A very positive day but help me get this right please!?!?!

DebtClearer

I recieved confirmation that I will be starting my dream career next month which will mean moving back home with my parents and living rent free for a while. I am leaving a higher paid job but with renting and outgoings so high the new career choice should hopefully be worth it.

I also reduced my Orange phone contract from £36 (in reality £40-£45) to a simple £13 SIM only.

Despite this though I'm not sure how to tackle my credit cards.

I have:

Virgin (MBNA) - £4822, £4900 limit (0% expires at the end of the year) 18.9% after exp, min payment will be 1% + interest

Barclaycard £3827, £3900 limit (0% expires Jan) 18.9% after expiry, min payment will be 1% plus interest or 2.25% of total.

M&S £3617, £3700 limit (0% expires Aug 14) 16.9% after expiry, min payment will be 1% plus interest or 2.5% of total.

All the cards have some cash advances on them so obviously elements of their construction have considerably higher APRs.

My plan at the moment is to throw £450 quid at these each month, £100 of which will go to the M&S card and can be used during the interest free period for petrol etc, this will also help to quell the dirty cash advances on the card and make sure the rate is 16.9% on expiry of the 0%.

I have used the snowball calculator but bearing in mind most of my payments post 0% will be 1% + interest it doesn't really make sense. So how am I best to spend this money guys? Please help

DebtClearer

cheeky bump just before bed

ch3101

You need to pay more into the cards on the higher interest rate first.

ch3101

From the details above your monthly payments should look like this :

Virgin - £48.22 + £75.95 interest = £124.17

Barclaycard - £38.27 + £60.27 = £98.54

M&S - £36.17 + £50.94 = £87.11

Total monthly repayments - £309.82

That will take a long time to pay off at 450 a month.

What you should do though it pay the barlcaycard and the MBNA with the extra £140.18 until they are clear, then focus on m&s because it is the lowest APR.

I'd also recommend closing the cards as well or at least cutting them up.

Sazzie23

And I'd recommend making sure you have a good budget so you don't need to turn to credit for stuff that can be planned for like annual insurance costs, medical fees, Christmas presents etc.

See other threads for budgeting tips.

Good luck with your new job

DebtClearer

Thanks for this, does the following seem reasonable to people?

Total Salary = £1100 (a guess on 19k net income per month - high pension due to role)

Loans (£261.54)
HSBC - £141.54 (for 18 months)
Santander - £120 (For 12 months)

Credit Cards (£425)
Virgin - £167
Barclaycard - £167
M&S - £91

Phone - £13

Save - £100

Disposable/Other - £300

I will be due a payrise to £22k after 8 months which should make things a little easier. Then after a year and 18 months the loans will be complete. Think I'm tackling this ok if I stick to my plan?

Sazzie23

Could you up your savings for a while to make sure you have a fall-back if things don't work out as planned? Spanners in works spring up at surprising times.