I've got myself into a MASSIVE debt in 9 months...

Newyorkdreams

Did you have your party weebit?

weebit

Newyorkdreams wrote: »

Did you have your party weebit?

Not yet. We've set a date in July 2014 for that. which means plenty of time to save up for it!

FireWyrm

Halifax Current Account..........1995......31........£1/day
Barclaycard - Me...............1740......43........29.9

Deal with these two first, the Current Account as a matter of urgent priority. Next deal with the second Barclays card using the repayments from the overdraft and B'card one. That will get you some headway. Throw all the £873 you claim to have at the end of the month towards those two above and get shot of them asap. BTW, are you really sure you do have £873 at the end of the month, or is that a guess? You need a really rigid budget to know for sure. Your food bill is excessive also, I feed 5 on £250 a month, so you ought to be able to do a bit better than that. £150 a month between two adults is quite sufficient. I suggest you work hard on meal planning, budgeting buying food to eat rather than 'enjoy' and take a close look at the Old Style board for some really good ideas in that department.

Good to hear you're getting back on your feet.

weebit

FireWyrm wrote: »

Deal with these two first, the Current Account as a matter of urgent priority. Next deal with the second Barclays card using the repayments from the overdraft and B'card one. That will get you some headway. Throw all the £873 you claim to have at the end of the month towards those two above and get shot of them asap. BTW, are you really sure you do have £873 at the end of the month, or is that a guess? You need a really rigid budget to know for sure. Your food bill is excessive also, I feed 5 on £250 a month, so you ought to be able to do a bit better than that. £150 a month between two adults is quite sufficient. I suggest you work hard on meal planning, budgeting buying food to eat rather than 'enjoy' and take a close look at the Old Style board for some really good ideas in that department.

Good to hear you're getting back on your feet.

Actually, the effective interest on the current account is 18.25% on my balance of just under £2000 (365/2000=0.1825). So therefore the 2 Barclaycards are getting dealt with first which will probably take us till some time in summer, After that will probably be the Nationwide card at 19.9%, and then the overdraft. By the time those have gone, all of my 0% deals would probably have run out so I'll be on the hunt for a few more.

In fact, I forgot to mention that shortly after my wife returned home, MBNA doubled her credit limit to £7000 so we transfered a load of money from the Barclaycard to that at 0% for 12 months! Figure that one out... she was out of the country for 10 months with no income and they still increased her limit! craziness!

FireWyrm

weebit wrote: »

Actually, the effective interest on the current account is 18.25% on my balance of just under £2000 (365/2000=0.1825).

You are paying £360 a year for the privilege of having the overdraft which is dead money and goes to pay nothing other than the fee. Kill the overdraft and then snowball not only that payment but the £31 a month into the bargain to the other debts. If you really do have £873 spare a month, you could clear that overdraft in 3 bites and be done with in in March.

weebit wrote: »

So therefore the 2 Barclaycards are getting dealt with first which will probably take us till some time in summer, After that will probably be the Nationwide card at 19.9%, and then the overdraft. By the time those have gone, all of my 0% deals would probably have run out so I'll be on the hunt for a few more.

I disagree...see above. However, it is ultimately your decision. Why dont you model both ideas in Excel and see which comes out better?

weebit wrote: »

In fact, I forgot to mention that shortly after my wife returned home, MBNA doubled her credit limit to £7000 so we transfered a load of money from the Barclaycard to that at 0% for 12 months! Figure that one out... she was out of the country for 10 months with no income and they still increased her limit! craziness!

Not really... I can get myself into about £23K worth of trouble across my credit cards (currently being used for 0% deals) if I wanted to...now, that's crazy.

weebit

FireWyrm wrote: »

You are paying £360 a year for the privilege of having the overdraft which is dead money and goes to pay nothing other than the fee. Kill the overdraft and then snowball not only that payment but the £31 a month into the bargain to the other debts. If you really do have £873 spare a month, you could clear that overdraft in 3 bites and be done with in in March.

