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ashleyhancock

OK so I've finally realised I need to start taking action before my debt problem gets any worse. I watched the Debt Problem video and from the I think the first thing I should do is use my savings to pay off something, but I'm not sure what, obviously the Hitachi loan is the biggest debt, but unless I can put all the money up I've got to stick with the monthly payments right? The savings have just finished maturing in a 3 year bond so are instantly available. Any advice you can give me to help solve this debt problem will be greatly appreciated.

Monthly Incomings:

My salary - £501.45
Student Loan - £275

Total - £776.45


Savings
Bond - £1155.45

Total £1155.45


Monthly Outgoings:

Mortgage/Rent - £250
Electric - £30
Sky £20
Phone - £5
Food - £200
Drink - £80
Mobile - 42.50
Tranport 51.96

Total: £679.46


Outstanding Loans/Balances
Natwest Credit Card - £395.07 16.9% (Interest free until 17th June) Minimum Payment 2.25%
Argos Card £214.62 25.9% Minimum Payment 4%
£313.25 25.9% (Interest Free Until 26/09/07)
£245.38 25.9% (Interest Free Until 12/06/07)
Hitachi Capital Loan - £2978.34 29.8% (36 Monthly Payments of £151.86)
HFC - £999 21.8% (48 Monthly Payments of £33.39)

Total: £5145.66

immoral_angeluk

Monthly Incomings:

My salary - £501.45 Have you checked if you're entitled to any help? Check out https://www.entitledto.co.uk
Student Loan - £275

Total - £776.45


Savings
Bond - £1155.45

Total £1155.45


Monthly Outgoings:

Mortgage/Rent - £250
Electric - £30
Sky £20 Go freeview! It's free and you get the same amount of trash on freeview as you do on sky..
Phone - £5 Is this calls? What about your line rental?
Food - £200 How many people is this for? If it's just for you then that's a lot each month so you can cut it down. In out family we have 2 adults, a toddler in nappies and a baby on formula and we spend MAX £190 a month for food and toiletries.
Drink - £80 Is this for drinking out? If so drinking in is cheaper!
Mobile - 42.50 Can you cut this down to the minimum or go pay and go?
Tranport 51.96 Would it be cheaper to get a monthly ticket?
Total: £679.46


Outstanding Loans/Balances
Natwest Credit Card £395.07 16.9% (Interest free until 17th June)
Argos Card £214.62 25.9%
Argos Card £313.25 25.9% (Interest Free Until 26/09/07)
Argos Card £245.38 25.9% (Interest Free Until 12/06/07)
Hitachi Capital Loan £2978.34 29.8% (36 Monthly Payments of £151.86)
HFC £999 21.8% (48 Monthly Payments of £33.39)

Total: £5145.66

What are the minimum payments on your debts?

Also there's nothing on here for tv license, gas/electric, internet etc?

Storm

Hi Ashley :hello: and welcome to DFW,

OK, there's some areas on your SoA that can be reduced I reckon, primarily food, drink & mobile. Have a look at the OS board for ideas on how to make the food budget stretch - when I was a student (about 5 years ago now!) I spent £10 a week in the supermarket, and although I didn't eat brilliantly well it did get me through!

Drink - £20 a week can definitely be reduced - do you mainly drink in the SU bar? If not, start doing so! If you can cut down by even 1 drink a night the savings will start adding up. Mobile - this is an expensive tariff - can you switch to PAYG, or at least phone them to reduce the contract?

There's about £100 a month left over from your income, but you've not included any minimum debt repayments in your SoA, and the 2 where you've mentioned monthly payments more than use this up, so you desperately need to get your outgoings down a bit if possible.

I have a question about the Argos card(s) - is this 1 card with 3 different balances on it or 3 different cards? The reason I ask is that if it's all 1 card they get to decide which balance you're paying off each month, and they always take it off the lowest apr one first, so you'll be paying 25.9% interest on the £214 without paying off any of the capital.

With the Hitachi loan - give them a call to ask for a settlement figure - with loans all the interest is put on at the beginning as if you're making the standard payments, so paying it off early should reduce this figure quite substantially.

If that's not within possibility then I would say pay off HFC (again, phone for a settlement figure) and put any extra towards the Argos card. I know that the HFC is a lower apr, but I personally found that clearing one debt completely gave me a real buzz to keep going (and it's easier to overpay on credit cards than it is on loans!)

