Need to sort my credit and get debt free

DayDreamSaver

Hi

This is my first post, so please be a little gentle! I have started lurking on these boards as like everyone here I want to get debt free.

We are in the middle of moving house - this is how we have got into debt as I've had to borrow money for fees and such like. I know ideally we would have saved before moving, but we live in a BAD neighbourhood, and I am fed up of feeling unsafe in my home.

Our debt is within our means (although obviously the spending was outside it!) and I am paying more than the minimum on each. We have cut back in every area (food, clothes, bills etc) and anything we save is getting thrown at the debts using the snowballer. You learn so much from lurking!

My worry is my credit score. We have now got a mortgage, but we got turned down by 2 companies first. I have used Equifax to get my report and was shocked to find I have 26 records on there. Most are listed as settled - but not sure if this means closed or not? I intend to go through and close everything we are not using (lots of old store cards that I opened but are now dormant) do I need to include the settled ones?

Secondly, I have a small saving account - to be used for essentials during the move (hiring a van for our stuff, the difference between our current and new council tax bill, etc). There will be some left and I don't know which debt to throw it at. I have a loan (7%) which ends in March next year. I could clear it. I also have a credit card, currently on 0%, but ending in about 4 months and going up to 18% ish which I could take a chunk out of.

I hope I have put this in the right place - but please tell me if not. I also know that my situation isn't as bad as some others, and I am incredibly lucky that i can get myself out of this house into a better one, I am just scared that if I don't get a handle on it now it will get out of control.

Thanks
DDS

bottleofred

Hi DDS and welcome to the forum,

Don't worry about anyone not being gentle, as I've only ever had good advice and assistance on this forum. You are probably better to close dormant and settled accounts as when you apply for credit and companies see you have lots of options, they can get nervous. Regarding what you are currently paying, you could post your statement of affairs for help/advice on how to save money from the forum and who knows, it may be even more beneficial than the snowball. Regarding the little bit of savings you'll have left, it sounds like you are not going to have the amount on the 0% credit card cleared prior to it going to 18%, so I'd concentrate on this as it's a lot less than the interest rate on the loan. Others will be along with additional/better advice, so good luck and if you do post your SOA, you'll get additional help/advice.

caeler

I'm sure from lurking you've pick up loads of good tips, as have I:
-Post a SOA - Other posters may help you trim even more than you have already managed!
-Tidy up your credit report, make sure it is correct (linked addresses, financial associates, all cards match up, etc).
-Be clear on the APR of all your cards and that will tell you want you need to pay off first.
-Keep your motivation levels up!
-If you have just moved house, I'd recommend you take regular meter readings on all utilities, that way you will know how much your bills definately cost. Consider water meter v's rateable.

I'm sure others will be along shortly to offer expert advice.

DayDreamSaver

Thanks both - I have done my own SOA, but in a different format to that used on the site. I'll sit down and put it in the right format this afternoon and then post it. Most of the sums are guesses though, because we aren't in the new house yet, so I'm adding about 10% to our current bills as an estimate.

I'm quite excited about the prospect of being debt free - even if its a long way off. Thanks for your help
DDS

DayDreamSaver

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.................... 1

Monthly Income Details
Monthly income after tax................ 2509.25
Partners monthly income after tax....... 100
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2609.25

Monthly Expense Details
Mortgage................................ 733
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 123.86
Electricity............................. 50
Gas..................................... 35
Oil..................................... 0
Water rates............................. 43.63
Telephone (land line)................... 15
Mobile phone............................ 30
TV Licence.............................. 12
Satellite/Cable TV...................... 68
Internet Services....................... 0
Groceries etc. ......................... 350
Clothing................................ 0
Petrol/diesel........................... 150
Road tax................................ 11
Car Insurance........................... 30
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 17
Pet insurance/vet bills................. 5
Buildings insurance..................... 25
Contents insurance...................... 10
Life assurance ......................... 19
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0
Entertainment........................... 40
Holiday................................. 0
Emergency fund.......................... 100
Total monthly expenses.................. 1887.49


Assets
Cash.................................... 1945
House value (Gross)..................... 190000
Shares and bonds........................ 0
Car(s).................................. 5000
Other assets............................ 0
Total Assets............................ 196945


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 161000...(733)......3.15
Total secured & HP debts...... 161000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
hsbc loan......................1233.84...154.2.....7
tesco loan.....................12000.....240.......7.8
American Express...............909.98....25........0
FD CC.........................3481.35...108.......0
Total unsecured debts..........17625.17..527.2.....-


Monthly Budget Summary
Total monthly income.................... 2,609.25
Expenses (including HP & secured debts). 1,887.49
Available for debt repayments........... 721.76
Monthly UNsecured debt repayments....... 527.2
Amount left after debt repayments....... 194.56

Personal Balance Sheet Summary
Total assets (things you own)........... 196,945
Total HP & Secured debt................. -161,000
Total Unsecured debt.................... -17,625.17
Net Assets.............................. 18,319.83

Created using the SOA calculator at makesenseofcards.
Reproduced on Moneysavingexpert with permission, using other browser.


