Newbie- £8k in the mire

gap1986

Hi Forum

Another newbie tale. I've dug myself in a to a significant mire and it's taken to me a long time to accept that I have a debt problem of my own making.

I made a number of bad credit decisions when I was younger, but I'm determined to get myself back on track. I'm getting married in 3 weeks (yes, it's an expense that hasn't made things better). I have a 21 month old son, who's experienced some difficulties reaching his development milestones, and I've used that as an excuse to spend money I don't have to make him feel special. The adverse effect is no that I struggle to put food on the table and petrol in the car.

I earn £20,000 a year, but will have a new salary of £24,500 form 1 September. I appreciate that I'm therefore in a better position than most, and intend to plough this extra money in to clearing my debts. I have set myself a target to be debt free by Christmas 2013. It's extremely ambitious, but I need to make the change now so that I can eventually (probably in my mid 30s)be a homeowner and provide the life that I want for my son.

Debts
Natwest O/D- £2,000
Natwest CC- £1,600
HSBC CC- £1,500
Barclaycard CC- £2,500
Egg CC- £600

I'll try and post on here regularly, as I've been a squatter for so long and I've always found other's stories helpful.

I'm open to any advice that the forum has for me.

Thanks for reading guys

Tixy

Hi and welcome, and congrats on the forthcoming wedding.

Have you worked out a detailed budget of all your incomings & outgoings so you can see how much you have spare for debt repayments each month? And have you looked out the APRs on all your debts so you know which to tackle first?
If you haven't yet done so I would work out a statement of affairs using this calculator http://www.makesenseofcards.com/soacalc.html so you can get a full picture of your finances.
You might find you can clear your debts much quicker than your target debt free date

Good luck.

gap1986

Salary after deduction (from September)- £1,573

Outgoings
Rent- £350
Car loan (last installment January 2013) - £157
Council tax- £98
Water (last payment in December '11)- £53
Orange mobile (inc. home broadband)- £25
Sky- £25
Primus (home phone)- £8
Food- £150
Petrol- £100
Car insurance (last payment in December '11)- £45

Natwest OD charge APR 26ish%- £28
Natwest CC (min payment) APR 17.9%- £39
Egg CC (min payment) APR 24.5%- £18
Barclaycard CC (min payment) APR 17.8%- £60
HSBC CC (min payment) - £23

Total left over to have a life/clear debts- £401

Thanks for reading.

Tixy

Does your rent include gas & elec, tv licence etc?

I'd suggest doing a more detailed budget to include all the items you need to pay out - even if you don't pay for them all every month, that will give you a better picture of how much of the £401 is realistically going to be spare for extra debt repayments. So things like clothes, haircuts, presents, car tax, car maintenance, a budget for entertainment etc.

Then once you have a detailed budget you will know how much you can put to your debts each month on top of the £168 minimums. With this info you can use a snowball calculator 0 like this one - http://www.whatsthecost.com/snowball.aspx to see how long it will take to clear your debts.

Eg If you could pay an extra £100 each month so £268 in total then your debt free target estimate would be 42months (jan 15), but if you can pay £368 a month you could be debt free in 28months ie by November 13.

gap1986

Tixy wrote: »

Does your rent include gas & elec, tv licence etc?

I'd suggest doing a more detailed budget to include all the items you need to pay out - even if you don't pay for them all every month, that will give you a better picture of how much of the £401 is realistically going to be spare for extra debt repayments. So things like clothes, haircuts, presents, car tax, car maintenance, a budget for entertainment etc.

Then once you have a detailed budget you will know how much you can put to your debts each month on top of the £168 minimums. With this info you can use a snowball calculator 0 like this one xxx to see how long it will take to clear your debts.

Eg If you could pay an extra £100 each month so £268 in total then your debt free target estimate would be 42months (jan 15), but if you can pay £368 a month you could be debt free in 28months ie by November 13.

