Debt Wizard Advice Needed!

shie6523

Hello.

I’m wondering if any of you debt wizards could give me some useful advice on how to tackle the following debt. Please see below:

Monthly Income (Net): £1,362.55

Outgoings:

Barclaycard: £20 approx.
More Than: £37 approx.
Capital One £60 approx.

Finance Agreement 1 £58.33
Finance Agreement 2 £121.11
Finance Agreement 3 £115.55

Credit Card Info:

Barclaycard Outstanding Balance: £1512.76
0% Interest End Period: None

More Than Outstanding Balance: £1789.91
0% Interest End Period: 16th Sep 2006

Capital One Outstanding Balance: £2034.95
0% Interest End Period: 1st Jan 2007

Finance Agreement Info:

Finance Agreement 1 Outstanding Balance: £583.31
Finance Agreement 2 Outstanding Balance: £1211.11
Finance Agreement 3 Outstanding Balance: £1770.00 (approx)

The main purpose of this exercise is to reduce my outgoings. I currently have £2000 is savings and I want to use this money to pay off some debt.

My problem is where do I use the money to reduce the debt? My biggest outgoings are Finance Agreement 2 & 3. By paying £1000 each of both of these agreements would reduce the monthly payments on these agreements.

I also have a Virgin Card which I have just paid off fully. I was considering a super balance transfer and paying all 3 finance agreements off and transferring the debt via credit cards – is this wise?

I am going to transfer my Barclaycard debt to a Post Office credit card as this offers 0% for 6 months and no transfer fee.

Any response would be most appreciated as I want to be debt free asap!

Daz.

lynzpower

Hi there Daz

You might want to think about doing an SOA http://forums.moneysavingexpert.com/showthread.html?t=107280

this should help us see what you could pay more on, or over pay.You should try to list your debts such as this

Eg
Barclaycard 14.5% apr owing 750
Egg 0% owe 1200 etc

UNtil we know what the APR is on the virgin card, its unclear whether you should shuffle.

If you can do a full SOA, we are sure to be able to offer advice on getting debt free asap!!!

Good luck
lynz
x

CLAPTON

the two strategies for reducing debt are to firstly to 'find' more money to increase monthly repayments and secondly reducing the interest rates that you're paying.

Lynzpower has already suggested you post a SoA which may help you find reductions in your spending so you can free up some more money to pay off the debts more quickly.

As far as moving the debt arround etc the best tactic is to snowball; that is all things being equal, to pay the minimum on all debts except the one with the highest APR ...on that one pay as much as you can until you have cleared that, then start on the one with the next highest APR.
It makes no real sense to have savings earning say 5% if you are paying 10% on debts.

to make an sense of your debt payment tactics you need to supply
a. for each CC the APR after the 0% period runs out
b. for the barclaycard you say it has 0% for ever....so why would you want to move this to a new card?
c. for the finance agreements ...several questions
for each loan how many payments are there left to pay
are they 'flexible ' loans with no penalties for early repayements?
if yes what happens if you make early repayments...does it bring the monthly repayment down or bring forward the end date?
d. do you have any PPI on any of the CCs/loans?
e. whether a super balance transfer makes sense depends upon the situation with your loans plus what is the APR of the card after the 0% runs out and whether you can pay off the amount before the 'normal' rate cuts in.
how much can you afford to spend on repaying the debts in total?

i would suggest you dont try to reduce your total payments but use them to best advance to clear the debts more quickly

Annie_Fanny

For more info on 'snowballing':

http://www.whatsthecost.co.uk/snowball.aspx

Regards
Annie

shie6523

Hello.

I’m wondering if any of you debt wizards could give me some useful advice on how to tackle the following debt. Please see below:

Monthly Incomings:

My Salary: £1,362.55

Monthly Outgoings:

Rent: £308.00
Utilities: £110.00
Council Tax: £40.00
Mobile Phone: £56.00
Food: £8.88
Petrol: £60.00
Pet Insurance: £9.34
Charity Contribution: £6.50
Electrical Item Insurance: £6.90
Electrical Item Insurance: £2.99

Debts:

Barclaycard – Balance £1635.79 (limit £3,200) APR 21.9%
Capital One – Balance £2034.95 (limit £5,400) APR 0% until 1st Jan 2007 APR 14.9% after
More Than – Balance £1789.91 (limit £2,000) APR 0% until 12th Sep 2006 APR 14.4% after

