In debt and need HELP!

emma2105

Hi,

im 21, my credit rating according to creditexpert.com is 860 (fair). i have a credit card with Capital One with £1000 on it. A credit card with Aqua with £300 on it. I have a gold bank account with LTSB and i am £3000 overdrawn. I have a Next account with approx £600 on there. I have a car on finance, a phone, gym membership as well as a few other direct debits.

I dont miss any payments on any of my cards, my car, any of my direct debits etc.

Basically me and my partner are starting to look at moving out and mortgages etc within the next year or so. So, i really need to get all my debt cleared and my credit rating back up.

Please advise me as to what i can do to help myself!!!!

thank you!
Emma

Tixy

Hi emma and welcome

First you need to work out a budget to see how much you have coming in and going out each month so you can work out how much you should have spare for debt repayments. You'll need to look at what APRs you are paying on all your debts so that you can make sure you tackle the most expensive debts first, and therefore reduce the interest you pay.

I'd suggest you start with completing a statement of affairs with all your info, that should help you see how long it will take you to clear your debts and then how much you'll be able to save towards a house deposit - we use this calculator - http://www.makesenseofcards.com/soacalc.html when you fill it in try to budget for every expense, even those you don't incur every month (so for car tax put in 1/12 of the annual cost in your monthly budget, and do the same for things like clothes, presents, haircuts etc)
If you post the SoA results on here people should be able to advise if there are others things you can do to improve your finances and get you debt free quicker.

As to your credit rating - well don't worry too much about the score, most people consider it pretty irrelevant as nobody ever sees it but you, but it is worth looking at your credit file main data to see what is on there. Being in your overdraft every month will be seen as a negative, as is pnly paying the minimum payments on credit cards/store cards etc. So if you keep up with payments, and pay off your debts your credit report will start to look better.

emma2105

thank you! im going to do the calculator just now and will post the details.

thanks
Emma

emma2105

Right my results are as below! please help me and add comments and advice where ever possible:

[tt]Statement of Affairs and Personal Balance Sheet
Monthly Income Details
Monthly income after tax................ 1330
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1330
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 335
Rent.................................... 100
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 52
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 50
Clothing................................ 50
Petrol/diesel........................... 120
Road tax................................ 30
Car Insurance........................... 82
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Overdraft Interest LTSB account average. 20
Love Film .............................. 5
Credit Expert........................... 15
Car Gap Insurance....................... 32.83
ICS..................................... 32
Gym..................................... 48
Total monthly expenses.................. 971.83

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 16000
Other assets............................ 0
Total Assets............................ 16000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 21000....(335)......11
Total secured & HP debts...... 21000.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Capital One CC.................1000......32........39
Aqua...........................300.......15........39
overdraft ltsb.................3000......15........16.9
Next Account...................600.......65........NaN
Total unsecured debts..........4900......127.......-

Monthly Budget Summary
Total monthly income.................... 1,330
Expenses (including HP & secured debts). 971.83
Available for debt repayments........... 358.17
Monthly UNsecured debt repayments....... 127
Amount left after debt repayments....... 231.17
Personal Balance Sheet Summary
Total assets (things you own)........... 16,000
Total HP & Secured debt................. -21,000
Total Unsecured debt.................... -4,900
Net Assets.............................. -9,900
[/tt]

Tixy

Hi

Well the good news is you should have quite a bit of money to put towards your debts each month, the not so good news is that some of your debts are really expensive.

Do you currently live at home and the £100 is board to your parents?

Your SoA says you should have £270 left each month after paying minimum payments which you should be able to use to make extra payments? does this feel about right? do you know what its been spent on in the past?

If you do have £358 to put towards your debts each month (and don't spend anymore on them) then you would be debt free in 16months (excluding the car). If you want to clear your debts quicker than that then you would either need to try increasing your income or often easier is decreasing your outgoings.

Your major outgoing is obviously your expensive car, which is costing you a big chunk of your salary each month. Obviously as its worth so much less than you owe on it you don't really have an option to do anything about this at the moment. I guess you just need to try to cut back in other areas where you can to work on bringing your other debts down.

