Worried and nervous about credit card debt

ss3n08

Hello all,
I have recently started reading about your debt free posts and although I have never considered myself in debt I have hit my head against a realty wall and realised that if I am not in the black then I am in debt. So, here it goes;

Car loan - £2421.88 (from £5500.00).
Credit card - £2913.83 (interest free until April 2012)
Overdraft - £500.00
Student overdraft - £500.00 (interest free until June 2012).
Total - £6335.71

I know that this is not as much as others but it’s enough to make me worry and I do think that worry is relative to the individual.
This is my income per month;
£1200.00

These are my outgoings;
Car loan £252.58
Car insurance £57.98 (went through all the comparisons to get this the cheapest)
Pet insurance £11.84
Food £200.00
Bills/rent £175.00
Petrol £125.00
Sky £36-£38
Mobile £36.00
Credit card £100.00
Dog £30.00 (vets fees, food etc)
Works do £25.00
Savings £100.00

This leaves me with £48.60 per month which generally gets used for weddings, birthdays and of course at the moment Christmas.

I am going on holiday in January and April (both bought by other people as surprises) and have been saving for these. That means in April I will have £100.00 more disposable income per month but it also means the interest free period on my cc will have ended.

My loan is paid monthly and I have never missed a payment and the interest was set at the beginning so I know exactly what I am paying for that so I am just paying it each month. I do have some things I can probably try and sell on ebay to earn a little extra income.

TBH the thing that is worrying me is the credit card. I have cut it up but the balance just does not seem to be going down at all.

I have thought in April about getting another interest free credit card and using it just for balance transfers and putting my credit card and overdraft debt on it and paying this each month. I am not too familiar with this procedure and don’t want to do anything that will mean I end up in trouble. Has anyone else ever done this?

Sorry for the long text....
Thank you everyone

Tixy

Hi

Whilst your debt might not be as high as some, if you are worried about it then its definitely something to try and tackle (and to try to curb it now so it doesn't increase).

I see you've listed out your outgoings and that its left you with £48 but its looks like you might have some costs missing? You haven't budgeted for things like car tax, car servicing & new tyres. You need to budget for these so you don't have to stick them on the credit card when they come around next. You don't seem to have budgeted anything for clothes & haircuts etc? And does your bills/rent figure include things like your tv licence & contents insurance (or are you lodging with someone else or living with folks?)

Is you overdraft costing you each month (either interest or charges?) if so you need to budget for paying these as well.

How much do you have saved towards spending money for your holidays? Do you have enough that you could reduce the amount you are saving and put more towards your debts?

It would certainly be worth trying to get a new 0% balance transfer card in April if you are able to (they are getting harder to get than they used to be). Who is your current credit card with? you'd need to make sure you applied to an unconnected card issuer to be able to do a transfer. Most new cards won't allow you to transfer from your card to your overdraft - only a few specific cards allow this, listed here - http://www.stoozing.com/sbt.php

If you wanted to look at other areas you could perhaps make savings - could you consider ditching SKY or dropping to the basic package? If £200 food is just for you then it should be possible to easily reduce this by £60 a month. There are people who can manage on around £80 per month (although it takes some effort), but would give you a potential saving of £120 a month.

ss3n08

Thank you Tixy,

I changed my internet provider yesterday to primus which will save me £24.00 a month (yippee).

The £150.00 does include everything as I live with my gran who has alzheimers.

My car tax is just £20.00 a year and I replaced my tyres in April just gone so I suppose that would be another £17 per month to add but I did just pay for these outright.

My holiday is a sort of once in a lifetime thing so I would like to go with as much as possible, I currently have about £800.00 but you are right I could probably stop that and use the £100.00 towards the credit card.

TBH I don't really get my hair cut, maybe once a year through groupon when its really cheap or at the local college and I haven't been buying clothes because I seem to have enough for the time being. I am not buying any more toiletries until I have used EVERYTHING and the same with loo roll, washing powder and other non perishables I feel I need to collect and store.

My overdraft is costing me £6 a month (I did manage to pay it off once upon a time) but I took this into account with my earnings because I would actually be earning £1206 but £6 comes out immediately for charges on the overdraft.

I completely agree on the food, I don't know how or why it is so high because I take my own lunch to work (sadnwhich, crisps, biscuit, apple and bottle of water). I do do one big shop at the beginning of the month to cover the whole month (Butchers Block and Tesco) but no matter whether I try to buy as I need or meal plan, it always seems so high.

ss3n08

I think my problem is that I get a bit over enthusiastic about clearing debt and don't actually leave myself enough for the rest of the month. I need to strike that balance.

EssexHebridean

Hello - well done for deciding to sort this before it becomes a major issue. can I also say you have my admiration for looking after your Nan. Altzheimers is a wicked a cruel disease - treasure her lucid moments and make sure that you imprint those, not the less good stuff, on your memory for later.

