Need to end the Shuffle..

Kid71

This is a good warning tale to anyone "playing" MSE great credit card shuffle who isn't 100% sure they can pay deals in the time specified.

A few years ago -I was self employed contractor through an umbrella company and had 2 years of very erratic good month/ bad month earnings. Needing "just get me through" loans and reading MSE - it became clear that the clever move was to obtain low interest CCs. After several shuffles I'm left with 5 cards with repayments I can afford - but with (now) prohibitive interest rates.

When applying for loans (unsecured) to transfer these to more manageable rates - 2 applications are rejected and I am "referred" to secure hi rate loan providers. I have a good credit rating (920 experian) but I think because I owe a lot no one is prepared to lend me any more - So I feel trapped.

As I am now stably employed with a good income I do NOT want to borrow any more money - but pay off my unsecured loans as a efficiently as I can.

CCCS Suggested a DMP - but I do not want to seriously damage my credit rating. (Will it??)

Loan companies suggesting a secured loan...

Or I could just grit my teeth and "Snowball" the CCS - but this would take me 8 years - and the interest I am paying (up to 27%) is terrifying.

Any advice would be really appreciated! My SOA is below..

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 3200
Partners monthly income after tax....... 0
Benefits................................ 201
Other income............................ 0
Total monthly income.................... 3401

Monthly Expense Details
Mortgage................................ 786
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 107
Electricity............................. 100
Gas..................................... 39
Oil..................................... 0
Water rates............................. 53.53
Telephone (land line)................... 35
Mobile phone............................ 30
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 400
Clothing................................ 100
Petrol/diesel........................... 100
Road tax................................ 33
Car Insurance........................... 53
Car maintenance (including MOT)......... 33
Car parking............................. 5
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 100
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 9
Buildings insurance..................... 10
Contents insurance...................... 13
Life assurance ......................... 100
Other insurance......................... 0
Presents (birthday, christmas etc)...... 75
Haircuts................................ 30
Entertainment........................... 150
Holiday................................. 150
Emergency fund.......................... 100
Total monthly expenses.................. 2623.53


Assets
Cash.................................... 0
House value (Gross)..................... 195000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 30000
Total Assets............................ 231000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 140000...(786)......0.73
Total secured & HP debts...... 140000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
0000 barclaycard...............2297......46........22
0007 barclaycard...............3212......71........18
7485 halifax...................11406.....114.......5.94
egg............................14000.....275.......27
9761 lloyds....................10620.....212.4.....20
Total unsecured debts..........41535.....718.4.....-


Monthly Budget Summary
Total monthly income.................... 3,401
Expenses (including HP & secured debts). 2,623.53
Available for debt repayments........... 777.47
Monthly UNsecured debt repayments....... 718.4
Amount left after debt repayments....... 59.07

Personal Balance Sheet Summary
Total assets (things you own)........... 231,000
Total HP & Secured debt................. -140,000
Total Unsecured debt.................... -41,535
Net Assets.............................. 49,465

Tixy

Hi

A DMP will affect your credit rating (for years) and that of your spouse if you have joint financial products.

Also because you are showing a surplus this would indicate that you can afford minimum repayments and therefore I think creditors would be less likely to accept a DMP or freeze interest.

If you really want to clear your debts quicker I think you can shave quite a bit off your spending. Once you have managed to repay some debt you may find it easier to get credit or if you clear 1 credit card you may be able to get a good rate for a balance transfer to move another card on to it (low life of balance transfers can suit people in this position).

Looking at your expenses
Your elec looks high (although gas is not) are you using elec heaters? tumble driers? is you water heated by elec? Are you paying off arreas? Do you make sure they have actual rather than estimated readings?

Water - metered or unmeasured? Have a look to see if you could save if you switch to metered (although not always a saving with big familys).

Groceries could definatley be reduced, especially if your partner is not working as they should have plenty of time to cook from scratch. Try drop a brand challenge, meal planning before shopping and look on the old style board for lots of tips on reducing this. Some people feed families of 5 on £200 but if you aim for around £300 that would still give you a big chunk to pay off your debts.

