Debt Free Wannabe - unsure of where to start

lola.lo

debtfree12000 wrote: »

Hi

Well done for admitting you have a debt problem.

I too had myself in a similar cycle, it is such a pain! You tend to borrow more every month. My advice is to call stepchange debt charity, I cannot commend them enough, they have been my saviour! They really do know how to professionally help you.

So ensure you open a basic bank account, cancel all Continuous Payment Authorities with your bank etc... then work with stepchange. In my experience the payday loan companies are only happy to get back their loans even on a repayment plan. Luckily wonga is one that offers an option 3 days prior to the loan being due to create a payment plan. See if this helps, and please please try to not enter anymore credit agreements, it is so easy I can vow to that one.

All the best, let me know how you get on.

Cheers

Kev
x

Hi Kev

that's definitely true, I did manage to break the payday loan cycle for 7 months last year so I know I can do it again!

I'm currently in the middle of discussions with Qucik Quid (other thread) so will see what comes of that bu will definitely get a call to step change sorted and see where I can go from there.

I had a breakthrough last night when I realised I simply don't budget and have never thought to do so, so I'm going to read up on budgeting and get myself a spreadsheet together!

lola.lo

NHS_worker_bee wrote: »

That's good news, I'm glad I could be of some assistance. I'm really speaking from the heart here when I say don't get another loan because I was in a very similar situation. I had payday loans which I paid off with an everyday loan. Now I've paid off the everyday loan but I had to live on my credit card to do it, and my partner helped me. If I hadn't taken the stupid everyday loan out, I could have used the money my partner gave me to completely clear my credit cards. But that's a valuable lesson I've learnt, taking out more debt is never the answer.

So now you can focus on the positives: if you're anything like me, you will never take a payday loan again - I've locked myself out of my accounts but I have honestly never been tempted to use them again, I feel sick when I think of what a financial pickle I was in. I can look at my bank statements without feeling ashamed now.

Another thing that helped me is that now I don't spend on my credit card, I just pay off a set amount that I can afford and that leaves me with enough money to get through the month. This then motivates me not to spend anything unnecessarily because then I can use the money to make overpayments on my CC (becoming debt free gets really addictive, trust me!) It feels really good to not have had to get my credit card out (I don't keep it in my purse either to avoid temptation).

I'm glad you're feeling more positive. If you were able to shift some/all of your credit card balance onto a 0% balance transfer card, that would help even more. I don't know if this is an option for you but if you currently have 'good' credit and haven't missed payments you may be eligible for a better credit card deal. Do you know what the interest rate is on the Vanquis card? Put it into the snowball calculator and see how much quicker you could pay it off at lower interest:

http://www.whatsthecost.com/snowball.aspx?country=uk

and most importantly, keep your chin up

Not sure what my interest rate is on the Vanquis card - I think I need to do an exercise where I look at everything I owe and the interest as well so I have an accurate picture of what I owe, another task to tackle but it feels good to be doing something! Tempted to cut my Vanquis card in half to prevent me using it here and there for small spend (took £10 out the other day :mad:)

NHS_worker_bee

lola.lo wrote: »

Not sure what my interest rate is on the Vanquis card - I think I need to do an exercise where I look at everything I owe and the interest as well so I have an accurate picture of what I owe, another task to tackle but it feels good to be doing something! Tempted to cut my Vanquis card in half to prevent me using it here and there for small spend (took £10 out the other day :mad:)

Taking out cash on a credit card is ridiculously expensive, stop!

If you have an online account for your Vanquis card, the interest rate should be on there. If not, just call them up and ask. Then you can put the Vanquis card and the amount you owe into the snowball calculator:

(I've just looked on the vanquish website for you and it says: Credit card on the Vanquis Visa card range from 39.9% APR variable to 69.9% APR variable depending on individual circumstances.)

http://www.whatsthecost.com/snowball.aspx?country=uk

If your Vanquis card APR was at the lower end (39.9%) AND you paid £100 off it each month AND (most importantly) you didn't spend on it, it would take you 105 months and cost you £7,411 in interest! That means you would still have the Vanquis debt until January 2023.

When I put my credit cards into the snowball calculator, it really opened my eyes to the fact I was never going to get out of the spiral of debt without making some big overpayments. For example, if your Vanquis card APR was at the lower end (39.9%) AND you could stretch to pay £150 off it each month AND (most importantly) you didn't spend on it, it would only take you 32 months and cost you £1,744 in interest. See the massive difference?

However, a credit card is better than a payday loan so I wouldn't cut it up until you have got the payday loans sorted (unless you can be very disciplined with yourself) Once you have some money put aside in a little emergency fund, you can safely cut up the card

What I would do is transfer some of the balance to a 0% balance transfer card if you can, asap.

http://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards#eligibility

If you could pay a £150 per month off the card on a 0% interest deal, you could clear it completely in just 20 months. (When I transferred my debt to a 0% card, I didn't even learn the pin number for the new card, I never use it, I just treat it like a loan rather than a credit card and pay back the same amount each month by direct debit.) Think how much better being debt free in 20 months sounds, compared to 105 months. If you could do this it would mean that in less than two years time, you could be putting money aside for your house deposit and be free from the stress of debt.

Best wishes getting everything back on track. It sounds like you are already making progress tackling the payday loans but I would strongly suggest switching to a better Credit Card deal if you can (once you have done this then yes you should cut up the Vanquis card)

Good Luck

lola.lo

Hi NHSworkerbee,

Thanks just logge donto my Vanquis account and couldn't see anything confirming my interest rate so I'll give them a call.

Had a look at other credit cards as well and I could transfer £1,500 to a Capital One - that would leave £1,500 on the Vanquis card to pay off. I'll definitely take a look at this once I've sorted out Quick Quid as that's the one worrying me the most! I've drafted letters to them and the bank cancelling my CPA and I'm going to post them out tongiht

NHS_worker_bee

That sounds like a great idea, with £1500 on a 0% interest card you'd be saving money which you'd be able to pay off the other £1500 on the Vanquis card with much quicker. I was surprised just how easy it was to do the balance transfer and I wish I'd done it earlier! Just make sure you set up a direct debit for the minimum payment on the 0% card and at least the minimum payment on the Vanquis card too (then you can overpay as soon as you are free from the payday loans). Once you have done the transfer, you could also ask Vanquis to reduce your credit limit from £3000 to £2000 (for example) in order to reduce to temptation to spend again.

I know the quick quid is your main worry at the moment but if you sort out the credit cards and set up the direct debits then you won't even have to think about them and you can focus on sorting the payday loans. Good Luck