Re the food - I assume you have access to a freezer? If so then you could batch cook and freeze - this will bring the cost of individual portions down as you'll be buying ingredients in greater bulk. Think about what branded goods you buy and consider where you can drop a level on those. You say you do a big shop at the beginning of the month - but I take it you also pop into the supermarket during the month as well for fresh goods - I wonder if like most of us you have fallen into the trap of "just popping in for milk" and coming out with £15's worth of shopping? If so that's negating the idea of doing the "stock up" shop. What I now do is shop weekly, but with the occasional bigger shop to take account of stocking up with bits. If I get one of those "£3 off when you spend £20" vouchers, then I make sure I spend the level to make the savings. ALWAYS use those - it's free food, so think what you need to stash to make use of it.

Is your mobile on a contract? If so, can you drop the level of the contract to make a saving, or are you tied in? If not tied in, consider PAYG - Tesco mobile for example will treble your top-up - so putting on £20 in a month earns you an additional £40 free. They also offer call and text bundles which I find useful, and internet bundles too if you use that. I put on £10 at a time, make use of the trebled credit for the month it's valid, then the next month just spend £5 of the credit on a text bundle - so my monthly spend on the phone is actually no more than £5.

With the holiday savings, why not compromise and put £50 of what you have been saving towards getting that overdraft gone in the first instance.

You said that the credit card balance doesn't seem to be going down - is that just your perception though? As it's interest free there shouldn't be anything being added on, and you know you're not using the card, so grab the statement (or look up online) and check. I suspect you'll find it IS going down, it's just "big numbers" and as a result is scaring you.

Car spends: Open yourself an online savings account and start sticking £5 per month in there in the first instance. As and when you can increase that then great - to give you an idea we budget £137 per month for two cars - both small diesels so cheap tax, but that accounts for everything else pretty muich. Mine's got an MOT this month, and will then need two tyres - the relief of knowing that money is there is huge. Remember also, tyres don't just need replacing because of wear - what if you run over a nail and have to replace one unexpectedly? Hopefully my figure gives you an idea of what is realistic there though.

Try setting yourself specific budgets and sticking to them - I use online savings accounts to budget for everything - I currently have one for my tax (I'm self employed), one for holiday, one for the cars, one for household stuff, an ISA, and the entertainingly names "FUN!!!" account! That's as well as my account, our joint account, and a tesco Clubcard plus that's used for food spends.

Good luck - you can do it!

MrWillyWonka

You put £100 a month towards savings. Is this a savings account or for your holiday?

Because if it's for the former then you would be better off putting it towards your cards.

Also, I know you are keen on clearing your overdraft but charges at £6 a month you would probably be better off clearing the credit cards first. However do bear in mind that the banks can ask for your overdraft balance to be paid back at any time - unlikely to happen though.

Cut the sky (~£450 a year!) and you will get there eventually, good luck

ss3n08

I really am just saving for the short run. I didn't want this holiday but it was bought for me. I think your right though, I have enough ins avings and the rest now can be used towards clearing cc.

I think its a but harsh to say someone in my financial position shouldn't be looking after a pet. FYI it's actually my nan's and without her my gran would be a lot lot worse. The dog means everything to her, I can't just get rid of her. No matter how bad things were getting rid of the dog is NOT an option.

The overdrafts I know are okay its more the cc. I still have 5 months interest free to pay some off and then perhaps shift the balance.

The £5 a month sounds like a great idea and not something I had thought of before. It would certainly reduce the pain of the MOT month!

AngryDog

Your car loan repayments are quite large for such a small loan? I am assuming it will be paid off in around a year? At which point you'll also have an extra £252.58 to pay against debts.

AngryDog

there is nothing wrong imo of someone being in debt and owning a pet. I had my pet before my financial difficulties and couldnt be without him now. He costs me less than £25 a month which I actually use as part of my own food budget anyway. He eats before I do.

ss3n08

AngryDog wrote: »

there is nothing wrong imo of someone being in debt and owning a pet. I had my pet before my financial difficulties and couldnt be without him now. He costs me less than £25 a month which I actually use as part of my own food budget anyway. He eats before I do.

Thanks angry dog, I felt that was a bit harsh.

Yes my car will be paid off by about September (2 year loan) which will free up about 1/5 of my pay and things will get cleared very quickly then. I am worried about the period April to September really.

ss3n08

Boris_Allen wrote: »

Pet Insurance? Vet Bills? Really....?

I don't think someone like you in your financial situation should be looking after a pet.
Also, you don't need Sky...FACT!

Finally, why on EARTH are you depositing savings when you have higher APR (compared to savings interest rates) debts to repay??? Pay off the debts first before you save for goodness sake!

I have changed from Sky yesterday, I was lead to believe by them that I could not leave due to needing a new line instillation which I am having done for free by Primus. All mentioned in my first post.

I have no interest at the moment and am saving for a holiday. I am not saving for a rainy day, I am aware that once I have been on holiday this money will go towards paying debts in April. Plus, as previously mentioned, I probably have enough for my holiday now so this will go towards cc. Can you please read the posts before you jump down my throat?!