New DFW - Now my diary!!!

LittleEmms

Ok .. .so I made an earlier post – but I haven’t really told my story and on reading around these boards, I realised I need to do that to get some advice.

I had a PLBM (pretend LBM) about 4 months ago, and stupidly I went to my bank for help :doh:(wish I’d come on here!!!). I had acquired four different credit cards over the last few years, transferring balances and then spending on them (worst thing I now know!!!)

I’d bought a one bed starter home (shared ownership) 4½ years ago with my then partner, he left after a year and although I knew it was going to be a struggle I wanted to stay in the property as getting off the ladder wasn’t really an option, I would have ended up renting alone (I have no family locally or anyone I could have moved in with) and costs would have been similar if not more.

Anyway – long story short, I had been slightly overspending each month and not worrying about it, which over time has obviously not done me any favours. So needless to say I got in a bit of debt. In comparison to some, I know I don’t have loads, but I know that if I didn’t stop soon, I would really struggle to be able to pay it back.

I will do my SOA later on (I’m at work at the moment) but here’s the scenario at the moment;

Four months ago – Pretend LBM – Bank suggested I consolidated all credit cards, chop them up (which I did apart from an emergency one!). Unsecured loan - £7,000 over 5 years. I also kept part of the overdraft at the time (£1000).

As it stands at the moment, I obviously have the loan, pretty much at £7,000 (first payment was only October) Credit card at £178.68 (some birthday presents, etc) and unfortunately went back into my overdraft, :doh: now at £900.00. and the sneaky monkeys at my credit card have put the APR up to 29.9% (I only noticed this the other day – my fault – I hadn’t really looked – ahhhh the blind ignorance before you become a DFW!!:o )

What the stupid bank told me to do, was open an ISA savings account, which I currently have today £150 (£25 a month)

My RLBM (Real LBM) was Monday 17th November on checking my online balance and realising I had gone up to £900 in OD. That was a shock. I then did the Budget Planner that night and realised just how much I’ve been overspending. Although shock horror ensued, I felt SO GOOD for doing it and making a start on sorting myself out. Since then I worked out a lot of stuff and just writing down everything since payday (25th Nov) has made me stop spending on carp!! I’m being so careful… I’m actually proud of myself!!!

SOOOO My first questions are; :think:

1. Do I throw all my savings and clear credit card??? (as I read Martins stuff that you pay out more in interest than you will make in interest…. And at 29.9%apr that must be the case!!!)

2. Should I get a 0% credit card for the overdraft and then tell the bank to completely get rid of OD (or keep the £100 interest free overdraft for month to month emergencies?) ????

3. Once the above are cleared, should I then save and make extra payments on my loan? (I need to read the T&C’s on overpaying tonight!)

(I do think I need a credit card for emergencies - can give to 'adopted mum' to look after - my boiler and car are quite old and obviously only have the above savings)

FYI - Am doing council tax reclaim as we speak – I’m sitting in a C band with the 2 beds down my road – and I should be in a B Band – they have already replied saying they will review. On my very rough calculations – if all goes well – should be looking at approx £400-500. This would help towards clearing overdraft (if I get it - not counting on it.. but here’s a hoping!!)

When I do my SOA, (later tonight) you may be able to help me more. But I just wanted to start with asking the above!!!

Many thanks in advance for any advice!!

LittleEmms

Where is everybody?? (sorry in the style of that old BA advert!:o)

geranium72

I'm sure someone will be along who knows more than me but I would definitely use the savings to pay off the credit card - no contest.

if you know you will definitely get the bank to reduce the overdraft and not be tempted to increase it again then anything you can do to reduce the interest is a good thing

urg123

Hi LittleEmms

You have the right idea about paying off the debt with the highest percentage off first. I'm not sure if you would be successful in getting a 0% card - I think they are getting harder to get and you have had a recently loan application. Have a look at look at Martin's pages on Credit Cards.