Clothing could be reduced for a while, only buy essentials for the children, shop around and consider hand me downs from one child to the next. Cut to the bare minimum for adults - you probably have lots in your wardrobes and could make do with almost nothing for 6months.

What are other child expenses? How old are the children? Are they at school? Could you partner work (even if just part time it would help).

Life assurance £100 - yelp - this is a huge amount, you should be able to at least halve this unless one of you has serious medical problems. Check out the comparison sites and if you switch any insurance/utility/media provider always check if you can earn free cashback by using quidco or topcashback.

Presents and entertaining could be cut (halved?) whilst you start clearing your debts. If you haven't booked a holiday consider doing without for a year £1800 would make a big difference to your debts.

What are the £30,000 other assets? Can you sell all or some to pay off your secured debts? Are they earning you more than your highest rate of interest of 27%?

Do either of you have an overdraft? If so make sureyou include it in your list of debts.

I think there are definatley changes you can make without going down the route of a DMP.

Please don't think I'm being harsh, I see you are earning a good income and its easy to think that this means you can live an easy life but the reality is while you have debts the money you are earning is not really yours to spend.

Good luck

GeorgeUK

A DMP will damage your credit score as you are not making the originally agreed payments.

Turning unsecured debt into secured debt is extremely high risk and would not be advised here.

As you are currently able to meet the payments, your best option would be to snowball the payments.

Have you had a look at your credit file recently?
The benefit of doing the credit card shuffle is that even though a 0% period may end, if you have an existing credit card with a nil balance you may be able to get a balance transfer offer - as an existing customer this usually doesn't require a credit check so you wouldn't need to worry about that either.

You can have about 3 credit checks in a 6 month period before your credit score is affected so make sure this isn't the problem.

Mortgage................................ 786
Interest only or repayment?

Council tax............................. 107
If paying over 10 months, can you pay over 12?

Electricity............................. 100
Gas..................................... 39
Take a look at the price comparison sites for a better offer (uswitch, moneysupermarket)

Water rates............................. 53.53
Are you using a water hippo in the cisterns to use less water? (Are you metered?)

Mobile phone............................ 30
PAYG?

Telephone (land line)................... 35
Satellite/Cable TV...................... 0
Internet Services....................... 0
Is this a package?

Groceries etc. ......................... 400
Might be able to cut this down a bit. Have you moved down a brand? Have a look at the oldstyle board for mealplan ideas and cooking in bulk.

Clothing................................ 100
every month? Can you reduce this?

Car Insurance........................... 53
Pet insurance/vet bills................. 9
Buildings insurance..................... 10
Contents insurance...................... 13
Life assurance ......................... 100
Again, check the price comparison sites for the best deal.

Presents (birthday, christmas etc)...... 75
Every month?

Holiday................................. 150
Can this be reduced?

Kid71

Thanks for the brilliant responses so far -

It looks like the flavour of the comeback - is the "grit your teeth & snowball" option - but with as much money thrifted to throw at it as possible. Does everyone agree with this or should I also be able (with my good credit rating) to get a lower rate unsecured loan - to move money off the highest rate card. Does anyone have any knowledge of what attitude a loan provider would take based on my info. I just can't believe that in an open market with a <1% base rate I can't move £ from a 27% APR to a 15% APR? Is this a temporary thing?

Regarding the SOA..

Mortage is repayment - Tracker (worrying if base rate rises again)
Water - will look into a meter - thanks!
GAs & Electric - on combined tariff - you need a Phd to understand their statement!
Council tax over 12 months - can you do that - mines always been 10!
Clothes - Yes your right - wife really frugal (primark only) - just put a bit of fat in for school uniforms etc
Children - 13,12 & 4 - Bus fares, music lessons, scouts - but again there is some fat in there.
The £30,000 equity is an optimistic view of my endowments current value - due to mature in 2018 - should I try & sell them & stop endowment payments?
Life insurance £100 = includes endowment payment.
Food - We love Lidl! - But try not to buy cheap dodgy meat - so use costco for that (£75 p/w on lidl - £100 p/m at costco)

All your advices are brilliant! And really help me reflect. Chasing this round and round in your own head night after night really sends you crazy...

