consolidation of relatively small debts

mayforher_2

Hi everyone,

I am sure there have been loads of posts like this in the past but I just want to know everyones opinion on my personal situation and what the best way forward is. Long story short, I got a credit card given to me by my bank when I was 17, didn’t really understand anything about credit whatsoever, spent all the money on it (£1,500) and paid interest only for the next 5 years, completely unaware of balance transfers etc. SO I then transferred my balance to a Barclaycard when I realised it was possible. They gave me a bigger credit limit, I got my car insurance on it in one lump sum because its so expensive and would have cost much more to pay it off in monthly payments.

I tried paying off the amount I would put into my car insurance to get the credit limit down but we ended up in a couple of situations where we needed money and used the card again. So I now have a credit card with £3,800 (limit, maxed) on it and the 0% interest runs out in June. I have an overdraft of £1,000, two smaller ones of £450 and £350 and my partner has an overdraft of £1,200. We desperately want to just consolidate all these debts but the priority is sorting this card out before the interest starts on it. I am not going to be able to afford the interest and I certainly wont be able to afford the interest AND trying to pay it off.

I tried to apply for another 0% card and got declined, decided not to apply for anymore because I don’t want it to affect my credit rating. I am not sure why I got turned down, because my credit rating has not changed one bit since I got the Barclaycard, its glowing green! I think it may be because the amount I have on it is so much perhaps? Not entirely sure. Anyway, went to get a loan and got told that because my partners wage doesn’t ever take him into credit we can’t get one at the moment.

We are going to work on that by putting all our spare money into his account to bring him into credit every month, but does anyone have any suggestions of what we can do to get rid of this credit card and pronto? I just want to pay it off and not be paying £100 a month interest because I just can’t afford it. I genuinely thought I would just be able to do another balance transfer onto another card….how foolish of me!

Does anyone have any ideas?

Thanks

p.s. everyone has said perhaps im living beyond my means. i definitely used to but I am not anymore, i'm living just within them. I can afford to save little bits here and there, roughly £100.00 a month or so but I am scared if i put that to my debts i wont have money for emergencies which is what I really save it for.

poppy10_2

https://forums.moneysavingexpert.com/discussion/3755427

You still haven't posted your SOA as advised - makes it difficult to make any suggestions

MusicalLawyer

You say your debts are 'relatively small', however your debts make a total of £5,600 - not including your partners overdraft.

In my opinion this isn't a small amount.

Consolidation loans etc are not the way forward, as you just end up in more debt.
You'd need a loan of £6,800 to consolidate everything - then you need to add interest on that.

Post up your SOA as suggested to we can see what you're spending where, and some people may have some ideas on places to cut back - even things you may not see yourself. It is always better to have an outsiders view on things

mayforher_2

yeh i did try and do that but it kept erroring. I'll try it again! thanks x

mayforher_2

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household.........
Number of cars owned....................
Monthly Income Details
Monthly income after tax................ 1216
Partners monthly income after tax....... 950
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2166
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 550
Management charge (leasehold property).. 0
Council tax............................. 103
Electricity............................. 35
Gas..................................... 35
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 0
Mobile phone............................ 70
TV Licence.............................. 20
Satellite/Cable TV...................... 65
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 50
Petrol/diesel........................... 200
Road tax................................ 10
Car Insurance........................... 83
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................. 10
Buildings insurance..................... 0
Contents insurance...................... 15
Life assurance ......................... 0
Other insurance......................... 10
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 100
Total monthly expenses.................. 1701

Assets
Cash.................................... 150
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 150

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Credit card....................3800......83........16.5
Current Acc O/d................850.......20........0
Current acc o/d................450.......15........0
Current acc o/d................350.......20........0
Total unsecured debts..........5450......138.......-

Monthly Budget Summary
Total monthly income.................... 2,166
Expenses (including HP & secured debts). 1,701
Available for debt repayments........... 465
Monthly UNsecured debt repayments....... 138
Amount left after debt repayments....... 327
Personal Balance Sheet Summary
Total assets (things you own)........... 150
Total HP & Secured debt................. -0
Total Unsecured debt.................... -5,450
Net Assets.............................. -5,300
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

There we go. The clothes thing actually relates to toileteries etc, and the fact that i have to wear my own clothes for work and dont have a uniform so need to have enough clothes to rotate so i dont have to do loads of washing a week! :rotfl:

Thanks everyone for your help so far!

anh1904

Your figures show you could be comfortably debt free inside a year, which is excellent. It requires discipline and a desire to do it though, so you need to be sure you are ready, and spending £100 per mont on entertaining when in debt will be on item you need to consider.

