Clearing debts faster when on benefits?

Loadsabob

Hello,

I wonder whether anyone has any tips to share with my boyfriend. He's on Housing Benefit and Disability Living Allowance, and has been clearing student debts since 2000. Not the Student Loan - that can wait.

He's been clearing an overdraft, and credit card balance, both with Halifax. He's superb at budgeting, and is diligent at repaying both, and lives very frugally. But as his payments are relatively small, the interest on each is ensuring the debt takes a long time to clear. In fact, he's looking at three more years to clear remaining balances of around £500 on the credit card, and £1500 on the overdraft, and those are relatively small amounts, really.

Each month he pays £11.00 off the Visa, of which about half is interest, and he pays £56 off the overdraft, of which £17 is interest. (We need to check the exact rates of interest he's paying)

It makes me fume that so much of what he's paying back is interest, but I know that's just the way it is.

But I guess the thing is that being on benefits, with no income (salary, anyway), he can't move the debt of either to a 0% anything? That would be such a help, as his repayments at the current levels would then clear more of the debt each month. I'd love to be told otherwise - if anyone knows anything?

Of course Halifax keep upping all his limits, because he's still in debt after 6 years, and they'd love him to spend more. They also junk mail him numerous credit card offers, but surely he'd be turned down for any 0% card they'd mailed him with?

I just hate that he is so diligent, and STILL looking at another three years of living so frugally - it seems criminal! At the same time, he's dealing with depression, which he also deals with admirably and pro-actively.

I had suggested I pay a chunk of the credit card debt to reduce the repayment time, but it only altered things by about 5 months...I don't think I can get a 0% card myself and do a balance transfer to a card/account not in my name (but in his), can I? And he's very independent, so doesn't like to accept help from me very much, though appreciates that this all has a knock-on on the things we can do together, when I earn a reasonable salary and could afford for us to do more than he can.

We live separately, but I'd love to find a way of him getting clear of this more quickly. He's looking at his food budget, which is fairly high (he's careful to ensure he eats foods which help fight depression, and he eats a great deal of fresh fruit and vegetables; he doesn't buy processed foods, cooks from scratch. But his entertainment / clothes type spending is really minimal.

Thanks for any thoughts...

poorbutrich

Is he likely to be able to work again in the future? Perhaps that would act as a light at the end of the tunnel?

Loadsabob

Hello - yes, he hopes to be able to work again as soon as possible, but at present his time and energy all go to staying on an even keel with his depression, which he does receive regular NHS support with. So though his goal is to get "back to normal" as he puts it, he can't put a date on when he might be in a position to work, without his health going backwards...

It just occured to me that if the overdraft interest rate is more favourable than the card one, he could write himself a cheque from the bank account to clear the credit card...possibly!

all_hours

Hi

Even if he gets a 0% card with the Halifax they might not let him do a transfer from another halifax account.

He could apply for a different card they can only say no and nothing is lost.

It might be better if he tried for a low life of balance card as, if he was successful, once the transfer is done he doesn't have to keep applying for new cards.

You could do his SOA for him and post it to get opinions on where he could cut back. See southernscousers sticky thread for a template.

Does he have anything to sell on ebay?

Is he getting all the benefits he's entitled to?

poorbutrich

Has he talked to the credit card companies to explain the situation? Would it be worth asking them to freeze the interest, or at least lowering it for the moment?

all_hours

Loadsabob wrote:

It just occured to me that if the overdraft interest rate is more favourable than the card one, he could write himself a cheque from the bank account to clear the credit card...possibly!

Yes definitely find out the APRs and limits for the card and OD.

OberonSH

Personally I'd approach the banks etc that the loans are with and ask them to freeze the interest under the circumstances. They're usually happy to do this from what other people have said. Especially as he's paid the minimums etc.

Loadsabob

Thanks all_hours,

he has a couple of small things he may be able to sell on ebay - he rents a room, so doesn't have a great deal of "stuff", as no space for too much.

I will check the benefits situation, but I think he's getting everything he can.

Thank you for pointing to the sticky, I'll have a look. There's really very little to cut back on though...he gave up smoking four years ago, hardly drinks, doesn't run a car, we don't take holidays (other than visiting people)...but I will take a look!

Much appreciated, thank you.

all_hours

I agree with the others that asking the cards to freeze the interest would be a good idea. Now I think about it, most cards have a 'must be working' and a minimum income requirement.

Small things like bringing the electricty bill down by a few £ a month, reducing his food bill by a few £ and using money off vouchers where possible would add up.

Loadsabob

Thank you - yes, he's consistently paid over the minimums since day one, to try and clear it faster and not be too stuck in the interest trap. He also clears extra if he finds himself having underspent at any time.

Thanks for your response, this is very encouraging. It may seem obvious simply to ask for the interest to be frozen, but it hadn't occured to me, and might surprise him, too! Certainly worth a try.

OberonSH wrote:

Personally I'd approach the banks etc that the loans are with and ask them to freeze the interest under the circumstances. They're usually happy to do this from what other people have said. Especially as he's paid the minimums etc.

Loadsabob

all_hours wrote:

Small things like bringing the electricty bill down by a few £ a month, reducing his food bill by a few £ and using money off vouchers where possible would add up.

Yes, we're keeping our Tesco Clubcard vouchers for next Christmas, though we don't go mad on spending then, but that will help. He's actively looking at every aspect at the moment to see if there's anything else...utilities etc are all included in his rent.

He's remarkably upbeat about this, because though it drags on and on, he's reducing it bit by bit, has passed the mid-point, and feels very on top of his budgeting...so that's all good!

Thankyou!