New to the forum - up debt creek - all advice welcome

_Persephone

Evening all,

I am new to the forum *waves* .

I sent the following email to Martin explaining my situation ( I went on a bit, sorry for the cut and paste) and a member of the team suggested I join here so here goes.

I am a 26 year old single woman that has been in debt most of her adult life. As soon as I turned 18, I was offered a credit card, and being fickle, it was too hard to resist the lure of being able to purchase anything I wanted. Since then, my bank (Lloyds) has pretty much chucked credit at me, and being weak I accepted it. I have taken out loans before to pay off the credit card, only to run it up again. My spending habits have been terrible.

I currently owe £2000 on a loan, £1000 overdraft, and nearly £6000 on a credit card, all with Lloyds TSB. Also over £10k in student loans for a degree I did not complete, but I'm not counting that at the moment. The worst debt is the credit card, a Lloyds Mastercard. The minimum repayment is £150, and £100 in interest gets added on each month! This is horrendous. My mother helps me pay the card, but obviously this is not ideal. I am getting very close to the limit, and the interest is going to take me over in itself.

I recently went into my bank, as they wanted to tell me about the new charges on my account. They ended up talking me into upgrading my account to a Premier Vantage (which costs £17 per month) so that I would get a cheaper overdraft. They then talked me into applying for a consolidation loan, which they assured me would be fine, although I was declined, and declined again after they referred it to their underwriter.

I applied for a Barclaycard for a balance transfer, I had been reluctant to do so for fear of damaging my already shoddy credit rating, and thankfully was accepted. I thought this was the answer to the credit card problem in the very least, but they gave me a limit of £1000 despite me saying on my application I was applying for a balance transfer. (I also recently got a credit report, which is a benefit of my swanky new bank account, which gives me a 1/5 for credit).

Now, in the next couple of months, the interest repayments are going to take me over the limit on my credit card. I can't even move back home with my mother as she has recently downgraded to a one bedroom bungalow, and has no room for me. I really don't know what to do next. I have thought about applying for my bank charges back after reading your guide, but that could take months, and I don't know which route to go down.

Do you have any pointers on what I can do? I am spiralling into debt, and cannot see any light. I know the amount I owe is smaller than the average, but it's all relative, and more than I can cope with.

beachie

Hi,

Just wanted to say Good Luck with everything - didn't want to read and run.

I am a 27 yr old single male and so know how hard it can be living life with paying bills etc.

It might help if you post a statement of affairs (SOA) here (or do it yourself) - sure someone will come along and give you the link to it soon. This will allow for you or us to see what your spending is and whether there is anything that can be reduced to help you balance it all out.

Good Luck! Will reply tomorrow night when I have more time.

Take care.

It will all be ok.

Adrian

mdr86

SOA info is here: https://forums.moneysavingexpert.com/discussion/107280

ghostmadlittlemiss

Hi,

Welcome to the forums, you've come to the right place. First things first, pop us up your Statement of Affairs (SOA) and someone will then come along and advise you on ways you can cut back and/or increase your income in order to try and get you to a point where you can hopefully exceed the minimum payments on your debts. If that's possible, which it very often is, you'll then be advised to snowball. This means throwing extra money at the debt with the highest interest whilst paying only the minimum on the other debts. You continue this until that debt is paid off and then move onto the next one. If it's not possible for you to be in a position to meet your minimum payments, you'll be advised about Debt Management Plans. But hopefully, you won't need one of those. Not that they're horrible or anything, just that being able to meet minimum payments is better.

One thing I found a bit strange though is this comment:

_Persephone wrote: »

they gave me a limit of £1000 despite me saying on my application I was applying for a balance transfer.

Maybe I'm reading it wrong but surely if you've been given a £1000 limit, that means you can use this limit to either balance transfer or spend, not just to spend. As I said, I might be reading that wrong though.

So yes, pop your SOA up here and we'll see what we can do.
Kayleigh

7roland8

Yes looks like you have £1000 on Barclaycard where you can transfer £1000 over from yuor Lloyds - and hopefuly its at 0% - that would save you some interest. I know its not the whole amount but better thn nothing.
Talking personally I'd rather have my grownup cild sleeping on the settee rather than having to pay their credit card bills!
Could you explain to Lloyds you have no money to pay the increasing bills and ask that they freeze the interest? No harm in trying,

_Persephone

Thank you for your replies...!

ghost - You're right about the credit card, I didn't word that very well I'm sorry. What I was getting at was that I didn't see much point in transferring only £1k of a £5.5k debt.

