Help on my Monthly Finances (what should i do?)

efcuk1_2

I was just wondering if you could help me out with my finances.

Im 25 years old. My Residential status is Living With Parents and i have been living there for around 12 years. Iam Full Time employed and have been working at the company for 5 years and 3 months. My annual Salary is £22880.

I have a personal Loan with Alliance & Leicester, which has around 2.5 years remaining, and i still owe around £6500. Iam paying £235 per month for this.

I also have two Credit Cards.

On the first credit card, i owe £1600, and i try to pay £50 per week off this, so i pay around £200 per month.

On my other credit card, i owe around £400, and i try to pay £25 per week, which is around £100 per month.

Therefore, my usual monthly payments are around £560 ish per month.

I realise that these payments will go down as i pay my credit cards off, but at the moment iam finding it hard to have money for myself.

Do you think it would be worth trying to get a loan over 3 years to pay off these debts, and have just one fixed monthly payment of around £250-£300? With the summer coming up i would really like to have money to spend myself!

Also, my car is on its way out and was really looking to get a new one (not brand new). I would have to get finance for this car, or save up to get one, which i cant at the moment as all my money is going on my loan and cards.

I would need to get a loan for around £8500 over 3 years.

The problem, if i done this, would be actually being approved for a loan. I recently tried applying for one with black horse, and after doing that and getting rejected, they passed my number to other companies, and i now get around 3 or 4 calls a day of various places i have never heard of and don’t trust, so i tell them i don’t need one.

Do you know of any decent loan companies i could go to, to try and sort this out. My Experian credit score is 765, which i believe is around the national average (fair).

Another problem i have, is at the moment my girlfriend lives 100 miles away from me, and iam trying to save up to get her and her child home for the new year.

Any advice would be greatly appreciated.

Thanks very much.

Joe_Bloggs

It would help if you could mention the interest rates on your credit deals. This could help in targeting you credit card repayments. What are the limits on your credit cards. How much do you spend on your credit cards each month ?
J_B.

zarazara

I think you are trying to too much at once so to speak. Firstly i would make sure i pay something, at least the minimum allowed, off each loan each month, then I would pay as much as possible off the £400 loan, even if its only £1 over payment. Clear the smallest debt first. this is a psycological boost.
Next put some money aside for rainy day/car repair savings. THis would be used when necessary so you wont need to take out a loan to cover an unforeseen emergrncy.
Then set about clearing the £1600 debt by overpaying a bit each month.
Only when you have cleared all your loans should you think about taking out a new one.
Keep the car as long as possible and talk to your girlfriend, admit to the loans and tell her what you are doing. There is time between now and xmas for the both of you to save up petrol or train fare in order to be together.
Only by clearing loans will you get some security. loans for things which do not acrue value are very expensive, for example a car. it costs x amount a month by going down in value y amount. its like a leaky pipe.
assuming they are all similar I would look to pay off the £400 asap. this is a psycological boost.

zarazara

Also make a spred sheet of your expenses month by month. i guess your take home pay is around £1,600 a month. get down on paper where all this money goes. [its more than me and my OH have to live on].
Once you can see where the money goes you can adjust the budget to suit, by doing things like making sandwiches for work lunches, going out less, buying less clothes ,whatever.
Also holding a car boot sale or put stuff you dont wear or use on eBay to raise money to pay down the loans or save up for a new vehicle.

agsnu

efcuk1 wrote: »

I realise that these payments will go down as i pay my credit cards off, but at the moment iam finding it hard to have money for myself.

I'm sorry, what? If you're only paying the minimum and intend to decrease your payments as the minimum payments decrease, then your attitude is completely wrong - you will forever be in debt.

To be perfectly honest, the fact that you are living at home and in so much debt indicates that you are living beyond your means. You are continuing to live beyond your means - you're trying to work out how to reduce your debt payments so you can spend more money. This is back-to-front. You need to minimise your spending and maximise your debt repayments.

Otherwise, you will find yourself indefinitely impoverished, and living in an unstable balance where if you were to ever encounter any unexpected difficulties (being sacked, unforeseen expenses, etc) you'd be in danger of suffering real hardship.

opinions4u

I have a 21 year old son, and while I understand his right to financial independence we have an agreement whereby I am all over his finances after he built up an overdraft and let himself get clobbered for bank charges.

This situation happened because he was spending more than he was earning. There is no other reason.

Indeed, he has £10k of expenditure last year that he cannot account for. The local pub now has a new plasma tv screen. Could be a connection. Don't know.

The reason I give out this information is simple. You're no different. You may have built up your debt in a different way (cards and loans instead of overdraft) and you may have spent your excess money in a different way, but ultimately you are spending more than you earn.

Do you think it would be worth trying to get a loan over 3 years to pay off these debts, and have just one fixed monthly payment of around £250-£300? With the summer coming up i would really like to have money to spend myself!

No. I think you should stop your junkie habit of borrowing and refinancing. Stop using your credit cards and stop relying on loans to purchase things with. Focus on nothing more than paying off the debt. Then when the debts are repaid, focus on building up a savings balance.

