It's just a jump to the left... or "Confessions of a Debt-Free-Wannabe"

diekleinemue

...and then a step to the ri-i-i-iiight! *shimmy*wriggle*

Hello there, I'm Mue! (pronounce Mü, as in Little My who lives with the moomin family in the moomin valley. Moomins and Snufkin anyone? No? *ignores the puzzled looks all round* Never mind, just google moomins!)

I am not from around here although I am living in England since over 8 years now. My partner and I bought a house 16 months ago and since 5 years I find myself in regular intervalls in financial difficulties.

June this year, after realising that I was (yet again) about to pay horrendous fees and penalties for being overdrawn, I decided to break this vicious circle and sought indepenant financial advice. I went to the Citizen Advice Bureau but they wouldn't see me as my situation wasn't "bad" enough. They did provide me with a debt advice booklet though and explained that opening a new account and paying the amount of money I can afford each month might be a way of dealing with the situation.

I felt affirmed in my wanting to swap to another (more ethical) bank and so I opened a current account with smile, planning to move all my banking from HSBC, who I have been banking with for the past 8 years. I transfered £3000 into a 0% BT credit card with the Co-operative Bank and I applied for a personal loan (for £10500) with smile to combine all my outstanding debt (bar the 'parked' £3000) into one.

The loan application took longer than I thought, I also had to travel for work and privately a fair bit and - convinced that the loan application would go through - I started using the current account, soon having used up the overdraft without having moved my income over because I thought I'd do the entire move and the closing of accounts in one big swoop.

The loan application was rejected as (co-operative bank on behalf of) smile felt it would make my financial situation worse, but I was invited to 'appeal'. I sent them a letter explaining my situation, how a personal loan with them would mean I could draw up a monthly financial budget that would allow me to pay back my debt, save money and contribute towards the mortgage/bills/etc. I didn't hear back from them for a month, meanwhile not persuing any other options - still naively convinced that now after explaining my financial situation they would gladly take me on as a customer despite my debt - and getting behind in payments in the process, having to be prompted by customer service advisors and also being charged penalties on my smile account. When one of the Co-operative Credit Card customer service advisors enquired why I was in arears I finally learnt that the decision to reject my application remained the same. That was last week.

They suggested to contact Freedom Finance which I did. I explained my situation and they took some details, soon getting back with a "suitable" loan from Black Horse Personal Finance. I met with them last Thursday and learnt that I would be rejected for a personal unsecured loan but that they would very much like to offer me and my partner a secured loan. They explained that I will receive the same response from other banks and so I asked them to leave my application open until I had spoken to my partner, conscious that a further rejection of credit would only add to the problem.

Thursday night I phoned the Co-operative lending department and explained my situation and asked if there really is no way how they would consider me as a customer. The very helpful customer service advisor explained that a personal loan application was calculated by a computer that didn't understand the concept of consolidation and based its decision on adding the new loan on top of already existing debts. He recommended to go into the branch, take 3 months' statements with me and explain to them what had happened.

I prepared a long letter detailing the whole story, took my statements and went to see them. First they didn't quite understand what I was trying to do, telling me that I would have to go back to smile. When I insisted that I wanted to apply for a personal loan with Co-operative Bank directly one of the managers came out to see me. She too explained I had to go back to smile until I finally got through to them. She looked at my statements and my letter and said that the application is likely to be rejected. She said (and I quote) that I obviously had problems because I had been to see the Citizen Advice Bureau and that I obviously had problems with HSBC. I was outraged and went bright red. I explained that I had no other problems than wanting to improve my financial situation, that I went to see the Citizen Advice Bureau because I was a citizen and I wanted independant financial advice, (I failed to point out though that they didn't see me as I didn't qualify for their services. Gosh, what would that make me seeing that I am near-untouchable for having been inside the Citizen Advice Bureau's office?!). I also explained that my problems with HSBC related to the way they invest their (or rather my) money and that I wanted to switch to an ethical bank. I am not sure if she believed me and she repeated that my application is likely to be rejected and that they would not override the decision if I was to go ahead with it. In the end they did key in the application and it did get rejected. I left close to tears, feeling humiliated and infuriated, angry and desperately alone. It didn't help that it was raining. That was this Friday.

I spoke to my partner and he said we'll find a way of sorting this out, I shouldn't worry. He was away for the weekend and I numbed my worries with ice cream and trashy tv. I considered to go to HSBC on Saturday morning and see if they could help me, realising I'd have to grovel for trying to leave and wondered if that would make a difference to their decision. I also wondered how long it would take until the Co-operative's rejection of credit would appear on my credit score.

