Cutting back debts

SparciaM

I need some help in cutting back my debts, as my 0% cc is coming to an end.

I applied for a new 0% card and was turned down - I actually applied for 2 at the same time and was declined. My Credit File is fine, but I think as I have a high limit on CC and 2 other loans that may be the problem.

I've got £2800 limit with Halifax (Amazon), currently owe £2100 at 0% till Dec 5th, then up to 15% from then.

I've just been accepted for a new cc with First Direct (my new bills account bank), dunno what the limit will be but they can give me fee free balance transfer and 2.9% for 6 months. I also have a £500 OD available with them at 9% and a £500 OD with smile available at 12%.

My theory is, balance as much as I can to FD and pay min for 6 months at 2.9%, but pay more towards Halifax. Or BT to FD and also use both £500 OD to pay remainder (I guess I'll have to live in neg for a while- but with wages going into acc will be positive at end of each month).

So question is:

Is it good to utilise ODs and 2.9% CC to bring Halifax card down, or is it best just to stay across 2 cards.

Obviously after 6 months I can try and get another 0% card and move all to that. Any suggestions?!?

P.S.

I've got a student OD with HSBC at £1500 (I'm at limit) but it's 0%. NOW HSBC messed up and gave me a graduate acc and then 2 years ago changed back to a student acc. So at the moment I've got 3 years or more left of 0% with HSBC, but I'm worried they may realise what has gone wrong and ask for money back. I currently only pay £10 a month to this acc as it's 0% - any other suggestions?!?

CLAPTON

transferring debts between cards doesnot actually reduce the debts in any way. i would suggest you post an SoA with a view to increasing income and reducing spending and so clearing the debts off permanently rather than simply transferring them. your total debt is about 13,000 quite a significant amount. having said that paying the least interest obviously make sense.

i would be very cautious about the HSBC overdraft; while everything may be find now, if they recalled the overdraft and gave you a month to repay it what would your plan be for paying it off?

SparciaM

If HSBC took my OD away from me I'd have to borrow the money from my parents, simple as. They'd give it me, but I'd prefer not to do that.

OK: My SoA

Income: £15900 (£1100 after tax monthly, on average)

Outgoings: per month

HSBC Loan: £161
Smile Loan: £121
Amazon CC: £50
Rent: £300 inc water and council tax
Gas/Electricity: £10
BT Line: £35 - inc line rental and wireless bb
Orange Phone: £45 - contract ends March 2007, looking to reduce then
Food: £100
Entertainment: £100
Xmas: £6
Birthdays: £6
HSBC OD: £10 (if and when)
No travel expenses as sold car and walk to work and everywhere else.

I do get bonuses at work ranging from £200 - £1500 depending on the month. It's been v slow and no bonuses are expected until Jan 2007. But when I did get bonuses I used to clear debts as techincally was free money as I can live on my wages.

Only reason why I was gonna switch some of the Amazon debt to FD is because the lower rate of interest. But if people have more options, please let me know.

CLAPTON

you're saying :

income 1100 plus some big bonuses
spending 602 before debts payment
leaving 498 to pay debts off
you actually pay 342 towards your debts

leaving spare 156 ....where does this go? annually this would be 1,800 which combined with a bonus or two should be enough to clear the CC and overdraft in a year.

i think probably it all depends whether you see the debts themselves as problems to be got rid of as soon as posible or your mainly concerned about the interest and minimum repayments.

I would suggest you keep a spending diary to find out where that missing 156 actually goes and see whether you can free up some of this to repay the CC or OD.
on the SoA:
your mobile is very high ...could you not replace this by a PAYG and use sparingly

i think switching to reduce the APRs makes lots of sense but better to accelerate paying the debts off.

Annie_Fanny

SparciaM wrote:

If HSBC took my OD away from me I'd have to borrow the money from my parents, simple as. They'd give it me, but I'd prefer not to do that.

OK: My SoA

Income: £15900 (£1100 after tax monthly, on average)

Outgoings: per month

HSBC Loan: £161
Smile Loan: £121
Amazon CC: £50
Rent: £300 inc water and council tax
Gas/Electricity: £10
BT Line: £35 - inc line rental and wireless bb
Orange Phone: £45 - contract ends March 2007, looking to reduce then
Food: £100 How long have you been a customer with Orange? If you have had the contract for a while and try and haggle a better deal. I did this yesterday - I'm with O2 - and managed to get my contract down from £30 p/m to £20 p/m with 5 months free as I didn't want a new handset!
Entertainment: £100
Xmas: £6
Birthdays: £6
HSBC OD: £10 (if and when)
No travel expenses as sold car and walk to work and everywhere else.

