please help

owen79_2

Hi there,

I'm new to this forum (but have used the site for a while).

I have managed to get myself into a bit of debt problems, and am now taking positive steps to deal with it.

A couple of years ago I was almost debt free (by following good advice from this site), but then I went through a divorce and had to move out of my marital home, into rented accommodation on my own.

The problems started from there. I had a high cost of living, and ended up with depression as a result of the marital problems. My ex wife stayed in the house and paid the mortgage with her new partner (although I was still, and still am on the mortgage). There is not much equity in the home - probably about £5000 now, but most of this will go on estate agents and solicitors fees if it sells, which it hasn't in 2 years.

I have just taken the mortgage back on - and moved in. We are going through a change of parties, and this has been approved by the mortgage company.

However, I have quite a lot of credit card debt, which I am starting to manage a lot better since stopping taking my anti-depressants (under medical advice), and have recovered from the depression.

The outstanding debt I have is:

Company Minimum/month Balance APR

American Express1869922.9Nationwide135453819.9Barclaycard160678914.9Intelligent Finance3726004.9Post office credit card120400015.9
Cahoot 124 4817 17.9
Student Loan 104 1360 2.9

Currently to meet the minimum repayments I have to find £698 per month, which is a struggle.

I have cut spending dramatically, and have now started paying any extra into the debt. I have done a proper budget, and incomings and outgoing sheet, and that is now sorted. The only problem left is the debt.

I need to reduce the monthly outgoings. I am soon to come into an extra £1300, so I was wondering if it would be sensible to pay the student loan back, as this is the highest repayment for the amount outstanding, although it is the lowest interest rate.

I was also wondering what are my options for reducing the monthly minimum repayment into something more manageable, so I have more money to live off, and clear the debt. I was looking at a personal loan - but don't want anything secured against the house. I have had a quote with my bank, which thinks I am a high risk, and the APR will be 19.9%. Other companies, such as Express Finance, offer an unsecured loan over a long period, but their APR is 21.9%, but specialise in people with a poor credit history. I haven't really got a poor credit history of payments (not many missed repayments), but am up to my overdraft each month, and my cards are near their limits which counts against me. I'm struggling with other things per month (bills etc) because of these debts.

I was just wondering what my options might be to reduce these payments, and then maybe throw everything extra into paying the debt off.

Many thanks.

owen79_2

Oops - that went a bit wrong in the format. I meant to put all my APRs and balance and stuff in, but it came out a bit wrong when it posted to the forum. I'll put it in another format.

Minimum Payments:

American Express18Nationwide135Barclaycard160Intelligent Finance37Post office credit card120Cahoot123Student Loan104
Balances:

American Express699Nationwide4538Barclaycard6789Intelligent Finance2600Post office credit card4000
Cahoot4817Student Loan1380

gonzo127

hi and welcome, if you have done a SOA you might want to post it up here as we might be able to spot areas of expenditure that you could make savings on which you might not have thought about if you havent used the SOA recommended by this site heres the link http://www.makesenseofcards.com/soacalc.html

apart from that the best bet is to ALWAYS pay the highest interest first

yes your student loan might be the highest monthly payment however it is only going to take you over a year to get rid of it at current rate

also consolidation is never usually a good idea, even more so when you consider how high the interest rate you are looking at!

are you able to do some card tarting with a credit card or to to get some of your balances on 0%? or do you have any spare on your lowest interest rate card to transfer some of your highest interest rate debt onto?, unfortunatly the list you have posted is hard to read so i cant see exactly how its all split

Tixy

Hi owen and welcome

As gonzo says it would be helpful to know the APRs of the debts as well as the minimum payments and balances.

Usually the advice is to pay the most off the highest APR, but that does need to be balanced with how much difference it makes to your cashflow each month.

How short are you of being able to meet your repayments now? Which debts are fixed repayments (loans etc) and which are based on the balance (cards etc)?

Do you have any space for transferring money around to minimise the interest you pay?

Also don't forget to include your overdraft in your list of debts (along with its APR).

bargainbetty

owen79 wrote: »

American Express18 - 699
Nationwide135 - 4538
Barclaycard160 - 6789
Intelligent Finance37 - 2600
Post office credit card120 - 4000
Cahoot123 - 4817
Student Loan104 - 1380

If you have £1300 coming, why not call Amex and see what they would offer you on a low life-of-balance transfer? If it is good, use some of the money to clear it off, and then use the transfer to clear as much as possible off the highest interest rate debt. Say you used the Amex low-life-balance and the £1300 to clear a big chunk of the Post Office card - you can then focus on overpaying the remainder to clear it.

You can then call them, get a low-life of balance rate from them, and move a chunk of high interest debt onto it. You make the same payments, but the debt shrinks faster since there is less interest. Once you have everything on low-life of balances, close the accounts as you clear them. Remove temptation, improve your credit rating.

It's a shame the smallest balance is on the best interest rate! I just noticed this and had to edit!

Good luck x

Tixy

owen79 wrote: »

Company Minimum/month Balance APR

American Express18 699 22.9 - 2.5% payment
Nationwide 135 4538 19.9 - 3%payment
Barclaycard 160 6789 14.9
Intelligent Finance 37 2600 4.9
Post office ccard 120 4000 15.9 - 3% payment
Cahoot 124 4817 17.9 -2.5% payment
Student Loan 104 1360 2.9

bargainbetty wrote: »

It's a shame the smallest balance is on the best interest rate! I just noticed this and had to edit!