I've put some comments below.

emma2105 wrote: »

Right my results are as below! please help me and add comments and advice where ever possible:

[tt]Statement of Affairs and Personal Balance Sheet
Monthly Income Details
Monthly income after tax................ 1330
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1330
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 335
Rent.................................... 100
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 52 are you in contract still? how long for? if in contract see if you can drop to a cheaper package, if not shop around for a cheaper deal (should be able to get a good package with almost unlimited everything for about £30).
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 50
Clothing................................ 50 you could try reducing this to put more towards your debts.
Petrol/diesel........................... 120
Road tax................................ 30
Car Insurance........................... 82 how long have you had the car? do you have any no claims? at renewal make sure you shop around for the cheapest deal.
Car maintenance (including MOT)......... 0 probably need to budget for tyres and servicing each year even if you don't need an MOT yet.
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 you need to budget for this - try to work out what you spend over a year on presents
Haircuts................................ 0 nothing here? do you cut it yourself?
Entertainment........................... 0 is this realistic to spend nothing here? if not set yourself a budget you feel you can stick to.
Holiday................................. 0
Emergency fund.......................... 0
Overdraft Interest LTSB account average. 20
Love Film .............................. 5
Credit Expert........................... 15 personally I would cancel this, and just get your £2 file every 6months or so.
Car Gap Insurance....................... 32.83
ICS..................................... 32 what is this?
Gym..................................... 48 do you use the gym? are you in a contract?
Total monthly expenses.................. 971.83

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 16000
Other assets............................ 0
Total Assets............................ 16000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 21000....(335)......11
Total secured & HP debts...... 21000.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Capital One CC.................1000......32........39
Aqua...........................300.......15........39
overdraft ltsb.................3000......15........16.9
Next Account...................600.......65........NaN
Total unsecured debts..........4900......127.......-

Monthly Budget Summary
Total monthly income.................... 1,330
Expenses (including HP & secured debts). 971.83
Available for debt repayments........... 358.17
Monthly UNsecured debt repayments....... 127
Amount left after debt repayments....... 231.17
Personal Balance Sheet Summary
Total assets (things you own)........... 16,000
Total HP & Secured debt................. -21,000
Total Unsecured debt.................... -4,900
Net Assets.............................. -9,900
[/tt]

I think there are some areas you could look to make cutbacks - its all about how much you want to pay off your debts and move out compared to if you are prepared to give things up. The other option would be to try to increase your work - can you do any paid overtime? could you look to get a second job at the evenings/weekends perhaps? Have you anythings you could sell to raise some money towards your debts? old clothes or phones, cds, games etc?

emma2105

Hi,

yes this is correct the £100 goes to my mum as i live with her.

I think in all honesty that spare money just goes on rubbish like food, clothes - wasted to be honest.

i am good and when i get paid i allocate all my moneys everywhere and then put "spare" money into my current account and then "live" off that.

i think now what i should do is allocate my money everywhere for the minimum payments. Then draw out money for petrol, food etc for the month and then no touch my bank account. That way the spare £270 can be allocated to my debts at the end of the month? do you think this is sensible?

Also which debt would you say i should tackle first? or shall i tackle them all proportionatly each month?

My car is a big expenditure but a month months ago i changed cars which enabled me to SAVE £200 a month!! and at least £150 a year due to reduction in road tax so at the moment im in a better situation! explains how i got to be in so much debt!!!

thank you for your advise.

RAS

You pay off the highest interest cards first - see the snowball on www.whatsthecost.com

emma2105

JUST SEEN YOUR COMMENTS! I HAVE COMMENTED BELOW IN CAPITALS.

