Dunno what to do now.

studentindebt

Im a student having debt problems that are really getting me down.

Here is my situation :

Nationwide Flexaccount - £1550 overdraft (will be at this limit before next pay.

Capital One credit card - £600

Income = £500 a month from part time job and £900 every 3 months from student loan.

My rent, food and bills (including a personal loan and loan to dad) come to about £480.

I'm unhappy with Nationwide as they don't do student accounts but I have been with them all my life. So I wanna get a student account with an interest free overdraft but Bank of Scotland have just turned me down I think cos I have been in loan arrears etc. I have applied for a Smile one and they have requested I send them ID does this mean they have credit checked me already and will accept me?

Im paying about £90 a month recently due to failed direct debits. I really need to get out of this mess and feel in control again.

Conor_3

DON'T GET MORE CREDIT, YOU DON'T NEED IT. You need to organise yourself better. You have nearly twice as much money coming in as regular outgoing, not including credit card and overdraft payment.

From the above:

Monthly income: £800

Monthly outgoing: £480

Balance = £320.

So you've got £320 a month to pay off a £600 credit card and a £1550 overdraft.

Do you know what your problem is? BUDGETING. When you get that £900 every 3 months, I bet you blow it straight away. DON'T. It's got to last you 3 months SO EXERCISE SOME SELF CONTROL FOR ONCE.

You're not in a mess. You're nowhere near being in a mess. What you are doing is finding out for the first time that living on your own in control of your own money requires you exercise constraint. You're just making the same mistake alot of kids make when they suddenly have £900 of money shoved in their hand every 3 months...go mad.

When is the next pay due and the next £900 from the student loan?

studentindebt

Next pay is in 2 weeks and next loan at start of April. I know I need to budget but whats done is done now. Most of the student loan I got just there went on clearing arrears and charges. So I only have £500 a month now really.

I just don't see the point in paying interest in my current account when I am a student and would like to transfer credit card balance which is high interest rate something like 17.5%.

Conor_3

So you're going to shift a debt on your current account that is costing you a few quid a month to service to a credit card that's going to be at best, the same or worst, cost more? ARE YOU MAD?

You don't have £500 a month, you have £800 but £300 a month is tied up in the overdraft.

THIS IS A 12 MONTH VIRTUALLY PAIN FREE PLAN. You can do it quicker but you'll be living hand to mouth with no spare cash which is risky as it can lead you to taking out credit if you need something.


You're going to need to borrow some more money off your Dad if you can - enough for 3 minimum credit card payments (£90) plus what you need to survive until payday. DO NOT GET EXTRA CREDIT CARDS OR LOANS TO HELP YOU OUT. DO NOT SPEND ANY MORE ON YOUR CREDIT CARD. It's only digging a bigger hole.

We need to make things easy to manage. Open up another current account WITH NO OVERDRAFT FACILITY. For the purposes of explanation, we'll call it your "living" account. Get your wages from your job and the £90 you borrowed off your dad for the credit card payments paid into it, your direct debits transferred to it and live off that account. Make the minimum payments on your credit card for the next 3 months.

When your next student loan is payed into your existing account in April, it'll reduce the overdraft to £650-ish. Pay ALL the credit card off THEN CANCEL IT. That'll take the overdraft back to £1250-ish but it's still £300 less than it is now.

You'll no longer have any credit card payments to make so you've now a spare £50 a month. Forget the account you have at the moment exists for the following 3 months.

When the student loan next hits the bank around June, your overdraft will now only be £350-ish. Take £300 out of it and transfer it to your new account. This will mean your overdraft is now £650-ish on the existing account. By taking £300 out and putting it into your "living" account instead of leaving it in to pay off the overdraft, it will give you an extra £100 a month and means that you're no longer living hand to mouth with your "living" account making it less likely you'll jump into getting credit just so you can go out for a few drinks etc.

When the following student loan hits the bank around September, clear off the overdraft and close the account. Put any outstanding student loan in your "living account".

Hopefully by now, you'll have a few hundred quid behind you, no overdraft, no credit card debt and it'll be plain sailing from there on. You should be debt free before Xmas this year.

studentindebt

Thanks for the advice....but I think you may need to tone it down a little :eek:

I most certainly do not even entertain the idea of using the credit card more!! I want to get rid of it asap and the high interest on it! Thats why i was looking at interest free student overdrafts.

But yes it would be a good idea to get a "living account" and pay off the debt with my loan. However the last payment is in April. So I can work more during the summer and pay the rest off then.

One question...will Nationwide not get !!!!!! off that I wont be paying a regular income into that account?

BWZN93

No they wont. One thing I will mention is: where are the statements going to - your parents address or your student accommodation? If I were you - id make an appointment with the local nationwide branch and sit down with someone - open a non overdraft account (and get internet banking if you dont already), change your address, and cancel dd's etc on the overdraft account and get them transferred to the new account, and when you get the statements, read them and make sure you put in enough money from your living account to the overdraft account for your interest payment which is notified in advance (its crucial or you'll end up over your limit).


Another point that might be helpful is to open the e-savings account on the 'living' account and put all your money in that, transferring your monthly budget to your living account and interest to the overdraft account once a month. And check your internet banking often to make sure that you arent about to go over your limit!

HTH

Jo xx

Conor_3

studentindebt wrote:

Thanks for the advice....but I think you may need to tone it down a little :eek:

Done. I'm a Yorkshireman, we do blunt and to the point, not touchy feely. Sorry. I've rewritten it for shandy drinkers.

studentindebt

Conor wrote:

Done. I'm a Yorkshireman, we do blunt and to the point, not touchy feely. Sorry. I've rewritten it for shandy drinkers.

Heh. Im guessing it's because you have the wisdom of age behind you too.
But in my defence - they do not teach you money management at school! Neither do parents it seems. Ah well better to learn the hard way now than later on I spose. Just hope I will be able to get a mortgage in the future
:rolleyes:

Another question - my Smile student account application is in process 5 I just need to send ID - does this mean they have credit checked and accepted me? I would rather go through with that and not ask for the overdraft, for my living account, as I want to switch to them when I pay off nationwide anyway.

Conor_3

Yes it usally does mean they've accepted you. Like I said early on, you're not actually in debt per se, but just managing your money a bit badly. It's just that which needs sorting out.

We never got taught money management in school either butI had the benefit of being brought up in poverty. I know it sounds daft to call it a benefit but it teaches you how not to manage money, where to get help, how to juggle and it's a great motivator because having lived it, you do anything to make sure you never return there.