SOA/Budget - Advice Please!

Hourglass · 14 July 2006 at 9:30AM

Hi

I am new to this so please be easy on me. My situation is as follows:

I currently live with my parents rent-free and have these debts:

Loan - £7,600 (Balance £5,500), 6.9% APR, due to be paid off end off end of next year, payment £340

Egg CC - Balance £997, 15.9% APR, payment of £25 per month

American Express - Balance £1900, 12.9% APR, payment of £55 per month

First Direct CC - Balance £500, 15% APR, payment of £15 per month

Overdraft- overdrawn by £500, can't find the APR.....

Next Store Card - Balance £498, 29.9% APR (!), payment of £55 per month

OK, so that's my debts. I have not been earning a lot recently and was paying almost £300 per month in train fares. However I have recently got a new job paying £17k (£1200 per month?) a year 55 miles away and I have had my lightbulb moment and want to pay everything off quick so I can re-locate. My friends reckons I should get a new loan including all my debts from my bank (who I have the loan with) and pay it over a longer period of time to make my life easier. Once I move I would also get a second job and save this money and then repay the loan early. I am single so will be shouldering the rent and bills alone. I have guessed the following:

Rent - £450
Gas, Elec, Water, Phone - £80
Council Tax - £85
Food - £100
Internet - £15
TV Licence - £25
Loan - £340
Next - £55
FD CC - £15
Egg CC - £25
Amex CC - 55
TOTAL - 1245 (eek!)

I am not normally overdrawn but had to withdraw the money to buy my car to allow me to commute. My company will pay a generous relocation package of moving costs and 3/4 weeks for "incidentals". I would like to take advantage of this and rent rather than flat share and probabaly get a second job too after a few weeks.

ANY advice at all would be appreciated as I really want to sort this.

Thanks so much.

T

lynzpower · 14 July 2006 at 9:55AM

Hello love

Welcome to DFW

OK, well a second loan isnt really the best plan, keep you in debt longer. Your best bet is to clear whatever you can as soon as possible. As you have no overheads at the moment, but are paying 300 train fares. How much is your income?

In order to budget properly for the future, you need to start now. Now clearly you have been living beyond your means what with all these CCs ( not being critical, hell Ive done the same!) but you need to work out what you spend at the moment, let alone when you move. So thinks like make up, toiletrires, clothes, haircuts, nightout, anything like that, you need to realise you are spending it, and in order to pay debts off can you do without, or do things cheaper?

How much is your car tax, petrol, insurance, repairs ( you wil have to guestimate those but you need to be putting something away for those when they appear so they dont end up paid on the CC) You currently owe 9895, and I would strongly suggest doing something about this amount before you move?

Will your companyt find the deposit for the rented flat? Or do you need to find this

All the best- we are with you and you ar ein the right place

Lynz
xxx

jessicamb · 14 July 2006 at 10:08AM

First things first - hello and welcome.

The general feeling on this board is that consolidation is not the best answer as you have already paid a lot in interest and you will be paying much more over a longer period with the loan.

First question: how did the debts get to be so high? I know you are on a low income at the moment but could you expand on this. In order to get rid of the debts you absolutely have to stop spending on the credit cards.

My strongest advice to you is to hold off moving for the moment and commute (even though it is a long way). The extra money will enable you to clear off the smaller debts with relative ease. Even the saving on rent/council tax you would make by staying at home should give you enough to clear a debt a month. If you move at the moment I think you will find it a struggle financially and you will be working all hours to clear the debts (and I suspect running up more debts to make your new home nice).

A short term delay would mean an easier life when you do move and more cash every month for the little things that you need/want - I see there is no budget in the 'new' SOA for going out etc.

Making the minimum repayments on each of the credit cards will take you a lot longer to pay off. Check out the debt snowballer at https://www.whatsthecost.co.uk/snowball.aspx to see which order you should prioritise your debt repayments.

Hourglass · 14 July 2006 at 10:22AM

Thanks Lynz for your help - that was such a friendly and helpful reply!

I am currently not working as I had to leave my job as I was doing 75 hour weeks with the trains and my shifts. After a while I could not cope and my dr advised me to get a less stressful job. I have been off work 6 weeks and frantically job hunting and worrying that I would get into a really bad situation. I had £1300 in savings to put towards my debts but have now used these to keep up minimum payments and towards the car.

My car is a 1.3 so will be in the lower tax group which was a deliberate choice. I have been trying to sort things while I have been off and organise my finances. I think I will need to find the deposit for the flat and my petrol for my new job (start on Monday!) will be approx £300.

