Advice and support please

kazl_2

Today is our lightbulb moment! We are finally facing up to the huge debts we have and trying to sort them out. We have been burying our heads in the sand hoping they will go away for too long. This is really scary and embarrassing.

We have filled in the MSE budget and also the 'snowball' calculator. I think we'll be needing lots of support and advice over the next few years! Any help will be gratefully received.

First question is whether we should put money for xmas, birthdays, etc into a savings account or pay it off the credit cards then use card later on. We've read that you shouldn't save when paying interest on debts but dont really want to use credit cards ever again if can help it as we have got in such a mess with them.

Also views on whether should pay cash for food shopping, fuel etc or pay on card then pay off each month? Not sure if disciplined enough for this?

yung

Welcome to the forum, if you post and S. O. A see this http://forums.moneysavingexpert.com/showthread.html?t=107280. the good folks wil be able to give you help and advise

flowerofscotland

Welcome ot the group and well done on on your LBM. You've taken the all important first steps and have also found companions here who will support you on your long journey.

I personally don't think there is one right way to get out of debt but it is important to try to understand why you have been overspending and then change your behaviour. So if you don't think you are disciplined enough to use cards at the moment then switch to cash. For myself I worked out a weekly budget for food and other weekly expenses - I draw out the cash on a Saturday and it has to last the week. I found I had a completely different approach to food shopping when I had to hand over real money instead of plastic! Every Friday night I empty my purse and put any left over cash - even if it is only pennies - into a separate purse I keep in the house. When this "leftover fund" reaches a worthwhile amount - say £50 - I throw it at one of my CC debts. Occasionally I have used it to add to the weekly shop e.g. when having a big family get together.

Like you I am wrestling with what to do about non regular items. At the moment I am saving the money because I don't want to spend on credit cards like I used to. If you open a new savings accounts don't forget to check out cashback sites such as https://www.quidco.com where you can get cashback - I opened a Cahoot account just to save for the TV license and got around £28 cash back.

Good luck

kazl_2

Here goes:

Monthly Income

My Salary £1200
Partners Salary £2000
Benefits £266

Total Income £3466

Monthly Outgoings

Mortgage £1044
Contents Insurance £17
Council Tax £114
Water £35
Gas/Electric £60
Phone £20
Mobile Phones £70
Internet £15
Life Insurance £43
Groceries £430
Petrol £150
Car Insurance £29
Car Tax £8 (£100 yr)
Tea fund at work £4
Bus fares for kids £43
Pocket money for kids £30
Loan Repayment £283
Interest free loan £63
Sky £37
TV licence £11
Hobbies £57
Clothes £40
Haircuts £20
Credit card minimum payments £770
Savings for xmas and birthdays £70

Total outgoings £3466

credit cards
M&S £3090 (£6500 limit) 3.9% life of balance
Barclaycard £4045 (£4900 limit) 6.9% life of balance
Mint £5484 (£6200 limit) 7.9% life of balance
MBNA £15049 (£15400 limit) 13.8%
Lloyds TSB £14659 (£15000 limit) 14.9%

Overdraft £800 7.9%
Loan £8500 7.9%

We have a loan agreed for £20000 over 5 years @ 9.5% which would refinance existing loan and pay about £12000 off lloyds card. we have forms but dont know whether or not to do it.

I_was_a_fool

Hello kazl & welcome

I like the way the incomings & outgoings match exactly!

Im no expert, I only have advice to offer along the lines of DONT do what I did! This is the place to be now you have realised how things are going, good luck!

Regarding the loan, IF you go for that, Im sure you could get one at less than 9.5. Speaking from bad experience, I found that top up loans were a very bad idea, we paid a fortune in interest penalties by topping up several times & ending up with slightly lower monthly payments but a much extended repayment period.

Ideally you want to aim at paying more than the minimum amount each month on your cards and making progress at reducing your debts. You seem to have enough to get by each month without using the cards, so you should cut all these up (maybe keep one for emergencies only). Remember, anything you put on the ccs will cost you more than cash unless you have 0% interest or pay it off at the end of the month.

CLAPTON

well done for starting so well..using botrht he budget and the snowball calculator...

start a spending diary to see exactly where the money goes...it may show up things you haven't realised like you seem to have no work related expense (lunches, whip rounds, etc) or socialising or school related costs )how many children do you have ).
do you never spend anything on the house / car (you need an emergency fund ...things happen appliance break, tiles fall off roofs, boilers go wrong)

as far as saving for yearly/oneoff/irregulars etc versa debt repayments its a personal thing....if you are well disciplined and can keep detailed records then repaying debts is best because you pay less interest overall...but then you have to use the credit cards again, but only for the planned item....its what works for you really.

Biffa

Just a couple fo quick thoughts (it's still stupidly early in the morning and brain hasn't quite woken up yet....):

Sky - ring them and say you want to cancel. They will probably be able to offer you a deal. We did this and got movies and sports back for half price for 6 months.

Your shopping bill seems quite high - how many kids have you got? Have a look at the old style board and see if you can cut this down a bit. We have 2 kids and our monthly shopping bill is around £150.

Phone bill - £20. You can shop around for cheaper line rental maybe. We're with Talk Talk and pay £9.50 a month. We get free weekend calls, so only phone people on the landline at weekends - during the week we use the free minutes on the mobiles.

Sorry I can't think of anything else at the moment, but I'm sure there will be others along soon who can find something else for you.

Good luck, and welcome to MSE!

evie451

Hi Kazl and welcome to the boards. I am quite new here and only have a few experiences to offer. First the thing that has saved me the most money per month in one lump is cutting down the food bills.

I can now shop for 2 Adults and 2 Children (1 teen and one 9 yr old) and a cat for about £40 a week..... thats including beer and a bottle of wine! long live Aldi and Lidl!! The meal planning thing really helps and the old style boards have loads of ideas have a look.

Your dilemma over the consolidation Im afraid I have no idea but check out the boards I know a lot of DFW have poor opinions of it

duncans-mum_2

Hi kazl and welcome to MSE.

Youv'e put your debts in the snowball calculator, have you done another one regarding the loan you have been offered, and then you can see how much more/less your overall interest payments would be and can compare when you DFD would be. If you go down the loan option though, don't give in to the temptation of spending on them again - get rid (or keep one purely for emergencies)

Good luck on your Debt free journey whatever you decide.

kazl_2

We have just phoned the our bank to ask why the Apr offered was 9.5% instead of the 5.9% quoted for Premier Direct customers (which we have been for 12 years or more). Initial response was about it reflecting our circumstances but we persisted and he went away for a few minutes to ask and came back to us saying will send revised papers to us for rate of 5.9%! £32 per month cheaper but more importantly £2000 less interest over the term of the loan.
Just have wait for the paperwork now to make sure its true.:j

kazl_2

evie451 wrote:

Hi Kazl and welcome to the boards. I am quite new here and only have a few experiences to offer. First the thing that has saved me the most money per month in one lump is cutting down the food bills.

I can now shop for 2 Adults and 2 Children (1 teen and one 9 yr old) and a cat for about £40 a week..... thats including beer and a bottle of wine! long live Aldi and Lidl!! The meal planning thing really helps and the old style boards have loads of ideas have a look.

Your dilemma over the consolidation Im afraid I have no idea but check out the boards I know a lot of DFW have poor opinions of it

how do you do food shopping for £40 per week? There are 2 adults and 17 yr old and 15 yr old (so basically feeding 4 adults) and dog and we spend around £100 a week. If I could cut that down it would help but yours is less than half of what we spend!