Come the summer will you be able to increase your hours at work or get a 2nd job? Can you advertise any text books around your college for the year below you to bring in a bit of extra cash?

Good luck!

RAS

Hi

Well done for posting.

I agree that the best option would be to clear some of the Hitachi loan, in theory. Do you know whether you can actually pay this back early without incurring any penalties?

Would suggest that you read the small print and that you ask them if you can make an early payment. Ditto the HFC payment.

If there are penalties, you need to clear all the first and third Argos cards, consider shifting anything you can to the second card if you have any interest free credit and wipe the rest off the Natwest card. Then save like mad to clear the second Argos card by September.

Looking at your SOA, that should be possible, as the food, drink and mobile costs should be easy to reduce. Also can you get extrea work over the summer?

ifstar

Hi there,
Not sure if you would be allowed to pay of the Hitachi loan, someone else may be able to answer this.

If it was me I would probably use your saving and -
Pay off Argos card at £214.62 and cut it up.
Pay off HFC in full (£999)
and make the minimum payments only on the other debts.

This is slightly more than your savings amount but you can probably make up the difference from the difference between your income and outgoings fairly quick.

After this you should try and the Argos card with balance of £245.38 as it's interest free period runs out next - then cut up the card. Pay as much as you can to this card and the minimum to the rest.

After this try and pay off the Natwest card as it's interest period is the next to run out. Pay as much as you can to this card and the minimum to the rest.

After this try and pay off the final Argos card of £313.25 as this stops being interest free in September.

You should now be left with just the Hitachi loan. You could try and see if you can overpay on that or if not then make the minimum payments but put the rest into an ISA until you have enough to be able to pay it off in full.


You should also see if there is anything you can do to your SOA to enable you to save more. On a quick glance, your mobile looks quite hefty - do you need it to be as much? It's coming in at £510 a year. Also your food bill is quite high if it's just for 1 person. You should be able to cut that in half with some planning and by visiting the Old Style board.

boo2905

Hi Ashley :hello:

Congratulations on facing your debts :T - you've come to the right place - there's loads of people on here who will give you some fantastic advice - some of them already have!! :j

Just a couple of thoughts from me - first of all how about selling some things on ebay? You'd be suprised what you can sell and even £5 a week would make a difference even though it doesn't sound it believe me you'd be suprised!

Secondly you should work out which debt is the best to clear first. The idea of this is snowballing where you pay minimum payments on everything and throw as much spare cash as possible at one debt so that it gets paid quicker - once that one is paid use the minimum payment from it to add to another debt - it sounds complicated but it's not really.

Third - Do you know if there are any penalty figures for paying extra money onto your Hitachi loan - if not an extra £10/£20 here and there could cut down your loan time period.

Good luck and keep us posted on how your going.

S

hypno06

Hi there, to see the difference that it would make paying various combinations of cards/loans off, have a look at the snowball calculator on https://www.whatsthecost.com.

Just put in all your figures and have a play - that way you can see how much difference it would make by paying off, say, your argos cards first, or your HFC loan etc.

The advice from other people is fab, get cutting down on that food and drink bill and you will soon be rid of your total debt.

Good luck!

ashleyhancock

I haven't checked if i have any entitlement as I am currently a student, in my final year so will be finishing in a month and will hopefully be earning more. Although I am still in doubt of whether I will pass the degree or not, so that may not be possible.

I would go freeview as I myself never watch TV, but the other 2 in the house demand Sky Sports, I pay slightly less that they do towards it because of this and that £20 I pay is also inclusive of internet access. Again with the phone, we all have mobiles so never us it for calls so I just pay a third of the line rental which is £13.95 I believe.

The food and drinks costs are for both me and my girlfriend as she doesn't have a job at the moment, but is planning on getting one in the summer. The majority of drinking is done at friends houses, but again as this is for two people it adds up.

As for the transport a monthly is £49 so yes it would be cheaper. I did have a yearly student pass which only cost me £270 but that ran out last month, and the adult one is £395, which would save me money but I don't really know whether it's a good investment or whether my savings would be better spent elsewhere?

I only have one argos card, I just seperated the balances as they are not all due now. The minimum payment each month is 4%. The minimum repayment for the natwest card is 2.25%

There is no gas on our property and the internet is included in the sky bill. As for the TV licence one of my flat mates pays for that and I don't have to worry about council tax yet as I'm still a student.

I will be able to work overtime during the summer even if can't find a full time job, and hopefully my girlfriend will get one too so that will ease off the money and food bill.

