Small Debt - But some tips would be appreciated

MK_Hunter

Hi guys,

I’ve had a read of these boards over the past few weeks and am often impressed with the advice that is given. I find myself in a position now,which is not nearly as bad as most other people here, but I would like to get it all cleaned up as I propose to my partner in a few months (waiting for ourholiday) and are planning on moving in together within 6 months to 7 months and don’t want my debt to be a part of our lives. She doesn’t have any debt.

My debt amounts to a credit card which currently has a limit of £2400, and has £1832 owing on it. As well as a £2000 overdraft, which as of today I am -£360 into but this will continue to go down until pay day, and will cycle like that month after month. My overdraft used to be much worse, often ending the month somewhere down the -£1800 figure, but since signing up for Money Dashboard and actually seeing the out goings, over the past 4 months or so I’ve reduced spending by around £300 a month.

I have posted a SOA below. To explain my situation, I live in a flatshare which is why I have no bills, council tax or TV licensepayments. My partner lives in St Albans which is a £35 round trip train ride and my family live in Nottingham which is a £30 round trip train ride, I live in Milton Keynes by myself which is why my travel expenses are high as I go to see my family and my partner at the weekends.

I currently earn £22,000 but this will be reduced to £20,000 as of September when I take a new job in a different part of the country. However this will also reduce my monthly rent by £100 so will balance out nicely with the reduced pay.

I think I need to get serious about the credit card debt, instead of saving the £300 odd a month on the overdraft which has a low interest, I should be paying off the credit card instead of making minimum monthly payments which is made of up £25 interest and £15 off the debt. Perhaps look into a 0% balance transfer onto a new card?

Another area I am interested in reducing significantly is groceries. At £200 a month, it’s silly money for an individual. It tends to come about from £3 and £4 lunches at work and then meals and dining for one from the supermarkets. When I see people saying they spend £100 on a family of four a month, my spending is stupid. I make the excuse that because I have a flatshare and my cupboard space is limited to two shelves, and my freezer/fridge space is limited to one shelf in each, I can’t keep a lot in the house and when you add there are 3 other people who all are using the kitchen, it’s easier not to cook a proper meal.

But I would be interested in seeing some good online resources for making cheaper meals and making them go further?

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0
Monthly Income Details
Monthly income after tax................ 1402
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1402
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 390
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 35
TV Licence.............................. 0
Satellite/Cable TV...................... 6
Internet Services....................... 0
Groceries etc. ......................... 225
Clothing................................ 20
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 180
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 20
Entertainment........................... 150
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1076

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................1832.97...40.95.....0
Total unsecured debts..........1832.97...40.95.....-

Monthly Budget Summary
Total monthly income.................... 1,402
Expenses (including HP & secured debts). 1,076
Available for debt repayments........... 326
Monthly UNsecured debt repayments....... 40.95
Amount left after debt repayments....... 285.05
Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -1,832.97
Net Assets.............................. -1,832.97
Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

Brightspark87

Hi! I completely understand about the flat share. I bought food items and other housemates would eat them and not understand why I was so stressed! they would replace them weeks later and it was very frustrating as I never knew what food I had in stock.

I got into the habit of buying bread, filling etc and leaving it at work - then it was there when I needed it. Also, tins of veg and pluses - no one steals them!

Pasta - you can always keep it in your room? Just a few packs.

When I lived in a flatshare I was also spending a lot to get to see my family and now husband. However, I started using the national express and mega bus and saved lots on that! Have you tried that? You've not said your age but are you under 25? Railcard? Do you complain to the rail companies when you are delayed?



Good luck! x

Tixy

Hi

I guess your credit card is around 16% APR. Do you know what interest or charges you are paying on the overdraft?

May well be worth trying to get a 0% credit card to do a balance transfer. I would look for one with a low fee rather than a really long 0% promo period as it shouldn't actually take you too long to clear the debt.

As you say hopefully you can work on reducing your grocery spend a bit. Perhaps start by trying to find cheaper things for work lunches?

As you mention the holiday and proposal - have you paid for the holiday (and ring?) already? or will you need to save some money towards those as well?

MK_Hunter

Thanks guys!

BrightSpark - I am 26, but have a young person rail card that will last me till February 2015 as I applied for it just before turning 26 so it's still valid. I like the sound of the National Express though, it doesn't work out cost effective right now for me, as each way the savings are a few pounds, but adds hours. However when I input the details from after my move, the price is dramatically less.

I don't complain when I'm delayed, is that worth doing and what's considered a delay? I can think of times where things are running 20 or 30 minutes late.

Tixy - the interest on the overdraft is almost insignificant. In May it was £1.60, in June it was £0.35, and in July it was £0.34. At the peak of the overdraft, when it was in the -£1800 region it was £5.41- compared to the £25 on the credit card. This is why I say I'm an idiot, I shouldn't be saving money on the overdraft, I should be using the £300 a month to pay off the credit card and reduce the interest there.

The holiday is all paid off, the ring I am looking at I have discussed with the jewelers who are offering a 0% interest for up to 3 years which I will be eligible for. But it does make me question whether I should propose right now, if I can't afford the ring without accruing another creditor.

littlegreenparrot

How do you think your partner would feel about accruing more debt for the sake of the ring? If she doesn't have any debts it suggests she might not be that keen.

When my partner proposed it was with a sparkly paste number, and another followed a couple of years later when he could afford it - which was a wonderful surprise. I wanted to be married and wasn't fussed about the trappings. As we lived in a rented house and both had debts I would have been cross if he had racked up more, and it would have put me in a difficult position - how do you say someone's an idiot in that situation?!

Its a very personal decision, and I understand and applaud the feeling behind it. But try not to get to carried away.