What options are available to me?

inbetweener

Morning all, after trawling through 20 odd pages the other night i found the gloom i have been feeling everyday kind of lifted slightly after reading peoples stories and the fantastic advice given by some of you guys on here!!

So here is my story and where im at currently.

After my wifes maternity leave finished we talked at length and decided to go aheaed with her dream of starting up her own business and not returning to work part time, obviously when starting a new business it is all outgoings.

I currently have 4k on a lloyds credit card which has been used a lot for living costs, unexpected dog and car bills etc at 17.9% apr (i dont know if this is a terrible rate or not?).

My wife gives birth to our second child in october, if the business is not making a good enough profit come the new year she is going to take a part time job a few evenings a week to help out.

So where do i start? My maximum on my credit card is 4750k so im going to be up to this soon, will they extend it ?

I have been with lloyds for years and currently have a loan of 3.2k to pay off at 167 a month (8k loan to pay for wedding and honeymoon).

Is there any advice anyone can give?

I know very little regards balance transfers, would this be worth doing in my situation?

Should i apply for another credit card at hopefully a lower rate?

I had an interview at the bank a month ago and she advised against a balance transfer and proposed a loan of 10k to clear my existing loan, credit card and overdraft, it worked out i would have to pay back 20k!!!!! Not an option!!

Sorry for such a long post and i hope this all makes sense, thanks in advance

Loubell83

Do you have a good credit rating?

If you do you should look at Martin's guide to the best balance transfer deals, and transfer the credit card debt to the longest 0% you can get.

Have a look at this -
http://www.moneysavingexpert.com/cards/balance-transfer-credit-cards

Looks like 22 months is the longest for good credit scorers.

inbetweener

Hi Loubell83, thanks for your reply,

I am not 100% sure how balance transfers work, my understanding of it is that you pay an amount to transfer an existing cc debt onto another one of which you pay no interest for x amount of months.
Am i right in saying after the x amount of months finshes it goes up to a high rate?

Not done an official credit rating for a while, when i had a meeting at the bank the woman said i had a good rating with them but this would decrease rapidly if i carried on with the spending

inbetweener

Just been reading some more on balance transfers to try and get my head round it.
So if i transfer the 4k i do not have to pay any interest on that for 22 months or however many months the deal runs for, what about the purchases made on the new card?
Are these charge at 17.9apr or is no interest paid on these for the x amount of months?

Apologies if im coming across as a bit thick its just all new to me !!

moohound

I would be wary of making new purchases on a balance transferred card. Look on the advice on balance transfers.

I would make sure the old card was cancelled, or else you would double the debt if twice the credit was available.

You need to think carefully about taking on more debt, when you asked about purchases it made alarm bells ring for me, it sounds like you want more credit. You can't live like this forever I know I tried it, 8k turned into 15k turned into 23k turned into 39k, it is very easily done.

Babies are not cheap, I will be paying off what I spent on my baby when he is the sixth form!

You need to do a SOA and the more knowledgeable will comment on it.

It sounds like you are in a similar position to me a few years ago, I now have £39000 of unsecured debt and I can even really say what it went on.

inbetweener

Hi Moohound,

For definitely the next 6 months maybe up to a year i will still need to use a credit card as i am the only earner.

You say it is not advisable to make purchases on a balance transfered card, in that case what would you advise?

Do i try and up the 4.75k limit on my existing card (just spoke to them and they said shouldnt be a problem as have a good rating with the bank)?

Should i apply for a new credit card with a better rate (assuming the 17.9apr i currently pay is easily beatable)?

Thankyou

moohound

I think a SOA is the place to start.

Your position will become clearer then.

Is there any way you can increase your earnings or reduce your outgoings, little things can add up.

Could you wife work for your company, would this be a tax benefit?

Are you claiming any tax credits you ate entitles to.

Does your wife know about the loans and card and that the card is near its limit?

Getting a balance transfer may be a good option if it will save you money.

What job is your wife likely to take in the new year, is she guaranteed a job?

You will obviously make your own decisions but I would be very wary of living on a credit card even in the short term, you will have an extra dependant and a bigger debt. I know this isn't what you want to hear, and it is just my opinion, but is based on painful experience.

Others may give you different advice, I am certainly no expert, if I was I wouldn't have nearly 40k of debt.

inbetweener

We sat down last night and discussed ways we could maybe gain a little extra cash, ie trying to knock some money off food shop, car boot sales, ebay sales etc.

Anybody else want to make suggestions for the position im in?

If a balance transfer is not advisable i guess my only option is to increase the limit and ride it out until things improve and we have more money coming in?

moohound

I think a balance transfer is a good idea, but I think continuing to spend on a credit card is a bad one.

You really need to do a proper SOA, there is a link for it, then post it and see what people suggest.

I think you have an opportunity not to get into a real mess.

You must ask yourself is everything you buy on the card absolutely necessary?

How much are you adding a month to the balance?

How long will it be before you need yet more credit?

No one can advise you properly without all the information. For example how long is there left on the loan?

I think you are motivated by wanting to provide for your growing family and wanting to reassure you partner and not give her any worries.

I think you can have it two ways

EASY NOW - spend on card and HARD LATER - run up big debts.

Or

HARD NOW - cut back, pay off debts EASY LATER - Debt free.

Your bank is your friend now, they like you, you are a walking profit for them. They will not be your friend when they hike the rates of your card.

cutestkids

I think that you are missing the point that people are trying to make OP.

A balance transfer to a 0% card for say 22 months would be a good idea if it was your intention to pay off the balance before the interest free period is up.

You appear to want to continue to use the credit card for living expenses which is a bad idea, you are not able to keep on top of things and live within a budget as things stand at the moment so adding to your debt would only make matters much worse in the long run.

Do what has been suggested and post up your SOA that way you will get more specific help.

You need to look at you current income and live within it otherwise you will spend your life in the debt cycle.

You will most likely have to make sacrifices for a couple of years, eg give up satelite tv, cut back on grocery spending, etc, take a long hard look at your budget there is always room for a bit of cutting back.

The last thing you should do if you are already living outwith your means is take on even more debt.

inbetweener

I am motivated to try and stop this which is why i have posted today.
Like i said earlier, once we get to the new year it should get a lot easier.

I have redesigned the shopping list, to be fair its only around £50 a week for 3 of us but have hopefully got it down more, have stopped smoking (not aheavy smoker so only saving of 4 quid a week) and hoping to do first car boot sale this sunday (weather permitting) and sell some bits on ebay.
I know its not major but a start.

Credit card is used for weekly shop and petrol and any unaccounted for suprises so have been putting on between 250-300 a month.

Thankyou for your responses, i know what i have been doing is not healthy but i have felt like i have not had any other option