Light bulb moment - time for action

ManagingDebt

Thanks to everyone for replying to my SOA. I really appreciate it. I commented where i can on some of your responses. Sorry if i didnt reply directly, but i have took everything you have said on board. :T:T

Domino9

Monthly income after tax................ 2500 (Is there any way to increase this? Overtime?)Afriad not, i'm a project manager on a fixed contract. I may get a bonus soon (not banker size bonus) and i'm starting to look for another job for a new challenge and more money.

Rent.................................... 500 (Is this good value for the area you are living in?)Yes, its good value for a houshare in South West London, Zone 2.

Mobile phone............................ 50 (This is very high - if you are in contract see if you can drop a tariff, if you are out of contract look at SIM only deals and PAYG)I'm under contract. I need to check my tariff against usage and see what i come out with

Groceries etc. ......................... 150 (You could probably cut this down - look at dropping brands, batch cooking, meal planning: check out the old style board)-I have started doing this
Clothing................................ 100 (again, this is high - get essentials only until you've paid some of your debt down)- i agree. I have most of the things i need now. It is work clothing.
Other travel............................ 100 (what's this? and is there any cheaper alternatives?) - This is my monthly rail and tube pass for london. Can't really trim this expense.
Contents insurance...................... 0 (might need something here) - i don't have any.
Haircuts................................ 20 (see if there's a local college near you and get cheap trainee cuts - or last an extra week or 2 between cuts)- I'll see what i can do. It is a treat that i like. (Vanity eh!)
Entertainment........................... 300 (this is very high - what do you spend it on, and can it be cut down) - i agree, i am trying to cut this down. It includes my gym and cinema card (totalling £79)
Total monthly expenses.................. 1292.5

Assets
Cash.................................... 650 (there's not really any point in having cash savings if you have debt - better to pay towards the debt that's costing you the most. Maybe keep a small amount as an emergency)- I agree, but i wanted to have this as a rainy day pot. This months disposable (and every month afterwards) goes onto this credit card.

Shares and bonds........................ 250 (Can these be sold and then pay amount to debt costing you the most)- I would prefer to keep them as they are a good investment.
Total Assets............................ 900

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Virgin CC......................2500......56........22 (This one should be your priority as it's costing you the most in interest - pay you savings towards this, and any monthly surplus you have towards this (after paying the minimum off everything else) until this is gone and then move on to Loan 1) - I agree
Loan 1.........................5342......230.8.....14.6 (Are you able to make penalty free overpayments?) - Good question, i will ask them about this.
Loan 2.........................2920.84...129.1.....5.6 (as above)
Mam and Dad....................5100......100.......0

HSBC...........................4000......0.........0 (Are you not paying anything towards this?) - I'm paying £100, but then taking bit back out. I know this is wrong. This will stop.



Amount left after debt repayments....... 659.6 (Do you have this at the end of every month? If so, pay towards debt with highest APR - Virgin CC is costing you a lot) If you don't have this at the end of every month, then keep a spending diary to see where it all goes.

I will setup a Spending Diary. I'm paid on Friday, so February should be a more true month after christmas and the tail end of last year which was expensive and hectic.


I'm really trying to shift my priorities. As eveyone has commented, i do have a good pot of disposable income each month but until now, didn't have the mindset to change my habits and look at what i spend.


Tixy. Thanks for your response. I've commented to a few of your entires below.

There are as you say a lot of areas you could cut down which would mean you could afford even more off your debts each month eg
Groceries etc. ......................... 150 -quite high
Clothing................................ 100 - very high, could easily halve, or buy nothing new for the next year if you have been spending this much - i work in the city and need to keep my wardrobe updated with work stuff. I have cut this down a little already.

Entertainment........................... 300 - very high, could easily halve and still afford the gym etc and a couple of nights out. - I agree

A couple of other things stand out
Council tax............................. 16 - is this right? seems very low. I assume you house share? Yes, its a houseshare and in Wandsworth - the lowest council tax in the UK.
Medical (prescriptions, dentist etc).... 0 - do you need to budget anything here, eye tests, dentists check ups, occasional prescriptions? - luckly, i don't use any of this.
Contents insurance...................... 0 - do you not have this? - i don't have this.
Presents (birthday, christmas etc)...... 0 - you should budget for this monthly ideally - 1/12 of the annual amount you spend. - i should do this. I'll look into it

HSBC...........................4000......0........ .0 - what is this? is it correct? no fees at all on it? - It's a balance transfer. as i mentioned above, i pay £100, then take it out again. This won't happen from now on.

Have you looked at the snowball calculator to see how long it will take to clear all your debts? Hopefully you can clear the virgin cc in 4months or so - I will look into this.

Josephine82

Thanks for the advice Josephine82. The gym is quite expensive, but around me in london this price is quite competitive. It is a lifestyle choice that i feel i get full value from...at least i have so far this year.

I do have a quite a bit of disposable income, which until now i have fritted away. This will now change and I will be keeping a spending diary and doing as you suggest with the weekly entertainment budget.

