I wanna be debt free - Moving out next year hopefully!

smartjoy

dont have that much in the way of debt, well I do compared to others at my age, I'm 20, I still live at home, but I am aiming to move out early next year, or late this.

At the minute I'm also learning to drive, that is expensive, I have to buy some more lessons soon, that will cost me around £180 for another 8 hours, my debt situation is as follows. It's worth mentioning that I earn £11.5k (basic, more depending on Sundays / Overtime) If i gain my promotion then I will go up to £14.5k per year (more depending on Sundays / Overtime).

So, my sums are as follows:

£800 on credit card, It is accrueing interest but I cannot get another card / loan to pay off the card. I am not overly sure why, when i was a student I got a credit card straight away. However now, on full time wage I cannot gain a credit card or a loan. I have tried a few applications but am wary of trying to apply for anymore because of the adverse rating these credit applications will have on my rating anyway.

£60 - HSBC Current, this is my old account, it no longer has any money going into the account, however it's something I've never bothered to pay off, I did pay off £-100 when I received a letter but that £60 has been on the account since last year sometime. It has a £100 overdraft limit. Will this have an adverse record on my rating?

£33.95 - HFC - This is for my laptop, I aimed to pay it off my credit card but I was 45p over my limit when the payment came out, so it was bounced. I now pay £33.95 a month and I am not sure how much I owe but the debt is accrueing interest...

£25 - Broadband blueyonder... No issues here, I use my internet connection

£30 - Orange Mobile, have had issues with huge phone bills, it transpires that I was on the wrong tariff since my upgrade, so I am trying to claim back three months (£70, £93 and £109) that i have been charged for even though I was on the wrong tariff and was using text messages i thought I had free but weren't.

£30 - 02 - Another contract mobile, I have taken out due to my huge bills with Orange, I got a free PSP and I am planning to sell both mobiles that I received with each contract and then purchase a lower spec one that can be used for both sim cards.

I have cut down my nights out to 1 a month maximum, of course I have driving still to do and once I pass my test I will need a car and to run it and insure it. My potential promotion depends on me being able to drive.

The overall aim is to sort out my credit rating, which worries me because I am being turned down for loans and cards even though I have a full time income.

Additionally I am looking to move out, I am tired of maxing out my overdraft every month, I would like to be positive for one month, then get £800 ish to make my account look healthy. At the minute I'm just lurching from crisis to crisis with my finances. Maxing out o/draft then having around £300, then after debts back to overdraft maximum.

I appreciate I am not that bad in terms of finances, not as bad as others.

If anyone can help it would be appreciated, also if you need any other information then I would be happy to provide it.

Thanks in anticipation of the help I might receive...

jobbingmusician

My first reaction is that you write well - I wonder what you do and why you are on such an appallingly paid job! But I guess that is written from the London perspective and rates of pay where you live may be much lower. What do you do?

I'm sorry to be negative but £800 in your account, when you achieve it, doesn't sound like very much for financing a move out. Have you checked what sort of deposit you would need to give on alternative accommodation?

I'm a bit confused by your figures. Most look as if they are total amounts owed, but surely the £25 broadband is per month? (and you say the laptop amount is)

Can you find out what the interest rates are on your loans? Even your HSBC overdraft will presumably be accruing some interest.

You need to work out what you have coming in each month, and what your expenses EACH MONTH are, including what you need to pay out on your loans and expenses. The only way to reduce your loans significantly is to overpay - if you just pay the minimum it will take you about 20 years to repay, and I suspect you would have to pay over £1000 in interest even on the small total you owe. There are snowball calculators which show how the interest mounts up - I'm sure someone will post you a link.

Good luck with the driving - this sounds like a good positive thing to learn to boost your career!

Bokken_2

read martins articles on Budget planning and print it off and stick to it like glue.
account for every penny and then use the money you save to pay off the £60 at HSBC.
This(if I have understood this correctly)is £60 you owe the bank and have done for a year and failed to pay it.Just pay it off ASAP.
You will need to be more accurate with your payments and spending hence the budget planner,two points with the Laptop/mobiles,one you over spent by 45p,and on the other you were on the wrong tariff and spending loads on texts,okay it was a miss under standing from now on check everything twice and try to avoid any costly mistakes.
Once you see where your money is going on the budget and being a little more accurate with your money you should soon see a improvement.
You may need to look at your credit rating through Experian to have a better idea why you can't get a credit card,are you on the electoral roll?
good luck

southernscouser

First thing that jumped out is that your laptop finance is with HFC! I hate those ******* ********! :mad:

You've probably fallen into the trap of it being interest free for the first 12 months and if you don't pay it all off at the end of that year they charge you interest for the next 3 years INCLUDING the previous 12 months! (not having a pop mate, did the same thing myself)!

They are probably charging you a stupid rate of interest aswell! You need to find out exactly how much you owe and what interest rate you are paying!

Having 2 mobiles is crazy aswell! When does the Orange contract expire? Can you not downgrade to the cheapest package if you are not using it?

Also Tiscali do 1meg broadband for £14.99 a month! Another tenner saved!