Thank you all for you advice, I think I've answered all your questions?

angelavdavis

Hi and welcome to MSE.

Well done for tackling the issue before it gets out of hand.

I have got a bit confused though by the details, so would appreciate clarification if poss.

ashleyhancock wrote: »

OK so I've finally realised I need to start taking action before my debt problem gets any worse. I watched the Debt Problem video and from the I think the first thing I should do is use my savings to pay off something, but I'm not sure what, obviously the Hitachi loan is the biggest debt, but unless I can put all the money up I've got to stick with the monthly payments right? The savings have just finished maturing in a 3 year bond so are instantly available. Any advice you can give me to help solve this debt problem will be greatly appreciated.

I think you are right to think of using the bond to reduce the debt, however, I think you could also make some savings in your current living costs too - suggestions below

Monthly Incomings:

My salary - £501.45
Student Loan - £275

Total - £776.45


Savings
Bond - £1155.45

Total £1155.45


Monthly Outgoings:

Mortgage/Rent - £250
Electric - £30
Sky £20 - can you not look at cancelling this and using freeview? I'm no expert, but If this is a new deal you might be tied in or have to give the box back, if you lose the box, a oneoff payment of £20 will get you a freeview box.
Phone - £5
Food - £200 - surely this could be reduced? Check out the old style board for ideas. I spend less than this for me and OH but don't buy much in the way of ready meals, etc. I reckon you could easily get this down to £75 a month with a little effort.
Drink - £80
Mobile - 42.50 - bit high - could you switch to a better deal (do through quidco to earn cashback) - check you are actually using your allowances you might be able to switch to a cheaper deal.
Tranport 51.96 - could you opt for a bike and save this plus get fit? People give away bikes on freecycle all the time - check out freecycle.org.

Total: £679.46

I reckon you could shave off at least £100 per month off this with a bit of clever moneysaving.

This is where I am confused - Are the remaining funds going on your debt repayments? This only leaves £96.99 per month but your repayments seem much higher. Have I missed something or are you struggling to meet the repayments? If this is the case, you have GOT to increase your income.

Do you pay council tax or water rates or is this included in rent?

Outstanding Loans/Balances - you have provided full detail for hitachi and HFC but are you only paying minimum or more each month for the other debts?
Natwest Credit Card £395.07 16.9% (Interest free until 17th June)
Argos Card £214.62 25.9%
Argos Card £313.25 25.9% (Interest Free Until 26/09/07)
Argos Card £245.38 25.9% (Interest Free Until 12/06/07)
Hitachi Capital Loan £2978.34 29.8% (36 Monthly Payments of £151.86)
HFC £999 21.8% (48 Monthly Payments of £33.39)

Total: £5145.66

Check you won't be penalised for paying a lump off the Hitachi loan. At the same time, check if you can increase your payments to reduce the loan period without penalty. I suspect you won't be able to do either. However, there are other ways.

Lets assume that the Hitachi Loan is fixed, I would be tempted to clear the Argos debts completely and pay off £232.20 off the HFC account. I would then increase the HFC repayments by the amount you are paying Argos each month (again, check HFC terms and conditions to ensure you won't be penalised). If HFC won't let you overpay, pay to the NatWest card - once cleared, put the money away every month into a bank account and once it has grown sufficiently, use to pay off the HFC balance.

I would then keep £150 of the remaining bond for a holiday, emergency funds or a treat for yourself.

If you have an OK credit rating, apply for a low life of balance card to transfer the HFC and Natwest debts to. That would leave you with the consolidated credit card at lob rate and Hitachi loan on higher repayments.

There are snowball calculators on this site to help you ascertain the order to pay off the debts but ultimately, you are tied to the terms and conditions of the credit agreement unless you can switch the debt to a more flexible term elsewhere.

If you have been clocking up Argos debts, does that mean you have stuff you can eBay to raise funds? You could try to reduce the HFC/Natwest balances before transferring by selling stuff. The overall debt isn't high so this would be an ideal way of reducing it.

I hope that has help and hasn't caused more confusion although more clarification on the repayments would help me offer more.

Thanks

ashleyhancock

Forgot....the phone bill was high as it was a special offer to get the phone I wanted....I'm a bit of a technofreak. Does anyone know if lowering my price plan would affect the phone in any way? Would I have to pay more to keep it or anything like that?

immoral_angeluk

How long have you had the contract? Normally you can't reduce the package within the first 3 months depending on your provider..