Best way for me to become debt free

thetiggler

What is the best way for me to become debt free?

I owe nearly £10,500 on 3 credit cards. At the monent I am only paying the interest as I can't afford to pay more.

I work full time and pay tax but my wages are not paid into my bank. I have asked my bank for a loan so that way I could pay the 3 credit cards off and know every month my debt was going down instead of just paying interest. The bank refused my loan due to my wages not going into the bank. They could see that each month I use my bank account to pay the interest on my 3 cards and I would have no problem making the loan repayments but that did not sway them.

I am really struggling with the 3 credit cards and would love to be debt free.

WASHER

Your bank did you a huge favour by refusing you the loan. Consolidating is rarely a good idea, it leaves you with spare credit cards and a large limit to respend on.

Why don't you post an SOA (incomings and outgoings) and we will see if we can help to reduce your outgoings in order to repay your debts.

You could also take a look at the CCCS website, a debt charity, a wealth of knowledge on there.

WASHER.x.

Tixy

Hi tiggler

I would agree with Washer that a really good starting point is to do a statement of affairs http://www.makesenseofcards.com/soacalc.html - it allows you to see your full situation clearer and helps us make suggestions as to what changes you could make or other options available to you.

spursfan14

I personally would suggest that you don't take out more credit. I would suggest a debt management plan. That can either be done with a free service (national debtline) who will give you tips on dealing with your creditors, or a paid debt management company (like Debt Line) who will talk to your creditors on your behalf, but take a monthly fee. Both routes will be so much better than getting a loan or going bankrupt in my opinion.

Best of luck.

foxgloves

Agree with earlier post about consolidation loan. Partner has done this 3 times before we decided enough was enough and that it was time to pay off our debts. We have the last half of the final consolidation loan to pay, which we are doing, but it feels as though it's been going on for ages. If you can blitz a credit card at a time (snowballing?) you may feel more motivated as you get the first one paid off & are one debt down. Consolidation always seems like the best thing at the time (it did for us) but ultimately, it's the money lenders who are the winners with this course of action. Whatever you choose, I hope it comes right for you.

losethedebtlou

This is what I am doing to clear my credit cards (I have three)

1. Add up what you owe on each card

2. Find out each minimum payment

3. Decide wether you will pay off the lowest balance first or the highest interest first (i chose lowest balance for motivation as my cards are all on 0% right now)

4.Once you have decided which card to tackle first, decide how much spare money you have each month to service you credit cards (for example lets say you have £50 spare after your minimum payments)

5.Paythe minimum plus the extra cash off the card you are taclking first and only the minimums off the others, you will notice the balance fall dramatically on the one you are tackling

6.Once the first card is paid off carry on using this method until ALL your cards are paid off.

7. It is SO satisifying to see your balances go down you will some fine even more extra cash to pay off your cards to get rid of them faster

The important things to remember are :

STOP USING YOUR CARDS! I NEVER NEVER use my cc now as I hate seeing the balance go back up! I have almost paid off my first card using this method and only have 2 to go

NEVER PAY LATE they will hit you with fees which wastes money that you could be paying off your cc!

DONT CONSOLIDATE, it prolongs your debt! This is the quickest and easiest way to get rid of your credit cards. I will be debt free in 25 months by following this method :rotfl:

IF YOU HAVE THINGS YOU DONT USE THEN SELL THEM I have made nearly £100 on ebay from selling old clothes and things, ALL OF THIS has gone to paying off more from my cc and the balance has fallen again today:D Theres something satisfying about knowing other ppl are spending and you are using their money to free yourself from debt!

Good luck! :money:

thetiggler

Thanks for your replies. I wanted a consolidation loan so I could fully pay the cards off rather than just paying the interest. Then every month I would be paying the consolidation loan off and actually seeing the debt go down rather than just paying interest. If I would have got a consoildation loan I assure you all 3 credit cards would have been fully paid off then all 3 cards would have been cut up.

I have now gone with a debt management company. The deal is I pay them £100 a month for 13 years (she may have said 12 years my mind has gone blank lol). Then the debt will be paid off. They take 17.6% out of the £100 every month. So I owe £9,500 on all 3 credit cards and by the time I have paid the debt off I will have paid back £15,600.

Could I have got a better deal?

the_cat

NOOOOOOOOOOOOOOOOO!!!!!!!!!!!

Cancel the debt management company. IMMEDIATELY!!!! You are entitled to cancel as there will be a legal cooling off period

This service is available free!!! CCCS are a charity which will help. There is another but the name escapes me at the moment. First off though, post a SOA on here for some detailed advice from the resident experts

Tixy

Yes a much better deal - with a charity who won't charge a fee - see here - IMPORTANT - Where to seek professional impartial advice about your debts.

Even if you are past the cooling off period you can still cancel - most require 4weeks written notice.

Then all your money goes to your debts and you get debt free quicker.

£17.60 per month for 12 years is £2.5k you don't need to spend.

thetiggler

Ok I will cancel it tomorrow. Besides CCCS which other charity debt help can I talk to?

psychopathbabble

As the others have said, cancel the plan immediately and call a charitable debt organisation!

Why not have a look at the different challenges, such as the payment-a-day thread and weekly spend challenge to try and get some inspiration on how to tackle your debts without too much hassle. As you haven't posted an soa, no-one can give you any advice on where you can cut back. Maybe you should just bite the bullet and reveal all, it might shock you into spending less and throwing more at your debt. I always moaned I had no money, but I've still managed to pay off 3k off my original debt since November, when I've been sat on the same debt figure for the lsat few years.