Newbie - grateful for any help or comment!

deliciosa

Hi,

I just decided to register hoping that facing my debts and writing about them freely will help and who knows, someone might be able to give me advice?

I am 26 years old and have the following debt:

HSBC Credit card: £2000 (Card limit: 2000)
M&S Credit Card: £1200 (Limit: £1500)
Capital One Card £500 (Limit £500)
American Express £1200 (Limit: £1200)

I have an overdraft facility and I am in it -£30.00 at the moment but I'll get paid tomorrow... I get paid weekly and my weekly pay is £250.

So I have a debt of £4900 and I have the following outgoings:

£500 rent (monthly) (incl bills)
£95 mobile phone (to talk to my family abroad, thats why its so expensive...)
£90 monthly - travelcard

and the usual expenses. I have no savings at all..

I know this amount seems not very big to most of you but for me its huge and scary and I can't sleep because of it. And it scares me that after adding it up, I am paying about £90 monthly just in interest on all my cards...

I don't know how to start - my credit rating is very poor: I had a loan and missed three payments but then paid it off so I guess it counts as late payments, anyhow they put 3 marks on my credit rating so I cant apply for 0% cards etc.

My question would be to you, experienced people (but any other advice I would be grateful for...)

1.) how long does it take to improve the credit rating? How much damage did I do by missing payments? how can I improve it?

I already called the companies to lower my percentage but they all said no... i dont know what to do. I do not have any savings, every week I get the money, put the rent bit aside and the rest I pay it to my american express and then I spend on it (I dont use the other cards too frquently only when I cant use amex...) and i usually spend it all because thats what I use for my orange bill, travel, food anything so I am at the credit limit again before next payday...

I would be grateful for any comments, advice...

Many thanks!

Maddy

CLAPTON

first thing to do is to write out a proper SOA ...
what is your income, what exactly do you spend , what are the 'usual expenses' , what are the APRs of the debts and their minimum payments

see this for more details
http://forums.moneysavingexpert.com/showthread.html?t=107280

so for the mobile...do you have access to a landline... use there are plenty of cheap call supplies to call overseas.. look at https://www.call18185.co.uk or generally google to find cheap rates.

justruth

OK first things first, what are your usual monthly expenses, the mobile phone, even for calling abroad is high, perhaps you could find a land line cheaper or even skype? I would suggest shopping around on that one. Assuming a 4 week month so that you never get caught out, you have an income of £1000 per month. The outgoings not including debt are £685, it appears that you are spending beyond your income. How much is your debt repayment each month? I'd guess from the figures around £100 HSBC, £60 MandS, £25 Cap1, £60 AmEx? Making £245 + £685 = £930 a month outgoings. That leaves you with £70 a month for all your other usual expenses.

My advice would be to not worry too much about your credit rating at the moment. As you have made enquiries about other credit it will be 6 months before you can reapply. Perhaps you could put up a full list of where every penny goes and we could work from there. Also could you indicate the APR of the CCs and how much you pay off each month?

deliciosa

Thank you for replying so quickly!!!!

Ok, so I will look around for cheaper deals re mobile phone. I do have access to landline but I work a lot and I am hardly at home so no good....

Ok I spend about £50 a week for lunch at work and some £20 a week for other food an toiletries
I can't think of any other big payment, other than the credit cards and ocasional clothes etc - believe me i am not even a shopaholic (since I realised my debts) and only buy necessary cheap clothes and shoes...

so HSBc is £65 minimum (APR is 16.99)
M&S is about 30 (APR: 16.99)
Amex is 30 (19.99% APR)
Capital one is small, under 10... but I summed up the interests and it totals at £88 each month, just the interest...
(The Capital one APR is 29.99!!!!)

I tried to pay off about £20 extra (I know its small) a month but because of xmas I maxed out all my cards again so only the M&S I did not touch but only because I could not find it....

Thanks again for posting!!!!

deliciosa

Oh one more thing justruth said that I cant reapply for credit for 6 months - and what happens after 6 months? will i be approved?

(I madea lot of applications unfortunately, maybe more than ten even.... please tell me i did not screw up my credit score for good... )

LookingAhead

Hi there deliciosa, welcome to the forum.

Everyone is going to jump on that £50 a week for lunch at work....is that right?? Or do you mean £50 a month? I presume so! But even then that is a lot, can you take in lunch from home, as it will be £50 to throw at debt....VERY worthwhile.

You need to get rid of that Capital One card first as that is the horriblest, highest APR.

deliciosa

sorry i totally made a mistake. of course it is 50 a month!!!!! actually it is 10 a week i just said more to leave space for occasional snacks... so its maximum 50 a month. but i suppose it wouldnt be cheaper if i packed my lunch - you have to buy ingredients too!

yes that capital one card is horrid... should i pay all money i can into that one first?

thank you for welcoming me

justruth

the 6 month period is when the searches on your credit file will no longer count. If you do a lot of searches it brings your score down. I'm with looking ahead, take food to work with you, a packed lunch is cheaper and healthier (depending n what you pack). I currently live on £10 a week for food and toiletries! The old style forum has lots of suggestions for learning how to live this cheaply. If you could put that bit extra on the capital one card and next time you have a 5 friday month put all your wages on it you will feel the benefit. How much is your overdraft limit? I don't normally suggest paying off debt with more debt as it merely extends the problem rather than solving it but I'm guessing that the APR is going to be less than 29.9% in which case use that to pay off the Cap one card and pay off the overdraft when you have greater control over your money.

If you can control your spending I would suggest not cutting up the cap1 card but using it to buy food etc up to your predetermined budget and paying it off in full at the end of the month, but only do this if you know you will be careful. Then do not get any money out of the bank! It will reduce unnessacery spending, but only if you can control it.

WHat are your options for a second job?

CLAPTON

there is no real majic about getting out of debt...increase income, decrease spending and minimise interest rates.

can you increase your income...overtime, partime job?

if you can't increase your income significantly then i'm afraid you really do need to analyse all your spending.


so do the following

a. work out everything on a monthly basis ..so to convert multiply weekly by 4.33 so your income becomes 250 weekly *4.33 = 1082 monthly.

you need to do this so you can work out how much money is spare at the end of the month.

b. start a spending diary and write everything down that you spend...and i mean everything.. so this will include socialising, work lunches, haircuts, any optical/medical/dental costs, magazines/newspapers or whatever

c. think about any oneoff or annual spends...do you have any holidays ever buy anyone a present, any weekends away, any clothes...all these work out a yearly figure and divide by 12. each month you need to save the monthly sum so you have it when needed and you dont need to use the credit card.

d. simpy stop using the credit cards.. if you have no money then dont spend.

e. then repost the figures

justruth

sorry you replied as I did, to look at the order of debt repayment try snowballing. I can never get the link right

I hope it workshttp://www.whatsthecost.com/snowball.aspx

LookingAhead

Hi again.

Other forum members may have opinions which I am sure they will post but I would say yes, throw all money at the Capital One balance of £500 - and do not add to the total of course.

Then when it is gone you can pay what you do the same with the nexy highest APR card. The link justruth gave you explains it all better.

I have to say I think it was a fantastic tip by justruth to use a 5 week month to throw the extra week's money at debt. Do you think you could realistically do this?