I must admit, I have been plucking up the nerve to join the forum for a while and I posted that email in haste. There have been a couple of developments since then:

- I am currently going through my charges to see how much I could potentially claim although finding this disheartening, as I can't believe I never faced up to my situation before. I always wondered why I was so skint, and it was because charges were being taken from my account every month.

- I have had a payrise, and also have the opportunity to work overtime, so potentially more money coming in to clear debts quicker.

- I spoke to the credit card company, and they have allowed me to enter a credit agreement, with reduced payments and reduced interest. £75 per month, with £25 interest. I am worried they will get suspicious if I start paying off lots though after we went through income and expenditure when they offered me the new repayments.

Anyway. Enough waffling - my crack at an SOA:

In - £1548

Out

Direct Debits
Rent £450.00
Council Tax £66.00
Car Insurance £53.20
Sofa £46.80
Phone £54.90
Mac £150.00
Broadband £21.25
Loan £89.74
Credit card £75.00
Bank Account £25.00
Other expenses
Petrol £80.00
Electric £75.00
Food £200.00

Total out £1385

Jesthar

Hi Persephone, and welcome

You might find this useful - our favourite SoA generator, with handy boxes for everything so you don't forget things, and automatic calculations

http://www.makesenseofcards.com/soacalc.html

If you do one of those you might well spot things you've missed or not thought of, and we'll be able to give much more detailed advice.But let's have a look at what you have so far:

_Persephone wrote: »

Thank you for your replies...!
Anyway. Enough waffling - my crack at an SOA:

In - £1548

Out

Direct Debits
Rent £450.00
Council Tax £66.00
Car Insurance £53.20
Sofa £46.80 - how much longer have you got left on this?
Phone £54.90 - that's very hefty, can you reduce this?
Mac £150.00 - how much longer have you got left on this?
Broadband £21.25 - that's very hefty, can you reduce this?
Loan £89.74 - how much longer have you got left on this?
Credit card £75.00
Bank Account £25.00
Other expenses
Petrol £80.00
Electric £75.00
Food £200.00 - this should be very easy to cut back on

Total out £1385

The very obvious thing is your food bill - I'm single and live alone, but I rarely spend more than £80 a month on food and other supermarket essentials (cleaning things, cat litter etc.) for both of us, and that's without cutting back to basic brands. We certainly eat well, too!

Other than that, your phone and broadband bills are pretty hefty too, could these be reduced?

Do the balance transfer anyway - better to have SOME of it on a much lower interest rate, yes?

On the plus side, you seem to theoretically have more coming in than going out, which is a good start. However, you are obviously missing a few things from your budget, as you aren't actually clearing debt, so you need to find out where the rest of the money is going. Doing the detailed SoA will help, and the other good tactic is to keep a spending diary (a spreadsheet is good) of all your income and spending, putting *everything* in so you can see where every penny goes. I have one, it helps me to keep overpaying my mortgage!

~Jes

_Persephone

Yes, food looks pretty hefty, a lot of that is due to not taking lunch to work... And the little spends here and there in the supermarket after work, it all adds up.

Sofa £46.80 - how much longer have you got left on this?

This was an interest free DFS job, I've got until August 2013! Deferred a year and started paying in August last year. £1500 sofa.

Phone £54.90 - that's very hefty, can you reduce this?
It's an iPhone contract, but yes, I tried before, but o2 are crafty and only let you drop down one tariff per month. I will reduce it tomorrow!

Mac £150.00 - how much longer have you got left on this?
I have until October on this. I have only made two payments - interest free MacBook Pro for 10 months.

Broadband £21.25 - that's very hefty, can you reduce this?
Its only the Virgin media L package I think, so definitely, yes.

Loan £89.74 - how much longer have you got left on this?
I am not sure, I took it out in Dec 2007, and it was originally for £3600. My internet banking says I have -£1721.67 left on it, and the original loan amount was £4798.28, which I am guessing is with interest?

ghostmadlittlemiss

_Persephone wrote: »

Thank you for your replies...!

ghost - You're right about the credit card, I didn't word that very well I'm sorry. What I was getting at was that I didn't see much point in transferring only £1k of a £5.5k debt.

I must admit, I have been plucking up the nerve to join the forum for a while and I posted that email in haste. There have been a couple of developments since then:

- I am currently going through my charges to see how much I could potentially claim although finding this disheartening, as I can't believe I never faced up to my situation before. I always wondered why I was so skint, and it was because charges were being taken from my account every month.

- I have had a payrise, and also have the opportunity to work overtime, so potentially more money coming in to clear debts quicker.

