First post, debt reduction strategy advice needed!

vdot8

Evenin' folks,

First time poster here so apologies if this message sounds familiar but I figured I should tell someone what I'm up to and at the same time thank the forum for inspiration while I've been lurking.

Before going into the money side of things I might just mention where I started from in general about 6 months or so ago.

I was 20,
Had roughly 12k debt, :eek:
In a low paying temporary job, :eek:
Obese (according to my BMI), :eek: :eek: :eek:
No qualifications, :eek:
!!!!!! all self-esteem.

Now...tadaaaa....

I'm 21, :beer:
Still got roughly 13k debt, :eek:
In a better paying temporary job with an interview for a decent (for me) paying position with one of the worlds biggest investment banks :beer: :beer:
'Slightly overweight' (again BMI) but losing every week a noticeable amount
Studying for a Degree in Accountancy and Finance with the London School of Economics (External Programme) :A
An awful lot more self-esteem.

The debt was essentially the next thing on the to-do list to get sorted in my life. A once in a lifetime experience to tour around Europe with my best mates over the summer hindered the debt part to the tune of approximately £3000.

So onto money:

Monthly Incoming:

My salary - £820.64 (After tax)
Benefits - £0
Total - £820.64



Monthly Outgoings:

Mortgage/Rent - £50
Council Tax - £0
Gas - £0
Electric - £0
TV License - £0
Sky £0
Phone - £0 (For 6 months thereafter £15)
Food - £0
Bike Insurance - £30 (Paid Annually £360)
Petrol - £50
Life Insurance £0
Total: £130

These figures may sound ridiculously low but I live at home and have came to an agreement with my mum that she will support me while I'm trying to get rid of my personal debt. It is her way of helping me, she can't directly help me get onto with the property market with a deposit etc so she is helping me help myself. Jammy !!!!!! I know.

For the last month or so I have been going week to week essentially spending no money on myself, being on a strict diet helps as well as I am essentially banned from eating anything I haven't made myself. I have given up alcohol (surprisingly easy!) don't snack at work and don't spend any money on nights out aside from petrol costs for the motorbike. This is saving on a number of things from the costs of drinks, late night curries and the taxi home.

My girlfriend is understanding, I took her out for a last supper for some tapas and treated her before I started all of this and she has been encouraging me on with the money saving (even though In my new found lease of life I don't need any encouragement!!)

Now for the juicy part.. the debt!
It is essentially split into 2 pieces.

The first is a £6500 loan with Mint @ 13.5% over 4 years (I have had this loan for 6 months now so hopefully the amount is a bit lower). The loan was originally taken out a couple of years ago to buy my bike and all my gear. Over the last 2 years I reduced the value every year then accept offers by my helpful bank to up it to any amount I like within a set range....I know I know... I have learned now.

Loan Repayment £175 PCM

This second part of my debt, the other £7k is split between a number of different current accounts/credit cards.

Egg Money account Egg Money - £481.73
Credit card Halifax ONE Card - £1,631.57
Current account Halifax Student - £1,499.05 go to
Credit card MINT Credit Card - £1,673.82 go to
Current account Natwest Student - £1,544.71 go to
Savings Natwest Uni Fees + £227.00

This is copied and pasted from my Egg Money, it is missing my RBS Current Account which is sitting at - £480.

So total current account and credit card debt of £7083.88.

Natwest and Halifax student accounts are 0% Overdrafts.
Halifax account is 0% but only for another 2 bills.
Mint is 15.9%
RBS Royalties Gold is 15.1%
Egg Money is 16.9%

Note the Uni Fees account is a wee money pot for my course fees due end of November.

My aim is to get on the property ladder. I am in a position where I can essentially spend pretty much no money on a weekly basis to do this. What should my tactics be in getting rid of the debt?

Should I try and get a 0% CC to cover my existing CC debts? I don't know how my credit is just now as I have only been working for the last months after a 3 month lay off.

I understand the methology of tackling the highest costing debts first - what I was wondering is how a mortgage lender would look a me if say in a years time I have either No loan but 5k in overdrafts and cc's or a loan with three years on it but no other debts?

Thanks

Steven

vdot8

Oh btw, if you can't be bothered reading the entire post then the last paragraph is the bit I am really interested in just now.

Thanks Again!

Steven

Welshlassie

Congratulations on your achievements to date, very well done.

I'd not even consider getting a mortgage until you have paid off all your debts and built up some form of deposit and backing to pay for fees.

I'd tackle your CC's first and now worry too much about the loan as it is on the lowest APR.

vdot8

Thanks for the quick reply, I understand what your saying from the point of view of paying the debts off but I should have added an important statement.

I am going to be moving out on my own in a minimum of 12 months maximum of 18 months - this part through personal reasons is well beyond my control.

I am interested in how potential mortgage lenders view different types of debt in assesing affordability. Assuming say I am able to save at least £6000/£9000* in 12/18 months - in relation to getting a mortgage what is the best tactic to use?

*(this figure will hopefully be higher if I get the 40% increase in salary before tax in the position I am going for )

Thanks again,

Steven