Thanks. I don't pay the gas or electric, which is why I'm paying more rent/food/petrol/council tax/water. I've got an abundance of clothing. I genuinely don;t buy myself clothes any more. Iget things at birthdays and X-Mas and get by comfortably with that. I forgot about hair cuts. If I've being realisitc, I'll use £10 each month for hair cut and probably spend £60 on doing things as a family. Our boy's happy just feeding the ducks on a weekend or playing in the garden. We've been spending about £10 a month for the last year, so £60 will seem like a lot! I'll also count £30 a month towards the cost of MOT/Car tax.

By my reckoning that leaves £300 to tackle the debts.

Thanks again.

Verbatim

How about presents for other people, TV licence, xmas, car maintenance, mot and tax?

Debt_free_by_2012

Have you thought of transferring some of the CC debt on to a 0% offer? I've been flogging a lot of stuff that I don't need, it gives you a bit more space as well as raising a bit of extra cash.
Good luck on your journey, I'm sure you will reach your goals!

gallygirl

gap1986 wrote: »

Natwest OD charge APR 26ish%- £28
Natwest CC (min payment) APR 17.9%- £39
Egg CC (min payment) APR 24.5%- £18
Barclaycard CC (min payment) APR 17.8%- £60
HSBC CC (min payment) - £23

Total left over to have a life/clear debts- £401

What is APR on HSBC?

Your Egg balance is the lowest, and is the 2nd highest APR. If I was you I'd clear this first - if you have £401 left you could do this within 2 months. Then you have gone from 5 debts to 4, so you have cleared 20% of your debts. Obviously not in balance terms, but it will give you a real boost and you'll feel you're achieving something. Unless the HSBC is higher, use the £18 towards the OD.

I strongly suggest you try to approach this as a challenge/game, not a struggle.

Set up a spreadsheet with lots of info & different stats. Record the total debt & each debt individually. Put in your regular payments and calculate your debt free date. Make a clear note of this. See how much you need to knock a month off it - that's your first target. If you save £3.20 by using coupons in the supermarket pay taht to a debt. Count the number of days saved, and calculate it as a % of a year. What % of your total debt have you paid off? What % of each debt have you paid off? How do you want to celebrate? Do a thermometer thingy like charity fund raisers do, with a picture of your pay off treat at the end, and record your progress towards it. Colour in squares in a spreadsheet to say HSBC etc. Fill the cells in with red. Work out how much each cell you've coloured in is worth (e.g. if 80 squares represenst £1000 then each one is worth £125.) Each time you've paid that amount off then change the colour of the cell to green/pink whatever.

That'll do on the spreadhseets I think :rotfl:.

But also look out for challenges on the debt free board, think of doing surveys at night while watching TV.

And finally - GOOD LUCK!!!!! :T:T:T

gap1986

Debt_free_by_2012 wrote: »

Have you thought of transferring some of the CC debt on to a 0% offer? I've been flogging a lot of stuff that I don't need, it gives you a bit more space as well as raising a bit of extra cash.
Good luck on your journey, I'm sure you will reach your goals!

I've had 3 late payments in the last 18 months, so I can't get any such offers I'm afraid.

Presents- I get £150 each September as a 'thank you' from work, so I buy all my x-mas and birthday presents then.

I have a warranty for the next 18 months on the car, so anythign major should be covered. That's why there's no maintenance budgeted for.

I've put aside £30 a month in my third post to cover car tax (£200 a year)/MOT (£100).

I bought a pre-paid servicing package with the car, so I've not got to account for that until May 2013. After that, I'll be having a friend service it for £50 each May.

ixia

Welcome Gap

Good luck with your debt busting and congratulations for you upcoming wedding

gap1986

Thanks Gally Girl.

I do enjoy a good spreadsheet! It should make this evening fly by!

I'll be digging out old mobile phones tonight! I've taken unwanted games to ASDA (which has paid for a pre-pay day food shop before now).

I've switched my shopping from Morrisons/ASDA to Aldi (highly recommended by the way).