A few bits of extra info:
- OH is self employed and gets very little work at the moment. I've put a token income of 100, sometimes it is more, but we can't count on it.
- I have about £1500 i can use against debts, not sure which to throw it at
- food is high, but we are cutting down month by month, and so far have reduced over 100 a month
- we have nothing left at the end of the month as anything I do have gets paid off equally between the 2 credit cards, however little.
- both 0% end in a few months, and I'm reluctant to try and get another 0% in case I kill my credit rating entirely!

Thanks in advance
DDS

bottleofred

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.................... 1

Monthly Income Details
Monthly income after tax................ 2509.25
Partners monthly income after tax....... 100
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2609.25

Monthly Expense Details
Mortgage................................ 733
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 123.86
Electricity............................. 50
Gas..................................... 35
Oil..................................... 0
Water rates............................. 43.63
Telephone (land line)................... 15
Mobile phone............................ 30 - Quite high as a payg will cost £10 per month.
TV Licence.............................. 12
Satellite/Cable TV...................... 68 - Has to either go or be massively reduced!
Internet Services....................... 0
Groceries etc. ......................... 350 - Very high should be less than £200. look on the forum for ideas of how to save money in this area (BOGOFs, Batch cooking and freezing etc!, cooking from scratch)
Clothing................................ 0
Petrol/diesel........................... 150
Road tax................................ 11
Car Insurance........................... 30
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 17
Pet insurance/vet bills................. 5
Buildings insurance..................... 25
Contents insurance...................... 10
Life assurance ......................... 19
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0
Entertainment........................... 40
Holiday................................. 0
Emergency fund.......................... 100
Total monthly expenses.................. 1887.49


Assets
Cash.................................... 1945
House value (Gross)..................... 190000
Shares and bonds........................ 0
Car(s).................................. 5000
Other assets............................ 0
Total Assets............................ 196945


Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 161000...(733)......3.15
Total secured & HP debts...... 161000....-.........-

Unsecured Debts
Description....................Debt......Monthly.. .APR
hsbc loan......................1233.84...154.2.....7
tesco loan.....................12000.....240.......7.8
American Express...............909.98....25........0
FD CC.........................3481.35...108.......0
Total unsecured debts..........17625.17..527.2.....-


Monthly Budget Summary
Total monthly income.................... 2,609.25
Expenses (including HP & secured debts). 1,887.49
Available for debt repayments........... 721.76
Monthly UNsecured debt repayments....... 527.2
Amount left after debt repayments....... 194.56

Personal Balance Sheet Summary
Total assets (things you own)........... 196,945
Total HP & Secured debt................. -161,000
Total Unsecured debt.................... -17,625.17
Net Assets.............................. 18,319.83

Making the majority of the suggested savings should create almost £200 per month. You could put this toward the credit cards and consider applying for another 0% card deal when the current deals are coming to an end.

DayDreamSaver

HI

Thanks bottleofred.

The sky is in contract, and includes our broadband. We do use it a lot - as we've cut down on going out to bare minimum, so watch the movie channel for home made cinema nights! I've read that a few people have rung sky up and asked for a discount, saying they are struggling, but not sure if it would work in my case? Either way, you are right it is a lot, and we should think about saving on it.

Food - Yes you are right!! I am amazed at how little others spend and doing my best to follow suit. I've started shopping at Aldi/Liddle and seeing some savings but know I need to do more.

Mobile is for both of us and both contacts, but trying to make sure we never go over our allowed minutes.

Another 0% card - I'm worried I'd be rejected and further kill my credit rating. By the time I need a new one it will be about 4 months since our 2 mortgage rejections. Is it worth risking do you think?

bennett310

Hi,

Just a suggestion really, I would fire the £1500 at the HSBC loan first, and the remainder (£266.16) at the American Express card, saving you £154 a month at least.

I had the same worries about getting another 0% credit card for balance transfers. I got rejected by my own bank, nationwide and Tesco, but got accepted by Leeds Building society (5% for life if I remember) and the Post Office at 0%.

You'll find, as you debt comes down and you have a plan in place, things will start to get easier for you.

Hope this helps

Matt

DayDreamSaver

Thanks Matt - I hadn't thought about one of the low balance for life cards. That might work, as I guess you don't have to have quite such a perfect credit score?

I also discovered that I have a *lot* of available credit showing on my file - where lenders have kept increasing my credit limit, even though I'm not using it. I'm sure they told me at the time, but it never clicked what damage it could do. I'll close most of these, but the ones I use for day to day spending (to get cashback I use a credit card that is paid in full every month) I'm going to ask them to reduce the credit limit from 10,000 to 1,000.

I think I agree to pay off the HSBC loan, at least then if i do try and apply for more 0% cards I'll have one less credit stream open.

DDS