How do you know if your debt is bad debt??

TweeyPie

I have just added up our credit card debt and it totals 20K (bit of a shock). So far I am managing to pay minimum payments but our outgoings excceed our incomings by £400. I have just got a new HSBC credit card with 0% BT and am trying to transfer most to it. Is this bad debt? I have equity in the house but after reading the articles securing a loan on the house does not seem a good idea.

tomstickland

The advice here will be to start paying the money back, not taking on any more loans etc. Via your "statement of affairs" people will come up with 101 ways that you can free up more money for debt repayment. £20K of debt is the point at which red lights start flashing. You need to start pulling the debt down before it can grow any more.

The 0% deal is a great first step. BT as much as possible over to it.

magentadreamer

I think you've answered the question yourself, if you're only able to met min payments and are over spending by £400 this is bad debt!

What I'd do is put up a list of your outgoings and incomings plus debts and apr's and let others on here take a look and see if there are ways you can cut back and throw money at your debts.

Also take a look around the different boards - it's a wealth of money saving tips/debt management etc. What you'll find on MSE is alot of people in a similar situation to you who will be able to advise and support you. No one will judge you on here. It's an amazing site.

MD x

bank_of_slate

Hi Twee.
Debt is personal, a small amount can be as bad for one person as a huge one can be for another.
When you are just meeting minimum payments, it's not a good sign.
Just put all the payments and APRs into the snowball calculator, this will show you the money you're wasting on interest payments!
That money could go to much better use.
Keep posting as you'll get lots of non-judgemental advice on here!
...Linda xx

https://www.whatsthecost.com/snowball.aspx

Xbigman

If your outgoings are £400 more than your income how are you meeting the minimum payments? If you are using credit to prop up the shortfall then you are beyond bad debt and into meltdown territory. By the end of this year you will be 25k in debt. This cannot go on. If you post you SOA we will have a look at see just what the situation is. From what you have said so far you need a debt management plan.
Regards



X

TweeyPie

Hubby had loads of overtime last year and I managed to save a fair bit which I have been using to prop us up. Savings have all gone. Am working on the incomings and outgoings andwill post it soon.
Have to say you've really scared me with the meltdown comment

JAMIEDODGER

i dont think x said it to upset you hun, its just you have reached a really dangerous point, what you do from this moment on is VERY important. big hugs to you for being brave enough to post though xx

TweeyPie

Here's my In's and Out's
Outgoings

Secure Homes
(Includes all utilities,
telephone, motgage,
car tax, tv licence) 1,468.00
Shopping 150.00
Tutor 52.00
Dinner Money 78.00
Fuel 173.00
House Insurance 12.77
Great Universal 20.00
T Mobile 30.90
Littlewoods 20.00
Caravan Insurance 17.55
Car Insurance - Hubby 23.29
Car Insurance - me 30.18
Car Loan 179.00 12 months left
O2 20.00
Watt TV 13.00
Total 2,287.69

Incoming
Wages - Me £1,190.00
Wages - Hubby £1,200.00
Child Benefit £110.00
Tax Credit £35.00
Total £2,535.00

Credit Cards Outstanding/apr
Barclaycard 1,418.00/ 18.4
Capital One - Hubby 557.00/ 27.9
Capitol One - Me 185.00/ 27.9
Monument - Me 1,669.00/ 27.9
Monument - Hubby 1,142.00/ 27.9
Nat West 6,084.00/ 17.47
Virgin - Hubby 7,003.00/ 14.88
Virgin - Me 2,458.00/ 14.88

magentadreamer

TP don't be afraid, you've woken up to the fact that your debts are out of control but there are ways to sort them out. you can do it -your on the first rung of the debt free ladder by realising they are a problem.

MD x

mintymoneysaver

Well my first comment would be do you have to go through secure homes.Surely they will charge you something for going through them?Better to set up direct debits.
Dinners?£78! Give them all packed lunches at a fraction of the cost.Can you get rid of the tutor? I appreciate you want your child/ren to do well, but could you do without it?
Sorry got to rush now,I'm sure people will be alng soon with more suggestions!

in*the*red_6

Hi TP

What is your credit rating like? You've got some really high interest cards there. If yours or hubbys is good, maybe think about applying for a couple of life of balance transfer cards which would be at a much lower rate.

ITR