I want to get out of debt

SammyPops

I want to get out of debt.

I was playing the 0% card game, but I am starting to be declined for new credit cards. I assume I have too many searches, but haven't checked my file out yet.

Below are my finances at the moment. I'm self employed and my income varies each month. I also get tax credits and maintenance from my ex-husband for my children. The income is an average of the last few months:

Income: £1300

Outgoings:

Gas/Electric £58
Water: £26.62
Council Tax: £81
Repayment Mortgage: £405.30
TV Licence: £10.49
Stakeholder Pension: £35
Life and critical illness policies: £42.99
Broadband: £23.44
Phone: £35 (includes home and mobile)
National Insurance: £9.50

That leaves £572.66 a month.

I'm reluctant to change the mortgage as I'm tied in with hefty penalties. I'm on 5.99% fixed till 2009. I was refused to change the terms to lower the payment. I need the internet connection as my work depends on having internet access, as I pick up jobs and file reports with online companies. I also need the mobile for work, and for school to contact me in emergencies as I have no fixed workplace. I am on the cheapest utility bills.

Then I have the following debts:

Personal Loan with Smile £3800 left to pay at 6.7%. Payment £98
Barclaycard £1020 on 0% till August. Min payment £20
Capital One £3800 at 9.6%. Min payment £78
Egg £1500 at 0% till July. Min payment: £30
Morgan Stanley £3600 at 1.9% till July. Min payment: £91
Nationwide £1000 at 15.9%. Min payment: £20

When you take them off my income, it leaves £235.66

That works out at £58 a week, which has to pay for food for me and 2 children, petrol and all the other expenses. It's a struggle to manage on that and as I you can see I can't pay more than the minimum on the cards.

Can anyone see the best solution to get me out of this hole? Advice would be very much appreciated

Mark_petty

Hi

I don't know that much about getting out of debt, but have u thought about putting the loans, credit cards etc on to the mortgage?

Or combining all the debt in to one loan?

Not sure though to be honest

MrB_2

Hi, i would certainly look into a re morgage. Can be a lot of hassle, but worthwhile IF YOU CAN STAY OUT OF DEBT AFTERWARDS. Don't bother with consolidation loans, they are Very expensive in the long run, plus if you are having a loan secured on your house, which consolidation loans are,(You may be declined because of your credit rating) your house may be at risk. But using a remorgage as a consolidation, the repayment apr is usually lower.

SammyPops

I don't think I have the income multiples to remortgage. The mortgage outstanding already is £60k, which is 4x my income.

I didn't think remortgage would be an option?

johannamse

Hey Sammypops -

Have a look at all the threads on Debt free wannabe, there are many threads like yours, with people looking to maximise money / get out of debt. The marriage, relationships and babies boards also has lots of advice on making a little money go a long way (food etc).

It may also be helpful to post your credit limits, some bright bod will come up with a way of shuffleing the cc's around to get the interest rates down, and therefore the debt down.

Good Luck.

SammyPops

I will read the other threads - thanks

The credit limits are:

Barclaycard £1400
Egg £1600
Morgan Stanley £3700
Nationwide £3400
Capital One £4500

Ideally at the end of all this I would just like to have one credit card account. I would keep this in a drawer for emergency use only and works spending. Putting work spending on a card means I don't have to use 'my' money, and I've usually claimed the expenses back by the time the statement is due so I pay it off before it incurs interest.

Debt_Free_Chick

SammyPops

If you're being turned down for credit cards (CC), then I don't see a remortgage as an option. A mortgage lender will search your credit card in the same way as CC companies do.

Also, it's generally not a good idea to put your house on the line for CC debts. If you don't pay the CCs then there's not a lot for you to fear. If you don't pay your mortgage, then it's curtains on the property front.

Do you have a full grip on your finances? Are you frittering money away on unnecessary food e.g. throwing stuff away, not getting the most from your food buys, buying at supermarkets (I advocatte meat from the butcher and veg from the greengrocer, market, barrow boy or farm shop - never, never, never the Supermarket! My grocery bill, including all household buys, is just under £100 per month for two adults and I've not been to a supermarket since November!!).

