Stuck in a cycle

myteeduck

I am new to this really. Not stuck in alot of debt but i am stuck in cycle with my credit card. I got a credit card and used it one month, paid it off completly. Fine. However the money that cleared it, left me however much that month worse of. Because i was down on wages, i didn't have enough to live off for the month, so again it went on the credit card, which I then cleared the following month. Now I am stuck in the same cycle. The credit card is usually about £200 a month, so Im down £200 the next month, which then goes back on the credit card. I would absolutely love to exit this cycle. Im not paying any interst coz I clear the balance, but would prefer to live solely on my main account.

Can anyone give me any advice on how to escape the cycle. My ma just told me to stop spending, which ive cut down on, but its petrol, services etc for the car thats keeping the credit card running. I once tried to clear it but using my ISA (thought id rather clear it, than save for a while). Didn't quite work. Now i have no savings to clear it with!

Please help.
Rebecca

lynzpower

hi rebecca

Weve all been here, that one month you spend beyond your means and voila- you are in the cycle of debt. It can get worse, so well done for coming now before it gets too late.

Why dont you pop up your SOA and lets have a look at your income & your outgoings.

With things like car repairs - you SHOULD put away a certain amount every month, so that when the car inevitably needs its MOT & repairs, the cash pots there straight away.

Lets have a look at your income outgoings & all debts, and then we can offer some pearls of wisdom to help you get DF- and learn to budget so this doesnt happen for you in the future.

Lynz

the_cat

Well done on recognising a potential problem early on!

To budget effectively you need to account and save for all the big one off payments throughout the year so that they don't come up and bite you!
It sounds as though you might not be doing this.

Put together an SOA with all your yearly expenses included (divided into monthly payments) and you should start to see your true monthly costs

HTH Cat

myteeduck

So new to this, Whats an SOA??

lynzpower

Oh sorry, A SOA is a statement of affairs. read southern scousers "sticky" at the top of the forum

Its a list of all your incomes
all your outgoings ( literally everything you usually spend money on every motnh)
and your debt, how much, how much the min payment is , and the APRs.

Use martins budget planner at the top of the page to jog your memory

myteeduck

ok done one....

Incoming

Wages - £625.93 (approx)

Total - £625.93

Outgoing (JUNE) as example

Peugeot – £144.95
Alliance Credit card – £150.00
Specsavers Contact lenses - £15.00 (Fixed till I cancel)
O2 – £29.99 (Fixed till August) – never go over.
Savings in to linked account – £20.00 – Fixed till January.
Board to mum - £60.00 (Fixed till get full time job)
Savings to mum account - £20.00 (Fixed forever – used to go to tax but now only pay £40.00 per year it will be xmas fund).
New look Store card – 50.00 Approx– (I know its naughty, but I pay it in full)

Total – 489.94

Remaining – 135.99.

APR – alliance credit card – 16.9% (always pay in full, never let interest occur)

ISA – £40.00
Savings Account – 40.00

chunky79

:hello: welcome to dfw

What i did, i did it over 3 months paid a little interest but it did break the cycle for me.

the_cat

well done, you have made a good start. The problem seems to be that there are a lot of things missing from the list. car tax and insurance petrol food/snacks at work socialising birthdays etc will all crop up whether you allow for these or not.

A good budget will add the yearly cost of all of these (and any other things you will have to pay) and divide by 12. This amount then gets put aside each month and what is left over AFTER that is the amount you have left to spend.

Personally I would leave the saving until I had got the monthly spend sorted out and within budget. Even if you clear the card every month you are running fast just to stand still!

