Can I be smarter

Pennyless

Hi guys and girls

I'm looking for you to look at my situation and suggest how I can be smarter to be debt free quicker.

I have been very good with my debt and have always kept with low APRs. I am starting to realise that my attitude of "if its cheap it aint worth paying off" is ensuring that I don't get out of debt and not necessarily smart. I have moved to a cheaper place and for the first time have also sadly defaulted on some debts, out of being disorganised rather than not being able to afford it. Unfortunately my credit record is now officially poor!

Income: £1780

Here are my expenses:

CC1 - 6960 owed (3.9% life of balance) 3% min payment - £208 this month
CC2 - 3655 owed (0% til June 06) £5 pcm while on 0%
CC3 - 0 - paid off this month - limit £900 and on 0% till april 06
Overdraft - 500 (0% till June 06)
Loan - 3800 owed £150pcm
Loan from Friend - £10000 - paying £600 pcm

here are my outgoings:

Rent - £475
Phone - £20
Gym - £50
Weekly allowance- 50p/w for food, entertainment etc - find it difficult keeping to this sometimes.

I am not sure whether to cancel CC3 or transfer anything to it. I don't trust the snowball calculator as its telling me to throw more money at the 0% card which I would rather not. I have started saving £100pcm for this instead.

Any ideas?

Thanks

snake666

hi
1st thing i have noticed is gym £600 a year so that looks as if that could go?

what % is the loan?

snake

System

Hi Pennyless - Welcome to the forum

I have moved to a cheaper place and for the first time have also sadly defaulted on some debts, out of being disorganised rather than not being able to afford it. Unfortunately my credit record is now officially poor!

What do you mean by "default"? Do you simply mean you've missed a payment? Or have you had your agreements cancelled?

Here's your current Monthly Income & Expenditure, chopped from your figures:-

Income: £1780

Rent - (£475)
Phone - (£20)
Gym - (£50)
Wkly allow * (£217)

CC1 - (£208)
CC2 - (£5)

Loan - (£150)
Loan, Friend (£600)

Total surplus = £55 per month


* = (£50 x 52 weeks divided by 12 mths)


Thoughts on this:-

Firstly - at least you've currently got a surplus! However, have you properly budgeted for all monthly expenditure? Council tax, water, utilities - are these included in your rent? If not, they need to go in your figures.

Also TV licence, insurance, etc., although I presume some of these are in your "weekly allowance".

Of the expenditure above, you need to think about getting rid of the £50 Gym expense (membership contract permitting.) Reason being:-

CC2 - 3655 owed (0% til June 06) £5 pcm while on 0%

I don't trust the snowball calculator as its telling me to throw more money at the 0% card which I would rather not. I have started saving £100pcm for this instead.

When the 0% period ends, your £3655 balance will - at a guess - be costing you between £30 - £50 a month in standard rate interest. This will virtually swallow up all your current surplus cash each month. Even if you've not missed any expenses at all from above, no surplus will make your budget even tighter and the gym looks the most obvious thing to go.

Re your point about the snowball calculator, I presume it's looking at the bigger picture such as the cost of interest for the next year. For example:-

£3,500 at 3.9% APR = £140 approx interest for the year

£3,500 at 0% for 6 months and then say 16.9% for 6 months will = £300 approx interest in year

BTW, of the £100 you've been saving, is that included as part of your overdraft balance? Or is cash in hand? Personally I'd throw it all straight away at the 0% card now.

CC3 - 0 - paid off this month - limit £900 and on 0% till april 06

I am not sure whether to cancel CC3 or transfer anything to it.

If you call the card issuer for CC3 and tell them you’ve got a balance on another card, they may increase your credit limit, so that when CC2 goes back to full rate, you could tfer some or all of that balance to CC3. By that time CC3 won’t be on 0% so see if you can blag an extension to your current promotional rate!

Overdraft - 500 (0% till June 06)

I’d throw any other spare cash at reducing this as much as you can by next June.

Loan from Friend - £10000 - paying £600 pcm

Wish my friends would do that! Is there any way that you could slightly lower the repayment amounts on this? Even £50 a month less would give you a bit of extra “breathing space” in case of emergencies.

Right, that’s all I can think of for now – hope some of the above helps.

Dave