I was naive...

fearitude

Hi guys, could do with a little help...

Back last year I got 3 credit cards all with pretty good limits (around £2700 each). I'm 18 and I didn't practically look at it and went a bit wild... at the time I had no thought to it, and thought it was easy money and I could worry about it later.

I didn't realise how soon later and how stupid I was being. I'm now about £8000 in debt with these credit cards and I have several missed payments.

One of them defaulted automatically and I called them up and they said they would put my monthly payments down to £80 for three months. I've now had a letter saying this is only for two months and I need to pay the full outstanding £2600 balance after the two months.

The other two cards keep ringing my house, and sending me letters asking for about £300 each. I earn about £750 to £800 a month, I'm a smoker, I'm learning to drive and I catch a bus to work every day. I also buy food for work...etc.

I'm really trying to get to grips with my spending, as I do spend it rather irratically, and I'm the first to admit I don't have the best self control.

I'm more worried about my credit rating rather than anything else as it's been completely tarnished by me missing payments. I need to get my spending down to about £80 on each of these cards ideally, but I don't want to default them as that would leave a 5 year black mark on my credit record right?

Would it be worth me getting a high-interest credit card like Capital One and just spending about £50 and paying it back straight away to improve my credit?

I am also paying off my old mobile contract at the moment as I had a high bill but I have about £250 left to pay off that from £600

My outgoings are bellow, and I hope you guys can help. Any help is really appreciated, and thank you in advanced.

Bus Travel: £70 pm
Food: £100 pm
Smoking: £160 pm
Learning to drive: £220
Mobile contract: £40
Old mobile contract: £100 (for the next month and a half)

RobertoMoir

I'm sure the experts in this forum will be along shortly, and they'll probably ask you to do a full statement of affairs/SOA.

Couple of things spring to mind.

You're spending £690 a month right there in that list which I'm sure isn't complete.

1) With your earnings being low, are you sure you're claiming all the benefits you are entitled to? Don't just tell us you think so... have you checked?

2) Do you need to be paying for driving lessons while you're in this situation? Can't you suspend this while you sort things out?

3) Mobiles... What the heck? Can you cut any of these... go onto a lower tariff, etc?

4) While I think we're all entiteld to at least one small sin in our lives, is there any way you can stop smoking or at the very least cut down while you sort this mess out?

5) This £100pm "food for work". Is this packed lunches? If so, how are you managing to spend £100 a month on that? If not, can you start doing packed lunches? I'm not spending that much on lunch and I buy mine from a sandwich bar near work, and it isn't rubbish either.

fearitude

I'm intending to quit smoking in the next couple of weeks (I have a week off next week so I intend to go get some stuff to quit from the doctor and having a week off will mean it's easier to smoke with any luck).

As per driving lessons, if I put it off for a while it will actually cost more as I'll have to practice everything again. I've just paid for 10 lessons (£160) and I'm hoping to do my test at the end of next week so that'll be the end of the £160 and I'll be spending about £150 (estimated) on petrol a month (no need for the £70's worth of weekly bus passes).

As per the £100 on food... I usually spend about £2 on food, a pound on coffee and then another drink later in the day, although I admit it would make a lot more sense to make food to take into work, and buy a bottle of squash for work.

Also what kind of benefits would I be entitled to? I have submitted my P60 and my old P45 to the tax office in hope of a tax rebate, I have overpaid on my taxes for last year wayyy to much. I earnt about £6000 last year and about £1200 of that went to my tax so I'm hoping to have about £700 rebate (correct me if I'm wrong) as I was on emergency tax code.

poorandindenial

I am not sure that £150 a month on petrol is better than £70pm on bus passes (plus the other costs that go with running a car)

You should think hard about cutting down on the food at work bill, I saved about £150 a month by taking my food to work.

You also said that you need to cut your spending on the cards to £80pm, actually you need to cut the spending to zero and repay as much as you can.

Your credit rating will improve fastest if you service the card syou have properly, getting another card will add to temptation for you and look more and more like you have overstretched yourself to potential creditors.

RobertoMoir

fearitude wrote: »

I'm intending to quit smoking in the next couple of weeks (I have a week off next week so I intend to go get some stuff to quit from the doctor and having a week off will mean it's easier to smoke with any luck).

