payplan or snowball?

jackied_3

Hi all

I have been sorting through my finances and i think i had what you call a light bulb moment about two weeks ago and decided that the time if right to get a handle on this. I have been looking around this site for a while so first of all i tried the 0% balance transfer options and managed to do this with a halifax one card with the intention being to do it again. Unfortunatly my credit report is very poor and i havent managed to get a new card to transfew onto again and have actually spent on this card and now find myself in more of a mess that i was before.
My SOA is....

Income
Wages £950
Sons board £120 plus £53 towards his car insurance

total 1123.00

Outgoings


House insurance £15.54
Poll tax £80.00
Power £75.00
TV licence £10.49
Car insurance £86.88
Car payment £80.00
Phone £28.00
Mobile £20.00
Marshall ward £67.53
Mum Nat west £110.00 (mum took this loan out for me and i pay her back)
Halifax card £33.73 (owe £1,700)
Barclaycard £15.98 (owe £639)
Westcott £42.50 (owe £900)
Mackenzie £10.00 (owe £2,850)
Bucannon £30.00 (owe £1,310)

Total £705.85

which leaves £417.15 for shopping, petrol savings ( i have just opened a savings account to put some of this extra money to good use)

Wescott, makensie and Bucannon are debt collection agencies i have been paying since a partner split up a few years ago and i couldnt maintain the payments so there is 0% interest rates on these three.

The main concerns are the marshall ward, halifax one and barclaycard payments which are costing me.

I have just done a snowball calculator which tells me to pay of the highest interest rate first which is Marshall ward seems like a good plan but will take me 3 years.

I have also applied with payplan who have accepted me and they could make me debt free in 14months but i will not have the excess money to save as they use it all to pay of the debts.

I read on here that saving isnt the best thing to do and that paying of the debts is a better way but right now im stuck between the two options and am wondering which is the best for me to take?

I wonder if i go with payplan and end up with no money at all to pay for things like the odd night out or clothes etc i will get disheartened and lose hope but with the snowball i will still have a little money to play with at the end of each month.

Any help would be appricated
Thank you

Toomuchdebt

I would pay off the debts-there's no point having savings when the interest rate on the cards is more than you would be getting in savings anyway.

iceicebaby

Pay off the debts for definate. The interest you are paying on the debts is higher than any you would get in a savings account. Pay off the debts first and then think about saving when you are debt free.

jackied_3

Thanks toomuchdebt have you tried payplan or snowball?
I like the payplan option but when i did the calculator some of the debts were only going to be paid about 7p, it said pro rata but i wasnt sure what this meant?

The debt collection agency ones wont like that i down my payments to 7p and they will take me to court and im scared of this happening whearas the snowball option keeps me paying my minimum payments on all and just firing extra money at the main three. This way as the savings build up i can grab a chunk and chuck it at one of the big ones every now and then while still following the snowball but i dont know if i will have this option with payplan?

jackied_3

sorry ice didnt see your reply when i posted mine.

CLAPTON

without seeing a full SOA its not really possible to fully comment.

at the moment you seem to be able to pay all your debts so i dont really understand why payplan are recommending a DMP... am i misunderstanding the situation?

jackied_3

Sorry what have i missed of my SOA i thought i covered it all, let me know what else you need to see and i will post it.

I was suprised to see that payplan accepted me to be honest as i thought i had to be struggling to pay my debts but i filled in the questions they asked and they mailed me to say they would take me on and when is best time for them to call me? Maybe when i have spoken to them they will reaslise and turn me down.

I am managing to pay all my debts at present but i want to be debt free as every month i end up skint and get so depressed that i have no money left for anything. I need so many things at home, washer is broke, bed has springs shooting through etc so i want the extra cash to buy things with which is the main reason im looking at ways to get out of debt not that i cannot manage cause i have been for the past few years im just sick of being in debt.


total debts add up to £13,064 forgot to mention that the 'mum' one is owing £5000

CLAPTON

by a full SOA i meant a budget you can live on for a least a year

so you would need to identify all the things you will spend over the next 12 months in the monthly budget

e.g you have a car so you will have to pay car tax sometime so you need to show and save an amount each month so you have the money when you need it.
similarly you have to allow for clothes, car servicing,MOT, RAC/AA, you need to show seperately food/groceries, petrol and i see no mention of rent /mortgage, are there any dental/optical/medical costs. and you need some allowance for going out and a modest amount for present and xmas

only when all those have been added is it realy possible to see how much is left to pay the debts.

jackied_3

Thanks Clapton i shall work it all out tonight and post it tomorrow

As for rent/Mortgage i dont pay either of these as i live in tied accomodation so my rent of £2,500 a year is already deducted from my wages before i get it therfore the money doesnt go into my income nor does it come out of my expenditure, same with the water rates

Right off to get pen and paper as my son has pushed me off the pc so he can chat to all his friends.

thanks for all the help so far

jackied_3

HI again
Here is a full list of my expenses, i think i have covered it all

Income
Wages £950.00
Sons board £120.00
Sons Insurance £53.00
Total incoming £1123.00

Outgoings

Powergen £75.00
House insurance £15.54
poll tax £80.00
Tv licence £10.49
car insurance £86.66
Car payments £80.00
Phone/ broadband £28.00
Mobile £20.00
Lottery £16.00
Shopping £150.00
Cigarettes £30.00
Going out £50.00
Clothes £20.00
Petrol £30.00

Total £691.69


Marshall ward £67.53
Halifax card £33.73 owe £1,700
Barclaycard £15.98 owe £639
Westcott £42.50 owe £900
Mackenzie £10.00 owe £2,850
Bucannon £30.00 owe £1,310
Loan to mum £110.00
Total debts £309.94

Annual Expediture
Christmas and birthdays £420.00 Monthly £35.00
Mot £50.00 Monthly £4.17
Hair cuts £60.00 Monthly £5.00
Car tax £110.00 Monthly £9.17
Summer holiday £780.00 Monthly £65.00
Need to save £118.00 per month for these above

Total outgoing £1119.63

Leaves £3.37




I have changed my payments to reflect what i will be paying if i use the snowball, at present i pay the minimum payments on all but will be changing that of this month

bank_of_slate

Hi Jackie,
welcome to the dfw family!

The advantage of using Payplan is
1, You will get accurate, impartial professional advice
2, They can often freeze the interest on the amounts you owe
3, They can deal with the companies on your behalf which reduces hassle for you
4, They understand that you still nees enough to actally live than just existing and worrying every month.

At least get their full advice before making decision.

Are you sure that you have the cheapest gas, electric, insurance etc?
Use this site for advice about saving in all areas
...Linda xx