Addicted to credit cards

trancebabe

*listens out for cutting sounds

Ames

What do you want the security for? You're not a homeowner or car owner so you're not going to get sudden big bills for anything essential. That's how I'd look at it anyway.

If I were you (and this is probably a bit different to most people on the site), I'd work out how many months are left till the end of the 0% deal. Then divide the balance by that many months and pay that much off. Then whatever's left of your income you've got to do what you like with.

And cut up the cards! If you really want one for emergencies, when you've paid them off get them to give a lower balance, them put the card in a cup of water in the freezer so you can get at it for emergencies but not for frivolous things.

I just wish I'd had someone to suggest all this to me a few years ago!

Bayblue

I know what you're saying golfingdog (!), we all love the comfort of having credit cards, but it's a bit of a cop out to say that you're 'addicted' to them.

At the moment your debt problem is worrying, but it's still at the stage where it's reasonably easy to sort out. If you carry on spending as you are then in not so many months it won't be, so it makes sense to do something now to make sure that you won't have major problems in the future.

Don't look on it as a negative thing, think of it as setting up your financial future so that you'll be able to enjoy ALL of the money that you earn instead of paying increasing minimum monthly payments to pay of credit cards.

Do an budget and a SOA, and perhaps a spending diary to see where your money goes. Then you can see where you can make savings. It's surprising when you write everything down, people often have direct debits for things that they've forgotten about or don't even use (the gym anyone??) so it's worth doing. You'll find that you probably won't even notice much difference in lifestyle, but it could make a big difference to getting debt free.

On the subject of cutting up cards: Well that works for many, but I must admit although I closed some accounts I do still have 2 cards left. However, one card is kept at home in a safe place and I've sort of taught myself to be good and not use the one I keep in my purse. It's for emergencies, and in case I'm ever tempted to spend I've set up the direct debit so that the whole amount owed comes out every month. Other people have put their cards in inaccessible places like an ice block in the freezer for example. There's no need to make them the enemy when they can be quite useful now and then, only you know what's best for yourself though.

Best of Luck- Remember that by sorting this put now you're doing the best thing that you can to secure your financial future.

katie2407

give them to your parents if you do not want to cut them up but stop spending on them now or you will have bigger problems in the future

trancebabe

*can't hear any cutting noises....

Sooler

Have you cut them up yet? .... we'll wait

dodecanese

It would be better to cut them up, get rid of them while you still live at home and have enough disposable cash.
If you deal with it now you'll save yourself a lot of potential misery in the future.
Spending too much money can be a bit addictive, but if you cut back now you'll soon adjust and get used to it. Using credit cards as a back up or "security" for an emergency- I used to think this, but you end up spending on them anyway.

lilac_lady

I agree - cut up your DEBT cards.

JimmyTheWig

thegolfingdog wrote: »

I have 2 credit cards with limits of 5.3k and 3.5k each. The interest free rates on these credit cards both end in Jan 09

My current credit card debt is £5362

After tax i clear £1000 per month

I have definite outgoings of £150 rent for parents, £50 for mobile phone, and minimum payments of £120 in total over the 2 credit cards = total definite outgoings is £320.


I dont have the will power to stop spending on my credit cards and im seriously worried about this mounting debt. I would love to have this clear within the next 12-18 months, but i just dont know where to start or how to manage my cashflow. Im sorry for heaping my problems on you guys, but can anyone help me with advice or tips?

Firstly, well done for asking for advice now. Lets see if we can nip this problem in the bud before it gets worse. And believe me, when the interest free periods run out it can get much, much worse.

I agree £50 a month on your mobile phone bill is way too much. But come on, even if you knocked £30 off that it wouldn't make _much_ difference.
The problem is, quite simply, that you spend too much. And you have rightly pointed out that it is a question of will power.

Lets say you carry on as you are, and when the 0% deals run out in January you still have £5000 outstanding. Lets assume you will be paying 16% APR on this. That's in the region of £70 in interest a month.
Now, I know you like spending. That's £70 each month that you won't be able to spend as you will be paying it out in interest. What a waste.

But maybe that's not enough will power, yet.
How about you imagine the boss of the credit card company. He's going to have plenty of money already. He's got a big house, a big car, expensive clothes, etc. Imagine every month you have to go up to his front door and hand him over £70 for him to stuff in his pocket. And remember that you get absolutely nothing for that at all.

Or imagine a used car salesman. the interest on £5000 might be £800 a year. Imagine you go to a car-lot and spend £800 on a car. Imagine the salesman then refuses to let you have the car. Imagine he's got a big dog to help him keep your money. How would you feel? You wouldn't let this happen to you, so why let the credit card company take that money from you for nothing?

Or imagine the credit card company boss, again. Imagine that he might have been a playground bully when at school. Maybe he used to take people's lunch money. This guy is now taking £2.20 off you every day (including weekends!). That's your lunch money.
Are you going to let him get away with it?


Enough will power, yet?

So you need to pay off these cards as quickly as you can. You've got about 4 months before the 0% periods run out. If you can halve the balance in that time then you will halve the interest you pay out when it kicks in (and pay even less than half in total).
What are the chances of paying off £670 a month? Your minimum repayments would be included in this so your only other fixed outgoings would be rent and phone. That would leave you £130 a month for spending. Not much, certainly, but maybe you could achieve it. If you could keep that up you'd pay the balance off in 8 or 9 months, and only pay about £70 interest _in total_ rather than every month!
If that's not possible then £450 a month would pay a third off before the 0%s run out. That would pay it off in about 13 months.
But if you only pay the £120 minimum, most of that is going to be taken up in interest and it will take you almost forever to clear.


Oh, and this might have been mentioned - stop spending on the cards!

trancebabe

Great Post Jimmy... I might go and cut my own up after seeing that!

LOL