Mobile phone............................ 52 are you in contract still? how long for? if in contract see if you can drop to a cheaper package, if not shop around for a cheaper deal (should be able to get a good package with almost unlimited everything for about £30). - AM IN CONTRACT YES, IS AN IPHONE 4 I WILL PHONE MY COMPANY AND TRY TO REDUCE IT BUT I THINK AS I HAVENT BEEN IN CONTRACT FOR A YEAR YET I MAY NOT BE ABLE TO REDUCE IT! GOOD POINT THOUGH AS I CURRENTLY HAVE 1200 MINUTES A MONTH BUT RARELY USE 500!!
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 50
Clothing................................ 50 you could try reducing this to put more towards your debts. - ADDED THIS IN BUT RARELY SPEND A WHOLE £50
Petrol/diesel........................... 120
Road tax................................ 30
Car Insurance........................... 82 how long have you had the car? do you have any no claims? at renewal make sure you shop around for the cheapest deal. - I RECENTLY RENEWED IN SEPTEMBER AND THIS WAS £650 BUT AS I DIDNT HAVE MONEY ON MY CREDIT CARD I COULDNT PAY IT OFF AT ONCE SO HAD TO SUFFER THE INTEREST BY GOING MONHTLY.
Car maintenance (including MOT)......... 0 probably need to budget for tyres and servicing each year even if you don't need an MOT yet. - MY CAR IS BRAND NEW AND SERVICING IS INCLUDED FOR 3 YEARS, ALSO UNDER WARRANTY. ONLY PLAN TO HAVE THE CAR FOR TWO/TWO AND A HALF YEARS SO TYRES ETC SHOULDNT NEED REPLACING. (JUDGING FROM PREVIOUS CAR I HAD) - I MAY START LOOKING AROUND FOR OTHER DEALERS TO SEE IF I CAN GET A CAR ON A LOWER MONHTLY FINANCE PAYMENT AND THEN BUY THIS CONTRACT OUT, IF THE FIGURES BALANCE!! CURRENTLY HAVE A BMW SO THIS IS WHY IS EXPENSIVE.
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 you need to budget for this - try to work out what you spend over a year on presents - GOOD POINT!
Haircuts................................ 0 nothing here? do you cut it yourself? - RARELY HAVE HAIRCUT AND WHEN I DO ITS BY A FRIEND SO IS REALLY CHEAP, I SUPPOSE I SHOULD FACTURE IN AROUND £12 A MONTH FOR HAIR DYE THOUGH.
Entertainment........................... 0 is this realistic to spend nothing here? if not set yourself a budget you feel you can stick to. - THIS WOULD I SUPPOSE CROSS OVER WITH THE £50 FOR CLOTHES IT WOULD BE SPLIT BETWEEN CLOTHES AND ENTERTAINMENT.
Holiday................................. 0
Emergency fund.......................... 0
Overdraft Interest LTSB account average. 20
Love Film .............................. 5
Credit Expert........................... 15 personally I would cancel this, and just get your £2 file every 6months or so. - I HAVE TRIED TO LOOK ON THE WEBSITE AND CANT FIND HOW I DO THIS SO I WASNT AWARE I COULD! WILL DEFINITLY DO THAT NOW THOUGH! I SIGNED UP AS A FREE MONTH TRIAL AND STUPIDLY FORGOT TO CANCEL, OBVIOUSLY A GOOD MARKETTING PLOY THERE!
Car Gap Insurance....................... 32.83 - THIS IS DUE TO END JUNE 2012
ICS..................................... 32 what is this? ICS IS HOME LEARNING FOR AN ACCOUNTING A LEVEL. THE COURSE COST MONEY AND I CHOSE TO PAY IN MONTHLY INSTALLMENTS, THIS IS DUE TO END IN A COUPLE OF MONTHS.
Gym..................................... 48 do you use the gym? are you in a contract? - YES GYM IS A 12 MONTH CONTRACT AND YES DEFINITLY DO USE THE GYM REGULARLY.
Total monthly expenses.................. 971.83

emma2105

so i should pay my credit cards, Aqua and capital one and then focus on my overdraft?

for my capital one at the moment im paying the minimum payment of approx £32 and every month this makes no dent in my debt on the card, literally all interest.

RAS

emma2105 wrote: »

so i should pay my credit cards, Aqua and capital one and then focus on my overdraft?

for my capital one at the moment im paying the minimum payment of approx £32 and every month this makes no dent in my debt on the card, literally all interest.

Both these are 39%. At that rate if you pay the minimum you will never pay off the debt; in fact if the minimum is set too low, your debt will increase even if you pay the minimum. 3% monthly minimum is roughly 36% per annum which is why these guys love you.

emma2105

very true! i have managed to stay a few pounds below my maximum so far.