Advice on 26k Debt

Shenk_2

Hi There,

I earn a good wage 50k + commision (normally an extra 2k per month before tax).

I have debts of £26000 which is basically

Green Egg - £15,000
Blue Egg - £5000
Alliance and Leicester £6000


All credit cards.

I have £12500 in a savings accounts and I want to clear my debts in the quickest time possible. I have had no late payments at all and can pay the monthly fee ok (although paying 300 quid to find 200 of it is interest is painful).

Now my missus wants me to get a loan for 25k,buy her a new car for 8/9k and then pay off the debts with the rest + savings. I think this is lunacy. :mad: :mad: :mad:

Firstly is it possible to offer a full and final settlement to an organisation that you've had no late payments on?

Secondly please someone tell my wife she is mad. She does need a new car but surely there has to be a better route than getting a loan?

Thirdly can anyone offer some advice on how to pay these damn things off quickly?

Thanks very much,


Paul

bonnie_2

your wife is definately mad, i nearly choked on that one. cant you give her a weekly bus pass.
clear your highest apr debts with the savings, you should easily be able to clear whats left quite quickly on your income.
how about posting all your incomings and outgoings to see if we can save you some money.

southernscouser

Only you can tell her that she's mad! :eek:

As bonnie has said the debt with the highest APR is the one to pay off first!

Also with the money you earn it might not take you too long to be able to save up for it if you have enough 'surplus' income!

magentadreamer

You earn a potential £74K before tax but can only make CC repayments of £3600 a year according to your figures, what else are you spending your money on? If you look at every thing you spend money on you might find ways of cutting back and being able pay more off your debts.Post a SOA and you'll find you get loads of good advice. I can't see any CC company being willing to reduce the level of your debts with your present level of income and the fact you can meet your payments each month.

Shenk_2

Ok here goes;

I'll take Aprils pay after tax £3613.60

Transfer to Savings £250
Interest £11
Mid Kent Water £7
Mortgage £778.21
Inland Revenue £21.51
Egg Green £300
Egg Blue £100
A&L £40
Council £130
TV Licence £10.49
O/D Protection £16.00
Account Fee (barclays) £13.00
BT £17.48
Powergen £67.00
Sky £42.50
HSBC Life Ins £30.89
Pinnacle Ins £49.21 (pays me a years salary if I lose my job)
Breakthrough £2
HFC Bank (PC World) £41.07
BT Yahoo £27.98
Home Ins £22.15
HSBC MRP £65.34
Talk Talk £5.00

Total £2026.32

It's actually quite easy for me to critisize her for wanting a new car but I do go out most weekends with the lads and most of these debts are my fault. I spose I see myself as the main earner and as such work hard play hard which has caused our financial position to be dodgy.

CLAPTON

I would suggest the following:

firstly get to grips with where you money goes-
this would involve doing a budget plan (if you go to the top of this page look for 'Budget Planner', or build your own on a spreadsheet;
also both you and your wife should do a spending diary ...basically a little notebook in which you write down every single thing you spend to see where you actual spend money as oposed to where you may think you spend money.


then I would suggest you post a Statement of Affairs (SoA) here and people will give advice.

If you browse the bulletin board you will see examples but the general format is

: statement of income:

: statement of expenditure
this should be quite detailed but excluding debt repayment
: a subtotal to save us all having to add it up

: statement of all debts including
outstanding amount, monthly repayment , APR
a subtotal of the total debt and of the total repayments, to save us having to add it up

also add a brief details of you situation, partner, any children, rent or own property, value of house and mortgage, any special circumstances that are relevant


I'm sure there will be significant opportunities to reduce expenditure to below your income and hence reduce your debts to zero and then build up a saving balance.

you should use your savings to pay off the cc with the highest APRs first.

You should buy a new /replacement car only after you have saved enough for it (plus of course an emergency fund of about three month your salary )

regards

magentadreamer

I'm assuming your wife buys the food etc? If so then you have a surplus of £1600 to chuck at your debts add on the £440 you pay at present plus the £250 savings and thats £2290 you could use to pay your debts off. A good site to help you work out the cost of paying back debt is : http://www.whatsthecost.com/snowball.aspx

CLAPTON

we crossed in the post

your a/c shows a massive surplus of income over expenditure so you should be reducing your debts but presumably you are not, so there must be things missing.
as i said in the previous post do a spending diary
some things that may be missing; car expenses, travel expense, snacks, lunches, coffees at work or when out, any optical (contact lens/glasses/dental /medical);
food and household items, do you have children?, do you have takeaways or go out atall, presents , holidays , cloths, haircuts, DVDs, paper/magazines
etc etc.... the spending diary is the key

also ..it makes no financial sense to save money at low interest rates but also to pay high interst rates on credit cards .

chivers1977

I know you will get loads of help on here but just wanted to say that I had HSBC MRP £35 per month for £600 benefit joint. i am just changing us to Pinnacle from a link on the left from martin under insurance and we will have two separate policies for £750 benefit for £35. You will be able to make a big saving there straight away!

chivers1977

what about madasafish for internet @ £13.99 per month for 2 meg broadband. And I guess you are a premier customer with barclays. I work for them and while I am sure it is nice to have a premier relationship manager, what are they actually doing for you for their fee each month!?!

dinkylou

You are in a very fortunate situation here. Dont make it worse by getting out another loan.

You have £12500 in savings. That is a large amount which could pay off one or more of your debts. It is not doing you any good in a savings account, in fact there it is LOSING you money when compared with the interest paid on the same amount on your CCS's.

As another poster said, downgrade your current account so that there is no monthly fee. You should not be paying for this.

Look at changing your broadband as you are paying double what you could get (madasafish for e.g)

Why do you need O/D protection?

You could cut down your sky by threatening to leave.

But most important you need to find where the rest of your money goes and cut down on a few unimportant things.

Tell your wife that she cant have a new car until you have got rid of your debt and saved for a car. (and not a brand new one)

You earn alot of money - dont throw it away by not being clever.

x