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  • FIRST POST
    • Needachange
    • By Needachange 6th Oct 17, 3:41 PM
    • 1Posts
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    Needachange
    Got myself into a mess and I want to get myself out
    • #1
    • 6th Oct 17, 3:41 PM
    Got myself into a mess and I want to get myself out 6th Oct 17 at 3:41 PM
    Hello

    So as the title suggests I've managed to get myself into a but of a mess debt wise and could really use some advice on the best way to turn things around.

    So I have about £8000 of debt. Split across a number of credit cards and one store card, they are split up below

    Card 1- £3000 outstanding, 0% until Nov 18
    Card 2 - £3200 outstanding balance, roughly 20% interest
    Card 3 - £300 outstanding, about 30% interest
    Card 4 - £200 outstanding, about 25% interest
    Store card £1400 - roughly 30% interest

    I'd rather not get into how I got here, I made mistakes I'm not proud of and I really want to get myself out of it as soon as can.

    After my bills and general living costs I'm left with about £420 per month. Not including the minimum payments for the above debts after which I have about £190. This is every last penny I have left after my bills.

    Ideally I would like to get myself out of this mess without defaulting on any of the debts. I'm having no trouble making minimum payments but I feel like I'm trapped there.

    Can anyone please give me any advice on the best and fastest way to clear these off without causing major damage to my credit file.i would really appreciate it.
Page 1
    • Bedsit Bob
    • By Bedsit Bob 6th Oct 17, 5:36 PM
    • 9,833 Posts
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    Bedsit Bob
    • #2
    • 6th Oct 17, 5:36 PM
    • #2
    • 6th Oct 17, 5:36 PM
    First step is to post an SOA (link below), and let the members see exactly where you stand.

    We'll then be able to give precise advice.

    http://www.stoozing.com/calculator/soa.php

    In the meantime, as a general rule, you should be hitting the highest APR debts (in your case the 30% ones) hard, while making minimum payments on the rest.

    You should also immediately stop using the cards.
    Last edited by Bedsit Bob; 06-10-2017 at 5:40 PM.
    My job is Top Secret. Even I don't know what I'm doing.

    Amount I have so far denied the BBC - £1161
    • DebtFreeDuo
    • By DebtFreeDuo 6th Oct 17, 5:38 PM
    • 628 Posts
    • 3,048 Thanks
    DebtFreeDuo
    • #3
    • 6th Oct 17, 5:38 PM
    • #3
    • 6th Oct 17, 5:38 PM
    I second the SOA, lots of people will offer help in possible areas to cut. Nobody is here to judge you and your reasons for being here, we are all here for the same reason and are here for support and advice.
    Loan:1780.49 2207.38 Car Loan:2039.22 2419.64 0% CC:984.98 1063.48 Overdraft: 860 Overpayment:1781 Total: 7445.69 DFD Dec 18
    SPC 586
    • Fireflyaway
    • By Fireflyaway 6th Oct 17, 6:33 PM
    • 1,360 Posts
    • 1,380 Thanks
    Fireflyaway
    • #4
    • 6th Oct 17, 6:33 PM
    • #4
    • 6th Oct 17, 6:33 PM
    I'd use the snowball method ( check out Dave Ramsey). If you are really strict then 2 of those cards could be wiped off in a month. Chop the cards up and close the accounts so you are not tempted again.
    You have spare money and your total debt isn't extreme so I think you can easily get rid of it. Posting you bills can help people advise on ways to cut back. Its important to know exactly what goes where. Make a plan each month before you get paid.
    • Maximum Saving
    • By Maximum Saving 6th Oct 17, 10:09 PM
    • 182 Posts
    • 333 Thanks
    Maximum Saving
    • #5
    • 6th Oct 17, 10:09 PM
    Getting out of your debt
    • #5
    • 6th Oct 17, 10:09 PM
    I suggest you try to do Dave Ramsey's snow balling your debts. Pay minimum payments on each of your debts and try to pay off your smallest debt. This one would be card 4. Once that £200 is paid back you can do the same for card 3.

    It will take you lots more time to pay off your £1400 store card. When that is gone get rid slowly of your card 1 and lastly card 2. Good luck.
    • datlex
    • By datlex 7th Oct 17, 11:48 AM
    • 1,456 Posts
    • 1,236 Thanks
    datlex
    • #6
    • 7th Oct 17, 11:48 AM
    • #6
    • 7th Oct 17, 11:48 AM
    I'd use the snowball method ( check out Dave Ramsey). If you are really strict then 2 of those cards could be wiped off in a month. Chop the cards up and close the accounts so you are not tempted again.
    You have spare money and your total debt isn't extreme so I think you can easily get rid of it. Posting you bills can help people advise on ways to cut back. Its important to know exactly what goes where. Make a plan each month before you get paid.
    Originally posted by Fireflyaway
    I suggest you try to do Dave Ramsey's snow balling your debts. Pay minimum payments on each of your debts and try to pay off your smallest debt. This one would be card 4. Once that £200 is paid back you can do the same for card 3.

