Credit Card Worry

karatedragon

I have never been in debt before and only recently had one credit card that I always paid off in full.

I need a new kitchen and I had saved up really hard for it. I decided to get an M&S and More card with 0% to pay for the kitchen cabinets and appliances. Total debt on the card £3800.

The kitchen has gone over budge now and now I do not have the savings to pay this M&S card off - the idea was to keep the money and get the interest. It hasnt really worked like this.

Is £3800 a lot to have on a card as I am really worried about it and I have heard that card providers can demand full repayment at any time.

Kevicho

I wouldnt worry too much at this time, I would focus on ways to pay it back or earn a little extra income, 3800 isnt much in the scheme of things, but im sure its a worry to you.

As long as you meet the monthly minimum you should be ok for a while.

Have you done an SOA on here? we may be able to help you cut back or save money in other areas to help pay this off quicker.

Kevicho

Also try and keep an eye on the interest rate, it may skyrocket when the 0% offer ends, and you may need to look at changing to another 0% card, a low life balance card or a cheaper loan

karatedragon

Ohh crikey I have seen the debts of other people's at the bottom of thier threads. I hope I havnt offended any one as my debt seems quite small and I dont have any mortgage.

I guess never having a debt before makes £3800 seem like an absolute fortune.

southern_chick

don't apologise if you have a debt it affects you personally and cannot be compaired to anyone elses, all circumstances are different, you will get good advice on here so stick with it

SC XX

GirlRacer_2

However small your debt is, its still a worry. As posted above. As long as you keep paying your M&S card everything will be fine.

CFC

karatedragon wrote:

Ohh crikey I have seen the debts of other people's at the bottom of thier threads. I hope I havnt offended any one as my debt seems quite small and I dont have any mortgage.

I guess never having a debt before makes £3800 seem like an absolute fortune.

You are being sensible. £3800 is a lot of money, unless you're taking home £3800 a month!

But there's no need to actually worry (as in sleepless nights and panic attacks) because you're going to take control of it.

0% finance for borrowings that you need (like new kitchen) is actually a pretty good deal. Now, that will last for 6 months. So in 5 months time, make a note on your calendar to look for another card which will give you 0% for 6 months, open an account, and transfer the balance from your current card to your new card. This will allow you to have interest free credit on your debt for a year.

Now look at how much you can pay back in a month. There are more sophisticated ways, but let's stick with the normal basic method. You want to have this paid off in 12 months so you can be rid of it, I presume? So can you afford to pay off £316 a month? If the answer is yes, then there's your action plan. If the answer is no, then you could consider trying the same move again at the end of the second card's 6 month interest free period.

Treat it like a formal loan. Work out how much you can pay off it a month, and pay it. Don't give in to temptation to pay off the minimum amount, that's why people get into shtuck. Used wisely, credit card can be your friends. Used unwisely, they are a ravening lion seeking to devour you.

karatedragon

Hi and thanks CFC!

The M&S card i have arranged for this has 0% for 12 months from opening which is from Feb 07. I have now sat and done a spreadsheet of my income and expenditure.

I work part time and take home £907 a month. I do not have any other loans or a mortgage and my outgoings are:

Council Tax £77
Food £110
Amazon DVD £9.99
Miele Washer Dryer 10 year guarantee Insurance £18.40
Gas Service Plan £22
Gas Meter Key £20
Electric Meter Key £20
Insurance £16.44
Internet £23.04
Block of Flats Maintenance £50
Telephone £25
TV Licence £26
Travel Expenses £36
Water £18

Total £452 per month

So my disposable income is £907-452=£455 a month

I have just £2000 in life savings left in a savings account also.

Sea78

Hi

The dvd rental payment could go - go to quidco.com and you can sign up for 1-3 motnh free trials for the DVDs and also get cashback!
The internet also seems quite high - who are you with? I've just got tiscali (9.99 for first three months and then 12.99) which I know isn't even one of the cheapest - with tesco internet you also get the clubcard points.

Welcome to the board - I know that compared to some you might not feel like your debt is much, but I wish that at your stage I had had the same attitude - it would have stopped me sliding down to where I am now!! Pay off as much as you can each month - keep the spreadsheet to hand to see it all! Pop over to the freebies board. You could sign up for Pigsback and get free vouchers for many things and then use then as treats or sell them on Ebay for more money for your debt - every little bit helps!

HTH
Sea xx

karatedragon

Hi Sea78!

I am going to ditch the DVD payment. The ISP i am with is called NewNet and i am very happy with them and would not want to change from the really. Their service is always excellent. The 5+5=10 service plan on the washer dryer ends in June, so no more payments on that PLUS a machine that is guaranteed until 2016 against parts and labour

bellsbells

The only other suggestion I can add is that if the cc is really bothering you, how about paying £2000 off by using your savings? You could then concentrate on building back up your savings without the worry of your card. The pros of doing this are that you are not worrying about the cc, and you are back in control of your finances. The cons are that you will be loosing the interest from your savings and as your cc is 0% interest you really don't need to worry.
I guess it is what is most important for you and how you want to play it. It is like me - the money I still owe is actually a loan from a family member that I used to buy a new car when my old one was written off. It is 0% interest so I could just carry on paying some off each month, and throw any extra at the mortgage which of course is costing us interest. Money wise this would be the most sensible. However, psycologically(sp?) I feel like I must pay off the loan first, not only because it is owed to a family member which is wonderful but does make me feel slightly uncomfortable, but also because I will not be able to move on and concentrate on bringing down the mortgage until everything else is clear. Hope that made sense!