I disagree completely. Why would i pay off a debt with an interest of 18% before a debt with an interest of 29.9%?

I've ran the numbers through Excel, and assuming i pay £800 a month towards the debt, by pay off barclaycard first, then halifax i would be charged £904.72 in interest between the 2 accounts. if i paid off the halifax first, i would be charged £1038.31 in interest. that means i'll be £133.59 better off by paying of barclaycard first

ViolaLass

I can't get over how crazy I think you are for wanting to spend £4-5k on a party when you're that much in debt! If having the party is that vital, fine, but surely you could spend a lot less?!

ValHaller

weebit wrote: »

I disagree completely. Why would i pay off a debt with an interest of 18% before a debt with an interest of 29.9%?

I've ran the numbers through Excel, and assuming i pay £800 a month towards the debt, by pay off barclaycard first, then halifax i would be charged £904.72 in interest between the 2 accounts. if i paid off the halifax first, i would be charged £1038.31 in interest. that means i'll be £133.59 better off by paying of barclaycard first

I used to think like you. But there is 1 real killer reason to deal with an overdraft, to do with the nature of the contract.

An overdraft may be recalled instantly. OK you would probably have a month to clear it, but as I say, in principle, it could be taken from you with no notice. If that happened, all the struggles you have had to stay afloat will come to nothing, you would go into default. And the fact that you are in such a financial pickle may mean that the bank will recall the overdraft to protect itself, because they can. And we have seen it happen on these forums.

Now, if you have already defaulted, the question becomes a little different - instead of trying to avoid a default on your file for 6 years, you are looking at another default which may last just a year or so longer. In which case you may as well load your overdraft to the max while you have credit at higher APR's

Having said that, there is a psychological reason to stay out of overdraft, which is that if you can do this, you know that your day to day living is in balance and you debt is just some history you have to deal with.

katsu

thanks for coming back and updating us. I am glad your wife is back OK and hope you are both very happy.

Honestly, our debt was never as high as yours but we used some credit on our wedding too

I hope you can slay as much debt as you can and get out of it as soon as possible as your current debt is rather scarey.

It is a long haul for you so just stick with it.

All the best.

weebit

ValHaller wrote: »

I used to think like you. But there is 1 real killer reason to deal with an overdraft, to do with the nature of the contract.

An overdraft may be recalled instantly. OK you would probably have a month to clear it, but as I say, in principle, it could be taken from you with no notice. If that happened, all the struggles you have had to stay afloat will come to nothing, you would go into default. And the fact that you are in such a financial pickle may mean that the bank will recall the overdraft to protect itself, because they can. And we have seen it happen on these forums.

Now, if you have already defaulted, the question becomes a little different - instead of trying to avoid a default on your file for 6 years, you are looking at another default which may last just a year or so longer. In which case you may as well load your overdraft to the max while you have credit at higher APR's

Having said that, there is a psychological reason to stay out of overdraft, which is that if you can do this, you know that your day to day living is in balance and you debt is just some history you have to deal with.

These are all thoughts that have run through my head over the years. The overdraft is left from my student days. I got a limit of £750 in 2002 when i started university, and this was increased to £2750 in 2008. I used to be right at the £2750 limit but over the years as Halifax have changed the charges for using the overdraft, I've changed what my balance is, firstly down to £2500 and then down to £2000. I do get nervous every March when they review my limit but t's not changed for almost 6 years. I do know that they can recall the overdraft whenever they want, but based on my past dealings with Halifax, I am not expecting them to do that. I also have a credit card with Halifax and recently they increased my limit from £500 to £1000, and also reduced my interested rate from 20.95% to 15.95%, so I have a feeling that I have a (relatively) good standing with them.

I should probably also mention that my main bank account is with Natwest which is where my wages go to and all bills get paid from. I do not have any debt with Natwest.