    It will take you lots more time to pay off your £1400 store card. When that is gone get rid slowly of your card 1 and lastly card 2. Good luck.
    Originally posted by Maximum Saving
    Definitely agree with these two posters. Snowballing works. There are videos on YouTube which explain this. As Dave Ramsey says it may be counter to the logic that says pay off the highest interest rate first but if logic worked folk would get out of debt quicker.
    So the order you would pay is £200, £300, £1400, £3000 and finally £3200.
    • Bedsit Bob
    • By Bedsit Bob 7th Oct 17, 4:58 PM
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    Bedsit Bob
    • #7
    • 7th Oct 17, 4:58 PM
    • #7
    • 7th Oct 17, 4:58 PM
    Pay minimum payments on each of your debts and try to pay off your smallest debt. This one would be card 4.
    Originally posted by Maximum Saving
    I disagree.

    Card 4 has a lower APR, and a small balance, so isn't costing much.

    The Store Card has a higher APR, and a big balance, so is costing a lot in interest.
    My job is Top Secret. Even I don't know what I'm doing.

    Amount I have so far denied the BBC - £1161
    • EssexHebridean
    • By EssexHebridean 7th Oct 17, 7:26 PM
    • 8,232 Posts
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    EssexHebridean
    • #8
    • 7th Oct 17, 7:26 PM
    • #8
    • 7th Oct 17, 7:26 PM
    I disagree.

    Card 4 has a lower APR, and a small balance, so isn't costing much.

    The Store Card has a higher APR, and a big balance, so is costing a lot in interest.
    Originally posted by Bedsit Bob
    This is one of the problems that seems to be emerging now - people are meaning 2 different things by "Snowballing" - the method we've traditionally advocated here involves paying off the debts with the highest interest rates first, then moving on to the next highest. however there is a new school of thought which suggests shifting the smallest debts first. Personally I think this can be a bit short sighted, particularly when there are 30% and higher rates involved! I would however suggest that where there are small balances that can be got shot of in a single month's payment, it may make sense to clear those first as it can make the whole picture look clearer if there are less tiny little debts kicking about.
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£702.45 (20/11/17)
    SOA Calculator for DFW newbies: Stoozing.com SOA Calculator
    • Bedsit Bob
    • By Bedsit Bob 7th Oct 17, 7:50 PM
    • 9,833 Posts
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    Bedsit Bob
    • #9
    • 7th Oct 17, 7:50 PM
    • #9
    • 7th Oct 17, 7:50 PM
    We don't have exact details, about what the OP is currently paying to his/her debts, hence why I suggested posting an SOA.

    However, let's assume, for an example, the OP is paying 1.5% of the balance, per month.

    Also, let's assume he/she decides to put an extra £50 toward the debts.

    Working only with cards 3, 4 and Store Card, this is what we get.

    Paying them in APR order (ie. paying the highest APR first), will take 36 months, and cost £894 in interest.

    Paying them in balance order (ie. the lowest balance first), will take 37 months, and cost £934 in interest.

    Why would you want to be in debt for an extra month, and pay £40 for the privilege
    My job is Top Secret. Even I don't know what I'm doing.

    Amount I have so far denied the BBC - £1161
    • MoneyEM
    • By MoneyEM 7th Oct 17, 11:32 PM
    • 94 Posts
    • 36 Thanks
    MoneyEM
    If this is my debt, I would focus on paying any spare money into the debts which have the highest APR while ensuring to meet minimum payments on all others:

    Pay Store Card first - this has one of the highest APRs and a considerable debt remaining, hopefully by time you settle this you should have minimal amounts to pay on cards 3&4 but what are your minimum payments out of interest (percentage wise?)

    Then i would tackle Card 2 until settled, then Card 1 last as this has no interest so the cost of borrowing is zero as long as the minimum is paid - however, what is the rate on this card after the 0% period?

    Have you tried to get a balance transfer card for your debt? I know there are cards available which will transfer your debt to 0% over a period of time for a low fee (i've seen one for 3.4%)
    Last edited by MoneyEM; 07-10-2017 at 11:40 PM.
    • MoneyEM
    • By MoneyEM 7th Oct 17, 11:39 PM
    • 94 Posts
    • 36 Thanks
    MoneyEM
    We don't have exact details, about what the OP is currently paying to his/her debts, hence why I suggested posting an SOA.