HTH

myteeduck

right, i have enought to pay every debt i have each month. My problem is not the clearing of the debt. its adding more debt as time goes on. i can always pay it. I have £135.99 left this month. i takee packed lunches to work each day. Birthdays are paid for in the month they occur and they get added in to the budget for that month in the month before, so i know if i have a birthday in for example june, a budget for it in may. I work out how much ill need and cut the spending fdor that month to pay it. I rarely spend alot anyway. I dont drink alcohol so nights out are not for me, im happy with a glass of cola, so a night out only costs me £2-3 and often my boyfriend pays. (He doesn't have a credit card or any debts). he only has £20 a week bored and £30 pm phone bill. He also works as a builder so has plenty of money. Not sure what his take home pay is tho, we dont live together as we still live with our parents. he has taken on an extra job as he wants to save for a 2 week holiday this year. he will have given me about £60-80 this week for it. (I cant spend money that isnt mine so im ok keeping hold of it). my dad is paying my share of the holiday, as a present coz he had a £12,000 windfall from a policy they took out with a mortgage (don't really underrstand), he has treated my mum, sister and so im treated with my summer holiday). My main problem is QVC! I work there in a reatil discount outlet selling the products for a reduced price. As im staff i often have full pickings of the stock. (designer bags, make up, products) so i started to buy some. Well that turned out to be a bad idea, coz that is the main reason my bill ends up being £200.00 a month. My main problem is how to take the temptation away, coz the way i see it, is its all sicounted stock, costing a hell of alot less if i bought it else where, but i cpuld live without the stuff.

I know people live by the rules of if its not useful dont buy it, do i really need it etc, but it doesn't work with me. i have tried this past week to put the item away for a few days and really tyhink about it, and i have ended up putting things back.(Yippee), i cant stop myself for ever. I need to learn how to limit myself. its like an addiction, i cant stop completely but i do need to cut down. this is my problem.

if i didnt work there the temptation would stop, but the pay is so good for the work i do that i havent found anywhere suitable to go yet. My sis told me also that people spend what they have. so if you earn 9,000 you tend to spend it and if it increases to 15,000, you dont save the extra 6,000 you tend to spend 6,000. also that if you only earned a £5 a week, you could spend a fiver a week. so im also frightened that if my income increases (ive just left uni) my spending addiction will move shops! so i want to nip it in the bud now. Also i can sell the stuff i buy on ebay as i could lose my job!

i dont class my student loan as a debt altho it is approx 11,000 due to the fact i only pay it at a rate of £7 a week, it comes out before i see it, ill probably never pay it off, and its stops when i have a family or earn less than 15,000 a year.

My car payments equal 7,000 approxd with 2,000 to pay at the end but i dont intent to keep the car at the end, but to trade it in and start again, hopefully bringing the payments down slightly.

the remaining money i have each month tends to go on petrol only and may be one or two magazzines. like i said car tax is £40 a year, and not due till end of April 2008. Car insurance is £300 max and due in sept. (that may be my only problem cost).

hope someone could help wth the spening addiction. If i was to stop the monthly saving i would end up spending on something else, so at least this way i will be prepared for xmas and for a rainy day next year (the alliance one £20 is fixed, cant stop it and cant access till jan 08.).

Thank in advance. think i hve covered every little snippet.

lynzpower

I know people live by the rules of if its not useful dont buy it, do i really need it etc, but it doesn't work with me. i have tried this past week to put the item away for a few days and really tyhink about it, and i have ended up putting things back.(Yippee), i cant stop myself for ever. I need to learn how to limit myself. its like an addiction, i cant stop completely but i do need to cut down. this is my problem.

the thing is - once you get into putting thngs back thinking seriously about want & need, it becomes easier not harder.

Storm

You say you can't sell the stuff on Ebay cos you may lose your job - which I can understand, but can I suggest to re-read the relevant policy again? I would have thought that there would be a reasonable amount of time after which stuff you bought could be sold on, purely because it's yours & you've got the right to decide to get rid of it at a later date!

Perhaps an honest conversation with your line manager along the lines of, I need to raise some cash for a holiday/car insurance etc and I was looking at selling off some stuff, but am worried about the policy would enable you to clarify exactly what their rules are and where there is leeway.

In terms of paying off the credit card once & for all, I would suggest that when it's cleared at the beginning of the month you try saying that it can only be used for essential spending (i.e. petrol, food, basic toiletries) and not for anything non-essential. Hopefully a couple of months of this should bring the total down, so that you can start leaving it at home.

The other option would be to get a 0% deal on a new card (cancelling the old one!) and transfer the balance - the new card is left at home cos it would be horrendous APR on purchases probably, and you work out a budget based on getting the balance paid off before the end of the 0% period (i.e. if you transfer £200 over for 6 months you pay £33.33 a month)

However - I would only recommend getting a new card if you think you'll be disciplined enough to cancel the old one & not spend on the new one!