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📊 Long-Term Debt Spiral Example (with 15, 20, and 30-year projections)
Assumptions stay the same:
- Initial balance: £3,000
- Annual interest rate: 22%
- Minimum monthly payment: 3% of balance or £50 (whichever is higher)
- Monthly new charges: £200
- No change in behaviour over time
| Year | Starting Balance (£) | Annual New Charges (£) | Annual Interest (£) | Annual Payments (£) | Ending Balance (£) | Debt Status |
|---|---|---|---|---|---|---|
| 1 | 3,000 | 2,400 | 660 | 900 | 5,160 | Normal debt |
| 2 | 5,160 | 2,400 | 1,135 | 1,290 | 7,405 | Struggling debt |
| 3 | 7,405 | 2,400 | 1,629 | 1,776 | 9,658 | Critical debt |
| 4 | 9,658 | 2,400 | 2,124 | 2,338 | 11,844 | Critical debt |
| 5 | 11,844 | 2,400 | 2,606 | 2,953 | 13,897 | Near-defunct debt |
| 6 | 13,897 | 2,400 | 3,057 | 3,591 | 15,763 | Near-defunct debt |
| 7 | 15,763 | 2,400 | 3,647 | 4,324 | 17,486 | Defunct debt |
| 8 | 17,486 | 2,400 | 4,196 | 5,096 | 19,086 | Defunct debt |
| 9 | 19,086 | 2,400 | 4,690 | 5,965 | 20,211 | Defunct debt |
| 10 | 20,211 | 2,400 | 5,249 | 6,883 | 20,977 | Collapsed debt → Collection or Bankruptcy |
| 15 | ~25,000 | 2,400 | ~6,800+ penalties | ~9,000 (some missed) | ~40,000–50,000 | Legal action, collections, ruined credit |
| 20 | ~50,000 | 2,400 | ~12,000+ penalties | ~10,000 (irregular) | ~80,000–100,000 | Bankruptcy risk, asset seizure |
| 30 | ~100,000+ | 2,400 | ~25,000+ penalties | ~15,000 (if any) | £150,000–£200,000+ | Bankruptcy, destroyed financial future |
💥 Key Insights After 10 Years
- 15 years: Late payment penalties, collection agency fees, and court judgments begin stacking — often doubling the debt.
- 20 years: Debt easily crosses £100,000 with compound interest + fees; lenders may pursue court enforcement or asset seizure.
- 30 years: Without bankruptcy, debt can balloon to £150,000–£200,000+, becoming completely unpayable; personal bankruptcy becomes the only legal escape.
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