Once you have cleared the CC and OD you should look at seeing if you can overpay your loan. You also mentioned keeping the OD for emergencies. Why don't you set a small amount aside in a savings account for this purpose. Rather than dipping into your OD you can access your savings. I am aiming for a pot of £500 for household emergencies.

Finally, lots of people have been able to reclaim bank charges and missold PPI - if you have been charged bank fees you may be able to do this. This would also help you to chuck a load of cash at the debt.

If you want some help with budgeting - post your Statement of Affairs on here(link is in one of the stickies on this page). There's loads of people who'll help you shave money off your budget and it will all go to paying off the debt.

Oh - just remembered. Use the snowball calculator (you'll find the link to the and the in the stickies above). It'll help you to work out which debt you should be focusing on and how overpaying will help you towards your debt free date.

URG

LittleEmms

Thanks Urg....

That's where I want to be - is to have a savings pot eventually. But until I get to that (£500 or so), I do need to have a safety net of some sort as car seems to have something wrong with it every 3 months. Its never very expensive, but it's always something! And I have a friend who does the repairs for virtually nothing (I just cook him a dinner!)

I guess what my fear with having savings is, is that Martins advice. Do I have an emergency fund first, or save to pay off debts first.... getting a bit confused (doesn't take a lot! :rolleyes:) If that's the case then I need something to rely on just in case. I can't work out whether its best to keep the existing credit card for that then, as I think I would be too tempted to go into the overdraft?

Thanks Geranium on C Card advice - I didn't realise with the existing loan that may cause such a problem applying, I guess its such a different environment right now!

Will definitely do my SOA later tonight!!!

LittleEmms

Ok Info on loan...

Firstly I'm a numpty... the big fat slap in the face is I forgot to add the interest to the aforementioned sum... (GUTTED) ... with the interest its total is £9273.60 (62 months). Fixed sum loan agreement.



Can't work out the paperwork that well, the only thing on early repayment is the following;

Amount payable on early settlement.

The following examples show the amount that you would need to pay if you exercise your right to repay the loan in full early.

Amount payable on the date your montly payment is due immediately following the date when a quarter of the term of the agreement elapses;
£5,892.56

Amount payable on the date your montly payment is due immediately following the date when a half of the term of the agreement elapses;
£4,232.37

Amount payable on the date your montly payment is due immediately following the date when three quarters of the term of the agreement elapses;
£2195.30

Can anyone help me with this gobledey goop??!?!

(Does have under the consumer credit act part that I can settle this agreement at any time by giving notice in writing and paying off the amount I owe under the agreement which may be reduced by a rebate)

Am feeling pretty poo after realising my debt is really nearer £10k!!!!

Numpty_Monkey

Hi LittleEmms

firstly i'm the Numpty it says so in my name:p:rotfl:

The part about having a savings for emmergancy is a lot better than having to repay anything back plus intrest, it will take you a bit of time to get the bit of savings you need

I'm not to sure about the loan, but that looks similar to mine, might be worth phoneing them up to ask if it is possible to make monthly overpayments
If not put the extra you were going to pay into your ISA

Welcome to DFW

And well done on your LBM:idea:

LittleEmms

Thanks Numpty - and sorry about the name pinching

You're right - I will ring them! They're such gits, telling me to get savings started whislt paying debt. I just trusted them... but I guess they were just doing their job!!

dancingfairy

Umm it seems to be giving examples of settlement figures if you were to pay your loan off at various points but does not say anywhere how they worked this out - perhaps this was somewhere else in the document - hidden somewhere? It is not obvious if these are the only points you can repay your loan or if they are just examples and that you are able to repay at any time.
What you need to do is see if you can find any more helpful info in the small print or phone the bank up and ask them.
2) Yes clearing the overdraft is a great plan - are you able to get a 0% card and do you trust yourself not to then run up your overdraft again as you will then have the debt on the cc and on the overdraft and it could make things worse if you are not 100% sure you will not use it as an excuse to spend?? Only you know whether you will clear it and then run it up again or not.
3) What is the interest rate on the loan? It is almost certainly going to be less than the cc -so pay the cc off and pay the minimum on the loan until the cc is gone and then tackle that loan. If you are not allowed to overpay then we expect to see any overpayments saved in an account until you are in a position to settle the loan in full - you got it? Sorry - getting a bit carried away there - begining to sound like a seargant major, lol.
Also a SOA as you have said will be a great help to people who will be able to see what your situation is at the moment.
Good Luck
df