    However, let's assume, for an example, the OP is paying 1.5% of the balance, per month.

    Also, let's assume he/she decides to put an extra £50 toward the debts.

    Working only with cards 3, 4 and Store Card, this is what we get.

    Paying them in APR order (ie. paying the highest APR first), will take 36 months, and cost £894 in interest.

    Paying them in balance order (ie. the lowest balance first), will take 37 months, and cost £934 in interest.

    Why would you want to be in debt for an extra month, and pay £40 for the privilege
    Originally posted by Bedsit Bob
    I thought the same, however, if you focus on paying those then you won't have paid much of card 1 which is interest free at the moment, but in 11 months you will get bumped onto a higher rate (for example, my 0% card would go up to 17.48%, but the OPs rate may be much higher than mine) so that's something to take into consideration.
    • Bedsit Bob
    • By Bedsit Bob 8th Oct 17, 12:27 AM
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    Bedsit Bob
    but in 11 months you will get bumped onto a higher rate (for example, my 0% card would go up to 17.48%, but the OPs rate may be much higher than mine)
    Originally posted by MoneyEM
    Higher than 30%?

    Of course, we're all speculating at the moment.

    What we need is a SOA from the OP.
    Last edited by Bedsit Bob; 08-10-2017 at 12:51 PM.
    My job is Top Secret. Even I don't know what I'm doing.

    Amount I have so far denied the BBC - £1161
    • binaryuniverse
    • By binaryuniverse 8th Oct 17, 7:06 AM
    • 479 Posts
    • 262 Thanks
    binaryuniverse
    I would also suggest attacking the 2 low total cards first. Get rid of those and you get 2 monthly outgoings gone, and a sense of relief that you're actually getting somewhere. Then start throwing all available cash as the store card.

    However, have you tried applying for a 0% balance transfer card? Tesco have a card offering 0% for 24 months (although this may vary). They are also fairly easy to get and, in my experience, give some pretty generous limits. If you could get one of those, you could potentially shift most of your debt to it, and have 2 years of money servicing just the debt.

    Alternatively, have you tried phoning your credit providers and asking to have the interest reduced as it's costing you too much? Even a small reduction will let you pay more off the debt, rather than servicing interest.
    • EssexHebridean
    • By EssexHebridean 8th Oct 17, 12:53 PM
    • 8,232 Posts
    • 43,626 Thanks
    EssexHebridean
    Another smart trick for you - where you're snowballing highest interest rates first, set the monthly payments on everything else that works on a "minimum payment" basis to a level slightly above what is currently payable - so a minimum payment of £33.87 might become £35, for example. That way you avoid the issue of the minimum payment falling each month as you pay off. This has two major advantages - firstly that you chip away a little more at the capital balance each month than you would with a standard "minimum payment" set, and secondly that you have a round figure going out each month and know precisely what that figure is - so you don't end up with random additional money in the bank account that will simply end up getting frittered. Bear in mind though that this method ONLY works where you are not using the cards - otherwise you;re setting yourself up for all sorts of trouble!
    Last edited by EssexHebridean; 08-10-2017 at 5:10 PM.
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£702.45 (20/11/17)
    SOA Calculator for DFW newbies: Stoozing.com SOA Calculator
    • Tarambor
    • By Tarambor 8th Oct 17, 5:08 PM
    • 1,763 Posts
    • 1,206 Thanks
    Tarambor
    I suggest you try to do Dave Ramsey's snow balling your debts.
    Originally posted by Maximum Saving
    Dave Ramsey is wrong in the way he says to do this, he is on several things, and it wastes money paying more interest than you need to if you do it his way.

    On a pure "making your money work the hardest for you" basis, what you should do is this:

    1) List the credit cards in order of interest, highest interest first, lowest at the end.
    2) Pay the minimum on all cards with the exception of the first on the list.
    3) Pay absolutely everything you can off the first card on the list until it is cleared then remove it from the list.
    4) Go back to 2, rinse and repeat until they're all done.
    • Bedsit Bob
    • By Bedsit Bob 8th Oct 17, 6:06 PM
    • 9,833 Posts
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    Bedsit Bob
    and it wastes money paying more interest than you need to if you do it his way.
    Originally posted by Tarambor
    In some cases, it not just wastes money.

    It wastes time too.
    My job is Top Secret. Even I don't know what I'm doing.

    Amount I have so far denied the BBC - £1161
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