I would advise setting up a new basic current account and setting up standing orders to pay off the overdrafts as well as the min payments on the loans.

I like this suggestion. I've started the Sealed Pot Challenge that i noticed on another thread with the aim of paying off some of the overdraft. I'll review the totals every month and decide to either take out the cash and pay it off the overdraft or one of the credit cards.

One comment i do have about my situation is that i really want to payback my parents for helping me out when they did but i feel as though i need to pay off the virgin credit card and perhaps one of the loans first. This may mean taking out another loan at somepoint this year for around £5,000k. With the dispoable income i do have, i would try to pay this off over a year. What do you people think to this idea?

mrsb83_2

More credit won't help you in the long run. You have enough ££ a month to be making serious headway in your debts without taking on another loan. I know you'd like to pay your parents back quickly but unless they need the money back, you're better off paying other debts off, paying less interest and having more in your pocket to pay them back at the end of the day.

https://www.whatsthecost.com really helped my figure out how I should be tackling things and gave me timelines I found helpful.

Tixy

ManagingDebt wrote: »

One comment i do have about my situation is that i really want to payback my parents for helping me out when they did but i feel as though i need to pay off the virgin credit card and perhaps one of the loans first. This may mean taking out another loan at somepoint this year for around £5,000k. With the dispoable income i do have, i would try to pay this off over a year. What do you people think to this idea?

I think you'll struggle with getting more credit now. Your income is I guess around £37k? with visible debts of £18k (so around half your income) you may find it hard to get a new loan in the current climate.

Whilst we have recommened you pay off your debts in order of interest rates (which will cost you the least overall) because of the family situation its understandable you may want to pay them before they appear in the cost list. Could you not just start paying them say £200 a month or something?

ManagingDebt

Tixy - "I think you'll struggle with getting more credit now. Your income is I guess around £37k? with visible debts of £18k (so around half your income) you may find it hard to get a new loan in the current climate.

Whilst we have recommened you pay off your debts in order of interest rates (which will cost you the least overall) because of the family situation its understandable you may want to pay them before they appear in the cost list. Could you not just start paying them say £200 a month or something?"

My income is £42,000 and your right about my visable debts being half of this. I'll be paying off the Virgin Credit Card of £2500 firstly and hope to then hit one of the loans. I'm slightly torn between which loan to pay off first though. The £2,920 (129pm) is lower at 5.6%, but easier to pay off becuase of the sum than the £5,342 loan at 14.6% which is being paid off at £230pm.

If i can pay off the virgin CC and £2,920 loan then i'll be down to £12580 visable. Would this help my chances of getting a loan?

ManagingDebt

mrsb83 - "www.whatsthecost.com really helped my figure out how I should be tackling things and gave me timelines I found helpful."

thanks mrsb83. This website is really helpful

Tixy

Hi

Yes it should make it more of a possibility in getting a new loan - as a rough guide it appear people are struggling to get new credit that takes them above half of their income (though obviously the loan from your parents wouldn't be included in this).

Def go for the virgin card first before anything else. Then before you start overpaying the current loans you need to think whether you'd be likely to get a new loan cheaper APR than your existing ones. If you cannot then there is no point overpaying these just to then take out a more expensive debt.

One option might be to see if virgin would give you a 0% BT deal once the card is clear. Sometimes they do once the card has been empty for a couple of months, if they would you could do a super balance transfer from that to your current account and then use that to pay off your parents. SBTs cost 4% fixed fee currently and then you could hopefully pay it off before interest starts being charged.

ManagingDebt

Thanks Tixy :T

I would have never of thought of asking for a balance transfer from Virgin once i've cleared it. I do need to speak to my parents about the monies i owe them. It's guilt that i havent paid they back so far that is driving me to pay them back asap. Perhaps either an increase in monthly amounts or maybe one months £650/700 would be of use to them then i can concentrate on paying off some of the other stuff.

Last thing i want to do is upset my two biggest supporters

dancingfairy

It's going to take a few months to pay off virgin so why not reassess things then? Virgin may offer you a decent rate to keep you as a customer so maybe you could see what the settlement figures for the loans are then and whether you could re-jig things when the card is clear?
Also are you honestly not being charged interest on any of the overdrafts?

df
Edit: I see Tixy beat me to it!

dancingfairy

If your overdrafts really are at 0% are you able to get any cash out and pay it off against the virgin card? then the debt will be transferred from 22% to 0% . Even if you can only transfer a bit it will all help.
df

ManagingDebt

I think your right dancingfairy. This seems like the best thing to do. I like the idea of putting one of the loans on the card. Particularly the current £3k loan. This would add another £129 to my disposable income to pay off the virgin card. I don't trust myself putting the £5k loan on a credit card. Temptation is a big reason as to how i got into this state.

I am paying a little interest on each overdraft. £19 on abbey, £5 on Alliance and Leicester and £9 on HSBC.