In a bit of a mess (again)

sarah0404

Hello, I had a LBM over a year ago. Reduced my spending, changed all my credit cards to 0% cards, changed to cheaper gas/electric suppliers etc. But, instead of seeing an improvement things have not got much better. I did a terrible thing! The thing I always advise everyone NOT to do!!! I got a consolidation loan from my bank. My partner was changing jobs, and we needed to free up some money in the budget for a car for transport to his new job. (we sold our car last year at the start of the DFW journey.)

Instead of working out nicely, one of the loans we consolidated was owed a lot more than we thought. Then my partner asked the bank to add on a couple of credit cards to it too, so we have actually ended up paying MORE than we were paying before. And paying for car running costs on top of that!

He has started yet another new job and is earning more money, but I am not seeing any difference. I am only able to make minimum payments on the credit cards we still have, my 0% offers have long since run out and I am being declined for any new ones I apply for.

I'm not too sure how best to tackle the debts. The first thing I need to do is get my bank accounts under control. One is constantly £100 to £200 overdrawn, and the other is about £400 overdrawn. No charges for those overdrafts thankfully! Then what do I do? I owe my mum about £1,300. I have been paying her back at £70 a week, but I have had to reduce this this week because I just don't have enough money to cover it. I only paid her £35 this week. I have about £1,000 + on each credit card. Their minimum payments are around £30 each a month. APRs are 16.9% and 17.9% Plus there is the big consolidated loan. I think it was for about £24,000 :eek: I'm paying it over 7 years - although I hope to have paid it back long before then. It is costing me £98 a week, which really is a lot of money.

I'm just a bit depressed. I have been wanting to buy a pin board for the kids pictures to go on, and to cover up a damaged piece of wall paper in the living room, but I just can't afford it! Every week the money comes in, it feels as if it has already been spent. I've been saving £10 a week since the start of the year for Christmas and birthdays, but every week I've had to pull the £10 back to stop my account going over it's overdraft. My xmas savings are a pathetic £10.59.

I can't really do a full SOA as I'm not too sure how to work out my partners earnings. He's only been in his new job for a month. His earnings are paid weekly and are variable from £200 to £600 a week. I know my outgoings are reasonably low though. Its just the debt payments that are killing me.

Any advice? Please tell me that it gets easier and that I will see an improvement soon!

GirlRacer_2

Hi Sarah, well done on posting. Can you do a new SOA to reflect all your incomings and outgoings and then maybe we can all have a look for you.

Dithering_Dad

It gets easier and you will see an improvement soon.

fruitycar

sarah0404 wrote: »

I have been wanting to buy a pin board for the kids pictures to go on, and to cover up a damaged piece of wall paper in the living room, but I just can't afford it!

have you tried Freecycle ?

sarah0404

I don't know how much use my SOA will be since I don't really know what our income is, but here are my outgoings.

Rent - 217
Council tax - 93
TV licence - 11.37
Virgin (tv/phone/internet/call charges) 65 - could reduce internet package but it wouldn't be that much cheaper. I have looked around for better deals, but most of them I'd have to pay connection or installation charges, so not really worth it.
Electric - 35
Gas - 15
Food/toiletries/cleaning products/pets etc - try to stick to a budget of £65 p/w, but usually go over by a bit. Probably about 300.00 p/m (2 adults and 3 children + 2 rabbits) Maybe over estimated a bit but better to over estimate than be under.
Daughter's maths classes - 45
Daughter also has swimming lessons at £18 per 8 lessons, so I put £10 a month by to pay for those.
Partner has a mobile phone. Just a new contract so I'm not totally sure how much it is a month. Think it is about £40 :eek: He has a work phone (paid for by his work) but can't make any outgoing calls on it. He needs his mobile to phone me - he works away, delivering vehicles and he needs me to check out train times, B&Bs, maps and stuff. But, he is looking into free mobile to mobile calls to one specific number. He is going to convert an old phone to PAYG for me, so I can receive calls from him on that. So he should be able to reduce his tarrif to a cheaper one.

Car - not budgeted for at all. Just paid the insurance on the credit card!
Petrol - probably about £20
LPG - £40
Road tax - should really be putting something by for this. It is due in Sept.

I try to save £40 a month for xmas and birthdays - but as I already mentioned I don't seem to be able to manage this.