Good luck with that. Starting in your time off is probably a good idea as you say.

fearitude wrote: »

As per driving lessons, if I put it off for a while it will actually cost more as I'll have to practice everything again. I've just paid for 10 lessons (£160) and I'm hoping to do my test at the end of next week so that'll be the end of the £160 and I'll be spending about £150 (estimated) on petrol a month (no need for the £70's worth of weekly bus passes).

Well as close as you are to finishing the lessons I suppose it makes sense to push forward with the test.

Hope this isn't an issue, but if you don't pass, I would strongly suggest taking a "break" from lessons rather than buying some more right now.

Same with driving and spending £150pm on petrol to "save" £70pm on bus.

Let me put this simply: Either way - You. Can't. Afford. It. Right. Now.
It's your decision, your life and none of my business what you do, but that's how I see things based on what you've said.

Same with "cutting your spending to £80 on the cards". I missed that first time round... Poorandindenial is right - you need to cut that spending to zero while you're up the creek... if you can't make repayments the card companies will do that for you anyway, so please don't "count" on being able to spend that money as it's not going to help your situation and the card companies will probably remove that facility if you can't meet their payment schedules.

fearitude wrote: »

As per the £100 on food... I usually spend about £2 on food, a pound on coffee and then another drink later in the day, although I admit it would make a lot more sense to make food to take into work, and buy a bottle of squash for work.

I'd give that a go. Listen, I'm not suggesting you should live a life of purgatory forever and if you really like to have a coke or whatever with your lunch I'm not saying you shouldn't... but I am saying that anything you can shave off your outgoings to get these debts paid off quickly will really help you right now.

fearitude wrote: »

Also what kind of benefits would I be entitled to? I have submitted my P60 and my old P45 to the tax office in hope of a tax rebate, I have overpaid on my taxes for last year wayyy to much. I earnt about £6000 last year and about £1200 of that went to my tax so I'm hoping to have about £700 rebate (correct me if I'm wrong) as I was on emergency tax code.

No idea myself what benefits you're entitled to, but I know who does.
It does sound like you could be due a tax rebate... let's hope so.

costaerer

i wouldnt rely on the tax back as they are taking monthhsssss at the moment. its going to take them 10 weeks to even open the post because they are upgrading the computers!!! bewilders me how hmrc can just'shutdown' for 2 months!!!!

Ames

I think when he said he wanted to get spending on the cards down to £80, he meant he wants to get the repayments down to £80. I could be wrong though.

You might have to pay £150 for petrol, but at 18 your insurance will be sky high, even on your parents car. On Top Gear the other week they had a challenge with £2500 to spend on a car for a teenager. Even insuring in parents name it was costing about 2k to insure, and that's on a car only worth a few hundred! I really think you need to forget about being able to drive once you've passed your test.

poorandindenial

Ames wrote: »

I think when he said he wanted to get spending on the cards down to £80, he meant he wants to get the repayments down to £80. I could be wrong though.

Ah, that would make sense - sorry OP

fearitude

Yes, what I meant is paying off £80 on each card, as I feel that's within my budget and not a permenant situation, just something until I get off my feet.

I really do need to be driving, as when I pass my boss has told me he's sending me to another store (which is open longer and allows for longer hours of work... more pay) and on top of that I will be promoted which will up my earnings by about £500.

As per buying a car, I already have one, it's a small car and doesn't use too much petrol. Insurance on it is only £700 for both me and my parents, and my parents are paying for half the insurance. So I'll only have to pay about £350 for the first year, and because it's going to be through them, it won't have to be all up front.

I'm not counting too much on that tax money in the short term, but once I do get it, that'll be a decent grand off my credit cards.

I'll take a look at that site now, thanks.

gizmo111

If you're living at home and under 25, then you won't be entitled to any benefits. Are you paying your parents anything for your keep? Have you thouht about a 2nd job in a bar to throw money at the cards.

daily_2

Hope you're not doing this?

http://news.bbc.co.uk/1/hi/programmes/moneybox/7052569.stm

With that amount of debt, a car should be the last thing on the agenda.

Getting another credit card won't help the credit rating, you need to deal with the existing ones first