Finance Agreements:

Agreement 1 – Balance £583.31 APR 0% length of term 24 months, 9 months to go (ends 24th Feb 07)

Agreement 2 – Balance £1332.21 APR 0% length of term 18 months, 10 months to go (ends 16th Mar 07)

Agreement 3 – Balance £1964.35 APR 0% length of term 18 months, 16 months to go (ends 14th Sep 07)

Savings:

£2,000

Notes:

Finance Agreements:

1. If the full lump sum amount is paid off before the end date of the agreement – no charged is incurred. If the lump sum is paid via a credit card a 2.5% fee is incurred.
2. If a partial amount of the agreement is paid off, the direct debits will not be taken from my account until that lump sum has been paid i.e. if I pay 5 months worth of balance this would mean no direct debits for 5 months but after that the debits would re-commence.

The main purpose of this exercise is to reduce my outgoings. I currently have £2000 is savings and I want to use this money to pay off some debt.

My problem is where do I use the money to reduce the debt? My biggest outgoings are Finance Agreement 2 & 3. By paying £1000 each of both of these agreements would reduce the monthly payments on these agreements.

I also have a Virgin Card which I have just paid off fully. I was considering a super balance transfer and paying all 3 finance agreements off and transferring the debt via credit cards – is this wise?

I am going to transfer my Barclaycard debt to a Post Office credit card as this offers 0% for 6 months and no transfer fee.

Any response would be most appreciated as I want to be debt free asap!

Daz.

all_hours

That works out that you have an extra £340 per month after all outgoings and paying the minimum. But you've only put £8.88 for food is that correct?

I'd pay off the barclaycard first as interest is the highest.

Then use the snowball calculator without including the barclaycard balance - it will show you which card you should overpay on next, so you know where to pay the extra £365 of savings and the £340 per month after that.

I don't think its worth overpaying on the 0% finance agreements as once you've paid of your credit cards you'd be better putting this extra money in a savings account and earning interest.

nadnad

i would transfer the barclaycard to the capital one card for now.

but just to double check - I assume £8.88 per month for food is wrong?

also you haven't posted things like car insurance, house insurance etc - to get a true view of your finances - try to find all the things you pay for once a year and divide by 12 = how much you need to budget for per month.

your monthly outgoings are basically £600 although i'd add another £100 for food so say £700.

your debt payments are £411 so total outgoings = £1111.

you have £255 left over.

With your £2k I would wipe out finance agreements 1 and 2 in full. Giving you £179.44 extra.

I would then put this towards your More than card with the £37 you are already paying = £216. By the time September comes you will have paid £864 off leaving £925 transfer this to the Capital One card. Then throw everything you have to that.

So I worked it out - once you've transferred the Barclaycard to the Capital One you will have a £3546 balance - pay £80 p.m. off that (ie the £60 and £20 you were already paying) until September when you transfer the remaining £925 from the More than so your balance in September on your now 1 credit card will be £4151. From September you will be able to pay £296 (combined payments you were previously paying) so by Janaury when your 0% runs out you will have £2671 left over.

Transfer this to another 0% card (remember to apply in lots of time) and if you keep paying the £296 you will have that card paid off by September 2007 at the same time as your final finance agreement. So by September 2007 you will have about £400 spare each month.

And if in the mean time you have anything else spare per month from the £255 originally left over - put as much as you can towards your debts and they'll be paid off even sooner!

I would also rethink the charitable donation at this time, and also the electrical insurance.

Have you got the cheapest pet insurance have you checked around? i've read somewhere on here that M&S are very cheap.

Your mobile phone seems expensive do you have the best contract available?

and could you break your utilites down further for us?

shie6523

nadnad, you are God - thank-you!

Daz.

CLAPTON

from the info you have supplied :

LOANS
1. there seems to be NO advantage to you paying the loans off early or making a partial payment as you still have to pay the full debt.
So by paying early you are simply losing the interest you earn on your savings but gaining no advantage or you can use your savings to reduce you high interest (CC) debts.

CCs
2. as your PO card has no BT fee then transfer your Barclaycard to the PO card. This will mean all your CC debt is 0% for a period.

3. Keep your savings earning high interest until your 0% deals run out.

4. Your PO deal will run out in OCT/NOV and your More than runs out in Sep
5. If you can do further 0% deals then do that other wise use you savings to pay off the highest APR debt (you dont say what the PO deal will be)