DEBTS
RBS loan £400
A&L CC £30 (minimum 15.9% apr)
Egg CC £21 (minimum 17.9% apr)
Amazon CC £30 (minimum 17.95% apr)
Loan from my mum (0% apr!) £280
Overdraft with RBS £250, is at -140 right now
Overdraft with A&L £600, is at -400 right now. Need to pay something towards these to get them at least back to £0.

Total: £1692.37

INCOME
child benefit £160
WFTC £500 (approx)
Wages - not too sure. No less than £200 p/w. Could estimate it at £300 p/w making it £1200 a month.
I do mystery shopping, online surveys etc, but don't really make anything worth mentioning.
total: £1860

So I should have about £150 left over. Should probably put some of that by for the road tax, and start paying something towards my overdrafts. If my partner can earn more than £300 p/w then that would be really helpful in paying the credit cards down. (have just been looking at snowball debt calculator and if I can pay £300 a month on one of my cards it will be paid off by November!)

I'm not sure what I should work on 1st though. Should I do the overdrafts, even though they are only charging a few pennies per month - and one of them is free, or should I work on the higher interest credit cards? I feel like I shouldn't be paying off the cards until my bank accounts are balanced.

onedayiwill

Couple of questions:
What are the Maths classes?
Does your daughter needs swimming lessons, or would a cheaper trip to the pool just to enjoy swimming be sufficient?

Not suggesting you cancel them necessarily - just wondering if there are any savings to be made.

You already know that £40 per month for a mobile is too much...

It would help to increase your family income - are you able to work, even part time? You're already doing some mystery shopping etc so won't make those suggestions. Have you anything you can sell on eBay? Amazon? etc?

The advice would be to pay off the CCs first as they are costing you more than your overdrafts. However, I chose to ignore this - I always have been a bit contradictory -- and pay my overdraft first because of the psychological boost it gave me to see my bank account consistently in the black.

I'm sure there is more but someone else will be along soon for that ...

onedayiwill

Oh ... the loan from your mum. I know we all morally want to pay our family obligations first. But if you can negotiate a lower monthly payment with her that would go a long way to helping you get rid of your overdrafts and credit cards.

gazelleintense

I'm not shocked that consolidation didn't help... it never does... moving debt around does nothing... paying it off and not having it works every time.

You can't borrow your way out of debt (Believe me I've tried).

0% credit cards also mean nothing... if you still have the debt. paying off and not having the debt is the way to go.

sarah0404

I don't suppose my daughter needs either the maths or the swimming lessons. I have thought about the maths many many times. It is a lot of money every month. I teach my daughter at home, so I like that she gets to work in a class room environment in case I ever have to put her into school. Plus she gets daily work books to do, so I don't have to buy any extra maths materials for using at home. She likes going to the classes, just doesn't much like doing the homework! So... it's hard to know what to do.

Swimming - she is almost swimming. She just needs a little bit of extra help, but because the instructors aren't actually in the pool she isn't being shown exactly what she needs to do to swim. My son is now old enough for lessons too. Taking them myself would probably be cheaper, but the thought of trying to look after 3 small non-swimmers by myself scares me! The thought of wearing a swimsuit scares me even more! But I will look into it. I'll check out the prices or see if we can get a frequent user card or something.

I don't think I really have anything I could sell. I was just about to sell all my baby clothes, nappies, maternity stuff etc, but then found out I was pregnant. Typical! :rolleyes: I know it sounds really terrible, but I will be able to claim more child benefit and tax credits with another child. Babies cost practically nothing, so I will be able to put the money towards my debts.

I have been looking around for a part time job, but with my partner working odd hours it would be hard to sort out childcare. Plus I don't think anyone would employ me at 20 odd weeks pregnant. I need to come up with a job I can do from home!

I agree about paying back the overdrafts first. I know its the wrong thing to do in the terms of interests etc. but I don't like living so close to the edge! If I go over the £250 overdraft I will get bank charges. If I can keep my accounts above zero then I will feel like I have some money.

I will try and sort something out with my mum. Its just that owing my mum is more scary than owing the banks! I keep thinking if I just pay as much as I can to her then I can pay her off quickly and use the money for the next debt. I'm sure she won't mind though, as long as I am paying her something every week.

onedayiwill wrote: »

Couple of questions:
What are the Maths classes?
Does your daughter needs swimming lessons, or would a cheaper trip to the pool just to enjoy swimming be sufficient?

