New member SOA and advice needed!

holeinmypocket_2

Hi all,

Have been looking on MSE for ideas on how to manage and sort my debts, as I am paying them back OK - but think I could probably not have to pay so much interest.

My SOA is as follows, which I have worked out on the budget tool on here - (very useful!)

Income (salary) £1297.25 per month after tax
Occasional additional work for ex-employer approx £100 per month when spread out over the year!

Outgoings:
Credit Card (monthly min) £86.00 - with bank at the usual 15.9% apr - oustanding balance £2894

Graduate loans - £330.31 per month - total remaining to pay: £10374 - apr 7.9%

HP agreement on PC (my very own stupid fault - will never buy anything on a HP agreement like this again!) £51.81 per month: left to pay £880.77

Rent: £275 per month - and this is mate's rates in London so not a lot of room for improvement there!

Mobile: £30 per month, I don't pay anything towards the landline at home
Gas and leccy: £15 per month and a landlady who refuses to change from British Gas
Internet: £8 per month
Food: £100 - £150 per month
TV licence: £0 - included in rent
water: £0 - inlcuded in rent
Bike insurance: £25.83 (I pay annually, but this is what it is divided by 12)
Petrol: £5 per week
Annual road tax: £35
Servicing: £200 to £250 per year
Public transport: £10 per month

I think that covers everything. I am not living outside of my means (e.g. there is more coming in each month than going out by about £122), but I would like to see if there is any way of cutting down my interest. At the moment, I am putting approximately £100 per month aside so that I can use it to start paying off more of my credit card bill and then other debts later on.

I was hoping to look at a DMP, but when I went to the CCCS online, I also entered my student loans (another £10,000). However, I am not paying them back at the moment, as I am one of the slightly luckier people on the old student loans system, where you don't start paying them back until you are earning a certain amount each month, and I have so far been below that bracket since graduation. I am hoping to get a salary increase in the not-too-distant future and will therefore probably look at the DMP option again, as the student loans will have to start being re-paid.

Because I noted them on the CCCS application though, the amount they suggested I re-pay on the DMP was higher than what I am paying out each month now, which seems a bit like shooting myself in the foot - or am I just being short-sighted here? Bearing in mind that the student loans are on an annual apr of 2.6%, it seems silly to start paying them back through a DMP when I could divert the money towards one of the more expensive debts.

I have tried moving to a 0% deal on the credit cards, but have been rejected by Virgin and am now a little scared to apply to any more companies. I think I need to look at my credit rating as well, to see where the problems lie on here: how do I go about doing this?

Any pearls of wisdom would be gratefully received. I am aware that at the moment, my living circumstances (mainly such cheap rent) are going to be nigh-on impossible to find again, and therefore my outgoings will go up once things change on this front - and that change will happen in 18 months time, so I would really like to be in a much better financial position by then!

Many thanks,
Holeinmypocket

CLAPTON

firstly a DMP is for people who can't pay the minimum amount on their loans. it results in your debts being defaulted and your credit record will be trashed.
why do you feel you want one, you can easily afford to pay your debts.

secondly you say you are putting aside 100 a month. why not use this now to pay off the highest APR debt. it will reduce the interest you are paying so will enable you to clear the debt quicker.

check out your credit file, but a couple of CC applications wont hurt your credit rating all other things being ok (you are of course on the electoral roll)

holeinmypocket_2

Hmmm - that's interesting. I was looking at the DMP option because that is what CCCS suggested when I filled out their forms. However, from what you have said it does seem like the wrong way to go.

I will be using the £100 pm to start paying off the credit card more first - well, that is the plan anyway. Getting rid of that debt will be a big relief.

Has anyone got any ideas on getting rid of the HP remaining debt as well. I have been paying it off for 31 months now and have another 17 to go. It is with HFC. Is there a way of paying these off early, or do you just end up paying even more over the odds in early payment penalty charges. I have found the paperwork, but it really does not explain anywhere about early payment. I suppose I can always give them a call on Monday to find out. The interest on this is higher than the credit card though.

Just looking at the budget and setting all of this out has been a big help - it has got it all clear in my head!

holeinmypocket_2

Oh and yes - definitely on the electoral roll

CLAPTON

just a few other points

when working out a budget etc its really good to add up the figures so you can see the wood for the trees

so add up the income

add up all the spending (but not including debt repyment)
(take sure all the spending is expressed monthly so divide yearly figures by 12 to get a monthly figure; you need to save up each month so the money is there when needed and you dont have to use credit to pay it off)
( so rather than servicing 240 per year say 20 per month and of course save the 20 each month)

the look at the difference income - spending = amount you can use to repay debts

then look at the debts and add them up so you can see

debt total and minimum monthly repayments.

then you can see how much surplus you have to use to 'snowball' the debts i.e. how much to pay on the highest APR debt

in your case maybe you should get a settlement figure from your HP provider to see how much you would need to clear the debt but sometimes it its worth doing.


also your budget seems to have some thing missing e.g. you have nothing in for socialising, clothes, holidays/weekends away, haircuts, magazine/newspapers, work lunches, presents/xmas expenses, any hobbies/activities?
try keeping a spending diary..write down everything you spend and you may be surprised where the money goes.

anyway with your relatively low outgoings you are in a good situation to hammer those debts.