Newbie - How to clear this lot!

trainee_expert

Hello Folks. I've been lurking here for a couple of weeks, read a bit, thought a lot and decided it's time to make some serious inroads towards becoming debt free.

Whilst not in the same situation as many of the sorry stories I've read here I'm looking for advice how best to clear the significant stuff.

First, about me.

28 year old, living with common law partner in a 'granny flat' paying a token rent.

Salary: £31,000 pa - £1883 take home per month.
In addition, there may or may not be a quarterly profit share of some £1200 before tax.
Savings: £3150 sat in a savings account.
No Mortgage - yet.
Rent: £200 / month (Partner also pays £200)

Credit History:
Nowadays, pretty good. I've checked my credit files and there are no defaults or late payments for any account for as long as any of them have run. When I was younger I had some debt I didn't manage particularly well - late payments but no defaults but none of this shows on any reports any more. The only bad thing on my record that shows nowadays is a Voluntary Termination which relates to a car finance agreement that was handed back in 2001. I bank with LTSB, have been with them for 8 or so years, run my account flawlessly and they do seem to be the bank that likes to say yes whenever I ask for things. I have a £250 overdraft, but don't think I've ever strayed into it.

Now the debt:
LTSB Personal Loan (Car) £15,648 outstanding, £379 / month , 48 remaining, 7.9%
Mint Personal Loan £5760.88 Settlement, £154 / month, 41 remaining, 6.9%
LTSB Platinum £9000 limit, £5856.17 Outstanding, £119 / month, at end of 0% will go to 13.9%
Tesco Platinum £5000 limit, £957.29 Outstanding, £29 / month, 15.9%
Capital One Gold £2750 limit, £2130 Outstanding, 58 / month, 24.9% (ouch!)
Virgin CC £2800 limit, £0 Outstanding
Barclaycard CC £4000 limit, 150 Outstanding, £5 / month, 19.9%
Mint CC £3000 limit, £0 Outstanding

I pay car insurance outright every year, so the only other DD on my bank account is for a mobile phone contract.
I totalled up my DD's for last month, the total came to £878.89.
I commute some 80 miles return journey each day and was spending a huge amount on fuel. I've recently changed cars and now spend £250 a month on fuel maximum.

I realise I need to cancel the cards with no outstanding balance and am looking for advice how best to use the £3150 sat in my savings account to clear as many of the cards as possible. Upon speaking to the card providers this morning to find out APR's, Barclaycard have offered me either 0% for 6 months or 6.9 for life of balance but will only increase my limit to £5750.

I'm not too fussed about the personal loans, I can manage them easily, I'd just like to focus on getting the cards cleared. Any advice you can give me would be very much appreciated.

Over to you!

Almost_there_4

Hello

I wouls use the savings to pay off the Mint, Capital One and Barclaycard cards (using your normal minimum payments to make up the extra required).

When does your LTSB Platinum 0% expire?

Can you overpay on your loans at all?

black-saturn

If you give us all a list of your incomings and outgoings we can give you some pointers as to where you could cut back and be able to use that money to pay off the debts quicker.

bluezone

Using your savings, I would pay off the capital one balance of £2130 and the Tesco £957.29 = £3087.29. This would leave you with £62.71 left in savings, which you could use to pay some off barclaycard with leaving only £87.29 on the barclaycard.
Having done this you could easily pay off the remainder 87.29 the following month and then the £92/month minimum payments you have been making to Tesco, Capital one, and Barclaycard cna be added to your LTSB monthly payment (from £119/month to £211/month)

This seems a good one to me

johannamse

Clear Barclaycard, Tesco card and cap one card. Then move LTSB card balance to Barclaycard for 6 months. You have a massive wage, and could afford 1000 a month to these guys. In 6 months time you will be cc free and can look at getting rid of loans.

I have only had a brief look, but this should be possible (200 + 379 + 154 = 733; 1883 - 733 = 1150 left).

I've said it before and I'll say it again. You are in an enviable position and it is unlikely things will ever be this rosy for you again (once you get mortgage, council tax, repairs on own house, wife , babies etc etc.) Please do not waste this opportunity to get yourself and your future sorted!

rchddap1

I'd also get into the habit of if the profit share comes through using it to pay off the outstanding credit cards. Once the credit cards are gone, start on the loans.

Don't forget...when the credit cards are paid off ring them up and cancel & close them.

southernscouser

Hi trainee and welcome to MSE. You seem to have quite a bit of disposable income so you could make real progress quite quickly if your determined.

Have a look at this thread below and post back here with all the other details.

http://forums.moneysavingexpert.com/showthread.html?t=107280

Also there is a fantastic money calculator where you tap in what you owe and how much you can afford to pay each month. It then tells you in what order to pay the debts off, how much to pay each one, how much interest you will be paying and how long it will take you to pay them off. You can also put different ammounts of how much you can afford to pay off and it shows you how it affects it. For example and extra £50 might pay it off 10 months quicker!

http://www.whatsthecost.co.uk/snowball.aspx

trainee_expert

Thanks for the advice so far folks. The LTSB Platinum is within days of ending the 0% deal so I need to get it moved elsewhere asap. I realise that compared to some I'm in an enviable position, I've been foolish myself allowing the debt to build relative to my salary as I've been in the position of being able to cover the monthly payments quite easily. As I said, I do want to get this cleared though as I accept I'm going to have to buy somewhere in the next year or two, we're just waiting to see what happens with house prices for now - and of course I need to get this debt cleared before considering further debt.

My monthly salary that hits the bank is £1883.
Last month, the DD total was £878.99
That leaves me with £1004 odd per month.

As I said, I've recently changed car to something significantly more economical. Ashamedly I was getting through on average £450 a month on fuel and that was pretty much just to-and-fro work. This month I'm down to £255 on fuel and next month I think that will drop further, I'm spending maybe £45 a week on fuel now.

My only real other expenses are:

£200 / month rent & keep
£15 / week lunch etc
£30 / month mobile phone

As to where my money had been going in the past, before I paid my car insurance outright, that was another £80 per month, but that's no longer applicable. The rest was spent on stuff which could admittedly be cut back on - lunches out of a weekend etc.

I am determined to clear and cancel the cards in as short a timescale as I can. I've already mentally earmarked all profit share payments towards debt repayment. Your informed advice as to what to pay off now and what to move where is very much appreciated.

black-saturn

Wow, I'd say you get off quite lightly without paying any electric, gas, TV licence, food, insurance etc etc. You should be able to get those debts paid off in no time.

skintchick

I second that! I earn £1,271 a month net and have to rent a room out to make ends meet, spend just £15 a week on food, and hardly ever go out.

Sort your life out now while you've got the chance!

xela_17

johannamse wrote:

Clear Barclaycard, Tesco card and cap one card. Then move LTSB card balance to Barclaycard for 6 months. You have a massive wage, and could afford 1000 a month to these guys. In 6 months time you will be cc free and can look at getting rid of loans.

I agree with this. The capital one card needs to go immediately. That interest rate is extortionate. It's also best to get the barclaycard for 6 months, transfer up to the max and concentrate on paying that off.