Good luck x

I hadn't realised the APRs were on the first posting Betty! Thanks. But it looks like the Amex is the highest APR as well as the lowest balance?

Obviously if you pay off the student loan you would save the most amount of money each month owen. But if you want to save the most in interest it would make sense to pay off the amex and the then nationwide first - it would only save around £36 off your monthly payments each month but would save you most in interest in the long run.

However if you can only afford the minimum payments its going to take you a very long time to clear these debts. Have you looked for ways to decrease your outgoings or increase your income to make better inroads into your debts? If you can just over pay by a few pounds each month it can literally knock years off the length of time it will take your to repay.

Have you looked at the snowball calculator at whatsthecost? this might be useful.

foxgloves

Hi,
I don't know if this applies to you, but my partner & I seemed unable to budget properly until we had got our current accounts in credit (or at least solvent at the end of each month). Once we'd done that, the debt management got much easier because we knew exactly how much we'd got to throw at debts each month. This particularly helped my partner as he was always up to or close to his overdraft limit each month so his salary would go in and just be instantly swallowed up into a black hole. The usual advice is to pay off highest interest first and that is good sound advice, but am just throwing into the mix the fact that a current account in constant overdraft does make it harder to budget. Best of luck witn it all. There is a light at the end of the tunnel.....you are nearer to it with every little bit you pay off. Last night, we were talking about the fact that we've nearly cleared our debts & my partner admitted that getting his current account out of the constant overdraft (20 years since he was a student) was what most helped change his attitude to money.

bargainbetty

Tixy wrote: »

But if you want to save the most in interest it would make sense to pay off the amex and the then nationwide first - it would only save around £36 off your monthly payments each month but would save you most in interest in the long run.

However if you can only afford the minimum payments its going to take you a very long time to clear these debts. ......If you can just over pay by a few pounds each month it can literally knock years off the length of time it will take your to repay.

This is why I was thinking of the credit card tarting option - if you call Amex and ask for a low life of balance deal, you might be able to pay off a debt and reduce the cost of another one at the same time.

JA1000

Is there no case for paying the Student Loan? - We all know it's interest free but proportionately it is the biggest repayment by a long way. I will probably be shot down for this but I know how annoying that SL is, even if it is interest free, the fact that you could clear it and see a significant change in your monthly income which you can than use to snowball.

For someone starting out on dealing with debt quick wins like this are huge motivation, yes we can argue the benfits of interest rates and I can agree with this side. The fact that there is an extra £100 pm guaranteed, I know everyone is encouraged to pay off ASAP but sometimes you have that emergency and that £100 can't be used for paying off but at least it's available.

What is the limit on the AMEX? If it was cleared are you guaranteed a transfer? If the student loan was gone the AmEx would be gone in 6 months time as part of the snowball process.

owen79_2

Hi Everyone,

Thank you for taking the time to reply to my post with all your helpful advice. I went on the makingsense of cards website, as suggested - and have the following SoA:

font=courier new]Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 2160
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 300
Total monthly income.................... 2460
Monthly Expense Details
Mortgage................................ 997
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 143
Electricity............................. 30
Gas..................................... 30
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 12
Mobile phone............................ 80
TV Licence.............................. 12
Satellite/Cable TV...................... 18
Internet Services....................... 6
Groceries etc. ......................... 0
Clothing................................ 0
Petrol/diesel........................... 250
Road tax................................ 18
Car Insurance........................... 23
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 11
Pet insurance/vet bills................. 0
Buildings insurance..................... 10
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 80
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1790

Assets
Cash.................................... 1300
House value (Gross)..................... 185000
Shares and bonds........................ 0
Car(s).................................. 350
Other assets............................ 0
Total Assets............................ 186650

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 172000...(997)......6
Total secured & HP debts...... 172000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Cahoot Loan....................4817......104.......17.9
Student Loan...................1380......124.......2.9
American Express...............675.......16.89.....22.9
Post office C/C................4000......101.......15.9
Intelligent Finance............2600......27........4.9
Barclaycard....................6789......158.......14.9
Nationwide C/C.................4538......135.......19.9
Total unsecured debts..........24799.....665.89....-

Monthly Budget Summary
Total monthly income.................... 2,460
Expenses (including HP & secured debts). 1,790
Available for debt repayments........... 670
Monthly UNsecured debt repayments....... 665.89
Amount left after debt repayments....... 4.11
Personal Balance Sheet Summary
Total assets (things you own)........... 186,650
Total HP & Secured debt................. -172,000
Total Unsecured debt.................... -24,799
Net Assets.............................. -10,149


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I have tried a few other things today:

- I phoned Barclaycard (still high APR) but the lowest of the high APRs, and checked if they were doing any balance transfer deals. They weren't.

Amex were not doing any balance transfer deals either - and when I paid off a chunk of that before, I reduced my credit limit to £700.

I am still debating the student loan vs highest interest scenario. Currently, after meeting all the expenses (and that's on a very tight budget), if nothing else needs paying I end up with abour £4 left for emergencies. If I paid off the student loan, I might have about £108 left at the end of each month - which I could either use to snowball current debts, or have just in case the car / house needs some major work done on it etc. I am currently looking for a second job to supplement my income too.