Does your account with the £60 overdraft accure interest? If not don't worry about this for now. It won't have any affect on your credit rating!

Regarding your credit rating get copies of your files from Experian and Equifax just to make sure there are no discrepencies (dp) on them!

KatrinaC_2

smartjoy wrote:

I earn £11.5k (basic, more depending on Sundays / Overtime) If i gain my promotion then I will go up to £14.5k per year (more depending on Sundays / Overtime).

What is your actual post tax monthly income right now? Don't make your budget based on what you might be earning later on - it might take longer than you think to come through (mine was approved in September and has still not processed... the latest news is that I *might* get my payrise in April!)

smartjoy wrote:

£800 on credit card, It is accrueing interest but I cannot get another card / loan to pay off the card. I am not overly sure why, when i was a student I got a credit card straight away. However now, on full time wage I cannot gain a credit card or a loan. I have tried a few applications but am wary of trying to apply for anymore because of the adverse rating these credit applications will have on my rating anyway.

What is the interest rate of the card? How much is your minimum payment? 2% of the balance is about standard, in which case that's only £16 per month. Depending on what else you owe and at what rates, you might be better off increasing this payment.

smartjoy wrote:

£60 - HSBC Current, this is my old account, it no longer has any money going into the account, however it's something I've never bothered to pay off, I did pay off £-100 when I received a letter but that £60 has been on the account since last year sometime. It has a £100 overdraft limit. Will this have an adverse record on my rating?

Pay this off and close the account - it possibly won't have an effect on your credit rating as I don't think that overdrafts show on your credit score (although I might be wrong and I'm sure I'll be corrected if I am!) however it's a small debt that needs to be cleared. Once it's payed off it is gone and you can forget about it.

smartjoy wrote:

£33.95 - HFC - This is for my laptop, I aimed to pay it off my credit card but I was 45p over my limit when the payment came out, so it was bounced. I now pay £33.95 a month and I am not sure how much I owe but the debt is accrueing interest...

How big is this debt, what is the interest rate and how long is the repayment period? Really you need to sit down and find out all the details about the loan so you can work out whether it's better to concentrate on clearing the loan or the credit card first.

smartjoy wrote:

£25 - Broadband blueyonder... No issues here, I use my internet connection

That's an expensive connection! Can you switch to a cheaper supplier or at least to a cheaper package?

smartjoy wrote:

£30 - Orange Mobile, have had issues with huge phone bills, it transpires that I was on the wrong tariff since my upgrade, so I am trying to claim back three months (£70, £93 and £109) that i have been charged for even though I was on the wrong tariff and was using text messages i thought I had free but weren't.

£30 - 02 - Another contract mobile, I have taken out due to my huge bills with Orange, I got a free PSP and I am planning to sell both mobiles that I received with each contract and then purchase a lower spec one that can be used for both sim cards.

Do you really need 2 mobile contracts!? £60 a month? That's a lot of text messages!

smartjoy wrote:

The overall aim is to sort out my credit rating, which worries me because I am being turned down for loans and cards even though I have a full time income.

Have you got in touch with Experian and Equifax to see what exactly is on your credit history? It's relatively cheap and it means you can see exactly what lenders are balking at.

smartjoy wrote:

Additionally I am looking to move out, I am tired of maxing out my overdraft every month, I would like to be positive for one month, then get £800 ish to make my account look healthy. At the minute I'm just lurching from crisis to crisis with my finances. Maxing out o/draft then having around £300, then after debts back to overdraft maximum.

Really I think you need to sit down with all of your paperwork and possibly the phone and find out exactly who you owe money to, how much you owe and how much you're being charged. You also need to work out where your salary is being spent as your income should be about £650 per month but the only out-going expenses you've listed come to less than £150 per month. What are you spending the other £500 on? In theory you can more than treble your repayments and clear all of your debts much faster.

Kat

smartjoy

Thanks so much so far, impressive, I'll try and answer the questions that have been posed.


My first reaction is that you write well - I wonder what you do and why you are on such an appallingly paid job! But I guess that is written from the London perspective and rates of pay where you live may be much lower. What do you do?

Thank you for the kind words, I'm a retailing extraordinaire! Im a supervisor at Sainsbury's which for someone of 20 isn't bad going. My promotion potentially means management, its a gradual rise in income but progressive, more moves, more money. Bonuses etc. Big things are expected from me, hopefully i can deliver!

I'm sorry to be negative but £800 in your account, when you achieve it, doesn't sound like very much for financing a move out. Have you checked what sort of deposit you would need to give on alternative accommodation

Fair call, I'm just trying to go one step at a time, for example, £800 would mean I woudlnt go into my overdraft, and would add to my balance with every payday.

I'm a bit confused by your figures. Most look as if they are total amounts owed, but surely the £25 broadband is per month? (and you say the laptop amount is)

Apologies, HFC £33.95 a month,

Mint (CC) - Minimum Payment

Broadband - Min Payment

Mobiles - Min Payment

Can you find out what the interest rates are on your loans? Even your HSBC overdraft will presumably be accruing some interest.

