My Debt Situation

paulmc18

Morning,

I've accumulated about £13k worth of debt due to credit cards. I'm a contractor at the moment earning good money. My outgoings are monthly rent £360, bills, car finance £250, car insurance £50.

What would be the best start to cutting this debt off. Obvioiusly I'm cutting back on everything.....

Thanks

Paul

Midas

Hi Paul

If you post a few more details the helpful folks on this board will no doubt be able to help you with a few ideas... for example you don't say if you're managing to meet all your repayments at the moment. If you are and have a good credit record you should be able to take advantage of some 0% offers to help get the debt down quickly.

You're spending a lot on your car... any chance you could trade it in for a cheaper motor and use the £250 pm to pay of some debt?

Don't be too disheartened... you've taken the most important step, i.e. visiting this site! I have learnt a great deal just from reading these forums and I'm sure you can too.

fazer6

I think if you give a more detailed list of your outgoings someone may be able to help. How much are your regular payments - each bills, debt repayment... and how much do you spend on food, entertainment, cleaning stuff, holidays...

Who are your debts with, what interest rate are they on? Can you still apply for more credit? Have you got room on your lowest interest rate card to move higher rate balances?

paulmc18

I'm just about managing, I've been juggling the debt about between cards and have 1 on 0%, one on 3.5% for life but it just doesnt seem to go away. I've got 5 cards now and it's a never ending battle!!! I've just transferred my next card and Ikea card across cause the apr on them is bonkers!! The car I need to get to work and back. Any ways of writing any of this off??????? help.......

paulmc18

AbbeyNational - 3.5% Life -£4500
Cahoot - normal apr - £880.55
Egg - 0% (for about another month) 1,950.73
Morgan Stanley - normal apr - £3,306.64
Barclaycard - Normal apr - £2,471.89

Weekly income - £433
rent - £360
Bills etc approx £150
Car + Petrol £450
Cards -lost count.....

paulmc18

Would a loan be alright.......just ran out of ideas......???!??!?!?!?!

fazer6

Find out the apr of every credit card you own and transfer the highest balance to the lowest rate. Barclaycard's quite expensive I think, perhaps 17%ish and I think Egg is about 14.5%. You say normal apr which probably means you're scared of the amount of debt you're in so you don't know exactly what you pay. Get control of your finances and you'll feel better.

Tonight take all credit cards out of your wallet and leave them at home. THat way the balances won't increase any more and you'll start to pay them off. Find the snowball calculator (search the chat forums for the link) and work out what order to pay the cards off in.

Are you on the cheapest electric and gas supplier? Do you use call18866 for home phone calls? Do you have a mobile? Do you have broadband? How much is your foodbill a month and can you reduce it? Have you gone to moneysaving oldstyle and joined the march grocery challenge. Reduce your foodbill by 10 or £20 a month and you could shave months or years of your out of debt date. Do you shop in netto, aldi and lidl? Petrol - could you drive at 70mph instead of 80mph to increase fuel efficiency?

Get the snowball calculator and put in the figures as they are and as they would be if you got a loan, that'll tell you if you're better of getting a loan or not. If a card is paid off by a loan make sure you cancel the card though so you can't get into any more debt.

robnye

as just mentioned.

get a clearer idea of what your outgoings are, that way you can then start to see where you might be able to cut down.


take sandwiches to work, rather than eating out all the time.

reduce take aways

cut down on evenings out

Debt_Free_Chick

Paul - it sounds like you need to throw more money at your debts. Sadly, this is the only way of paying them off. Juggling, rearranging etc helps, but at the end of the day only real money will deal with them.

So, you need to increase your repayments and there are probably only two/three ways of doing this

1. Cut back on all unnecessary expenses e.g. Sky TV, eating out etc. This is only temporary, whist you pay off the debt

2. Get the best & cheapest deal on necessary expenses eg. Electricity, phone, food

3. Increase your income by taking a second job or selling stuff on eBay.

You may find this useful. It's a Debt Management Plan ... one you manage yourself. It disusses (amongst other things) negotiating with your Creditors to reduce your repayments. You probably don't want to do this, but the budgeting tips in the pack might be helpful.

In your case, you want to "create" as much money as you can to repay your debt. Firstly, list all the cards in order of APR, with the highest first. Then put the minimum repayments for each one. Aim to pay all you can off the first card on the list AFTER making minimum repayments on all the others.

Debt Management Pack here

http://www.nationaldebtline.co.uk/england_factsheets/debt_advice_england_wales.php3#3

HTH

Midas

Well the 'good news' if we can call it that is that you have a decent income and at the moment you're earning enough to cover the minimum payments. You also have a good chunk of the debt on a very low rate for life. So try not to panic, with some hard work you will be able to dig yourself out of this one.

As Fazer says you need to take control by finding you who is charging you what. Then thing you need to do is to try and get the level of interest you are paying on the non-Abbey debt down as low as possible. Two ways to do this - apply for a low interest card and transfer it over; call the existing card companies and see if they'll cut it for you (they often will if you ask). If you do this today you'll have taken a massive leap forward.

I'd avoid a loan for now if you can, as the danger is that you clear the cards with a loan, and then run up the cards again.

Then, the second part of the strategy is to cut your spending. This site is full of articles/advice by Martin on how to do this - starting with the easiest things which you hardly notice, ie cheapest utilities etc. The forums are full of great advice on money saving in virtually every area, have a browse!

paulmc18

What do I say when I phone the card companies? Can you cut my apr please?? what's the best approach??

Ladies and Gentlemen, thanks for all your help. Thought I was alone in all this.