LittleEmms

Hi DF

Thanks for that - you must have been typing just as I put up my SOA!!

I was tempted to get try and get a 0% card, but someone mentioned above that I may struggle as the loan application (obviously sucessful) was only July. My plan was to give the card to (adopted) mum... I'm not really adopted, but she's the nearest and best thing I have to one!!!

I will ring the bank, I don't want to pop in there again as it was them who set me on this path of having savings whilst being in debt! Kinda don't trust them now.

I think looking at my SOA, i can reduce mobile easily and my satellite includes evening phone calls and internet. All can be reduced. After all - mobile includes free minutes.

LOL at seargant major - don't say sorry - it's what I SO desperately need!!!

dancingfairy

Right then let's have a look:
Statement of Affairs and Personal Balance Sheet
Monthly Income Details
Monthly income after tax................ 1500
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1500
Monthly Expense Details
Mortgage................................ 336
Secured loan repayments................. 0
Rent.................................... 253 rent and mortgage is this because it is shared ownership?
Management charge (leasehold property).. 0
Council tax............................. 92
Electricity............................. 30
Gas..................................... 25
Oil..................................... 0
Water rates............................. 17
Telephone (land line)................... 11
Mobile phone............................ 35 this should be reduced - are you on contract or payg? if on contract phone up and haggle and point out that x,y,z company are doing more minutes for 20 a month and you would like then to match it - otherwise you may move when your contract is up! Haggle, haggle, haggle.
TV Licence.............................. 12
Satellite/Cable TV...................... 29 is this really worth it? or would this be better spent paying off debts?
Internet Services....................... 0
Groceries etc. ......................... 160 not bad but if just for you could be reduced - head over to MOneysavingOldstyle for ways to shave this.
Clothing................................ 0 o.k for the short term but long term presumably you will need to buy some stuff even if just really cheap stuff?
Petrol/diesel........................... 100
Road tax................................ 17
Car Insurance........................... 30
Car maintenance (including MOT)......... 0 again as a short term measure o.k but you will need to pay this at some point - can you save a small amount a month to pay for this or it will ruin the budget.
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0 no buildings? is this covered with mortgage?
Contents insurance...................... 14
Life assurance ......................... 21 do you need this? who will benefit as you have no dependents? - not really sure on this - get some more advice but may be worth cancelling?
Other insurance......................... 28 what's this for?
Presents (birthday, christmas etc)...... 0 you need to budget for this otherwise they will crop up and throw your budget out.
Haircuts................................ 20
Entertainment........................... 0 you need to be realsitic here as well - even if it's just a small amount.
Holiday................................. 0
Emergency fund.......................... 0
Wash machine cover...................... 9
Total monthly expenses.................. 1239


It is fairly easy to see what the problem is - your budget is fairly tight - o.k it is showing your have 76 a month spare which is going towards your car and the other bits and bobs not accounted for.
You need to do a more realistic SOA and see wher to go from there - there are some areas that could be trimmed a bit but to make serious inroads in your debt you will need to try and generate some extra income from somewhere - perhaps a second job, surveys,mystery shopping etc.
Your income is not really able to support your lifestyle so if you want to keep the flat then you may need to make some sacrifices - the car is a big expense from your salary - can you use public transport for a while as this would get you back on track fairly quickly. It is costing you over 150 a month and that's not even counting maintenance and mot costs which you could really do with to make a great chunk into your debt.
Best of luck whichever route you go down.
df