First post, large debts, any advice appreciated

c247

This is my first post to the website. Having read all of the good advice that people have offered to various others I thought I would put details of my debts up here to see if anyone could offer any advice. I currently have total debts of about £51k, which is a horrendous amount but I have calculated that I can repay it in just under 3 years and so am not considering anything as drastic as an IVA or bancruptcy. Most of the debt is on credit cards and so i regularly move between cards to get the best rate of interest (this was one of the main ways that I ran up so much debt!) and the rest is in the form of unsecured loans. I don't own a house and so a large percentage of my expenditure (aside from debt repayments) goes on my accomodation. My details are below:

Credit cards:
Virgin £9,800 (of which £6,500 is interest free and £700 is 1.9%APR until July 07, otherwise 15% APR) (monthly payment £330)
Halifax £9,300 (of which £8,500 is on life of balance rate of 6.9%, otherwise 22.95% APR) (monthly payment £200)
Barclaycard £7,400 (of which £5,800 is on life of balance rate of 6.9%, otherwise £930 on 27.9%APR and £750 on 19.9%APR) (monthly payment £400)
American Express £4,300 (all 4.9% life of balance rate) (monthly payment £115)
Capital One £100 (kept open to do a balance transfer later) (monthly payment £10)

Loans
No.1 £1,800 (0.56% monthly) (monthly payment £100)
No.2 £10,000 (0.495% monthly) (monthly payment £240)
No.3 £6,000 (0.62% monthly) (monthly payment £180)
No.4 £500 (0.13% monthy) (monthly payment £120)

Income (after tax/ per month)
£3,100

Expenditure (per month)
Creditcard and Loan repayments c£1,700 (as above)
Rent £1,100
Food £300 (for 2)
Transport (tube and train) £80
Phone £30
Council tax £100
TV licence £12
Insurance £30
Sky £25
Broadband £18
Going out £120
Clothes £60
Lunches/coffee £30 (trying to cut this out!)
Drycleaning £30

My aim is to pay the above debts off as quickly as possible and so I am actively looking for ways to reduce expenditure (not really much I can do to increase income in the short term). Any advice greatly appreciated.

Thanks

Vickicb

Hi c247, welcome!

The thing that jumps out at me immediately is that your outgoings exceed your income by £447, so unless you cut down on spending asap you're going to add to these debts, or start defaulting on them. My thoughts below....

c247 wrote:

Expenditure (per month)
Creditcard and Loan repayments c£1,700 (as above)
Rent £1,100 Is this for 2? I guess you're in London but it seems quite high as you appear to be sharing, if so, why are you paying it all?
Food £300 (for 2) I spend less than this for a family of 4 and I don't really try that hard - so this is high
Transport (tube and train) £80
Phone £30
Council tax £100 If you are in a couple or sharing a home surely your 50% should be less?
TV licence £12
Insurance £30
Sky £25
Broadband £18 Quite high, can you switch?
Going out £120 This will have to go / be reduced
Clothes £60 as above - cut this out!
Lunches/coffee £30 (trying to cut this out!)
Drycleaning £30

That's my immediate thoughts, but I don't know your home circumstances so I might be way off if you have dependents. I'm sure others will be along soon with more advice too!

bonnie_2

You have also not included water, gas and electric, bdays, xmas, holidays, etc.
Sky is not needed.
If you carry on overspending you will add £5364 per year to your debt, you simply cannot afford this level of expenditure.

c247

Thanks Vickicb. Well spotted re the overspend! The numbers i put down are for last month and I think I overpaid on a couple of the credit cards as I had a bit of extra cash (cash back from a mobile phone offer). The numbers above are based on just my salary. My partner doesn't work at present but is looking for a job, which will help us to repay more of the debt. Food, clothing and going out are all areas where we have tried to cut costs and this has been the lowest we could get them down to so far. Also want to cut out Sky but given that we're not able to spend on going out thought this may be more cost effective than video rentals! My main goal at present is to cut down the weekly food bill which comes out at £60 pw for 2 (plus a further £15/20 pw on bits and pieces).

CLAPTON

its really essential to work out realistic numbers for income, spending and debt repayment, because the options you have to resolve the debt issues depend upon them

so income has to be your average income (preferrably over the NEXT 12 months)

spending has to be the average over the next 12 months and not just this month. so unless you are saying that over the next 12 months you will not spend anything on presents, xmas, holidays, newspapers/magazine, haircuts etc then that's fine but think about your plans a bit.


also for the debts work out the APRs rather than monthly figures (simple but not exactly right is multplying by 13) and the minumum monthly payments and snowball the debts..that is pay the minimum on each debt except the one with the highest APR and on that pay as much as possible...
see
http://www.whatsthecost.co.uk/snowball.aspx

c247

Thanks Clapton. I will post a revised list of income and expenditure with average income and expenditure over next 12months. I have got a budget but haven't stuck to it as well as I should have done. Also doesn't include holiday, christmas and birthday costs which I will have to factor in. I have a spreadsheet with all of the balances on each account broken down by interest rate (ie. working out interest charges on each element of the credit card balance - cash/ purchase/ balance transfer) and regularly reappriase whether i need to do a balance transfer to reduce the average rate of interest. I also pay a little more than the min. on each and then pay the remainder of the amount allocated to debt to the highest APR card.

Will re post tomorrow with the correct averaged figures. Thanks once again. This is very useful and is helping me to focus on what I should reduce more.

c247

Tustastic. In answer to your question re rent, this is simply the rent that we pay to the landlord. Bills of about c£40 per month are on top of this (which I have missed on my initial post). We live in a 1 bed flat in London - we didn't know the area when we moved into london and so ended up living relatively central, which is why its a bit steep. To be honest, the one thing I don't want to change if I can help it is where I live as I really love it here. The stress of the debt is one thing and it is very depressing each month realising how little I have left to spend even if I try hard to cut expenditure, but if I had the same and lived somewhere that I didn't like or feel safe/ comfortable in I would be 10 times more depressed!

bandraoi

Your salary is generous for one person, but it's not that generous to support two people living in London. Your partner needs to contribute financially. You're £51K in debt and that means you really can't afford to support him/her.

Until they find a job, they should certainly be working to get the bills down - the cheap cooking is one thing that definitley needs doing.

If you like the area, then it might be worth starting to keep an eye out for a cheaper place close by. It can just be a matter of keeping an eye on the listings, you might get lucky and find a nicer place for less money. Also look at the places that are a bit further of a walk from the actual places you like.
Ten minutes walk can bring you down £150pcm in the rent in a lot of places in London.