By Saturday morning my hurt ego had calmed down a bit and I understood that Co-operative had simply rejected me because of the risk. I decided to treat the whole situation as cool-headedly and talk to my partner. We need to find the best financial deal that suits our situation, be it solving the problem together or individually. This is not the time for rushed decisions although my situation is urgent and I want to resolve it within the next 8 days.

A friend told me about this website and I am now reading my way through a lot of interesting stuff since a couple of hours. I am most inspired by some of the posts in this forum and decided to add my story. So there you have it!

Do you want some numbers?

I owe...

£309.65 HSBC Current Account (£500 overdraft)
£7879.68 HSBC Graduate Loan (7.9% APR)
£1653.39 HSBC Credit Card
£279.41 HSBC Business Account
£493.70 smile Current Account (£500 overdraft)
£3000 Co-operative Travel Credit Card (0% BT until Jan 2007)

£180 money to live on until my salary arrives on 14th December (not to mention Christmas presents. Home-made picture frame made from pasta anyone...?)
________________________________________________________

£13795.82 Grand Total

I earn £1094/month, I am working part time 3 days/week and I am studying part time for another year for the PGD, a further year for the MA. I am also part time self employed but since I started studying last January I haven't been able to take on any commissions and haven't had any income from my self-employed business. That is unlikely to change for a while.

My partner (who admitteldy earns more than twice as much as I do) is currently taking the full blow of all things house: the mortgage, the bills, the council tax - the whole lot. He has around £3000 outstanding on his student loan and £7000 on his credit card (having used cheap rate credit card cheques).

My personal expenses (including getting to and from work, university fees, clothes, mobile, etc. ) are £400/month, I could pay back £350ish/month into the loan and £50ish/month into an ISA (which I opened with smile when I still thought they'd have me as customer) to start saving some money which could go towards paying back the loan or financing some of the renovations we are planning for the house or a holiday or whatever. And I could pay £294 towards the mortgage and bills. That sounds realistic to me. Is it not?

My partner and I will both keep a diary of all outgoings for a while and we want to draw up a budget for our expenses. We are looking for more info on how to tackle the situation. Any ideas and suggestions would be very welcome.

I'll also be back to report on my progress.
I want to be debt-free!! (Can anyone else hear the melody to Queen's opening of "I want to break free" here...?)

Thank you for reading this long, long post.
Have a good night!
Speak soon,


diekleinemue

System

Wow that must be the longest debut thread ever! Welcome and I like the moomin dit at the top. I dont what to say except welcome and I am sure someone will offer you some top advice.

Lenny

moozie_2

Hello there diekleinemue

Just wanted to say welcome and good luck with your debt free journey

All the best

Brassic

Very long :O

Umm, I guess a SOA is the best way to start really. In a way it could be good that they rejected you I think, as consolidation is not always the best way out. Have a gander at the link at the top of this board on how to write an SOA, and post that so people can see at a glance what your situation is

CLAPTON

i would suggest you post a SoA

that is three lists

firstly your income

secondly a list of your spending
plus a subtotal

third a list of your debt saying
debt, amount owed, minimum payment each month, and APR
also subtotal of debt and minimum monthly payments


then we may be able to see the wood for the trees

iceicebaby

Hello and welcome fellow moomin fan!

lynzpower

hello Mueeeeeeeee

welcome to DFW :j

diekleinemue

Dear all,

thank you very much for your kind words and for welcoming me into the community. You were right - I already feel a little better.

I have pulled some more info together to fill in the gaps for my SOA. (My partner is still exploring his options, so I can only work with my data in the moment.) Here goes:

INCOME

£1094 monthly income from part time employment
£0 monthly income from part time self-employment
£0 benefits (I am pretty sure I don't qualify for any)
_______________________________________________________
£1094 TOTAL INCOME


EXPENDITURE

£450 personal expenditure/month
£60.62 travel/transport into work/uni
£86.60 food/hospitality in work/uni
£40 mobile phone
£35 gym
£125 university fee
£22.19 organic veg bag
£80.58 clothes/frivolities


I owe...

£309.65 HSBC Current Account (£500 agreed overdraft)
14.9% APR on debit. My account balance usually moves between £600ish credit and £600ish debit over the course of a month.

£7879.68 HSBC Graduate Loan
7.9% APR, paying back £246.24/month, 32 payments left. I took the loan out in June to take the pressure off, thinking I'd move to smile soon anyway. It was the last opportunity to get a "decent" rate with a graduate loan.

£1653.39 HSBC Credit Card
Credit limit £4000, 14.9%APR on purchases, 20.9%APR on cash. I have used this credit card for cash in the past. *feels sick*

£279.41 HSBC Business Account (£0 agreed overdraft)
10.6% APR on debit, £3/month account costs, £4/day for being overdrawn.