Also, my car is on its way out and was really looking to get a new one (not brand new). I would have to get finance for this car, or save up to get one, which i cant at the moment as all my money is going on my loan and cards.

As sure as night follows day a car will wear out eventually. Where was your planning for this event? While you were out spending on the cards you could have been saving up to replace the car.

Another problem i have, is at the moment my girlfriend lives 100 miles away from me, and iam trying to save up to get her and her child home for the new year.

Have you tried the National Express web site?

Going back to your first question ...

I was just wondering if you could help me out with my finances.

I've said what I think you should do.

I will add that you're 25, a big boy now. Take control of your finances. Posting on here is a positive step, but if you do nothing about it I will predict that you will have £30k of unsecured debt by the time you're 30 and no real hope of ever being out of debt in your life.

It's up to you. Controlled by your debts or in control of your financial destiny? What would you prefer?

jadex

efcuk1 wrote: »

On the first credit card, i owe £1600, and i try to pay £50 per week off this, so i pay around £200 per month.

On my other credit card, i owe around £400, and i try to pay £25 per week, which is around £100 per month.

It doesn't make that much difference whether you are paying just minimum or more unless you are actually paying in full.
It is better to pay minimum on all cards and concentrate on clearing them in full one-by-one. But not by weekly payments as you will not be rewarded for doing this, in fact you are making a favour to your card provider - keep the money in 'high' interest savings account and clear the card in one go.
Pay minimum on both cards and save £400 to clear the smaller debt as soon as you get your statement (the best the very same day), no matter if it has higher or lower APR as the amounts you owe are uncomparable.

opinions4u

jadex wrote: »

It doesn't make that much difference whether you are paying just minimum or more unless you are actually paying in full.
It is better to pay minimum on all cards and concentrate on clearing them in full one-by-one. But not by weekly payments as you will not be rewarded for doing this, in fact you are making a favour to your card provider - keep the money in 'high' interest savings account and clear the card in one go.

I can't agree if the card balance is being charged interest at a higher rate (e.g. 17.9%) than a savings account will pay (e.g. 2%).

Unless what you're trying to convey is that the card payment should be made monthly rather than weekly.

Even in that scenario, the key for the OP is to get away from the habit of using debt to fund lifestyle, so earning less than £1 a month in interest by playing games is a distraction from taking responsibility for the situation.

Pay minimum on both cards and save £400 to clear the smaller debt as soon as you get your statement (the best the very same day), no matter if it has higher or lower APR as the amounts you owe are uncomparable.

The OP should pay the minimum amount on the card with the lowest interest rate and the maximium amount affordable on the card with the highest rate.

efcuk1_2

Thanks very much for all your replies. I think iam just trying to pay too much too quickly. My loan amount is fixed monthly, so i must pay that. I agree with the poster who said try to clear my lowest Credit card first, and just pay minimum for now on my higher credit card. Then once that has cleared i will start paying more on my higher credit card. Iam feeling against getting a consolidation loan now as that will be atleat another 4 years i will be in debt for. Thanks very much,

CLAPTON

efcuk1 wrote: »

Thanks very much for all your replies. I think iam just trying to pay too much too quickly. My loan amount is fixed monthly, so i must pay that. I agree with the poster who said try to clear my lowest Credit card first, and just pay minimum for now on my higher credit card. Then once that has cleared i will start paying more on my higher credit card. Iam feeling against getting a consolidation loan now as that will be atleat another 4 years i will be in debt for. Thanks very much,

The way to clear debts the quickest and paying the least interest is as follows

1. pay the minimum on each debt EXCEPT the one with the highest APR.. on that pay as much as possible ... so find out the APRs of each debt and act accordingly

2. try to shift high APR debt to lower APR debt... maybe a 0% BT CC or a low life of balance card
-so get hold of your credit files and see what they say about you... any missed payment etc.

3. learn to budget .. try this budget planner
http://www.makesenseofcards.com/soacalc.html
post up the results if you like and I'm sure people will help you cut down..
and work out exactly where your money actually goes each month ..start to kept a spending diary and write absolutely everything you spend

bendix

I can't believe the wooly-minded advice on here. It seems only opinion4u has the fortitude to say it how it is, and curiously the OP ignored his/her reply and focused on others.

Here we have a situation where a 25 year old man (not boy, man!) who so far as I can see has minimal living costs because he lives with his parents is significantly in debt despite having a half-decent salary.

And when he asks plaintively if it's a good idea to take out another loan to pay off those debts, we !!!!!foot around it and say 'well done' for posting and ignore the real issues.

YOU ARE SPENDING TOO MUCH.

There is only ONE way out of debt. Stop spending and pay it off. Then save.

Do NOT take out another loan. Make your old car last longer.

It's called being an adult.

God help us . . this is precisely the sort of thing that gets people into a lifetime of debt and misery. It got the world into the mess we're in now. And we're not jumping on it, and trying to stamp it out?

Here is a simple lesson - the way out of debt is NEVER through taking on more debt. It's that straightforward.