Ready to get debt free, but need some advice

SerafinaJayne

Hi everyone

This last year has been awful for me from a money perspective due to some really bad decisions made on my part. I've managed to sort my finances enough to set a budget for myself and I now have a better living situation so I now have about £130 extra to pay off my debts (on top of minimum payments and monthly payments).

I would like some advice on how best to sort my credit card debts as the card with the most debt will stop being interest free in September, but I have just been rejected for a 0% balance transfer (i think I have done it too many times - trying to be smart).

I know of a few options such as consolidating everything, or just paying it back with interest but I'd like to try and keep the interest to a minimum as interest will eat up the amount I can pay back.

I know there are debt advice agencies out there to help, but as I now technically have the money to pay back my debts (slowly but surely) I don't want to use resources and time that can better help someone who is in debt crisis. On the other hand though, I don't understand "bank speak" and I don't want to be sold a resolution by my bank that ends up costing me more in the long-run.

I completed a SOA but as I have already worked really hard on my budget and reducing my outgoings, I have copied in the basics only. If you think it would help to have everything I can provide this

I'd really appreciate any help that you can offer so that I can be on my way to becoming debt free.

Thanks in advance

:A

Notes:

• My Rent & Bills below cover all rent, gas, electricity, insurance etc...
• I don't own a car
• "Spend" covers all groceries, clothes, presents etc... I allow myself a weekly cash budget.
• I have no assets / other income
  

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1248
Total monthly income.................... 1248

Monthly Expense Details
Bank Loan repayment.............. 160
Rent & Bills ..............................520
Mobile phone............................ 40
Spend............ ......................... 220
Camera insurance......................5
Pension ....................................45
Gym....................................... 40
Cineworld Card........................15.00

Total monthly expenses.................. 1045

Secured & HP Debts
Description....................Debt......Monthly...APR
Bank Loan.................... 5190.......162......approx £65 interest p/m

Unsecured Debts
Description....................Debt......Monthly......APR
Credit Card....................850..........15........approx £15 interest p/m
Credit Card....................1860........50........0% interest till Sept.

Monthly Budget Summary
Total monthly income.................... ...........1,248
Expenses (including HP & secured debts). 1045
Available for debt repayments........... .......203.00
Monthly UNsecured debt repayments....... 65
Amount left after debt repayments....... approx 135.00

Personal Balance Sheet Summary
Total HP & Secured debt................. -5,190
Total Unsecured debt.................... -2,710

Total Debt.................................... -7,900

Tixy

Hi and welcome

Do you know what rate the card will revert to at the end of the 0% deal?
If so you can feed all the details into a snowball calculator (it will allow you to put a 0% rate for x months and then the full rate) and this will tell you how long it will take to clear your debts and in what order.
Snowball calculators are on the same site as the SoA or on http://www.whatsthecost.com/snowball.aspx

Once you know that you can then decide on what option suits you best - whether to stick with the cards as they are and pay them off, or whether to consider seeing if you could find cheaper finance elsewhere.

You say you have switched debt around 0% cards before? you don't still have any old cards that are technically still open (even if you have cut the cards up)? If so then you could approach them and see if they will offer any existing customer 0% balance transfer deals to you.

Also if you have been declined now then it might still be worth trying to apply for a new card in September time, when you'll have paid that bit more off your debts. Which lender is the current 0% card with?

Snowball calculators are on the same site as the SoA or on whatsthecost.com/snowcalc

SerafinaJayne

Hi,

Thanks for the reply.

I wasn't sure about the interest rates so I just checked the Credit Card statement and it will be the following as of 1st October:

Interest Rates:

Annual Purchase Rate 19.90%
Cash Interest Rate 27.90%



I'm not sure which one my amount will fall under as it is the leftovers of a balance transfer?



I only have the 2 credit cards, the history is as follows.


My debt got out of control on my Natwest Credit Card (currently £850) so I transferred it to a Barclaycard 0% offer. I have never spent on the Barclaycard but kept spending on the Natwest card when I'd run out of money at the end of the month.


Every few months I'd always get a promo letter from Barclaycard offering another 0% transfer and I was well within my credit limit of £4,100 so I kept doing it...and kept spending on Natwest.



In December of last year, I had had enough and arranged with my bank for a personal loan to pay off both credit cards and get a deposit for a flat as I had to move. So all my debt was on the one loan with a monthly repayment.


Unfortunately things went down hill when my partner lost his job, so I was paying for him for a few months. Our relationship then ended so for the next few months I was living in a 2 person accommodation by myself (like I said, some bad decisions on my part) so the credit card spending started spiraling again and another nice offer of a balance transfer made sense at the time.


I will definitely take a look at the snowball calculator, it sounds like just what I need. Do you have any idea which interest rate I should use for a balance transfer amount - cash or purchase?


Thanks again for your reply





p.s sorry for the life story, I've kept all of this to myself so once I started it felt good to let it all out!

Tixy

There should be a third interest rate - a balance transfer rate. But its usually the same as the purchases rate.

It is easy to get in to that cycle - but the good thing is that you are tackling it now and your debts are coming down.

SerafinaJayne

Working out the snowball calculator with the purchase rate, I should have all 3 debts paid off by September 2014.

The snowball calculator was brilliant, so thanks for sharing that. I think for now I'll focus on paying everything off as the snowball calculator suggests (including the interest) and then look at my situation again in a few months time to see if a balance transfer is an option.

Thanks for your advice