£493.70 smile Current Account (£500 agreed overdraft)
11.9% APR on debit.

£3000 Co-operative Travel Credit Card
0% BT until Jan 2007, credit limit £3000, 16.9%APR on purchases, balance transfers and cheques, 19.9% on cash. I am not using the card though, it's just to pay back those £3000.
_______________________________________________________
£13615.82 Grand Total


Since 15 October I paid the following monies towards my accounts/debts:

£246.24 towards HSBC graduate loan
£73 towards Co-operative Bank credit card (minimum payment)
£35 towards HSBC credit card (minimum payment)
£3.27 interest to 13 October 2006 HSBC current account
£50 total charges to 13 October 2006 HSBC current account
£246.24 towards HSBC gratuate loan
£180 towards smile current account (to get back within overdraft limit)
£115 towards Co-operative Bank credit card (minimum payment)

These payments led to the figures detailed above under "I owe..."

Did I miss anything? It was very interesting and reassuring to read your replies yesterday day and learn that consolidation might actually not be the best way forward and so I wonder if you can help me unravel this chaos and identify with me where I should start paying back. Although with £4/day charges I guess I better get rid of that business account, seeing that I am not taking any income from my freelance work anyway. And seeing that my smile current account it actually cheaper in terms of APR when overdrawn I might move my current account anyway. No? Yes?

I am much looking forward to your input.

Bye for now,
diekleinemue

toontastic

Hi,

I know the first thing people will say is you are spending £80.58 a month on clothes/frivolities do you really need to spend this ? Stopping in and not buying clothes (you can't need that many if it's a monthly thing) would allow you to throw an extra £80 at your debts. They gym is also a luxury which with your debt you can't afford.

Is the mobile for both of you or just yours, if so it's to much you need to get a better deal.

Where is the £604 going which is the difference between your wage and your expenditure ? Maybe a debt diary is a good start so you can see where your money is going and stop it leaving. With that £680 you could wipe out the £279.41 HSBC Business Account and the £493.70 smile Current Account. The next month you could get rid of the £309.65 HSBC Current Account debt and then you can start throwing money at the big debts and getting rid of them in no time.

lynzpower

OK let me see here -

INCOME

£1094 monthly income from part time employment
£0 monthly income from part time self-employment
£0 benefits (I am pretty sure I don't qualify for any)
__________________________________________________ _____
£1094 TOTAL INCOME


EXPENDITURE

£450 personal expenditure/month
£60.62 travel/transport into work/uni ( is there a cheaper way? bike for example-0 you might be able to get one off freecycle?)
£86.60 food/hospitality in work/uni ( this is almost the same amount you spend on food, as me & my partner- for both of us for a month- good news you can make significant svings :T)
£40 mobile phone do you NEED this tarriff can you reduce your tarriff & go PAYG)
£35 gym ( do you NEED this)
£125 university fee ( whats this? Is it tuition fees?)
£22.19 organic veg bag ( fair enough, but is this the BEST value? is there any cheaper? )
£80.58 clothes/frivolities ( dont need this! )


I owe...

£309.65 HSBC Current Account (£500 agreed overdraft)
14.9% APR on debit. My account balance usually moves between £600ish credit and £600ish debit over the course of a month.

£7879.68 HSBC Graduate Loan
7.9% APR, paying back £246.24/month, 32 payments left. I took the loan out in June to take the pressure off, thinking I'd move to smile soon anyway. It was the last opportunity to get a "decent" rate with a graduate loan.

£1653.39 HSBC Credit Card ( can you move this card to a 0% - I bet not given your overdebtedness.... but worth thinkinbg about over the longer term)
Credit limit £4000, 14.9%APR on purchases, 20.9%APR on cash. I have used this credit card for cash in the past. *feels sick*

£279.41 HSBC Business Account (£0 agreed overdraft) ( any charges here?)
10.6% APR on debit, £3/month account costs, £4/day for being overdrawn.

£493.70 smile Current Account (£500 agreed overdraft)
11.9% APR on debit. ( any charges here?)

£3000 Co-operative Travel Credit Card
0% BT until Jan 2007, credit limit £3000, 16.9%APR on purchases, balance transfers and cheques, 19.9% on cash. I am not using the card though, it's just to pay back those £3000.

Have all the cards been cut up?

tyllwyd

"£279.41 HSBC Business Account (£0 agreed overdraft)
10.6% APR on debit, £3/month account costs, £4/day for being overdrawn"

Is this right ... you are paying £4 per day ie £120 per month on an overdraft of £280?? Plus interest charges and another £3 on top just to have the account. That is crazy! You have to get that overdraft cleared asap.