Advice needed.....

Timetochange89

FinanciallyUnsavvy wrote: »

Hi there

Your debts are similar to mine. At the start of the year I had just over £4000 on credit card and an overdraft of £1500.

I've had the overdraft since my first year of uni; I've been in full time employment for 4 years now and until recently, as you said, it's a vicious cycle of money going in, OD going down a bit, end of the month, OD being maxed out again.

My account with the OD is also the account my wages get paid into and the account I use day-to-day. I've considered changing to another bank account, but aside from seeing a positive number on my bank statement every day, I decided it wouldn't really make much difference to me. Credit cards that let you move your OD to them are hard to come by (they're called super balance transfer cards, I believe), but if you can find one, then you could consider it to save some interest.

You are in a good situation to fix this, and fast. You still live at home, and although you don't have a large wage, you have plenty of disposable income. You're obviously spending more than your fixed outgoings you've highlighted above, so you need to sit down and be strict with yourself; look at past bank statements, find out EXACTLY where the money is going. Your car/home/phone totals to £235, so everything after that is free for debt, and disposable income. Personally - I'd be strict with yourself for a couple of months. Cut back on some luxuries. Even if you give yourself £100 a month for entertainment (which is a lot more than most people have when they're battling the debt monster!), you still have £465 left to throw at your debt. You could have your OD cleared totally in less than 5 months, then you can have the CC cleared in another 8/9 months after that.

What I would strongly urge you to do though is try and get a 0% deal for your credit card. There are a lot out there, and even if you can't get one for the full amount, any amount you can transfer is going to save a good deal of interest.

Good luck, you can do it. It's a bit overwhelming at first, but honestly, working out a true budget is the key. Be brutally honest with yourself. Work out what you spend, what you can live without, what you can't live without. Budget for EVERYTHING. I'd highly recommend looking up some software called "You Need A Budget" - or at least watching their budgeting tutorial videos and reading their advice on their website. I use this; it basically teaches you to give every penny a job. It's essentially a modernised version of envelope-budgeting (i.e. everything you spend is separated into categories). It's helped me so much. Before Christmas I was frequently having to use the credit card just to make ends meet by the end of the month, just because I wasn't aware of where my money was going. Now I know exactly how much I'm spending, and how much I have to spend on what, I always have money left at the end of the month - as well as having an extra £150 to throw at my debt than before.

Well.. sorry for rambling on quite so much. I hope you find this somewhat helpful though!

This is all so helpful and thanks! I just have to be really strict for a while and hopefully see a difference soon ish!

Timetochange89

FinanciallyUnsavvy wrote: »

You CAN do it.

I felt the same way just a few months ago. You've taken the right step by coming here and admitting you need to sort this out before it gets any worse.

I live on my own, so have rent and bills to pay. After non-negotiable monthly outgoings, I'm left with roughly £380, so a bit less than yours.

Look at my signature - I've managed to pay off over £800 in less than 3 months.

I NEVER thought I'd be able to do it, but I am doing it, and you know what, once you get past the initial feeling of being stuck in a big black hole... it really isn't that hard. It just takes a bit of determination.

All this info is really helpful! Were you paying your credit card bill with some of your overdraft?

That's the circle I find hard to imagine that I'll get out of but if I don't spend on anything else I guess it will kind of equal out in the end a little bit?

Thanks for all the positive comments though

FinanciallyUnsavvy

Timetochange89 wrote: »

All this info is really helpful! Were you paying your credit card bill with some of your overdraft?

That's the circle I find hard to imagine that I'll get out of but if I don't spend on anything else I guess it will kind of equal out in the end a little bit?

Thanks for all the positive comments though

The first thing I did was balance tranfer my credit card to a 0% deal. I was lucky and Barclaycard gave me a credit limit big enough to allow me to transfer everything.

As I know that my CC is now interest free for another 20 months, I'm concentrating mainly on my overdraft for the time being. I'm still trying to pay over the minimum on the credit card though. My minimum payment is £80; this month I'm aiming to pay £160, and approx. £300 to the overdraft. As soon as I've got my OD under £1,000, I'm going to contact the bank and get them to reduce it to £1,000. I'll then keep getting them to lower it at regular increments (probably £750, £500, £250) until it's gone entirely.

Timetochange89

FinanciallyUnsavvy wrote: »

As soon as I've got my OD under £1,000, I'm going to contact the bank and get them to reduce it to £1,000. I'll then keep getting them to lower it at regular increments (probably £750, £500, £250) until it's gone entirely.

That's good idea re getting the back to keep reducing so I guess that's kind of a way of getting rid of it and staying within budget. So for this month when I get paid my current account will be -£700 but then I will have a few bills so that will put my overdraft back to around £1000 so if I put £200 for my credit I'll still be below my £1500 overdraft ? Does that sound ok?

LianeB

I found it useful to open up a basic bank account with another bank which had my wages in and then transfered enough money for bills and debts to the other account so I could clearly see in my 'spends' account how much I had left for the month and with no chance of an od I couldn't spend more.
This also meant that at the end of the month anything I had left in my spends account I transfered to pay off additional money to the debt

getmore4less

OK here is what I think might help.

part of the problem is multiple account and moving money arround so you can't see where your limit on spending is.

Try to get a 0% SuperBT card(one you can move money from the OD)

Transfer the OD to that, if it has a limit over the OD consider maxing it out to get the current account well into the black.

This will save instantly £60pm.

Pay the minimum of this new CC each month

Then set yourself a target amount the current account must not go below that will cover one months planned spends say £400, when you get paid add another months spends so you have 800 in the account anything extra goes onto the CC that has interest.

(the first month this transfers some of the CC debt to the new interets free one.

Each month you should have £400 to pay off the CC IF you don't overspend and a £400 buffer in the account to stop the OD coming back.

GingerFurball_2

How likely is it that someone with debts of £5,500 on a salary of about £10k will get accepted for new credit?

It makes sense in theory, but in practice it's not always great advice.

FinanciallyUnsavvy

GingerFurball wrote: »

How likely is it that someone with debts of £5,500 on a salary of about £10k will get accepted for new credit?

It makes sense in theory, but in practice it's not always great advice.

True, but there's no harm in attempting an application if there's a chance it could save OP a lot of money on interest in the long run.

OP, try the MSE eligibility checker. It's not an exact science, but gives you rough estimates of your % chance of being accepted, without needing to have applications showing on your credit history. http://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards#eligibility

getmore4less

GingerFurball wrote: »

How likely is it that someone with debts of £5,500 on a salary of about £10k will get accepted for new credit?

It makes sense in theory, but in practice it's not always great advice.

The cost of the debt is critical here as it is over 25% of the initial available funds to tackle the problem.

A full SOA may be usefull to see if there are other savings even if some are short term.

Another option may be to discuss with Nationwide ways to reduce the costs.
What sort of account is it? is this an arranged OD.
http://www.nationwide.co.uk/~/media/MainSite/documents/products/current-accounts/shared/p7430-rate-and-charges.pdf

if it is exactly £60 that suggests an unauthorised on a flexdirect.

Timetochange89

getmore4less wrote: »

What sort of account is it? is this an arranged OD
if it is exactly £60 that suggests an unauthorised on a flexdirect.

It's a current account agreed overdraft