Visit this site, click on Debt Advice, Eng & Wales (or Scotland, if you live there) and then the Self Help Pack. Work through it. It has great ways of helping you set your budget, prioritise your expenses & debt, sample letters to send to your creditors and tactics for bashing your debt down. It's a charity and you can call them for free advice on any debt issue

https://www.nationaldebtline.co.uk

Good Luck

SammyPops

I've cut my grocery bill as much as I can.

I buy meat and fruit/veg from the local market which is a lot cheaper than the supermarket. I do some supermarket shopping but visit different ones and buy their BOGOF and other special offers. I also collect coupons as my local Tesco accept them even if you don't buy the item, which saves money. Food is rarely thrown away.

Thanks for the link. I will look at that too

charliedavis

I've been in a similar situation myself. I do not recommend remortgaging or debt consolidation, or writing to creditors to reduce the debt as it will utterly destroy your credit rating - and you will never be able to get a remortgage then!

I suggest reading another excellent book similar to Martin's called the Complete Cheapskate - there is also a website called http://www.cheapskatemonthly.com/ It's a bit American but still good. I've got my shopping bill down to £25 per week too, using coupons - see the other forums for more advice on this one. You can halve your bill. I've also bought several xmas presents at rock bottom prices already for this December.

The book suggests a really useful way of managing money - paying credit cards off one at a time. In addition - you shouldn't reduce the amount you pay out on credit cards until every last one is paid off - so let's say you pay £250 per month in credit card debt. After 10 months you pay off credit card 1 - put the money you were paying into that one immediately into credit card 2 repayments and soon you will pay that one off too - then direct both repayments to credit card 3 and so on...giving you an excellent feeling as you receive nil balance letters! I really don't agree with shuffling debt as it's too easy to end up in more, as the new card company extends your limit..you forget to close your old card..hey presto you're now up to both limits!

The book also suggest setting up individual savings account for expenses we normally regard as "emergencies" for which we would end up using a credit card. We KNOW we will need to pay for car repairs so why use a credit card - save up each month in a special account and the money will be there when a bill comes in.

Anyway - I'm now in the process of financial recovery and finally have a clean credit history after SEVEN years. It's taken me a long time..and now I'm in the process of teaching it to others (I teach Financial Planning to sixth formers in addition to my usual subject - ICT) as I know how little information we are given about credit card debt and the dangers of the minimum repayment...

Wow, my longest post ever!

Charlie X

Debt_Free_Chick

Hello SammyPops

Also ... have a look at Money Saving Old Style on this site.

Just be careful with old BOGOF too ... it's only a Bargain if you were going to buy it at the full price, in the first place. Or, if you genuinely make a cutback in your budget, to reflect the BOGOF. I guess I'm trying to say ... don't do BOGOF in addition to your normal budget. Have a realistic budget and stick to it. And look in your store cupboard/freezer now & then. You'd be amazed at the meals you can conjour up.

We can help ... just ask

johannamse

Hi sammypops -

i have been having a think and have come up with an idea. See table below of your current situation (btw get all this into excel, and start seeing the debts go down):

barclay 1020 1400 0 aug 20 2%
cap one 3800 4500 9.6 78 2%
egg 1500 1600 0 jul 30 2%
ms 3600 3700 1.9 jul 91 2.50%
nation 1000 3400 15.9 20 2%

1. Move 370 of nationwide debt to barclaycard, and 630 of remaining debt to cap one. This will get you from 5 cards to 4, and will slightly reduce your min payments due to nationwide card having highest IR. You also get rid of that nasty 15.9.

2. After a month of the NW card being clear, Ring up nationwide and see if they will offer you a low rate for BT, 3.9 or 1.9. Have never tried this with NW, but it should work. Transfer as much of the cap one debt as poss. Both these points will not save you millions, but every little helps. If they do not let you move any debt, close them down, one reason why you may be getting turned down for CC is your total limit is 14600, which maybe too high.

3. Bide your time, make all payments on time don't apply for any nerw cards for at least 6 - 9 months, by this time some of your credit card limits may also have been uped. The idea that I have outlined above, may not work out, but it outlines the idea that you should be imaginative with the debts.

4. How long have you had the personal loan, your main problem is having cash NOW to live on, so you do not go further into debt, you seem to be moving the debt around quite well. Although having a slightly higher loan, will be more money at a higher ir, at least you have more money to live on. Maybe just do step one above, close NW, and ring smile up??? All ideas...

I know it seems hopeless, but it is not and you will get out of this. Good Luck. Keep reading and keep posting.