Will do! Then report back here with the relevant information


read martins articles on Budget planning and print it off and stick to it like glue.
account for every penny and then use the money you save to pay off the £60 at HSBC.
This(if I have understood this correctly)is £60 you owe the bank and have done for a year and failed to pay it.Just pay it off ASAP.
You will need to be more accurate with your payments and spending hence the budget planner,two points with the Laptop/mobiles,one you over spent by 45p,and on the other you were on the wrong tariff and spending loads on texts,okay it was a miss under standing from now on check everything twice and try to avoid any costly mistakes.
Once you see where your money is going on the budget and being a little more accurate with your money you should soon see a improvement.
You may need to look at your credit rating through Experian to have a better idea why you can't get a credit card,are you on the electoral roll?
good luck

Thanks!

Just a note on the Mobile saga, I was upgraded on the understanding that I remained on my tariff, however that wasnt the case, when i received bills of high amounts I checked and 500 free txts went to 120 free. This was two months later, I contacted dealer and they agreed their fault and put me back on my old tariff. I have finished my letter detailing the shambles and am determined not to be charged for the 500 texts that I should have had. Anything over (fair enough) but there are 380 messages I was charged for that I shouldn't have been because my tariff was wrong and changed without my knowledge.


First thing that jumped out is that your laptop finance is with HFC! I hate those ******* ********!

Agreed, issue is, they said I couldnt pay via Mastercard, then I could, then I couldnt, then I got Mint cheques and paid it that way. Turns out I could have paid for the laptop over the phone via CC!!! Disaster.

You've probably fallen into the trap of it being interest free for the first 12 months and if you don't pay it all off at the end of that year they charge you interest for the next 3 years INCLUDING the previous 12 months! (not having a pop mate, did the same thing myself)!

No problem! Yeah, true, what it is, the interest free 12 months is now on the account, so my interest free period has been charged interest. Every month the account gains interest. At whatever the rate is (29% i think, will follow that up)

Having 2 mobiles is crazy aswell! When does the Orange contract expire? Can you not downgrade to the cheapest package if you are not using it?

True, I decided to get another one before i investigated the Orange saga, I am selling both handsets and buying a cheaper one for both SIMS. I am hoping of a good resolution to the saga with my overpaying, credit for the overpayment and ideally my leaving the contract altogether. Will be interesting to see their response to my points.

Also Tiscali do 1meg broadband for £14.99 a month! Another tenner saved!

True, however, Blueyonder - £25 - 4mg and unlimited, I had a very bad experience with Tiscali with their dial up. My broadband is the only thing I am 100% happy with!

Does your account with the £60 overdraft accure interest? If not don't worry about this for now. It won't have any affect on your credit rating!

Regarding your credit rating get copies of your files from Experian and Equifax just to make sure there are no discrepencies (dp) on them!

Yes it does, I will investigate the rate, also, credit wise, my first payment with Mint wasn't paid. I signed up to Direct Debit when I applied and it was all passed, however Its not active for the first month. I didnt know and didnt pay. I contacted Mint and they accepted I wasnt informed and refunded me the late payment fee. I'm not sure what effect that will have?

Thanks for the responses so far!

smartjoy

Kat,

Fantastic reply, I'm just heading into work (slave to the cause) on holidays but people want their BOGOF Cakes (Sainsbury's, excellent offers start tomorrow folks!) so I am off to deal with that.

Wil be back soon!

jobbingmusician

LOL Smartjoy, you will be such an asset to this site if you can tell us what deals are coming up at Sainsbury's. I totally understand about the rates of pay now - it's almost like being a student - they pay you peanuts, but you do have great prospects!! And the excellent thing is that as you are working for them you can probably minimise your household expenditure by maximising your spend on heavily reduced items once the customers have gone home (do they still do that?)

smartjoy

They do and they don't, the whole reductions area is very very grey. Involves stuff being counter signed for by a duty. People reducing meat and taking it themselves for example, it's very risky and should anything occur I want to be well out of it !

skintchick

Can I just say that I am using Madasafish for my internet as advised by Martin - £11.99 for first six months then £17.99 afterwards, and their CS is in SAa nd brilliant, really helpful!

I'd definitely try and switch that if poss, and I echo everyone else's advice too.

smartjoy

Ok, here we are, exact debt amounts and interest paid.....

HSBC (Current Account) £-68.81 (Interest Paid from 28/12 - 27/1 - 81p)

Mint (Credit Card) £865.70 (Interest at 14.939% on purchases, however I did have some money advances as well on the card. Those are charged at 19.435%)

HFC Bank - Going to ring them in a min will post back

Any others?

Orange, the basic update is:

I am in the process of writing a letter, my last three bills have been £63, £93 and £115 beacuse I was on the wrong tariff, despite being assured my tariff would remain the same on the upgrade.

I checked my bill after £93 and realised I had been knocked onto 120 texts, I called Orange, they said dealer's recommendation, I contacted my dealer (they deal with upgrades) who denied it was them and arranged for me to go back to my old tariff. My finances are bad at the minute because of the paying for 380 text messages that I believed were free but now are not... (they are now, as I am back on my old tariff) so I claiming credit back for those overcharged amounts. I will get it too, believe me, 3 page letter LOL!