New Poster - Seeking Advice

michaelmcw

Hi everybody. I am new to this forum and am just looking for some advice. My current list of debts are as follows:

Credit Union - £2,750 (try to pay £100 per month)
Loan 1 - £5,800 (paying £198 per month)
Loan 2 - £4,000 (paying £278 per month)
Credit Card - £1,000 (minimum payment all I can afford)
Store Card - £260 (minimum payment all I can afford)
Overdarft - £800 (always at maximum by month end)
Total Debt = £14,610

I have savings of £1,150 which are linked to my Credit Union borrowing.

I earn £27k per year.


I desperately want to rid myself of this debt and move on with my life. My girlfriend wants to get engaged / married soon but I can't afford either. The thought of trying to secure a mortgage with this level of debt is impossible.

My credit rating is poor as sometimes I have fallen a month behind on payments (i always make it up though).

Long story short guys. Is there any tips you can give to help me increase my credit rating or pay of debts any quicker?

Should I get rid of a particular debt first? Should I cancel a card once I clear it or leave it with a zero balance?

Is it possible to get a mortgage even if you have had a few missed payments in the past 24 months or will I need to wait for 3/4 years?

Happy to answer any questions. Don't know where to turn really as this is starting to depress me.

paulwellerfan

Post up your SOA and the good people on here will take a look at it.
remember to put in the intrests rates for all the cards loans etc.

moohound

Post an SOA and we can help.

http://www.stoozing.com/calculator/soa.php

You might be able to use the snowball method to clear them faster, paying a bit off each every month will take an eternity.

michaelmcw

Hi guys. See SOA below:

Statement of Affairs and Personal Balance Sheet
Monthly Income Details
Monthly income after tax................ 1660
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1660
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 120
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 30
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 40
TV Licence.............................. 0
Satellite/Cable TV...................... 10
Internet Services....................... 0
Groceries etc. ......................... 120
Clothing................................ 0
Petrol/diesel........................... 200
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 40
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 43
Presents (birthday, christmas etc)...... 0
Haircuts................................ 8
Entertainment........................... 140
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 751

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 4000
Other assets............................ 0
Total Assets............................ 4000

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................1000......35........29.9
Santander Loan.................3900......278.......10.9
Credit Union...................2750......100.......14.9
Overdraft......................800.......0.........0
Store Card.....................260.......25........29.9
Tesco Loan.....................5800......198.......12.9
Total unsecured debts..........14510.....636.......-

Monthly Budget Summary
Total monthly income.................... 1,660
Expenses (including HP & secured debts). 751
Available for debt repayments........... 909
Monthly UNsecured debt repayments....... 636
Amount left after debt repayments....... 273
Personal Balance Sheet Summary
Total assets (things you own)........... 4,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -14,510
Net Assets.............................. -10,510

[Deleted User]

TV Licence........... 0 - Satellite/Cable TV No TV Licence :huh:

Emergency fund.... 0 - You really should have something in here.

You have £273 left, yet you are paying just £25pm on a 29.9% Store Card :huh:

At that rate, you will pay another £36 in interest, by the time you have paid it off.

Likewise, the Barclaycard. At the rate you are paying it, it's going to take you another 49 months to pay it off, and cost you £687 in interest.

If you paid off the Store Card now, then used the £25 toward the Barclaycard, that alone would reduce your Barclaycard debt to 22 months, and the interest to £267.

If you used the £25 and £200 from the £273 you have left each month (ie. £260pm), you could have the Barclaycard paid off in 4 months, and pay just £37 in interest.

29.9% really is buying money, so you would be well to get rid of those two debts as quickly as possible.

Malkin157

Forget about buying a house in the short to medium term, you can't afford it.

Your rent is currently £120, whereas mortgage repayments would be significantly higher. Plus you need a deposit.

So you need to forget about that and use this period where you have low monthly rent to clear all your existing debts.

A mortgage is just another debt, yes it is nice to own your own home, but the old adage of "you can't go wrong with bricks and mortar" is finished, the greed of government and landlords has put paid to that for the foreseeable.

In terms of your existing debts, if you REALLY have £273 pounds spare at the end of the month, then this shouldn't be a problem.

Using the £273 - lets call it £250

Month 1 - clear Store Card (frees up £25 - add to repayments)
Months 2, 3, 4 ,5 - clear the barclay card (frees up £35 - add to repayments)
Months 6 to 15 - clear the credit union (frees up £100 - add to repayments)
Months 15 - 30 - clear the tesco loan (frees up £200 - add to repayments)
Months 30 - 36 - clear santander.

Debt free - 3 years.

- Of course try to avoid anymore debt during these 3 years.

Good Luck.

moohound

There are a few zeros, clothing, TV licence, car insurance/tax/repairs.

There should be some money left over to chuck at these debts but you say the minimums are all you can afford, do you know what the rest of the money goes on?

Mobile is a bit high, is it a new contract or could you get cheaper/sim only?

Does the overdraft really cost nothing?

The Store card should be the first target, then the Barclaycard.

Always start with the highest interest debt first, if two are the same interest rate, then pick the one with the smaller balance.

Have you got anything you don't use, old phones, gadgets to sell/eBay, I don't mean part with your useful possessions, I mean stuff you really don't use and won't miss.

I would hang on to the savings for now in case of disasters, like your car packing up.

harrys_dad

£140 a month for "entertainment"? That seems very high indeed. I suggest you slash this amount and use the advice above to really go to work on the high interest debts.

michaelmcw

Thank you to all who have replied.

No tv license as I still live with parents and it is covered in my contribution to other bills / groceries etc.

Phone unfortunately is 12 months into a 24 month contract but will be reduced as soon as is possible.

Store card is first on the hit list then. Avoiding future debt has always been my downfall. All cards (bar current account) have been cut up and with a pay rise this year I was hoping to be debt free by November 2014 (before i turn 30). That's my plan however ambitious it may seem.

foxgloves

Hi,
Agree with previous posts. Concentrate all your efforts on 'snowballing' your debts while you are living at home, to get rid of them & have a fresh financial start. Start with the storecard & don't ever take one out again. They hook you by offering 20% or so off the first purchase but the interest rates are massive. You may as well pop outside & poke wodges of your cash straight down the drain! It's so tempting to buy stuff, & adopt a lifestyle that your income simply can't sustain without going into debt. We've done it, & so have many, many other people on here. The money that you have coming in each month is YOUR money, so you must budget so that all your essentials (always pay these first) are covered, plus a little for building an emergency fund, then the non-essentials like going out, entertainment, etc. If this comes to more than your monthly income, you won't get rid of the debt. If you pay it off but go back to not living within your mean, the debt will grow again (been there, done that X about 20 times!). Bear in mind at all times that if you are having to go into or extend an overdraft to pay for something, or put it on a credit card or loan, that's someone else's money you are using, not your own, & you will be paying them handsomely for the privilege. Get rid of the debt now, so that it doesn't hamper any future plans to buy a house or do some of the things you'd like to be able to do. I aimed to be debt-free by 25, then by 30, then by 35, then by 40......(I also acquired a similarly debt-ridden tho' very lovely husband along the way!) but I didn't finally achieve it till 2011.......from pretty much continuous debt since I was a 19 year old student. 3 key messages: 1. Accept that you MUST live within your means (i.e your income, not what banks will lend you) 2.Work out a monthly budget each month when you get paid & stick to it. 3.Learn the difference between a 'want' & a 'need', especially while the debt-busting is underway. Good luck with it.....don't take as long as we did!

michaelmcw

Thank you.

I have to make this work or I will lose the person most important to me. I wish I had met her 10 years ago.