One year to be debt free

Vampgirl

Well free of debts on credit cards anyway!

Due to taking some bad decisions and basic not paying attention to things hubby and I have managed to accumulate over 20k debt on our credit cards:eek: Its nobody's fault but our own: hubby is very much of the "enjoy life now, worry about the cost later" attitude and I suppose for the past few years I've just let myself go with the flow. I'm in charge of all the finances (he can't be bothered with the details), I don't know why this is getting me down so much coz we're in the fortunate position that we both earn enought that we can afford to pay this back over time - I suppose I'm just annoyed with myself that I allowed us to get to this and didn't realise the situation sooner :mad:

We also have a couple of personal loans so don't really want to get another one to consolidate the credit card debt but I think I've worked out (with the help of Excel!) that we can be credit-card debt free in 12 months if all goes to plan! Not worried about the personal loans: will sort them out when we've got rid of the credit cards!

So anyway, we owe approx £20,500 spread accross 4 credit cards between us and have managed to juggle it around using balance transfers so that I think we've got the lowest rates possible at the moment:
£1800: HSBC interest free until March (making minimum payments until Feb 08 and will pay off balance with bonus in March), no spending.
£7300: Egg interest free until November, then 17.9%, no spending.
£4600: Marriott/Halifax at 16.9% - can't BT this anywhere at the moment, this is our spending card.
£6700: Natwest at 4.9% life of balance, no spending.

We have approx £1600 per month spare after rent, bills, food, etc....so the plan is to pay pay the minimum balances off all the cards, except the Marriott/Halifax card which we will pay as much as we can afford until it is paid off (two or three months - this is the card we use for spending).
Then we switch to paying as much off the Egg as we can afford coz the interest free period is very short.
That just leaves the Natwest which we will start paying more than the minimum payment as soon as all the other ones are paid off.

We also get guarateed half yearly bonuses and those go directly to pay off the cards, plus anything extra we earn from things like ebay go straight onto the cards. Hubby will apply for a new card in a couple of months to try to get a 0% BT which would obviously improve the situation, but I can't apply for one for another 6 months or so as I've just applied for a Tesco card (but only got a £400 limit so it wasn't worth bothering with!). I haven't factored this into the equation as its not guaranteed and I'd rather look at the worse-case scenario.

Does this sound like a good plan? I've looked at it from all the angles I can think of and it seems to be the best way as far as I can see but I'm no expert so would welcome any comments if I've made any glaring errors!

Storm

The snowball calculator at www.whatsthecost.com is great for helping you work out how much to put where each month.

I am slightly concerned that you say the Marriott/Halifax card is your spending card - if you're still spending on the CC each month then you need to find out where you're going over budget.

If your credit ratings are good then it might be worth looking into more 0% or low LOB deals to transfer some of the Halifax card to, and with the Egg one look at how much you'll need each month to clear it by the time the 0% finishes.

angelavdavis

Hi and welcome,

In principle, it sounds a good plan.

Like storm though, I am also concerned by your "spending card".

Why do you term this the spending card?

I use a Morgan Stanley cashback card in place of cash/debit card and then clear the balance every month - purely to earn the cashback, but you are clearly not clearing the card every month so I am puzzled why you are using a credit card to live on?

It might be worth posting a full SOA on here (see SouthernScousers sticky post for the format). The good folk on here should be able to assist you in lowering your outgoings so you can have more spare cash to pay off your debts sooner.

Start a spending diary that both you and OH update every night containing all expenditure for a month or so, it will help you highlight areas where you may be able to cut back.

Vampgirl

Thanks for your help!

We're not going over our budget each month: we have allowed in our budget for spending on the card. Hubby has to travel abroad every week for work so he needs to use a credit card for things like hotel bookings and hospitality and this is the only one we don't have a BT on at a promotional rate. I'm aware that in an ideal situation we should only spend on a card that we can clear each month however this isn't possible at the moment. In 3 months time we will be doing this.

Our credit ratings are very good but at the moment neither of us are in a position to apply for more cards at...we will do this when it sensible to do so. Hubby was rejected for the last card he applied for (unknown reason, credit file all ok) so he is going to apply again next month.

I'm afraid a spending diary won't work tho: whilst I've done this sucessfully before, hubby won't do this as he feels its too much messing around for him. He really isn't one for details and if I do the diary and ask him his expenditures then it appears that I'm checking up on him and creates bad feeling. My marriage is more important to me and seeing as we aren't actually struggling I'd prefer to keep things nice and happy and find some other way of controlling things. I've worked out our combined income and expenditure (taking averages from 6 months of bank and credit card statements) and I know how much we have in surplus each month so I'm working on this figure.

I have to be very careful here: hubby and I fundamentally disagree on debt - he doesn't see it as a problem and doesn't feel any need to try to address it. I on the other hand want to clear this so we can save up a deposit and finally buy our own house (I think its too risky for 100+% mortgage at the moment even though we could easily get one). So I have to try to arrange to repay these debts without impacting our lifestyle too much.