I do get bonuses at work ranging from £200 - £1500 depending on the month. It's been v slow and no bonuses are expected until Jan 2007. But when I did get bonuses I used to clear debts as techincally was free money as I can live on my wages.

Only reason why I was gonna switch some of the Amazon debt to FD is because the lower rate of interest. But if people have more options, please let me know.

People gotta learn to haggle!

SparciaM

I can't get my Orange contract down any lower. I've haggled with both Orange and BT and those are the lowest I can get until the contracts run out.

With regards to the £156 left each month, that goes towards CC (The £50 is what I pay to the cc when the bill comes through) - but I don't have £156 spare every month. I have probably around £50 - £100. I do need to find out where the rest is going.

What I do is the day before payday I take all my money out of my bank acc and use to pay off debt. So on payday I start from 0 again. I'm trying to clear my debts as quickly as possible, but obviously moving to a lower interest rate would help.

In regards to the loans and OD I don't really think about them really, as loans are fixed term and OD is 0% for time being. Smile loan I'd never pay off early as the interest in total for the whole loan is £120, so I see this loan as not a debt (even though it is). Obviously the HSBC one would be nice to get down, but I doubt that would happen any time soon.

SparciaM

Ok! I've been thinking about my Mobile Phone and Home Phone Bills.

As you can see I pay £35 a month for BT inc wireless BB and I pay £45 a month for Orange. NOW Orange offer free BB on a new 18month contract which I can do, BUT, I've still got 8 months left on my BT contract. So this is an option - what do people think.

Option 1: Stay with BT and Orange paying a total of £80 a month and then March 2007 try to change Orange contract or go to PAYG, but keeping the £35 for BB and phone with BT until contract runs out in July 2007 and then see what can do then.

Option 2: Cancel BT BB (need to pay £160 upfront for remaining 8 months contract), but then change to a £35 - £40 a month tariff with Orange inc BB (but contract will be a new 18 month one). So in essence from Dec 2006 go from £80 a month to £35 - £40 a month (but owe £160 to BT - But saving between £40 and £45 a month from now). I could even not tell BT and just keep paying them the BB fee from the savings from my new Orange contract. BT BB is £20pm, so I give BT £20 and save £20 and then after 4 months I'd have £60 left to pay and just call BT to cancel. So in essence I pay no cancellation charge and I get the savings as well.

I'm leaning more towards Option 2 as it gives me a massive saving every month (well after 4 months of paying back the £160 - if it was paid off with the £40 a month saving).

But the Option 1 could work out better come March 2007. What are peoples thoughts?!?

CLAPTON

i dont really understand the numbers here

surely BT comprise
line rental 11 or 15 per month ? ?? or what
and BB 20 per month?

but you will need to continue paying the rental to BT even if you move to Orange as the 160 is simply your BT BB of £20 x 8months remaining.

so i see no savings with your switching until your BT contract finishes

SparciaM

I'm getting really confused with all this now.

In regards to the BT option. I will always have to pay a BT line rental that's a given. I can't get sky or cable, so the BT line rental will always be paid no matter what. But at the moment with BT BB and Orange the bill is just under £70pm, yet the new contract with Orange would be £35pm (they quoted that I could get it to £30 if wanted as I am a Band 5 good customer).

So yes, I have to pay £160 on my next BT bill, but then I move from £70 - £35pm. Whereas to wait until BT ends will be 8 more months (4 of those at £70pm Orange and BB - after month 4 can go into an 18 month contract at around £30 or PAYG), but still have BB.

I'm just thinking things through. Maybe it's best to wait until March and see, but I do have the £160 now from my bday money that I can pay BT. I just don't know at the mo, as £70pm is a lot for mobile and BB. A HELL OF A LOT

Whatever happens, I'm told (atm) that I can't change my contract until March 2007, if this date will change I dunno.

CLAPTON

i see it this way

if you stay as you are in 8 months you pay in total
(35+35) x 8 = £560

if you take your option 2 you pay

160 + 35 +15 for one month then (35+15) x 7 months giving a total of
560 i.e. exactly the same except of course you have paid the 160 upfront ..no benefit here.

also why are you paying 15 for BT line rather than simply 11?
also can you consider going PAYG in March and reconsider the whole matter when BT contract runs out?