One Day I Will .... get debts below £8500 (Debt Diary)

gallygirl

What great news on your progress, and am glad Smile paid up without a fuss - what an example to set the rest!!!

Lydia.42

Hi
Well done, just been reading your diary. What an amazing month!!

With regard to your A & L over-draft. Don't think of an over-draft as any different to any other debt. Look at the interest rates.
If you have an over draft facility with A & L which is 0% for a year (or what ever), pay as much of your credit card off using your overdraft as you can. This way, you have some of your debt on 0%, and the bonus of an overdraft is that when compared to a cc you don't have a minimum monthly payment to make either - all the more cash to go towards the credit card.
Hope this helps
Keep up the good work

onedayiwill

Hi Lydia,

This is an option that I have been thinking about for a while now and I know that it make sound financial sense.

Paying of my CC debt at the rate I plan to pay it (around £225 per month) I will pay aroud £75 in interest and pay off in July 2008. Assuming I could move the full debt to my OD - which I can't - at 0% then I would pay no interest but still pay off in July 2008. So I would save myself £75.

However, for me, the psychological benefit of seeing my bank account in the black, and learning to operate properly with the money I actually "have" is worth more and is also more motivating. So I will not be using my OD to pay my CC.

Of course, I do actually hope to be paying more than £225 per month on the CC whenever possible (from extra income - ebay sales etc), but I need to be sensible in my projections. Secretly, I'm really hoping I'll wave goodbye to my CC debt by the end of the year ... to do this I have to pay £390 per month on CC.

I love the snowball calculator ... how come we don't have a snowball smiley?

Thanks,
OneDay

onedayiwill

First, I called Egg today and cancelled my CC with them. One less avenue of debt available to me. Very pleased with this. The less credit I have available to me, the less likely I am to get into debt again.

I have been trying to learn more about my loan today. I'm the first to admit I really didn't know what I was doing when I took it out ... I just wanted to consolidate my debts and see one monthly payment going out of my account (of course this didn't work and I ran up my CC and OD again!). Yes, it was a stupid and uninformed move.

So now I need to live with it and understand the terms of my loan better.

So, I've done some research over the weekend and I now know that:

• my loan, which was taken out on 18th May 2005 is governed by the "Rule of 78".
• The "Rule of 78" seems very complicated but basically means that my interest payment is weighted so I pay more interest at the start of the loan and less at the end. Which means that if I settle early my settlement figure will probably be larger than I expect.
• Using a "Rule of 78" calculator I found online and entering my loan amount, monthly payment and number of months the result tells me my Annual Interest Rate is 5.1%. But according to my loan agreement it is 9.9%. Confused?? Don't have my loan agreement with me today but Total Finance Charge given by the calculator looks correct ... so I don't understand.
• Using the "Rule of 78" calculator the remaining balance to pay on my loan is £5268.75 + approx £505.45 interest (5774.20) which is less than I have calculated by totalling my remaining monthly payments... why is this? Need to double check my calculations. But it looks like I owe less than I thought I did. Good news
• According to the calculator, if I settle today my settlement figure would be £5309.19 - about £800 LESS than if I continue paying monthly. Sadly, I don't have this type of money available to pay off!
• All these calculations assume that I'm not going to be able to do anything about the PPI policy.
• loans taken out after 31st May 2005 are not subject to the "Rule of 78".
• I *think* that older loans are not subject to the Rule after 31st May 2007.
• I don't know how this affects me.

Anyone got any comments or suggestions or insights or better understanding than me? All help greatfully received.

onedayiwill

OK, so I'm planning ahead here.

OH & I go on a couple of trips abroad each year. Normally, I take foreign currency cash as spending money and use my credit or debit card if necessary for extra spends or getting cash from machines.

I do not wish to use a credit card ever again. Nor do I wish to use my overdraft.

My next trip abroad isn't until September by which time I hope to have some spending money put aside. If I don't, then I won't have any spending money for the trip - which may not be a bad thing. But anyway, consider for the moment that I HAVE put money aside and in my debt free future I hope this will not be a problem.

I have never really felt comfortable carrying lots of cash abroad (even though I have never had any problems as I am quite security concious), and I don't like travellers cheques so I was looking at alternatives. I see the Nationwide FlexAccount does not charge for the use of cash machines overseas, and does not charge for overseas debit card transactions either.

So if I were to pay for things with the debit card, or use a cash machine abroad to get cash I would not be charged, and all transactions would be made with the current exchange rate. Which sounds good to me.

I thought I could set up a FlexAccount without an overdraft (though leave it a couple of months as I have only just got my new A&L bank account and M&S card) and then just before my trip transfer my spending money across to it.

Is this a good idea? Are there any catches?

elantan

seems like a good idea to me alot of people like the nationwide for this very reason ...i'm going in july and intend on doing the same for the same reasons ...you can also get front loaded credit cards but i wouldnt recommend them ...your doing fantastic by the way

onedayiwill

Thanks elan. Glad to know there are other folk looking into this/using this. I don't like the idea of the prepay cards .. there seem to be lots of charges, and this solution with Nationwide seems simple, easy and cheap.

I already have a Nationwide Cashbuilder account - which hasn't been used for 13 years and has a balance of £1. LOL. I will go there tomorrow and get my details for that updated (married name, new address) etc. I have had this account since 1983 (with Anglia Building Society) ... so you could say I'm a very long term Nationwide customer. Just have never really used them!

elantan

their regular savings account isnt too bad either (not that i can afford one of them just now but have been looking about) hey i wonder how much interest you'll get lol....try and keep £100 with them just incase tyhey ever demutulize

onedayiwill

Hi elan ... well I went to Nationwide today, updated my details and they updated my book .... 3 pages and a tired printer later, I have earned 21p interest :rotfl: I had estimated 26p so I was pretty close!

I'm not sure about whether to put £100 into it or not, so I'm going to start a poll on a new thread.

onedayiwill

Time for an update me thinks.

Today I received my first M&S &More CC statement. I have set up a standing order to go out at the start of each month to the CC for £200. Then at the end of each month I'm going to pay any remaining balance from my current account to it.

I need to phone up Virgin Money & T-mobile and see if I can change their DDs to come out earlier in the month. They currently don't come out until the 19th and I'd prefer it if they came out sometime in the first week (all my other regular payments come out before the 8th). That way I can know exactly where I stand within 1 week of payday and can then work on boosting my balance until the end of the month.

Having a positive bank balance is still a novelty.

Oh, and I have decided to put the £100 into my Nationwide account. It'll still be easily accessible if I change my mind and want to put it towards my debt instead.

Ho hum. Think that's all.