Sorting out debt with poor credit worthiness.

LEA1987

Hey!

I'm hoping someone might have some advise for me.

I'm 27 years old and have made a few lil mistakes financially.

To put you all in the picture, I had no debt a few years ago and had never borrowed any money before.

I wanted to get a car on finance but despite having a large disposable income no one would touch me on what I felt was a reasonable repayment rate - some quoting 55% APR on car finance?!

Anyway, I spoke with Experian when I went to cancel my trial and they told me to go get a credit card! I thought this was a genius idea and I'd be OK despite my parents warnings.

I went for Marks and Spencer as I'd heard online they never gave much of a limit and I felt it would be safe.

Anyway, I got a £4000 limit on my first card and in no time I started filling it up thinking 'It's OK, because I'll just pay a lump off next month' as I was using it to buy items I'd normally save for or, far worse, items I wouldn't really bother buying in the first place!!

Anyway, that train of thought stayed with me and in no time I was offered more cards so snapped up them to get that item I really wanted which would mean I could just use my income to clear off the cards!

I'm afraid to say it never really stopped and I now have three cards with £8250 on and 4 items on finance that I wanted but could never justify the heavy cost in one hit!

Needless to say, my income has been shattered by the hefty payments on the cards.

I've been wanting to get a loan to just pay everything off and leave me with a tidy amount per month that'll see me debt free in 5 years and see my credit worthiness return.

Problem is, no one wants to give me a loan as I'm not a home owner and I'm over half way on the amount I'd be allowed without being a home owner so Im finding it pretty tough!

I'm starting up my own company alongside my normal day job which will help but I'd rather be paying extra off a loan than tackling so many cards etc.

I'm just at a bit of a loss as to how to handle this.

Looking for any advise please as to how to best handle this and get debt clear and stay debt clear.

I'm going to want to consider mortgage options in a few years and look at children at some point and I just don't feel I can even think about any of that whilst I keep trying to live a 'flash' lifestyle..

I earn around £1350 per month but my photography company does bring in bits but at random.. for example, october I have around £1400 coming in but November to February I have nothing lined up at the moment.

glentoran99

First of all a loan wouldnt help you, as you would likely just end up running up the debt on the cards again, and you end up with twice as much debt , been there done that,

whats your seperate balances and APRs?

enter your details here http://www.whatsthecost.com/snowball.aspx and it will show you how best to pay of the debts you have the quickest

sourcrates

Oh dear, this is a classic story of what not to do, however, its a familiar story to me, and was the cause of my debt mountain, that eventually topped at £54,000, because I, like you, naively believed that I could pay off credit cards with consolidation loans, then stupidly ran up the debt on the cards again, and you will do it, you say now you wont, but the next shiny, must have thing you see, and out come the cards, and hey presto !!.


You would be ill advised to get a loan, what you really need is a debt solution, maybe you can tackle them with a DMP, or just by throwing all the money you can at them.
But the first thing you need to do is cut the cards up, and throw them away.

Mort

Consolidation loans are potentially dangerous, I failed multiple times with them. There are plenty of people on this board who can tell similar tales.

You don't say that you are not able to meet your current payments, or that you have missed payments. If you want a mortgage at a later date you will want to avoid missing payments and these days you will need a deposit.

Have a look at this Snowball calculator, you can use it to target your cards in the best order so that you can clear them. The most important thing though is to stop spending on them.

honey10

Have you considered posting an SOA? That will allow you, and us, to see where you can cut down to throw money at the debts that are crippling you.

The SOA is here you can format it for MSE.

Good luck :-)

LEA1987

Thank you all for your input so far! :-)

I cut all my cards up tonight! I just use them as a fall back so often more so I don't miss out rather than NEEDING to actually use them.

I've never missed a payment - one did get rejected for some reason but it was spotted and paid in time so Halifax advised me it wouldn't be a late or missed payment.

My credit history is showing as OK on a report taken after that so all should be good there.

I really appreciate everyone's advise.

I think I was looking more at managing the payment over managing the debt.

It's a horrible word and besides my Mum and Dad no one has any idea what I've done.

Worst thing is I waste so much money per month.

I think this tread and site in General has made me open my eyes to how wasteful I am over anything else.

I think I need to look at taking £50 a week for myself for anything that's non essential.

Then, on payday anything I had left over go towards reducing a card.

I applied for a balance transfer but was rejected which didn't help!

Would've saved a fortune from doing that :-/

bargainbetty

General advice is to pay minimum plus £1 off every debt per month, and then throw everything you can at the highest interest debt. Using the snowball calculator will help you see how fast this might work.

You could also consider throwing all the spare at the smallest credit card debt, as you might find that you get a balance transfer deal from an existing provider more easily than a new one - you can then move as much of the highest interest debt onto it as possible.

In the meantime, do you have any thing you can sell, as well as doing the extra work? Have a good clear out on ebay, at car boot sales etc, and you might find you recoup a chunk to pay back against the cards.

Good luck