Help with debt (detailed info enclosed)

I'm looking for some debt advice.

I have about £25,000 debts on credit cards and £3,500 on catalogues (details below):

CARD BALANCE LIMIT
Alliance & Leicester £1,700 £3,000
Barclaycard £3,100 £3,550
cahoot CC £3,750 £5,750 (I have a current account with cahoot too)
Capital One £3,600 £4,000
Egg £5,550 £6,500
MBNA £5,600 £8,400
Morgan Stanley £1,500 £2,600
Tesco CC £0.00 £750

CATALOGUE
Freemans £700 £800
Kays £2,500 £3,200
LX Direct £200 £1,400


My outgoings are pretty high (though I've cut down everything that I think I ca), but this is mainly down to the CC repayments I have to make (thankfully I have no car, but this is very limiting atm):

Outgoings:

CARD MIN. PAY. INTEREST
Alliance & Leicester £25 £21
Barclaycard £70 £40
cahoot CC £80 £40
Capital One £120 £21
Egg £125 £65
MBNA £75 £70
Morgan Stanley £40 £20
Tesco CC £0 £0

CATALOGUE
Freemans £45
Kays £80
LX Direct £58

Internet £22.50 (Freedom2Surf)
Mobile Phone £33 (Singlepoint) (I use the phone over the BT landline as I have 200 mins free a month)
Council tax £76
Phone £10 (BT)

Electricity £23 (Southern Electric)
Gas £12 (Southern Electric)

Rent on house £535

Groceries and others £245

Accountants fees £105


I pay the catalogues, the majority of the groceries and other payments via my credit cards and use the CC where possible so I have cash available to pay the repayments (is this a backwards logic?). As I am self-employed I am claiming any expenses to do with the house (technically my second home with my parents being my first home 100 miles away from work). So the Internet rental is on my company credit card (Company Barclaycard), the utility bills and council tax are paid direct from my business current account (free charge account from Abbey)

I've chosen to be self-employed as I was a contractor and was told that I could be financially better off being my own limited company, which was just about right. So my income is fairly good at the moment (though this will only be for a few more months, probably till October at best). Income (after tax is about £1,800 per month and any extra money left over each month (I get paid fortnightly) I use to pay my credit card debts with. I don't have many luxury costs as I'm desperate to pay this debt off.

I've taken ages to create a spreadsheets to calculate everything and I predict that I would pay about £3,000 of my debt off by the end of the year (job permitting). But I would love to just freeze the interest and/or stop use of the card (I only use one card to buy things and will use my new Egg Blue card till October (?) as purchases are 0%) to allow me to arrange some sort of settlement/repayment programme with them.

What I am considering doing is paying off the company CC and getting rid of it as I can now afford to pay all the housing costs direct from my business account and also balance transferring my debts around from one card to another to get low rates of 0% rates for a while (to cut the interest I pay). My Egg Card anniversary is in October and have been told that transfers will be 0% for 5 months (so can't wait for that :-)). I'm not sure, however, that the charges for balance transferring will greatly save me money on the interest I pay, for example, Morgan Stanley will charge me 2% or a max of £35 for transferring a balance and I think I would save myself about £50 on interest (not a great difference).

I wanted to get a big loan to pay off all my credit card payments as this would cut my monthly repayments by half if not more. But I have tried getting loans (2) and been refused. I have written back explaining what I am doing but still I am refused. I cannot get more credit card (nor do I wish too) for the same reason - my credit rating must be too low.

I regularly check my rating and credit report and due to do this again this month, but I don't see too much wrong with it (I have no defaults for example).

I would also like to buy a house instead of renting. I can obviously afford a mortgage of £535 per month, but being self-employed doesn't do me any favours here and neither does the increasing house prices in this country. I am waiting till I get my first year's accounts before I even try to get a house, but feel that I will be refused. As I said above I don't have a car but require something to get around the town and thus a push bike is my thought - but I could spend about a £1000 on the bike and all the gear and that feels too risky, but it's so annoying to not have my own transport

I have not lump sum money (though I could get a cash advance from a credit card I suppose, but this wouldn't help much) and not likely to get anything unless I win the lottery. :-) I have no savings account any more, or investment bar a pension which I cannot touch will I retire and have into paid into for a few years

I think I would have to claim myself a bankrupt if I lose my current job and unable to get a job quickly afterwards that pays anything near what I am on now, so this could be blessing in disguise though would rip my credit rating apart.

What recommendations do people suggest? Should I contact my credit cards to arrange something? Should I balance transfer my debt around? Should I arrange a repayment programme with a debt company? What options do I have open to myself? I might need to sort something about before I lose my current job (would telling my job situation help?). If I try for a loan again, what amount should I ask for (perhaps something lower than my debt that I could use to arrange settlements with)?

Sorry for the long message btw, hope everyone's still awake from reading this? ;-)

K
«13456

Comments

  • krazyk
    krazyk Posts: 265 Forumite
    Sorry about the formatting at the top, hope that makes sense?

    Any help is much appreciated, I'm all out of ideas myself. :-(
  • Try whatsthecost.com and " Snowballing" It worked for me!!!
    :cool: The Bug
    There's nothing worse than wasted talent!!!!!
  • Debt_Free_Chick
    Debt_Free_Chick Posts: 13,276 Forumite
    Combo Breaker First Post
    You need a robust budget first. One that lists your outgoings in order of priority. Work through this pack

    http://www.nationaldebtline.co.uk/england_factsheets/debt_advice_england_wales.php3#3

    Firstly, just deal with the minimum payments on the debts. If you still have money left over, then snowball, as already posted by The Bug.