Not suggesting you cancel them necessarily - just wondering if there are any savings to be made.

You already know that £40 per month for a mobile is too much...

It would help to increase your family income - are you able to work, even part time? You're already doing some mystery shopping etc so won't make those suggestions. Have you anything you can sell on eBay? Amazon? etc?

The advice would be to pay off the CCs first as they are costing you more than your overdrafts. However, I chose to ignore this - I always have been a bit contradictory -- and pay my overdraft first because of the psychological boost it gave me to see my bank account consistently in the black.

I'm sure there is more but someone else will be along soon for that ...

sarah0404

gazelleintense wrote: »

I'm not shocked that consolidation didn't help... it never does... moving debt around does nothing... paying it off and not having it works every time.

You can't borrow your way out of debt (Believe me I've tried).

0% credit cards also mean nothing... if you still have the debt. paying off and not having the debt is the way to go.

Of course, you are right. I didn't consolidate to get out of debt though. I consolidated to try and free up some money so I could afford to run a car. But it didn't work out the way I hoped it would. I have advised many people on these forums not to consolidate. It never addresses the real problem - which is usually overspending. Six months down the line you find yourself in exactly the same position. I am hoping that the loan will only be temporary though. Once we have cleared the credit cards etc then i will have more money to pay towards the loan and get rid of it as fast as possible.

I do disagree with what you say about 0% cards though. My minimum payment on one card this month is £30. £17 of that is interest, so I'm only clearing £13 off my balance! That's practically nothing. If I had 0% interest then every £30 I paid would be coming straight off the balance, bringing the total down much faster. While I can only afford to pay measly amounts to my credit cards then 0% cards mean a lot.

SarahNeedle1872

sarah0404 wrote: »

Of course, you are right. I didn't consolidate to get out of debt though. I consolidated to try and free up some money so I could afford to run a car. But it didn't work out the way I hoped it would. I have advised many people on these forums not to consolidate. It never addresses the real problem - which is usually overspending. Six months down the line you find yourself in exactly the same position. I am hoping that the loan will only be temporary though. Once we have cleared the credit cards etc then i will have more money to pay towards the loan and get rid of it as fast as possible.

I do disagree with what you say about 0% cards though. My minimum payment on one card this month is £30. £17 of that is interest, so I'm only clearing £13 off my balance! That's practically nothing. If I had 0% interest then every £30 I paid would be coming straight off the balance, bringing the total down much faster. While I can only afford to pay measly amounts to my credit cards then 0% cards mean a lot.

0% is great providing u actually pay the £30 off each month - it's very easy to think 'Oh it doesn't matter if I only pay the min this month, I'm not accruing interest' believe me, I have been there!
What I have found is working for me with my 0% is...
Firstly cut as much as possible out of your monthly spend - change utility providers, sign up for cash back sites, sell anything and everything on eBay/Amazon (in my house, anything that isn't nailed down is listed on eBay!), cancel unneccesary spends like smoking, sky, gym etc. Meal plan, shop as cheap as possible, do a storecupboard challenge, reclaim bank charges etc etc etc.
Then Budget Budget Budget. I have learned from this site, that u haver to budget for EVERYTHING, even down to the daily paper. If it's not essential, and u can't afford it, don't get it.
.... sorry this is long, but if even one bit helps you, it'll be worth it.....
Once I'd done all this, I decided how much I could afford to pay off my CC each month. I pay the min off my 0% card, and put the rest in a high interest savings account, known as the 'DFW Account' which is not touched under ANY circumstances. The plan is that at the end of the 0% term, I will have enough money to pay off the balance, if not, I will 'tart' again until I can afford to pay it all off. I am luck that I have a reasonable credit rating, so haven't found it too difficult to get a 0% card.

When u have a better idea of what ur DH is earning, and can do a more definitive SOA, get urself over to www.whatsthecost.com and have a play with the snowballing sheet. I find that really helps me keep a focus on saving money towards my DFD - U see that even an extra £5 a month on ur debts can make a massive difference. Also have a look at Old Style Money Savings for some great ideas on reducing shopping bills (I never knew there were so many things that could be done with white vinegar and bicarb of soda!)

But most importantly, keep posting heer because there are thousands of people with millions of ideas, and u'll get nothing but support.

Good Luck

Sarah x