Just had my light-bulb moment - Now I'd like your help.

thebuffalo

Hello all,

It's finally time to own up to my debt problem and to try and start dealing with it. I anticipate this may be a long, detailed post, so please try to bear with me.

The Background

From the age of 18 I became reliant on credit to lead an unecessarily lavish lifestyle. I was shocked by the ease at which I obtained my first credit card and enjoyed spending on it. Looking back, I was very naive and the credit companies (I believe) were inciting me into problems. Not that I blame them now - I've made this situation for myself.

As I went through four years of University, I continued to apply for more credit and was surprised that it continued to be forthcoming. At the end of Uni, I got a consolidation loan but continued spending on my credit cards.

I was sure I would get a decent job after Uni and that I would find it 'easy' to pay off what I owed.

The Current Situation

Well, 2 years after finishing Uni, I do have a decent, enjoyable job. It's hard work, but relatively well-paid. This is the time I'd been waiting for, when it all would be easy!

The Lightbulb Moment

I had basically ignored all my statements from creditors over the last few years, just paying off minimum payments by Direct Debit. I'm a little proud (maybe this pride is misplaced), that I've never missed one of these minimum payments, even when it's been a struggle.

However, having received a recent payrise and reached my salary target, I decided now was time to start sorting out my debt. Upon checking, I was shocked to find I now owe more than £31,000. I'm disappointed and annoyed I've allowed myself to get into this situation.

The Good

The good thing now, I suppose, is that I'm not relying on credit to run my life and I'm not getting into any more debt. The amount I owe has been stable for about the last 6 months.

The Bad

Nevertheless, because of all the high-interest, I'm not actually paying anything off. The amount of debt I have is quite staggering and, unfortunately, I still sometimes have to fall-back on the plastic for unexpected purchases - such as car breakdowns.

The Ugly

I work every hour possible and am fortunate that there are plenty of overtime opportunities in my job. However, I've got a terrible feeling that it will only take one or two bad months of low overtime to throw me right back into the debt spiral.

The Big Problem

I thought I could try and consolidate all my high-interest credit card debt into another unsecured personal loan, to run alongside my Egg loan. However, for the first time in my life, this credit was refused. 'Oh no' (or something similar), I thought. I now seem to be tied in to these high-interest accounts.

I've meticulosly been over my last four months of statements and payslips, to produce a very detailed Statement of Affairs. I've also listed full details of all my debt, including where I am paying different rates for cash/purchases on credit cards.

My first objective is to lower my interest rates, so I can plough my payments into paying off actual debt not interest. Then I'm willing to 'bite the bullet' and cut back on my outgoings.

So, that's where I am. And I love any of your help or suggestions for how things could be sorted out.

I'm sure some of your first suggestions will be to stop playing poker. As a non-drinker, I should explain that not only is this fun for me, but also my main hobby and social interaction outside of work. I don't consider the money spent here to be an addiction, but more a budgeted amount that I decide to play with each month, in the same way other people may buy alcohol.

The Statement of Affairs




Notes: All numbers quoted are in GBP, rounded to nearest whole £. I've worked out averages based on four-months of statements. It was originally an Excel spreadsheet, so I've had to post as an image to keep the right formatting. I've uploaded the original file, if anyone finds that easier: http://nickc.sent.com/thebuffalodebt.xls (only about 30kb)

Closing

Thanks for getting this far - it's been a very long post. You won't believe how good it feels to have got all that out. I've never shared these problems with anyone.

I plan to come back regularly and become a useful and supportive member of this site.

Kind wishes,

thebuffalo

tealady

Hi and welcome. A quick glance shows you are paying a lot out for food. If you hop over to the old style board there will be LOADS of ideas on how to eat cheaply but well. For a start dont buy lunch at work! I can make sarnies for less that half the price I would pay in the shop. If you want to keep the poker then the fruit machines must go, sorry but you cannot afford it.
Finally somewhere on this site is a snowball calculator which will show you how long it will take you to pay off your debts. Someone much cleverer than me will be along soon to point out where it is. Final thought, use cashback sites such as greasypalm to buy your car insurance, if you look around this site there are a few mentions of these.
Oh I nearly forgot. Don't forget to register so you can have a "proud to be dealing with my debts" sig, check the stickys at the top of the page.

tealady

Found it!

www.whatsthecost.com

Crown

Hi and welcome to the site,

I dont know how old you are but you are on a very good salary and depending on how seriously you want to be debt free you can make some serious savings and pay your debts off if you are willing to cut back on luxuries for a while. Also are you single and are the figues shown just for you. If you play with the online snowball calculator you can work out how these savings could seriously reduce your debt. Take a look at http://www.whatsthecost.com.

First thing that should be stopped is the Fruit MAchines and Poker. you just cant afford to be spending £70 a month a gambling at the moment. Also how strict are you with this amount. I know how easy it is to spend hundreds playing poker without thinking about it.

