£20,000 in the red - HELP!

W33f33t

Hi

I'm a newbie here and hope that someone out there can help me.

I owe just over 20k - 13k to my bank and nearly 8k on 2 credit cards (now up to their limits). Now, I'm not on the breadline but I don't own a house so have no security.

I approached my bank about a top up loan to clear and get rid of my CC's, as my loan is only 3.9% interest. They refused and I'm gutted, claiming it would be irresponsible for them to give me more money.

I'm trying to pay for a wedding in April, had a sick Grandmother overseas and had to go there for a time, which drove my expenditure out of control.

Can anyone offer me some sound advice, I'm feeling very desperate!

Rafter

Sorry to hear you are having problems.

All I can suggest is calling your credit card companies and tell them you are having trouble making payments and can only afford to pay £x per month and can they reduce their interest charges? I presume you are paying much more than 3.9% on your credit cards?

I'd then follow a lot of the good advice on this board about cutting expenditure on anything non-essential to try and get back on an even keel. Also trying to get some extra income by doing a second job (bar work?)

April is only 6 months away and weddings are very expensive. Can you scale down your plans or get family to help with the cost. Similarly with the costs of going overseas to see your sick relative.

Good luck.

R.

svmitche

Hi there,

PLEASE DON'T PANIC!!

I know that's easy for me to say, but now that you've come to the right place for advice, panicking is the worst thing you can do.

Rafter's advice is sound about your credit cards, but why not take it one step further and visit your local Citizen's Advice Bureau or call National Debtline on 0808 808 4000 (website at http://www.nationaldebtline.co.uk/)? Sometimes if you speak to your credit card companies through an objective third party it shows a genuine willing to clear the debt and may make the CC companies more likely to listen to your suggestions.

The most important thing you could do is find the time to read this site. Martin has provided all of the guidence that you might need to cut your debt, spending and get out of the hole you find yourself in. Take his advice and also read through some of the tips on the chat forum. There are some very knowledgeable people here who only want to help.

If you are serious about curbing your spending and clearing your debt you must make yourself a budget. Martin's automated budgeter at the top of the page will help you with this.

I see you are planning a wedding in April. On the assumption that your partner is fully aware of the money situation, take a look at the weddings chat board. There are some excellent tips and contacts on that board to be able to make your day just as magical but on half the money.

I wish you the very best of luck in improving your situation and please don't think that you're alone. I think a lot of the MSErs have been in your position, so you are amongst friends.

Let us know how you get on.

Robert_Sterling_3

You owe a serious amount of money.
Either do not get married at all next April or get married with two witness present and then meet up with friends and relatives in a pub where they can pay for their own food and drink. The last think you need is to increase the £20,000 debt.

W33f33t

Hi folks

Thanks a million for the advice. To answer a few questions, regarding the wedding, most of it has been paid for already, bar a few balances so it isn't the source of my present situation really.

My credit cards have interest rates of 14.9% and 15.9%.

I tried approaching one of the companies concerned to see if they would reduce the interest rate of my card and they said no but would I like to take out a loan instead?!

Believe me, if I thought cancelling my wedding was now a viable option, I'd take it.

Martinslovechild

Consider taking out a loan with somebody else - you should be able to pick one up at a rate of approx 6.1% (or less) - Cahoot do a fixed rate loan for 5.7% over a 1 to 7 year term.

Then pay off both the credit cards (or as much as you possibly can). This would effectively halve the amount of interest you pay each month on the cards.

If you take out a loan, you could consider paying it off over a longer period than you would normally consider simply to keep the repayments down to a realistic level of affordability.

However - you must sit down and look at ALL of your expenses right now. Work out which ones you cannot do without and which ones could effectively be reduced or cancelled altogether.

For example:-
1. Purchase cheaper items at the supermarket
2. Try walking or cycling to work - if this is a long-term option, then consider selling the car.
3. Cancel any unnecessary insurance policies
4. Cancel Sky TV
5. Stop smoking (if you do)
6. Drink at home instead of the pub
7. Take up cheaper hobbies, e.g. reading/borrow books from library
8. Get an additional part-time job in a pub/supermarket
9. Sell your unused stuff on eBay
10. Work out a realistic payment plan and STICK to it!!!

ffs

Clever use of credit will enable you to reduce your interest payments and probably your minimum payments too. This will free up income which you can then use to fund even more borrowing to allow you to marry in style. You will probably be able to extend your credit even further if you have to fund another emergency trip abroad. This will leave you will a much larger debt which you will have even less chance of being able repay (although you might just be able to maintain it indefinitely).

Are you sure you really want to do that?

Please don't be tempted to repeat my mistakes.