Kid71

PS - Agree with your thoughts regarding the DMP. It was a bit worrying how ready CCCS where to put me on a DMP without any balanced explanation of the creditability impact.

getmore4less

Kid71 wrote: »

Regarding the SOA..

Mortage is repayment - Tracker (worrying if base rate rises again)
This looks like 15y sort out the debt and you can overpay, great rate though.

The £30,000 equity is an optimistic view of my endowments current value - due to mature in 2018 - should I try & sell them & stop endowment payments?
Life insurance £100 = includes endowment payment..
Get some quotes for surender/sell and some alternative life cover( got any with work that will pay enough)

The mortgage is repayment so no need for a saving policy that may nor be performing, there is no way the endowmwnt is making 20+% so suurender/sell looks like a good option even of it is worth very little it will make a dent in the debts and you can clear the rest much quicker.

Do you need 2 cars? this is costing a lot also.

GeorgeUK

In the current market lenders are cutting right back and there is no indication of when or if it will get back to where it was before.

Your annual income is probably about the same as your debt. This may be why lenders are unwilling to loan more money to you right now.

Take a look at your credit file and see if you have any old creditcards that were not closed and how many credit checks you've had in the last 6 months. Ordering a catalogue (without even ordering from the catalogue) and purchasing a mobile phone will also add a credit check to your file so it is best to request credit when you have not had any recent checks.

Would your wife be able to get any 0% offers? If she phones to enquire she may be able to have your wage taken into consideration. Not heard of anyone trying this on the threads for a while now, but pre-crunch it was sometimes considered.

If you can get a loan at a lesser APR than you are currently paying, then this saving is definately worth considering. The problem with most loans however is that they are not flexible and you cannot overpay the loan without incurring an early settlement charge. I would be happier to get a 0% card with a decent rate so that i could clear one card andthen try to get a 0% for 6 months or low interest for life of balance transfer, then transfer again and repeat.

I agree that the interest rates are a problem but having limits of 10k is not very common which is why shuffling is usually easier than you have found it. I would wait until you have no credit searches showing on your file for a 6 month period and try again for credit.

I would personally try for a Virgin creditcard as this is 0% for 16 months and a 1% minimum monthly payment. You may want to look at getting a loan but be careful of how the adverts state the rate. Where it states 9.9% typical rate, you may be offerred an very different APR.

getmore4less

Another option to look at is to change the mortgage term or go interest only for a while. 16y(£772pm)-25y(£510pm) - I/O(£84pm)

This is the same as transfering unsecured to sercured debt but the rate differentials make this worth while if you have spends/debt under control it will not take long with overpayments to undo the transfer.

Kid71

Any tips on surrendering Endowments? Estimated purchase value based on specified current value?

Kid71

GeorgeUK wrote: »

I agree that the interest rates are a problem but having limits of 10k is not very common which is why shuffling is usually easier than you have found it. I would wait until you have no credit searches showing on your file for a 6 month period and try again for credit.

I would personally try for a Virgin creditcard as this is 0% for 16 months and a 1% minimum monthly payment. You may want to look at getting a loan but be careful of how the adverts state the rate. Where it states 9.9% typical rate, you may be offerred an very different APR.

Checking my credit records (experian & equifax) apart from my own credit checks I have only had 1 search since January (3 in January) this year and that was for paying my insurance by DD. My experian reports says I should have £13000 of loan available - do you think I should apply for the Virgin card now ?

LeeSouthEast

In your situation I'd ask your own bank for a loan to cover the payoff of the Egg card, then snowball the rest. Almost any loan rate is going to be better than what you're paying. You can save a small fortune in your SoA by cutting back.