and when people can sign for money, they do not put pressure in the market to bring prices down.

So as far as I am concerned, being bugged by being in debt should be the norm and if it was there would be a lot less trouble in the world right now.

I think the people who can just remain 1000s in debt needlessly and brainlessly are the ones with the problem and the cause of many problems.

I think you're absolutely right on the issue of finance and markets.

Not in my country.
You only don't have to repay while you're in grad school. The day you get out of school the bill comes in the mail.
You MIGHT get access to higher tier incomes. Might. Even then, you have to pay back and the interest rate is high.
And, not even bankruptcy will get you out of it. You HAVE TO pay it back unless you die.
And, you have to pay interest while in grad school now.

And if you default, you're credit score is ruined, so your potential of getting a high-tier job is screwed.

What country is this?

America. United States.

Don't panic or let this take over your life and your every thought.......I know it's easier said than done, but you sound like you have a very sensible plan and if you stick rigorously to it the reward of being out of debt is Sooooooo worth it.

I've been in your position but with a much much larger debt amount (and I don't say that to make your debt sound insignificant, because it isn't, it's a lot of money and probably feels like a world away from being able to make it disappear. Right now you probably have it hanging over your head giving you a big prod now and again and that horrible empty sickly feeling creeps into your stomach............maybe you don't but that's how it made me feel, I remember it well!) Try not to let it get to you!

I went through a debt managment plan with the cccs and I'm so glad I did it that way, it kept my creditors off my back (used to get lots of bullying phone calls, caused major stress and became ill as a result) and I got rid of my debt quicker through them than if I'd done it on my own, unlike you by the sounds of it, I couldn't see beyond all the mess and formulate a plan. So, good on you for being proactive and trying to sort it, I mean that, it takes guts to face it head on

Have you spoken directly to your creditors about what your plan is? It might be an idea to do that so that they are aware that you are aware of the problem and are actively doing something about it.

My credit score is much improved now because I keep track of it regularly and have used 'tactics' to keep it on the up. I've NEVER been so financially aware!

I know one person who was made bankrupt and has started all over again from scratch, and their attitude towards it amazes me, they basically, now that is, (I don't know how they were during the difficulties!), shrug it off and have this attitude "it's only money"!

It's not the end of the world; if you can see a 'debt free date' then you're half way there.

It's not easy to try and mask or ignore the feelings of vulnerabiltiy and stress you describe, but when you slowly, every month or week see a debt going down it's a massive motivator and soon you'll be wondering why it was getting you so worked up.

You may already know about this website:
http://www.moneysavingexpert.com/

p.s. I don't know what anyone else might think, but I don't think borrowing more is a good idea; that's the advice most people in the know about finances gave me, and I'm glad I listened to them (even though I wasn't in a position to borrow any!) because I'm pretty sure it would've given me a false sense of security and I could have easily let things spiral out of control even more.

Debt you have a payoff date for is a known. It's a problem but time will take care of it.

Focus your worry and effort on the unknowns in life; the problems that grow with time.