It's so simple in theory!

Trishiapp

So today, it's my 37th birthday. As I'm sitting here, I am not only pondering my life in general, but also my financial situation!

Yes, I'm in debt! Altogether I have: £800 on a credit card, £1500 overdraft and £500 flexi loan with HSBC. These debts are due to my financial ineptitude over the past 10years

I am a single parent to two fantastic children. I have a good job and bring home around £1400 each month. My ex husband pays £400 each month towards our children. I receive child benefit and £200 tax credits. As everyone can see, I have just over £2000 each month, and yet, struggle to pay my debts off!

So, as of today, I have decided to pay them off as quickly as I can( I think I will start with my credit card first as it has the highest APR.)

The plan is: I will NOT go to supermarket for top-up shopping and will use what's in my cupboards, fridge and freezer for as long as I can.

I will have as many spend free days as I can.

Whenever I have an urge to spend, I will study ( doing PhD in metaphysics.)

My utilities are taken care of, so don't need to swap anything at the moment

At the end of each month, whatever I have left will go towards paying off my debts. Also, February and March are council tax free, so the extra money will be used toward paying off my credit card.

I shall use this site to log my progress which should( hopefully) motivate me! I hope this is the last year of me being in debt!! :T

Neil_948

Trishiapp wrote: »

So today, it's my 37th birthday. As I'm sitting here, I am not only pondering my life in general, but also my financial situation!

Yes, I'm in debt! Altogether I have: £800 on a credit card, £1500 overdraft and £500 flexi loan with HSBC. These debts are due to my financial ineptitude over the past 10years

I am a single parent to two fantastic children. I have a good job and bring home around £1400 each month. My ex husband pays £400 each month towards our children. I receive child benefit and £200 tax credits. As everyone can see, I have just over £2000 each month, and yet, struggle to pay my debts off!

So, as of today, I have decided to pay them off as quickly as I can( I think I will start with my credit card first as it has the highest APR.)

The plan is: I will NOT go to supermarket for top-up shopping and will use what's in my cupboards, fridge and freezer for as long as I can.

I will have as many spend free days as I can.

Whenever I have an urge to spend, I will study ( doing PhD in metaphysics.)

My utilities are taken care of, so don't need to swap anything at the moment

At the end of each month, whatever I have left will go towards paying off my debts. Also, February and March are council tax free, so the extra money will be used toward paying off my credit card.

I shall use this site to log my progress which should( hopefully) motivate me! I hope this is the last year of me being in debt!! :T

Welcome Trish,

That does sound like a plan of action how ever I noticed you said you had an overdraft as well as the credit card if you are planning to pay off your credit card first the only advice I have for you to really keep an eye on is the overdraft (keep upto the min repayments) I have heard from people so many times say that they have failed to do this or miss a payment to pay another debt and then the bank has written to revoke the over draft stating they have xx amount of days to clear it or face unauthorised charges.

Good luck would like to hear how you are progressing through your plan.

Trishiapp

Good morning Neil.

Thank you for your kind reply and advice- much appreciated.


Hmmm, in theory, if I concentrate on my credit card first, my overdraft would not be reduced. Do you think it would be better to tackle both at the same time? If so, should I pay more towards credit card, whilst still paying something into my overdraft?


The flexi loan is on standing order, so payment is made each month.

Trishiapp

Forgot to mention...

I'm up to date with all my payments ( utilities, credit card, flexi loan) but, of course, my overdraft always remains

Cornucopia

I think it makes for greater motivation (and it makes sense mathematically) to go for one debt at a time, and start with the one with the highest cost. (Note: cost, not necessarily just APR, but other fees, too).

You'll see results quicker, and if you are making sacrifices to get there, you'll be making them for a shorter period of time.

Trishiapp

Good morning Cornucopia.

Thank you for your kind reply.


That's what I thought, but then I can see what Neil is saying. The truth is, my overdraft Will Not go down, unless I tackle it properly. In order to do that, apart from cutting down on non-essentials ( I'm very happy to do that) I have to start paying chunks off, but this I cannot do while I'm paying off my credit card. I do hope this makes sense?

Cornucopia

An overdraft is also an attractive target for paying off. Hopefully you'll begin to see yourself overdrawn for a smaller proportion of the month, and ultimately not at all.

It's important to stay motivated, and going with your "gut feel" is part of that. However, it's also the case that once a debt is gone, you won't have the payments to make, and that money can be directed elsewhere.

It may help your decision if you compare the monthly cost of the overdraft and credit card. If they are similar, then it makes little difference.

Neil_948

Trishiapp wrote: »

Good morning Cornucopia.

Thank you for your kind reply.


That's what I thought, but then I can see what Neil is saying. The truth is, my overdraft Will Not go down, unless I tackle it properly. In order to do that, apart from cutting down on non-essentials ( I'm very happy to do that) I have to start paying chunks off, but this I cannot do while I'm paying off my credit card. I do hope this makes sense?

I would look at the situation again Trish can you move the CC balance to another lower APR card?
If not I would still look at paying at least a token payment to the overdraft as the last thing you want to happen is the overdraft to be cancelled and the bank say you've got 30 days to pay or you will be charged un-authorised overdraft charges and a higher APR.
Best course of action would be to do an online assessment with step change or indeed speak to the bank tell them you are having financial difficulties and can you pay a lower amount for x amount of time (but don't tell them you are using the money saved for another debt) and they should be able to help as it would be in there interests to help you as much as they can to reclaim there money.

Trishiapp

Thank you Neil.

The only thing is, I still use my overdraft on monthly basis. So I wonder whether I could leave, say £50 in there and not touch it? After that, whatever I have at the end of the month, will go towards my credit card?


Also, I already pay £22 for the overdraft each month


I could (potentially) look into a lower APR credit card, but to be honest, I just want to pay it off ASAP.

Cornucopia

I'm slightly confused - are you juggling these debts on a monthly basis because you struggle with them all, or is it that you want to pay them off because it would be good to do it.

I think our advice would be different for the two different scenarios.

Maybe it's the loan you should tackle first - because it's the smallest?

Neil_948

Trishiapp wrote: »

Thank you Neil.

The only thing is, I still use my overdraft on monthly basis. So I wonder whether I could leave, say £50 in there and not touch it? After that, whatever I have at the end of the month, will go towards my credit card?


Also, I already pay £22 for the overdraft each month


I could (potentially) look into a lower APR credit card, but to be honest, I just want to pay it off ASAP.

If you could move it to a card with a lower APR and a interest free period on balance transfers it can help you pay it off faster as you will probably have an admin fee to pay but then nothing more until the end of the interest free period meaning every penny you put towards it will come off the balance not the interest.