Anyone help me make a plan to be debt-free?

emma2205

Hi,

I'm new to this forum but there seems to be lots of knowledgeable people around so just wondered if anyone could give me some advice.

I really want to get my finances sorted. I generally think I'm pretty good with money and try to live pretty cheaply, however I'm having trouble getting on top of things.

Due to low paid jobs and car troubles, over the years I have ended up with a loan which I have got one more year until it's paid off, £1500 on a Barclaycard and can't quite seem to drag myself out of my overdraft. I've managed to go from being £500 overdrawn at the end of the month to £200 so am getting there but am also aware that as I bank with Barclays, their changes to overdraft fees are going to make it even harder for me.

I've been thinking about using the money transfer facility on my Barclaycard to get me out of my overdraft. Then transferring the debt on the Barclaycard to a 0% credit card. I'm hoping that once my loan comes to an end next year then I can use the money that I am paying on that to get rid of the credit card completely quite quickly. In the meantime, I am on a tight budget so would only be able to make the minimum repayments.

Help!!! I'm not sure what to do for the best. I am just starting to make some headway and don't want to do anything to jeopardise that. However, if there was any way of paying less money to the banks in interest and overdraft fees then that would really help me out.

Many thanks in advance.

Fmess

Hi Emma


It would be better if your debt was on a 0% credit card as opposed to accruing interest and charges, however do remember to take into account the balance transfer fee. I would also cut up or freeze the credit card so that you are not tempted to use it.


I would also write a SOA and see if you can reduce your expenditure and then pay more than the minimum payments as this will help, or can you increase your income?


Good luck on your journey

savingmummy

Hello and welcome.


I would definitely start with a SAO. http://www.stoozing.com/calculator/soa.php
This is a big first step of seeing what comes in and whats going out each month.
Ensure you do it 100% accurate so you get a true SOA.


I saved £150 a month just on reducing my food bill, switching elec/gas companies and cancelling sky!
So £150 to pay off a debt!

sazaccount

Hi,

I third the comment on starting with an SOA, sit down with a big cup of tea/coffee and go back though your bank statements and a couple of highlighters eg one for bills, one for food shopping, one for entertainment etc you should then be able to see where your money is going

Post it up and the lovely guys here should be able to help with cutting/reducing

Good Luck
xx

yan101_2

not advice but ill post my similar experience. I also had car problems, loan debt etc. i would get paid and still be in my overdraft. my soloution was a debt management plan, started a new account and made a decent plan with stepchange to get back on track. it worked for me but did affect my credit. But im sure you wont want to get yourself in deep again so would you need credit again?? if you can do it without hurting your credit then youll be better off. but be careful not to get in any further, thats what i did before i made my DMP. i extended my loan, made balance transfers, but it only got me in deeper. Just my experience.

pleasedelete

You dont want a debt management plan as it will jepordise everything as you will be unable to get any credit for years. You might need a mortgage etc in the future

emma2205

Thanks for all the replies everyone

I will definitely do an SOA but just had a quick look and think I'm going to need time to go through it properly.

The debt is definitely going down already and I am sticking to a fairly tight budget in order to make sure that I am always able to make the loan and credit card repayments. I don't feel that it is unmanageable and I can see that it won't be too long until it's gone completely.

However... if there was a way of reducing the amount I pay to the bank in overdraft fees/ credit card interest - then that extra money could go to reducing my debt even further.

mfmaybe

Hi Emma

What is the interest rate on your Barclaycard? And roughly how much is your overdraft interest each month? Do you know what the interest rate on this is? And out of interest, what about the loan? I'd guess that is the cheapest rate.

Assuming your overdraft is the most expensive, I'd focus on paying the minimum to Barclaycard until the overdraft is paid off. If it's a maximum of £200 (was that the overdraft before you got paid or after?) then it should be possible to do that quite quickly. I'd be selling everything you don't need or want, via Facebook or Gumtree by choice as these are free, but Ebay has a wider audience usually.

One option for you would be to switch to a 0% purchases card. You could switch your day to day spending on to that, to effectively "Pay off" the overdraft by not spending your wages. But before you do, you must do a SOA or a proper budget to ensure that you can then live within your means each month. As soon as the OD is paid off, you would switch to paying off the Barclaycard, and then the 0% card. This is how I recently paid off my overdraft, but at the same time I've really reined in my spending.

Dobbibill

Hi Em and well done on posting for help and advice. You are right about plenty of knowledgeable people on here, and in my experience, all very willing to share their experiences and tips on becoming debt free. :wave:


I echo the comments to post a SOA. When it's all down in black & white it will be clearer where savings can be made.


Good luck on your journey to freedom


DB

On_my_way

pleasedelete wrote: »

You dont want a debt management plan as it will jepordise everything as you will be unable to get any credit for years. You might need a mortgage etc in the future

I agree with this - only go for a DMP if you really can't manage to pay at least the minimum amounts. The DMP will affect your credit rating very badly and will mean that you won't be able to borrow for a number of years.

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