Your Entertainment budget seems excessive to me. Infact I think thats one of the highest ive seen for a while on here.At £120 What exactly does this cover?

Can you rent DVDs from one of the online rental companies? As for Pubs and Clubs can you cut this down for a while why you sort yourself out? The same with Eating out. You dont have to turn into Billy No Mates but you are living a champange lifestyle still and way above you means IF you want to make a dent in that £31k debt.

Have you thought about moving all your TV, Phone Broadband needs onto a package deal? I moved to Virgin and cut my bill from £130 pounds a month to around £40 and although I had to reduce my broadband speed to 2Mb its more than ok for the meantime.

AI would advise also that you start trying to take sandwiches on some days with you the office as again this seems pretty high. I know how difficult it is if all your colleauges are eating out in restraunts but remember when you are debt free you can eat and not worry about how much its costing.

Start a a spending diary immediatley noting down EVERYTHING you spend however little as you will be amazed how those mints and a newspaper will add up over the week. It doesnt have to be anything special and most of us just use a notepad and pen.

I can see many more ways you could possibly cut back but it all comes down to how seriously you want to sort it out. This is a great community if you want to get involved and you will receive a ton of advice and support.

Let us know what you think

tealady

Wow Crown you are more awake than me, I couldn't think of that lot at this time in the morning. And I am usually a morning person!

Seaxwyn

Hi thebuffalo

Welcome to the board. You are not alone - there are plenty of us on this forum with debts as high as yours or higher (look at my signature for example).

Most of us have come to the conclusion we have to cut back on inessential spending in order to get rid of the debts. What struck me from your SOA awas the huge amount you are spending on things I'd consider inessential: dry cleaning, lunch at work, eating out, entertainment in and out, poker and fruit machines. £288/month on these is £3456/year - or a lot more if you pay for any of them on credit cards with high APRs.

If you are keen to continue playing poker, then drop the pub and the fruit machines (I'd drop the latter anyway). And dry cleaning is seldom necessary - most things can be washed without ill effect.

Hope this doesn't sound harsh and best of luck with it.

cookie9

Hi and welcome to the site.

Your Virgin and Barclays credit cards are charging a high rate of interest. If you cannot balance transfer them then you need to think about paying them off asap.

Fuel - can you cut back a little by walking or taking public transport sometimes?

BT and Broadband - this is a competative market so you should be able to shop around to get a better deal. A deal where you get free evening and weekend calls might suit as then you could just pay for the BT rental.

Mobile - very high. Do you really need to use your mobile that much? Again shop around for a better deal. Don't be tempted when they offer to up-grade your phone just say you'll take a discount instead. Look at MArtin's article for help on haggling.

Drycleaning - exceptionally high. If your job is that dirty surely they give you an allowance for cleaning. If it is just a small mark then sponge it and spray with frebreeze to fresh clothes up.

Food - Cook from stratch and in large quanties and freeze half. Start taking packed lunch into work. Alternatively if you don't cook then if your canteen is cheap get your main meal of the day there and have a light meal at night eg beans on toast, pasta in sauce etc. The OS board has lots of ideas.

DVDs - stop buying them. You may want to think about selling some of the ones you already have to boost your income. You could join Lovefilm going through Quidco where you would get £14 cashback and a free DVD to keep. This would cost for 2 DVDs a month £5. You normally get a 14 day free trial but if an existing member refers you it's a 30 day trial. If you don't knwo anyone who has it then can someone on these boards.

Pubs - can you cut back a little here? The fruit machines should go.


Look around your flat to see if you could sell anything eg old Cds, DVDs and Books. Keep this as your emergency fund to stop you using your credit cards for cash.

Make sure you sign up for cash back sites such as Quidco and Pigsback.
quidco is purely cash back but pigsback offer points to redeem as vouchers and you can get points by clicking on selected advertisers instead of spending.


Good luck.

Crown

tealady wrote: »

Wow Crown you are more awake than me, I couldn't think of that lot at this time in the morning. And I am usually a morning person!

The truth is I havent been to bed. my second job has thrown my sleep pattern

magentadreamer

If you can't get a new card you could see if you could get as much of the Barclaycard onto your other cards to get rid of as much as possible on that whooping 27% APR for cash. Once you've moved/paid off the Barclaycard balance I would still keep the card and then move the Virgin balance to it again to get rid off the whooping cash apr on that! Also ring the card companies up and see if they can reduce aprs on all your cards. Good luck!

irishmist_2

Hi and welcome to the site.:wave:

You have clearly done a serious amount of thinking already putting all that information together, and by not increasing your debt loads over the past 6 months, so I am guessing you have already spotted areas that you can cut down on.:T

If poker is an area that feels important for you to keep, then you need to work out where savings can come from in other areas that feel less important. Like other people have said easy areas to cut back on are lunchtimes at work (can always tell people you're on a health kick and making your own food as a result, if you don't want to explain about money etc), cutting fruit machines out, cutting down on transport, DVDs, going to the pub a bit less often etc.

