My State of Affairs

angel31572

This is my Statement of Affairs:

I work a 37.5 hr week.
Income after deductions: £1920
Overtime after deductions: £300-£700

The overtime is unusual. I have been doing it since November and it is guaranteed until June but could go on longer. When that stops, I have another alternative which is likely to amount to £300 per month.


Mortgage: £692
Insurances: £56
BT: £35
Union Fees: £11
Council Tax: £140
Gas/Electricity: £59
Sky/Setanta: £52
Car Finance: £95
Loan: £180
Gym: £35
Broadband: £16
Total: £1391

Other:

Food: £100
Petrol: £100
School Dinners: £60}16 year old at school full time
Miscellaneous household,car and living expenses: £150
Mobile phone: £25
Total: £410

Credit Cards:
#1
Interest rate: 27.9%
Balance: £3900 I pay more than the minimum payment of around £120 per month (usually £200) but have to use the card again before the end of the month. Balance is not going down.

#2
Interest rate: 26.5%
Balance: £1800 I pay more than the minimum amount each month (usually £150-£200) but have to use the card again before the end of the month. Balance is not going down.

#3
Interest rate: 27.9%
Balance: £750. I pay more than the minimum amount of around £60 (usually £80-£90) but have to use the card again before the end of the month. Balance is not going down.

Total: £6450

I have an existing loan of around £7500 which I have been repaying for around seven or eight months and have been offered a new loan (secured) from the same company to settle the debts. The new loan repayment would be £370 per month over three years. This is considerably less than my credit card and loan payments put together and this way I would see the balance going down. I have already cut the credit cards up in anticipation.

Am I doing the right thing?

Any advice will be gratefully received.

Crown

Hi Angel,

I do not like the idea of consoldiating debt or turning unsecured debt into secured as if you find yourself falling back into using credit again and cannot pay you stand a chance of losing your home. If you cannot pay credit cards you will only damage your credit file what can always be repaired in the future.

Saying that the Interest rates that you are paying are outrageously high so this could be a solution to cutting costs if you have truelly leant a lesson from it and do not use credit again.

Have you looked around at getting a Unsecured Loan? Even this will be better.

What interest rate have they offered you on the secured loan (Its early and im being lazy and cant want to work out £370 over 3 years )

Well done on cutting your cards up though. just remember that you cannot get completley out of debt why you are still using credit.

bluezone

angel31572 wrote: »

This is my Statement of Affairs:

I work a 37.5 hr week.
Income after deductions: £1920
Overtime after deductions: £300-£700

The overtime is unusual. I have been doing it since November and it is guaranteed until June but could go on longer. When that stops, I have another alternative which is likely to amount to £300 per month.


Mortgage: £692
Insurances: £56 What are these for? Can you simplify?
BT: £35This seems quite high?
Union Fees: £11
Council Tax: £140This seems a lot too
Gas/Electricity: £59
Sky/Setanta: £52You dont need this at the mo as ou have debt that needs paying off - go freeview
Car Finance: £95
Loan: £180
Gym: £35You cant afford this if you want to pay off your debts
Total: £1375

Other:

Food: £100
Petrol: £100
School Dinners: £60}16 year old at school full time
Miscellaneous household and living expenses: £150Please expand on this?
Mobile phone: £25
Total: £410

Credit Cards:
#1
Interest rate: 27.9%
Balance: £3900 I pay more than the minimum payment of around £120 per month (usually £200) but have to use the card again before the end of the month. Balance is not going down.

#2
Interest rate: 26.5%
Balance: £1800 I pay more than the minimum amount each month (usually £150-£200) but have to use the card again before the end of the month. Balance is not going down.

#3
Interest rate: 27.9%
Balance: £750. I pay more than the minimum amount of around £60 (usually £80-£90) but have to use the card again before the end of the month. Balance is not going down.

Total: £6450

I have an existing loan of around £7500 which I have been repaying for around seven or eight months and have been offered a new loan (secured) from the same company to settle the debts. The new loan repayment would be £370 per month over three years. This is considerably less than my credit card and loan payments put together and this way I would see the balance going down. I have already cut the credit cards up in anticipation.

Am I doing the right thing?

