Terrible situation - advice desperatly needed!

abc123_3

Hello,

Firstly apologies for this very long post. I figured that the more info I provide the more likely it is that someone will be able to give me some good advice!

As with most people’s posts that I have read this morning on here, I have had a really bad day and woke up to the fact that I’m in a HUGE mess with no way out. I need to sort my debt problems out which, to be honest, have got massively out of control. This is the first time I have actually truthfully considered my actual financial position and its pretty scary, many times worse than I thought.

I’m 28 now and really should be in this mess at this stage. I have had a look at the various options and really don’t want to face bankruptcy. As I understand it the other option is an IVA but that isn’t so appealing either. My main problem is I have tried to sort myself out countless times, it seems to work for a few weeks then I completely disregard the problem – my fault I know. This will not happen now I have realised just how bad it is – a big wake up call.

What are my options??

After looking over the past postings I’m hoping you guys can come up with some suggestions for me. Here is my situation:

Debts:

Egg Loan: £5962 remaining (paying £160 a month – ends 27 Jan 2010)
Egg Credit Card: £3519.90 (15.9% APR variable)
Egg Money Account: £3572.10 (0% for 6 months then 15.9% APR variable)
HSBC Gold Card: £3800 (14% APR)
Morgan Stanley Credit Card £1400 (5.9%APR)
Bank Account Overdraft: £1500

Income:

Salary of £26,000 – this is paid on a 4 weekly basis. I take home 13 instalments of £1496.16 over the year.

Ebay buying/selling: Approx £100 (this is a very approximate figure and really unreliable though)

Note: The 13 weekly payments doesn’t help with budgeting in any way!! Hopefully Ill be moving to a new job in the next month or so which may rectify this. Maybe the salary will be slightly better but the difference will be small.

Monthly outgoings:

Rent: £530 – I realise this is expensive but I’m locked into a contract until April 2007
Council Tax: £40
Food: £50
Elec/Gas Bills: £40
Mobile Phone: £25
Travel: £70 (I’m considering buying a bike and cycling everywhere which is realistically possible).
Socialising: £100 (I know that this can realistically be £0 and is the first thing that needs to disappear)
Internet: £5

Monthly outgoings on debts:

£160 on HSBC Loan
£70 on Egg CC 1
£64 on Egg CC 2
£50 on HSBC CC
£30 ON Morgan Stanley CC

I know the obvious steps first point of call is lower APRs on credit cards but I typically get offered limits of £1000 or something. Then money ends up all over the place – loads of payment dates and it gets really messy. I don’t want to end up missing payments and feel its almost better to keep it in one place and prevent this?

ANY help would be massively appreciated – even if its bad news. I just want to get on the road to recovering this situation as best I can.

Thanks in advance!

wanna-be-mortgage-free_2

First of all welcome ABC123 to the DFW board and congratulations on your lightbulb moment!

With regard to your rent and being locked in, do you have a spare room you could rent out? Would bring in some much needed cash for you.

Others with more experience will be along shortly to help you cut costs. Oh and you are right you'll have to cut the socialising budget if you want to seriously get rid of your debt

abc123_3

Im in a shared flat so no room to rent out. Im looking at some extra part time work but need to see if I can fit it in with my current employment, also it only adds very little extra income after tax hence not including it on the budgtet at this stage...

wanna-be-mortgage-free_2

Maybe even try looking for internet based work or mystery shopping you could do at weekends?

Oh and your mobile phone costs seem high, move to payg and use only in emergencies. Good idea to get a bike and cycle good for the wallet and good for the health

lynsayjane

few thoughts from me, tho i'm fairly new to this myself,

-food, is this for yourself? where do you shop??? after starting weekly meal planners i've gotten my food budget down to £30 a month, not much of a saving but from little acorns...

-is your gas/electric as cheap as it can be, looks fairly good from here (unless it's shared?) but you could try uswitch to make sure.

-can you cut your mobile phone bill down any?

-there is nothing for land line/tv license etc on there have you forgotten it or do you not pay? what about home insurance etc

-i would definatly invest in the bike, it'd save you money long term and is good exercise!

-your socialising budget defiatly needs cut down, you need some kind of life, but not that much! there are cheap ways of doing nights out or in.

-try the snowball calculator thing to check which accounts you should pay to first to lower your interest rates
http://www.whatsthecost.com/snowball.aspx


hope that gives you something to think on, and congrats on the lightbulb, may it burn brightly!

all_hours

I make your total expenditure £860 and total debt repayments £374 - a total of £1234.

With income every 4 weeks of £1496.16 - that works out at £1620.84 per month.

So you should have an average surplus of £386.84 per month.

You must have things missing from your SOA. Food bill is small - are you sure that's all you spend. Do you spend money on lunches + coffees etc.

What are the credit limits on your credit cards?

Bargain_Rzl

Without tackling the details, you can make your 4-weekly salary scheme work to your advantage ... If you can devise a budget that's based PER CALENDAR MONTH on your FOUR WEEKLY salary, then every year you can treat your thirteenth payment as a bonus ... From the above SOA it looks like you could do this quite easily ... your minimum outgoings are only £1184 ... you have an additional £312.16 each month which you could be using to overpay your debts ... and that's without taking into account the thirteenth salary payment each year! ... Are you SURE you've listed ALL your expenditure? cos to be honest, you should have plenty left at the end of the month based on the figures you've given.

CLAPTON

well done for posting

first thing you need to do is to find out where your money actually goes
your SoA says your income is 1496 (every four weeks)
and your spending is 820
debt repayments are 374

which leave a surplus of £302...so where does it go?
to find out, start to keep a spending diary and write down absolutely everything you spend....any thing on lunches/coffees at work, sport, magazines, newspapers, haircuts, clothes ...anything and everything
also look at yearly and one off spends....anything on presents, holidays, weekends away, xmas, boys toys, CD/DVDs ...with these divide by 12 and add them to your SoA
Once you know where the money actually goes you can see where to cut back.

find out the aprs on each of your debts.....pay the mimimum on each debt except the the one with the highest APR and pay as much as possible on that one until you clear it ...then pay as much as possible on the one with the next highest APR and so on (snowballing).

xela_17

What is the limit on your MS cc? This has by far the lowest interest rate so it would be better to try and move as much of the other credit card debt as possible to this card.

abc123_3

Credit limit on MS is £1500 so no room to move any more on to there...

I thinkI need to revisit my SOA as I have overlooked some o the suggested items that were suggested...

DrEvil_2

Try phoning MS and ask for a credit limit increase.
Try phoning the credit card companies and make noises about leaving. Virgin offered me an 2% interest rate reduction when I spoke to them about leaving.

I understand that you're trying to keep the payment schedule simple. Some credit card companies allow you to set your own payment dates.

Spend a couple of days working on your interest rates. Interest payments are a huge barrier to clearing your debts, as snowballing can show you. Imagine if you can cut your interest payments by over £50....