- I spoke to the credit card company, and they have allowed me to enter a credit agreement, with reduced payments and reduced interest. £75 per month, with £25 interest. I am worried they will get suspicious if I start paying off lots though after we went through income and expenditure when they offered me the new repayments.

Anyway. Enough waffling - my crack at an SOA:

In - £1548

Out

Direct Debits
Rent £450.00
Council Tax £66.00
Car Insurance £53.20
Sofa £46.80
Phone £54.90
Mac £150.00
Broadband £21.25
Loan £89.74
Credit card £75.00
Bank Account £25.00
Other expenses
Petrol £80.00
Electric £75.00
Food £200.00

Total out £1385

Have you tried checking the price comparison websites to see if you're getting the cheapest fuel tariff? I'm guessing that where you put 'electric', that covers gas as well. Also, try Petrol Prices to make sure you're buying petrol from the cheapest place in your area. And if you pop over to the OldStyle board, there's not a thing they don't know about cutting your food bills.

I know having more outgoings is probably the last thing on your mind right now, I've noticed that despite you budgeting for petrol, you don't seem to have put anything down for next year's insurance/maintenance/the MOT. Learn from my mistake here, one of the reasons I ended up in debt was because I took on a Morris Minor that I was told would be dirt cheap to run because "they're so reliable, they never break down, you can fix anything wrong with them yourself." My reply isn't printable, I'm afraid. Yes, you can fix it yourself, if you have a garage, a shed load of tools and the mechanical skills of one of the Top Gear blokes! Otherwise, you're screwed because believe me, my car has broken down more times than the cars of everyone else I know combined! :mad:

Anyway, bit off topic there, sorry. The point is that if you don't put aside money for necessary expenses then when they come along, you'll wind up running up debts again. You'll hear, "Don't save when you're in debt," a lot on here and that's right, if you're saving for the sake of saving. But putting aside a bit a month for expenses that will come up, ie, insurance and MOT, and ones that very likely will, ie, repairs, isn't saving, it's budgeting. I'm sure you know how much more you're paying through having bought your car insurance monthly than you would have had you paid up front, you don't need telling. I'm in the same boat this year and I hate every second of knowing I'm paying that much. Yes, modern cars don't break down as often as old ones do but when they do, it costs a huge amount more and they're much more likely to need scrapping. There's a reason we recommend the SOA link that we do and it's not just ease of formatting. It's the most comprehensive one there is and the only way to get out of debt is to have enough money for any problem that comes along so when they do, you don't have to borrow to get by.

I'm sorry if that seems really lecture-y and patronising, I really don't mean it to. I just hate see people start down the road that I've been down. I ended up in debt because I didn't budget properly, not because I spent money on clothes and holidays. All I have to show for 3 years of hell is the fact my car is still running and a Friends boxset of all 10 seasons that I've never even opened. Everything else was just 'stuff'. And I don't want that to happen to anyone else because it sucks.
Kayleigh

_Persephone

Thanks for reading Kayleigh.

ghostmadlittlemiss wrote: »

Have you tried checking the price comparison websites to see if you're getting the cheapest fuel tariff? I'm guessing that where you put 'electric', that covers gas as well.

My flat is all electric, and on an economy 7 tariff. I don't think I can change this, as I have storage heaters, and all the properties in the areas are like this. It's also on a prepayment meter.

I know having more outgoings is probably the last thing on your mind right now, I've noticed that despite you budgeting for petrol, you don't seem to have put anything down for next year's insurance/maintenance/the MOT.

I'm sorry if that seems really lecture-y and patronising, I really don't mean it to. I just hate see people start down the road that I've been down. I ended up in debt because I didn't budget properly, not because I spent money on clothes and holidays. All I have to show for 3 years of hell is the fact my car is still running and a Friends boxset of all 10 seasons that I've never even opened. Everything else was just 'stuff'. And I don't want that to happen to anyone else because it sucks.
Kayleigh

I was planning to pay the insurance monthly. I am still building no-claims bonus so was hoping it would reduce (although unsure now with the new court ruling). Putting money aside for maintenance is a really good idea, but how much?

Jesthar

I always take my own lunches to work, costs me about £1 a day max

Make SURE you pay the sofa off on time, or a couple of months early if possible. If you don't you may get hit with having to pay the full interest from the whole period of the finance, even if you are only one day late - happened to some friends of mine... :eek:

Try not to buy anything else on store credit for a while, eh? You've got a fair bit to pay on that front until at least October.

Other than that, you need to have a good read of ghost's advice, and then try completing a full SoA, and you'll have made a great start to your debt free journey

~Jes