Have a look at the snowball site that tealady described - I find it really motivating as you can see how much more quickly you can pay off your debts by increasing payments by even a little. Seeing that £20 a month, which is so easy to spend, could over time alter your debt free date by a month or two, really gives a different view as to whether it's worth spending or not on the stuff that's non-essential.

Good luck and looking forward to hearing how you get on,
Irishmist x

thebuffalo

Thanks for all your help so far. I'll address what I can. Everyone's help is appreciated, but I'll only quote the first person to mention each point.

Crown wrote: »

I dont know how old you are but you are on a very good salary and depending on how seriously you want to be debt free you can make some serious savings ... Also are you single and are the figues shown just for you.

I've just turned 24. I've worked hard to get to the money I'm on now and I'll continue to work for more. I am single. Was living with a housemate until 4 months ago. I'd like to consider moving in with someone again, as when the bills and rent are halved, that's more money to pay off debt. Sadly I'm tied into a contract for my one bedroom place at the moment.

Crown wrote: »

First thing that should be stopped is the Fruit MAchines and Poker ... Also how strict are you with this amount.

I'm pretty strict with the poker money. I don't play for cash. Basically, I take the money out as cash at the start of the month and play tournaments (more time and fun per pound). I really do want to stick doing this, as the cost per hour's entertainment ratio is honestly very good. I will cut out the fruit machines though. It's scary to see how much £2 or £3 here and there adds up to - clearly I'm not winning!

Crown wrote: »

Your Entertainment budget seems excessive to me. Infact I think thats one of the highest ive seen for a while on here.At £120 What exactly does this cover?

My indoor entertainment is anything I buy for enjoyment at home - DVDs, video games, CDs, etc. Outdoor entertainment is socialising in pubs with mates, going to the cinema - stuff like that. I don't drink due to a medical condition, so perhaps I should stop doing rounds. Sounds tight, but I always feel ripped-off buying mates alcoholic drinks that cost £4 when my orange juices are £1.50.

Crown wrote: »

The same with Eating out. You dont have to turn into Billy No Mates but you are living a champange lifestyle still and way above you means IF you want to make a dent in that £31k debt.

I do want to seriously tackle my debt. One of the most annoying expenses for my social life is that I've recently moved house to be closer to work. Most of my good friends are 90 miles away, so even if I want to see them once a month, it's quite expensive to drive down there. Public transport is not an option, as my job requires me to have my own transport always immediately available (hence car allowance paid each month).

Crown wrote: »

Have you thought about moving all your TV, Phone Broadband needs onto a package deal?

I don't have any premium TV services. I had tried to get a bundled mobile/broadband deal, but reception is very poor where I live and I'm tied into the one network with reception, who don't offer a bundle. I can probably shop around for a cheaper broadband provider though and should be able to reduce my mobile contract in 3 months time.

tealady wrote:

A quick glance shows you are paying a lot out for food. If you hop over to the old style board there will be LOADS of ideas on how to eat cheaply but well. For a start dont buy lunch at work! I can make sarnies for less that half the price I would pay in the shop.

The silly thing is, I actually like making my own sandwiches. Last week - end of month and no money - I did it. Not only did I eat what I liked, but it was about a third of the cost. It sounds stupid, but it comes down to a lack of time more than anything. I need to get into a routine of making something the night before.

Crown wrote: »

Start a a spending diary immediatley noting down EVERYTHING you spend however little as you will be amazed how those mints and a newspaper will add up over the week.

Will do. Am a bit of a geek, so will probably end up chucking all the details onto Excel in the end!

Seaxwyn wrote:

dry cleaning is seldom necessary - most things can be washed without ill effect.

My suits are dry-clean only and I do need to look smart for work. It's frustrating, but the way I see it, I need to keep a smart appearance for the job and all-in-all these things contribute to a higher salary overall.

Seaxwyn wrote:

Your Virgin and Barclays credit cards are charging a high rate of interest. If you cannot balance transfer them then you need to think about paying them off asap.

I was very shocked when I realised just how much these two cards were charging. I have balance transfer deals available on most of the cards - so even with a 2% penalty it wil end up much cheaper, so I'm going to try to do the 'card shuffle'.

I'm a little scared at having been declined for my first credit recently, so not sure whether I should try applying for the M&S card, purely to move the balance from one of my high-interest cash cards to it's low fixed rare. 24.9% to 4.9% with 4k or 5k would make a BIG difference.

I don't want to reduce the amount I pay towards debt - in fact, I'd like to pay more - but I'm certain reducing my interest rates will make the money go a lot further. I'd like any more specific help anyone can give about 'card shuffling'.

Thanks again.