I am considering commuting for a few months just to get at least Next and something else paid off. But it just feels with the loan around my neck I will not be able to re-locate as it it such a huge amount to pay each month.

Hourglass · 14 July 2006 at 10:30AM

Thanks jessicamb.

My debts got high as I was stupid - plain and simple. Champagne lifestyle and beer income. This new job has made me re-assess this attitude and have been unconsciously not going out so much and trying to cut down. I have returned a suit to M&S which I brought after seeing on my interview that everyone was casually dressed!

I only get my hair cut about twice a year and use the odd hair mask instead. Sorry, I put the essentials in my "new" SOA as I wasn't sure what to put. I suppose after all the commuting I will not be going out so much! On advice on this site, I have joined Quidco and Pigsback and and used them for car insurance and breakdown cover and follwed Martin's steps to get cheap car insurance.

I agree with you - it would be better to stay put and commute for the short term but I am just worried about the large payment on the loan which will not be paid off until the end of next year.

Thanks so much for your help.

jessicamb · 14 July 2006 at 10:31AM

Aw chin up - you're paying a fantastic amount each month off that loan. Maybe if you cleared the smaller ones off you could use the amount that you paid them towards the loan and get it paid off quicker?

You will be able to relocate eventually - maybe its not such a bad thing commuting at the moment anyway. It will give you a chance to see if you really like the new job without committing yourself to the location.

lynzpower · 14 July 2006 at 10:32AM

Hmm that loans a biggie isnt it? I wonder, can you overpay the loan or are you fixed to making the same payments till the end of it.

I agree getting rid of the cards is your best bet, to free up a bit extra you are paying the minimums there on those and they total 150pcm. I would suggest "cart tarting" either moving your balances to a 0% rate or a low life of balance rate. REad martins article on the left hand part of the page on credit cards for all the details. if your credit rating is alright, you should be able to do this no problems. so you want to be looking for the least amount of interest as the min payments on cards with interest barely touch the balance. On a 0% card every payment reduces the balance by everything you are paying off. ( go through quidco as well for new cards if poss)

Also Id suggest, selling everything you dont need on ebay, amazon car boot, wherever then using this cash to pay off the debt that is costing you the most money, currently that the Next account.

How far away is the job in driving terms away from your folks place??

Hourglass · 14 July 2006 at 10:45AM

The loan is a fixed amount each month rather than a flexible one. I have looked into 0% cards but cannot get one because my credit rating is not so good. I may try again though once I have started my new job and paid something off as this should affect my rating.

I currently have a few things on eBay which I am hoping to get about £200 from

) and use this towards paying off Next.

The job is roughly 58-60 miles away. I can take a nice route that is about 65 miles and gets me there in 1 hr 15 mins and another route that is more direct that takes 1hr 40 mins as it goes through lots of pretty little honeypot villages....

I have also recently got a Tesco ClubCard to put my pertol on as I will be doing a lot of this...

Thanks so much for your help!

jessicamb · 14 July 2006 at 10:50AM

Hourglass wrote:

The loan is a fixed amount each month rather than a flexible one. I have looked into 0% cards but cannot get one because my credit rating is not so good. I may try again though once I have started my new job and paid something off as this should affect my rating.

I currently have a few things on eBay which I am hoping to get about £200 from ) and use this towards paying off Next.

The job is roughly 58-60 miles away. I can take a nice route that is about 65 miles and gets me there in 1 hr 15 mins and another route that is more direct that takes 1hr 40 mins as it goes through lots of pretty little honeypot villages....

I have also recently got a Tesco ClubCard to put my pertol on as I will be doing a lot of this...

Thanks so much for your help!

Well done hun - you're a regular :money: .

Keep coming back here for support. It'll be tough at first with the travelling but you'll be debt free in no time at all.

:T

frak · 14 July 2006 at 11:02AM

Is the longer route on the commute motorways or major A roads where you are keeping a constant average speed ? If so use that route it may be longe rin miles but will be much more economical in fuel. Also Make sure your tyres are in good condition and check they have the correct amount of air in them each week. You can lose up to 5% of your fuel economy if your tyres are not at the correct pressure. Also when driving, move swiftly through the gears to get in to 5th and maintain a constant speed. Don't rev too hard but also don't change gear too soon. You can gain another 5% of fuel economy by just driving like this.
That all might sound a bit like overkill but if you are doing a lot of miles and you can get an extra 100 miles out of every 1000 from your fuel which is almost a free days worth of commuting.

frak