Any advice will be gratefully received.

Personally I would not take out another loan as you are not dealing with your debt problem the best way. Having a secured loan always rings alarm bells for me as your assett you have secured it on is at risk. With your income and making a few cutbacks i.e getting rid of the luxuries for now you can easily pay your cards off.
Do start a spending diary as you say on every card that you will need to spend on them before the end of the month - you shouldnt have to if you have budgeted correctly.
You can easily get rid of SKY and get rid of the GYM. Housework and walking to the shops is great exercise and its free.
I hope you dont think I'm being too harsh - I've been where you are, in fact I've been buried a lot deeper.

Crown

Also have you thought about trying to get some better rate deals from new cards and doing balance transfers?

angel31572

Thanks for replies. I'm just leaving to go to a funeral so don't have time to reply but will later.

Bestthingsinlifearefree

Hi Angel,

Could you balance transfer those Credit Card debts to a lower interest rate?

The rate of interest is horrendous. Consolidation is not usually the way forward. You have taken a loan from this company 7 months ago and now they want you to borrow more. Taking debt to pay debt (particulary when you are securing it on the house is not usually the best option).

Could you rent a room out in the house? Why not get rid of the gym / sky temporarily and if you miss them, once you have cleared your debt you can get them back.

I am sure there is a way forward.

ifstar

I know a lot of people don't like doing consolidation loans but I think in your case it is something to think about if you can't transfer the balances to 0% or at least much cheaper credit cards. I would say though that if you are taking a loan then try and get an unsecured one if possible.

Whatever you do, when you clear the original credit cards, you must destroy them and not be tempted to use them again. If fact if you are going to transfer the balance to new card(s) then you don't want to spend on the new ones either so I would be inclined to store them away somewhere in the house rather than your wallet where they might give you temptation. If you purchase things on the new cards then it is likely these will be at a high rate and that the cc company will likely make you pay the balance transfers off first before it pays off the additional purchases.

How much do you normally spend on the cards each month and are the things that you purchase necessary items? I think you need to try and make some saving out of your monthly spend too as this will cut down the need for you to be spending on the credit cards.

angel31572

Thanks for the replies everyone. bluezone..you made comments like 'this seems high' to things like Council Tax..em yes! but I don't run the country and have no say on this lol! How do you suggest I cut back on council tax? As for cutting back? I don't really see where I can cut back in a way which will help the problem. Also, you asked for details of the misc expenses. I have a 16 year old son in full time education.

Perhaps I didn't explain properly. I am not in dire straits. I am not in arrears with anything and I earn okay money. My problem is the balance on the cards is not going down because of the high interst rates. If I could get a better rate then I would. I obviously can't so I thought the next best thing would be to transfer the amount to a loan and then it will be clear in 3 years (less if I try really hard)

I don't have my head in the sand, in case anyone is going to say that next. I am looking for advice on how to clear the balance, not cut back. I have around 5-600 pounds going to debt which is staying the same. Surely, transferring the balance and destroying the cards is better than what I am doing now?

angel31572

Also, gym and sky subscriptions are for a year and there is no way out without a penalty.

LandyAndy

I don't understand why someone with a decent income who isn't in arrears etc can't get a better interest rate than 27%? Is there something in your credit history that prevents it?

An unsecured loan is the way to go if you really can't get another card with a better rate. Even if its only for part of the balance - every little helps.

As you say for all the cards " I have to use them again before the end of the month" you are obviously spending more than you can afford. I don't think bluezone deserved your little dig just for trying their best to be helpful. People here are much more likely to offer help if they think it will be taken in the spirit in which it is given - ie one of mutual support.

LandyAndy

angel31572

My partner died unexpectedly when my son was a baby and as I was at university at the time, I had no financial security etc. 4 years later, I had student debts (not horrendous) and a child to bring up on a graduate's wage. So, life has pretty much been an uphill struggle and I can't seem to get a break when it cames to interest rates.

I think you misunderstood me earlier. I certainly didn't have a dig at anyone. I think texts, emails and posts can be ambiguous when you can't hear someone's tone of voice. Have also been at a funeral since 10am and my head is bursting. Sorry if you were offended.