Bad with Money

chicken_5

Just wondering if I could get some advice on what to do about my debts and how I generally manage my finances. I currently have
HSBC Credit Card £2800 (at 1.9% APR although this is about to run out)
Egg Credit Card £1276 (High apr probably around 15-17% I haven’t checked the website)
Egg Loan £4700 (7%apr)
Over draft £1100
Which comes to a grand total of £9900 give or take a few pounds

I earn £1250 after tax and pay £500 a month on rent and bills
Which should leave me with approx £750 to buy food, socialise and pay of debts etc which sounds a lot but I don’t appear to have made any improvements on my level of debt! My minimum monthly payments are about £100 for each card and I pay £125 a month for my loan.

I am not sure whether I should get one big loan and have a standard amount to pay of each month, and then when I can pay more of each month or if I should transfer all the debts to a life of the balance card – I have moved around quite a lot which I think doesn’t help my credit rating and when I was earning less I got declined a couple of 0% cards so I am sure if this will affect my chances at getting a new one it was about 6 months ago now.

I realise that I can pay of my debts if I am good and don’t go shopping and budget properly but its going to take quite a while and I would like to minimise interst charged etc if I can, I am hopeless with money and it probably doesn’t help that my boyfriend earns considerably more than I do and I tend to forget that I cant afford to do all the things he wants to. But I am trying to sort this out just not sure which is the best way forward. Any ideas would be welcome
Sorry if I rambled on a bit
Thanks

SaveMoreMoney

If you get one big loan to consolidate all your loans at present, then you must ensure that you don't spend again on the credit cards - as this will obviously take you back a step.

You mention that you need to 'budget properly' - quite correct. See where you spend all your money every month and then look to see where you can either cut down or stop..........it will take 2 or 3 months to see the changes, BUT it's well worth it and then you can use the extra money to pay off debts.

Best of all is to post up a complete monthly list of all your income and outgoings.............others on here will then be able to offer some quick and VERY effective thoughts.

CLAPTON

debt reduction and budgetting are all about detail and working out exactly where you money goes.
you could consider keeping a spending diary where you write down absolutely everything you spend so you know where the money is going. secondly draw up a 'real' budget..that is your best estimate of everything you will spend over the next 12 months....so that expensive holiday has to be included (divide by 12 to get a monthly figure) as well as those work lunches coffees etc...absolutely everthing.


worth reading the 'sticky' thread at the top of this page 'first time poster' and also look at the 'budget planner' at the top of the page.

best to work out the budget first and post a SoA before worrying too much about the best cc deals etc... bets way of reducing debt is to pay it off although reducing interest rates obviously has a big part to play. You must find out the APRs of your cc

as far as boyfriend is concerned, does he know of your debts...if he earns much more than you then its only fair he pays a bigger share of all the costs

calleyw

As has been said by other posters and many other threads that consolidation loans are bad

Unless you have already had a light bulb moment and know that you are never going to spend on the credit cards etc again. You are going to be in the same position £9K in debt and then some.

I agree with Clapton. Before you make any major decisions. Keep a spending diary for a month and see where you are spending. Until you have months worth of information from the spending diary. Why not pull out your bank and credit card statements and just see where you are spending money. That will give you a little clue as to where you are going.

You say you are bad with money. But handling finances is the same as learning to drive. You can learn it.


All the best you can do this. But it will take some work. Also post the SOA as well so we might be able to help free up a little more money to help you get rid of the debts quicker.


Yours

Calley

ms_london

chicken_5 wrote:

HSBC Credit Card £2800 (at 1.9% APR although this is about to run out)
Egg Credit Card £1276 (High apr probably around 15-17% I haven’t checked the website)
Egg Loan £4700 (7%apr)
Over draft £1100
Which comes to a grand total of £9900 give or take a few pounds

I earn £1250 after tax and pay £500 a month on rent and bills
Which should leave me with approx £750 to buy food, socialise and pay of debts etc which sounds a lot but I don’t appear to have made any improvements on my level of debt! My minimum monthly payments are about £100 for each card and I pay £125 a month for my loan.

Hey chicken (love the name!!) - well done on making the first step - thats always the hardest!!

You are on a good wage!! The £500 a month you pay on "rent and bills" - could you break this down for us?

Is the HSBC only 1.9% APR or is this the monthly rate? What are your OD charges/interest?

Assuming you can't get any further 0% deals or a consolidation loan I suggest that you make the minimum repayments on all of your debts apart from the Egg Credit Card where you should "snowball" the remainding money?

What you need to decide is how much of the £750 you have left over each month is to be used on "living" and what should be used to service your debts & then split it accordingly..

Are you hoping to be debt free asap? Saving for a deposit? Or just generally get your finances in order?

Have you covered mobile bill? Car (if a car, what about tax,insurance,mot)? Gas? Elec? Council Tax? Transport? - how much do you spend on food? Do you take lunches to work or eat out a lot? Do you have a gym membership? Do you pay anything else out each month? You need to budget for EVERYTHING - how about Christmas/Birthdays or a holiday? Do you have savings for this or any savings at all?

Could you move to a cheaper place with less rent? Move back home with your parents? Are you due a payrise? Could you increase your incomings? (2nd job/ebay/carboot?)

Let us know what you think & we'll try and help some more.
xx

chicken_5

Thanks I will go home and find out all those figures etc and make an effort to write down everything I spend
As for my boyfriend earning more than me, he does know about my debts and although we havent really sat down and worked anything out formally he probably pays for more stuff than I do over all, he is doing the saving up for a house thing and my job is to pay of my debts, So I cant really complain about that - its just annoying when he is always suggesting holidays so far we have New York, France and some city breaks- nothing is booked but its hard to say no!

thanks for you help so far

chicken_5

Also whats snow balling?

CLAPTON

snowballing means that you pay the minimum amount on each of your debts each month except for the one with the highest APR (all other things being equal). On the one with the highest APR you pay the maximum you can until you have paid it off, then you start on the debt with the next highest APR ...you now have a little extra as one debt has been paid off...hence snowballing.

chicken_5

So below are a few more details

My Salary is £1250 a month



HSBC Overdraft Total 1100
HSBC Credit Card APR 1.9 Total :2800 Monthly:100(goes up to 13.9% next month)
Egg APR15.9 Total:1276 Monthly:80
Egg Loan APR 6.7 Total:4686 Monthly:125

Total 9862 Monthly 305

Rent inc electricity etc 400 (I live in London so it isnt going to get much cheaper)
Council Tax 50
BT 10
TV licence 3
Mobile 25
Internet 3
Travel Card 85

Food 100 (for 2 people)
Total 676

So that leaves me with about £675 for debt payment and other stuff, I will ofcourse write down my future spending so I have more of an idea what the rest of the money goes on. But after paying the minimum amounts on my cards I have about £350 left a month, if I dont spend anything other than what I need for the essentials.

Somebody mentioned snowballing - thanks for explaining this - it makes sense only problem is that the low rate on my HSBC credit card is almost over so it will go up to 13.9% which isnt much less than the Egg card.

Would I be better of trying to get a life of the balance card and if I cant just leave the money where it is and pay of as much as I can in order of APR? or extend my loan/get a new one to cover the debts and then pay of more than the loan amount when I can? I am worried about applying for credit and being turned down as this happened about 6 months ago when I was earning nothing temping, and had just moved house (unfortunatly I didnt read the bit about credit rating system till after I had applied and been turned down by about 2/3 companies for 0% cards)

So what do you think - now I have got a decent job I know I can start making some headway to paying of my debts but I am not sure where to start !
I do however have a book to write down my expenses - so I am making progess!;)

Thanks for the advice so far