    You could try to shuffle some debt onto 0% cards, but you look to be pretty committed on the debt front and you may find you are declined for another card.

    Post back if anything is unclear.

    A couple of observations on your expenses
    Groceries and others £245

    Is that for 1 person? If so, you should be able to get this down to £100. That would give you an extra £145 to go against the debt.
    Accountants fees £105

    a month?!!! What on earth is he/she doing? Is there nothing you can do yourself to cut down this bill. I'm self employed too but don't use an accountant at all. However, you have to be religious about keeping your records & accounts up to date. But your local tax office will help with tax queries e.g. which expense is allowable. There's loads of free help on the internet to help you cut your accountants bills.

    Regards
    Warning ..... I'm a peri-menopausal axe-wielding maniac ;)
  • krazyk
    krazyk Posts: 265 Forumite
    Sorry for delaying reply.

    Accountants fee: I use an accountant has I have no idea about all the tax stuff, etc. for a company. So decided (for the first 6-12 months) to have an accountant and hopefully take over myself at some point. When I moved from being a normal contractor to a limited company my hourly rate went up and the accountant costs are easily covered by this increase, so thought it was good at the time.

    I think I spend about £175 a month on groceries, which seems very high, the other stuff is a £33 a month towards a loan/credit deal when I brought some hi-fi equipment, got a few years left on that. :-(

    Egg have given me their new Egg Blue card. There's no special balance transfer deal on it but I can use the large-ish credit limite to move debts off my other cards then back onto them as most of the other cards have BT deals for 4.9% and 5.9% (plus maybe a 2% charge).

    I have asked my credit card firms if they can lower (or freeze) my interest rate down to match cahoot's (at 14.0%). Egg have already refused, so I wait and see what the others say.

    K
  • krazyk
    krazyk Posts: 265 Forumite
    Any tips on getting my grocery bill down? Any use threads here, had a quick look and didn't find much.

    K
  • johannamse
    johannamse Posts: 498 Forumite
    Check the Money Saving Old Style board for some amzing recipes.

    Also check the Money off coupons board.
  • Alien8_Hi%
    Alien8_Hi% Posts: 13 Forumite
    I don't have a car but require something to get around the town and thus a push bike is my thought - but I could spend about a £1000 on the bike and all the gear and that feels too risky, but it's so annoying to not have my own transport

    Check out the following Inland Revenue webpage on Green Transport, http://www.inlandrevenue.gov.uk/pdfs/ir176.htm#i

    If you use the bike for travel to work you should be able to make the purchase tax deductible and claim 20p per mile tax free.

    You should be able to get a good, robust and durable bike from a local independent bike trader for £400+ good lights and a secure lock should set you back another £75.

    Is your workplace near your home? If you have to commute you might want to consider a quality folding bike e.g. a Brompton T3 or T6, slightly more expensive but come fitted with lights and a rear luggage rack and are allowed on trains/tube and buses as luggage when folded. Try this link
    http://www.bromptonbicycle.co.uk/brompton/index.cfm?fuseaction=home.home

    Some bike dealers will offer 12 months interest free credit on the upper end of the ranges stocked.

    If you have not ridden a bike for a while or do not feel confident, contact you local authority Road Safety department or Cycling officer to see if they provide refresher / confidence building courses for adults who want to try/return to cycling as a mode of transport.

    For more details on all things bike try the following web portal
    http://www.bikeforall.net/default.aspx

    I hope this helps.
  • Magentasue
    Magentasue Posts: 4,229 Forumite
    Try
    here
    and
    the challenge threads like this one
    on the Moneysaving Old Style board for starters.
    If you look back over this board there are lots of threads on buying value and supermarket ranges instead of branded, making your own, healthy eating etc.
  • krazyk
    krazyk Posts: 265 Forumite
    Great, thanks guys.

    One thing about bikes though, I wish it was just buying the bike and lights but if I am going to use to every day to travel to work (and probably for leisure) then I would need lots of extras, helmet, gloves, lock, clothing, repair kit, spare inner-tubes, etc., etc. and a lightweight road bike is probably about £400-500, anything cheaper will be heavy and nightmare to ride.

    My brother got a cheap bikem it was heavy and it was a lot of work. He got rid of it after only a few weeks, spent some more money and got a much lighter bike. Travelling to work is almost a joy...almost. ;-)

    I'll be quite lucky here I can get to work and home without hardly touching the road. Many bikers don't use the road and there are areas for bikes on footpaths.

    K
  • Josuk
    Josuk Posts: 8 Forumite
    Don't spend that huge amount of money on a bike!!

    Go to your local lager Asda and get one of their better ones about £80-£100 I know you said you need a good one but these are totally capable of being used everyday also if anything goes wrong with it at all take it straight back under their No Excuse Gaurantee and get a brand new one they also have loads of accs!! You can buy them boxed or ready made if you buy it ready made check for any marks on the bike you could end up gettin 10% off for a tiny scratch that your actually not bothered about!!

    I also have alot of debts but not catologue stuff (have you seen what Jason wrote about cat debt? Thread title 'a couple of debt tips)

    I really think you should get all yours consolidated some of yours into one place so you know where it is all going, you sound a bit like me I find it so difficult not to spend money on new cc's .

    If you need any future help or just want to sound off just shout!!

    Hope its of some use

    J

    P.S keep going.......


    Josie

    xx

    :rotfl:
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