Money transfer to pay off OD and also CCs

Eels100

I'm in a very tight spot and struggling to think clearly so I'd really appreciate any words of wisdom on this.

We have a good income but high outgoings and about £2k debt. My husband is hoping to change jobs which will involve a pay cut, but the saving we make on fuel and car maintenance will make up the difference. We will need a little more childcare but currently tax credits would cover this.

I have a £1100 overdraft costing £20/pcm
I have a £450 CC at 16.9%
Husband has a £450 CC at 17.9%
Two other CCs totalling £600 at 0%

I currently pay £110 pcm off the 0% ones but a series of disasters recently has led to us both having to spend on our CCs. We've also had increased childcare costs and are basically at the tipping point where we're spending more than we're taking in. Not really on anything frivolous either anyway I'm hoping to pick up some extra work to give us some more income.

So, I'm thinking the best thing is to grab that Virgin 0% for 26 months card and pay off everything - my OD, both our high-interest card. Then just make minimum payments until the £110 is available to throw at it in 6 months time. Obviously I'd cancel the overdraft and cards once cleared. Leaving me 20 months to pay £110/pcm off a £2000 debt.

The only major problem is that we have no savings, and things like car/house maintenance, Christmas and stuff aren't affordable on our budget. If I cannot earn more then we will have to resort to the CC to cover emergencies. But I can't see a way round this really, we have very few unnecessary outgoings.

Am I right in thinking this is the only way forward that makes sense? My head's a fug just now

pennies_from_Heaven

Sounds like a plan to me. If nothing else it will give you breathing space whilst you get everything sorted with regards to more work, and for your oh to settle in his new job and to adjust to childcare issues.
Are you planning on putting the current 0% cards onto the new card? I probably would leave them as they are as it will cost you to transfer them, then when the 0% deal runs out move them then as Virgin have 0% offers nearly all the time once you are with them.
Other than that, how about put your soa up on here so others can help you cut back in places which you may not have spotted yourself?
£2k is not high debt my any means, but I think the real issue is sorting your outgoings now so it doesn't get any worse, so please do consider putting up that soa as it is very easy for debt to run away with you, speaking from experience!
Hope that helps,
Pennies xx :A

Ilona

Hi OP, you wrote an almost identical post one year ago, you posted your SOA then. Does that mean that nothing much has happened in the last year? I suggest you look hard at your outgoings, and cut them to the bone. You need to curb your spending, which will free up some cash to pay your debts. It is doable as long as you knuckle down and be strict with yourself.
Ilona

Voyager2002

Yes: go for it, but then be very disciplined...

At present you are paying an awful lot in interest (above all the cost of your overdraft), and once all the debt is at 0 per cent the money now spent on interest will be available to build up an emergencies fund. Do, however, see this as being a first step rather than a solution: visit the "debt free wannabee" and "money saving old-style" sections of this board for good and supportive advice on ways of reducing your living costs.

milky1991

basically at the tipping point where we're spending more than we're taking in.

This is the main problem, I'm not preaching but this is what you have to address however you do it I wish you well

If your spending more than your earning you have to cut costs somewhere be it on household bills, petrol,food or by swapping credit cards whatever you can do

Good luck

Eels100

Aha well remembered Ilona.

Things are better in that DH's OD is gone, and the big NatWest card and the little Halifax card are on the way to being paid off within 6 months. But unfortunately because paying the debt left us with nothing to save, we have had to resort to cards for car repairs, and then when we had a leaking shower which wrecked our wall (but for which we couldn't afford the excess for the insurance) we had to do it ourselves and get a plumber in ...

Our tax credits have also disappeared, because they suddenly decided that the way I was calculating my hugely varying childcare costs wasn't right, and then they started trying to overpay "to prevent financial hardship". So I just called them and told them to cancel the claim rather than ending up owing them money too. But it means the £60 a week which paid for groceries and household stuff has gone and I have to find that from our existing budget. I will look at the claim in April and see if I can put in restrospectively but I'm scared to rely on anything from them.

I really don't want to cut insurance but we may have to look at it. And when we have zero savings but we rely on a car and we own our own house we have got to have a credit card. Next plan is to have a joint card so we are accountable to one another. In fairness to us very little of the spending is frivolous but it will help keep us focussed. Also if DH gets this new job we won't have to use the car so if it breaks it can stay broken until we have enough to fix it so it will be a worthwhile pay cut in that sense.

I am also trialling YNAB, which seems good, but I am struggling to quite get the hang of it.

I am rabbitting on and on now. Sorry. No idea how we're going to manage Christmas but we will keep afloat!

Eels100

I'm not sure what I can cut John I'll try to get a chance to do an SOA later, but in essence we are as low as we can go.

I guess an option would be to sell the car if DH gets this job. We'd still have a little finance to come up with but we could soon clear that. Hmmm.

Welshlassie

I'm 3 months into using YNAB and love it. It has really changed our approach to our finances and we are definitely more financially comfortable since introducing it. The forums on the YNAB are excellent for asking how things can be done as well as the online help articles. I spent about 2 evenings getting ours set up and I've never felt so flush, but not deprived since starting to use it.

Eels100

I look like a loon now. I swear there was a part by someone called John up there!

Good to know ynab is helpful. I need to persevere.

nixj

Eels100 wrote: »

I look like a loon now. I swear there was a part by someone called John up there!

Good to know ynab is helpful. I need to persevere.

Hi there OP I was just wondering if it was a mistake that you say you're paying £110 a month off the 0% cards? Is there a reason for this as you would be better doing minimum payment on these cards and using the £110 to the cards with the higher interest...

Word from the wise (ha) you may not be given a high enough credit limit to BT everything you owe so try and get the OD or higher interest CC's if that's all you can cover. Good luck xxx

Eels100

Update: I have put both of our interest-charging cards plus my overdraft onto a 0% card which gives me 25 months. I have calculated that if I can keep up the current rate of debt repayment I will be able to pay off the two little 0% cards by March and then pay off the biggie within the 25 month period. We have binned our personal cards and have now got a single credit card for emergencies (eg car blows up). So the accountability will help.

I am YNABing so it will be interesting to see how we manage to budget after the next payday. Christmas is adding a bit of pressure but we aren't able to visit family this year (can't afford it!) so we'll have more time to save for presents which we can deliver when we do visit later in the new year.

DH is a lot more on board - I don't think he gets/cares about YNAB much but he is accepting of having strict personal budgets and it is nice to have no CCs or ODs to worry about, just a chunk of o% debt which we are chipping away at.

The nice thing is that we will have broken even at the same time as our childcare bill reduces when the littlest starts school - we'll feel like millionaires!