£70 on mobiles is high, so check when out of contract. SIM only deals for £10 per phone per month are readily available if out of contract.

Finally, do you know what you actually do with the £327 per month you have left after making all of your payments and entertaining expenses?

£100 for emergency fund - what has this been used for? Has it built up in a savings account which could be used to pay off debt?

redpete

mayforher wrote: »

Mobile phone............................ 70 If you can get out of the contract this could be a lot less
Satellite/Cable TV...................... 65 This could be a lot less, try Freeview
Groceries etc. ......................... 200 Could be lower for just 2 people.
Entertainment........................... 100 Could be lower if clearing debt really is your priority.
Emergency fund.......................... 100 Probably worth getting up to a few hundred saved - 'just in case', then use this to clear debt.

Amount left after debt repayments....... 327

Even without the savings above the £327 should give plenty of headroom to clear the debt - sure you've included everything in the spending?

mayforher_2

anh1904 wrote: »

Your figures show you could be comfortably debt free inside a year, which is excellent. It requires discipline and a desire to do it though, so you need to be sure you are ready, and spending £100 per mont on entertaining when in debt will be on item you need to consider.

£70 on mobiles is high, so check when out of contract. SIM only deals for £10 per phone per month are readily available if out of contract.

Finally, do you know what you actually do with the £327 per month you have left after making all of your payments and entertaining expenses?

£100 for emergency fund - what has this been used for? Has it built up in a savings account which could be used to pay off debt?

The £70 is between two phones, myself and my partners. Mine is £36 and I really did get it as low as I could but I will be reducing my tarrif midway through because I really don't use any of the calls or texts i'm paying for. My phone is part of the contract too. My partner's contract ends in a couple of months and he is going to go sim only so that will bring it down a bit.

Definitely dont know where £327 goes at all. I tend to buy myself lunch instead of using the grocery shop ingredients etc. I go out about once a month with my friends which i have already started cutting down on. I definitely want to be debt free but I also dont want to stop living my life.

I forgot to put my gym membership on actually which is £30 but thats really my only hobby and my fella has his which is band practice. i have recently moved to a cheaper gym and he has moved to cheaper practice rooms so we are trimming down where we can.

the sky bill includes phone and broadband and line rental i just couldnt be bothered splitting it up.

We really try and cut down on groceries but do you have any tips on this? We always seem to spend £10 more than our budget a week!

What happens when I use my emergency fund to clear the debt and then end up needing loads of dental work or my car breaks? I panic about this, hence why we are in this position now. I am finding it really difficult to realise that i need to clear my debts before I save, I feel like I need to have that back up money there.

redpete wrote: »

Even without the savings above the £327 should give plenty of headroom to clear the debt - sure you've included everything in the spending?

As said above, definitely not sure I have. I have put everything on I know about but I know that every month I end up skint and scratching my head as to why!! Need to fix it asap!

redpete

mayforher wrote: »

What happens when I use my emergency fund to clear the debt and then end up needing loads of dental work or my car breaks? I panic about this, hence why we are in this position now. I am finding it really difficult to realise that i need to clear my debts before I save, I feel like I need to have that back up money there.

I've just realised I might have confused what I meant - I suggest saving say £500 then using the £100 a month towards debt, leaving the £500 until an emergency comes along.

mayforher_2

redpete wrote: »

I've just realised I might have confused what I meant - I suggest saving say £500 then using the £100 a month towards debt, leaving the £500 until an emergency comes along.

Ok that's a good idea, £500 is a lot of money though! we would be able to do £400 though and maybe split it halfhalf - so £200 in debt, £200 in savings. Thats a good idea, that way I will be panicking less about having a back up.

Another thing I have done is unsubscribed from all the fashion news letters (New Look, Republic etc) and hidden all their posts on facebook. That way I can't be tempted to go on their website and browse/inevitably buy something. Sometimes I have a splurge with money i definitely dont have and end up feeling so guilty.

glasgowsaver2011

You are on the right track, just need a few months of head down hard work

Home made lunches.

Cancel sky/broadband and home phone.

Pay off as much as you can each month.

cut down the entertainemts fund

go to a museum or a park or awrap up and have a country walk.

- I suspect you are 24 - prob a bit young for those things, but if you really wanna be debt free its very do able in a year