Advice please!

nelbo009

Hi guys, new here, registered because I really want to get debt-free. Any advice/help will be much appreciated. Here's a list of my monthly receipts/payments:

Outgoing:

Northern Rock loan - £288.45 p/m
Royal Scottish Assurance life assurance - £8.30 p/m
Monthly train ticket to work - £63.40 p/m
Overdraft interest - Average is £23 p/m
RBS Royalties account subscription - £6 p/m
RBS Visa - £80 p/m
Barclaycard Visa - £33 p/m
JJB Sports store card - £27 p/m
Sygma Bank Mastercard - £27 p/m
MBNA credit card - £60 p/m
Capital One credit card - £30 p/m
Burton store card - £27 p/m
Car insurance - £24.57 p/m
Petrol - £80 p/m
Sky - £38 p/m
Setanta Sports - £9.99 p/m
Mobile phone - £45 p/m

Total = £870.17

Incoming:

Wage - £1,023 p/m

I have a £2,000 overdraft that I use all of over the course of a month.

I racked up my debts when I was a student at university and haven't been able to pay them off. I still live at home with my parents, and, God bless 'em, they don't charge for food or rent, so I haven't any outgoings on that. When it comes to Christmas/birthdays etc., I spend whatever is available, so unfortunately can't give concrete figures for those. Other outgoings, such as going out etc., vary wildly, although I do keep an eye on them to ensure I'm not going over budget.

Ideally, I'm looking to pay off the credit cards first, and have considered a further loan in order to consolidate them. But, my credit rating isn't great, as far as I know (I've tried to get the free trials, but I've had problems with the websites), due to the level of debt I have, although the last time I missed a payment on any of my cards was December last year. All my outgoings for cards/loan/insurance are paid by Direct Debit to ensure no payment is missed. I also realise that cancelling Sky and Setanta are quick reductions in what I am paying out, but this is something I'd prefer not to do, although will if necessary. Credit cards are my main priority though.

Any advice is much appreciated. Thanks in advance!

Dave

davetrousers

Ahah the immortal word "Consolidate". Borrowing more to get out of debt doesn't make sense to me, remember it is in the lender's interest to keep you in debt, it's not in your interest.

My advice would be:
Ditch Sky and Setanta, do you really watch £50 worth of tv a month (or £600 a year)?
Your train fare is £60 a month, so how are you using £80 a month in petrol?
£45 on a mobile is quite high, negotiate a cheaper tariff, (CAUTION: this may require exercising some restraint in its use!)
What do you need life assurance for?
Cut up the credit and store cards and pay off the most expensive first.

Unfortunately these debts have built up and in order to pay them off you will have to make some sacrifices.

Another thought would be try looking for a new job.

angelavdavis

Hiya and welcome to MSE and well done for doing your SOA,

I am afraid I am also in the "don't go down the consolidation route club".

As many have, I have been there, done that, ended up running up additional credit card debts and eventually found that the only way to pay off debts is to stop spending and increase your income!:D

Consolidation is only ever any good if you are strong enough not to run up additional debts, but in my experience, most people after about a year or so realise they can afford to spent a bit of money on this or that, and before they know it, they are paying credit cards and consolidation loan payments!

OK lecture over. My suggestions to trying to cut back on spending so you have more money to throw at debts would be:

1) Start keeping a spending diary - what is the remaining £150 going on every month? The spending diary will help you keep track of the real cost of stuff so you can see areas where you can cut back.
2) What are the aprs and total owed on your cards? Are the payments the minimums? You mention clearing the credit cards first, but I suspect the store card aprs are much much higher. You need to update the SOA with the total owed and aprs so people can make suggestions on moving these across to 0% or lower life of balance cards, etc.
3) How good have you been at making regular payments to the cards? This will affect your options too.
4) Davetrousers is right - I know you aren't keen but I think you should also get rid of Sky and Setanta and use freesat/freeview for a while - an extra £50 off the cards will clear them far quicker. Also the mobile could be reduced by £20 per month easy.
5) Enter your debts onto the snowball calculator, it will help you see what order to repay stuff off on and focus you, you can see how the £50 from the TV money will have an effect on your debt-free date, etc.
6) Do you have anything to eBay? You can then put the money toward the debts too.
7) As mentioned, cut up the cards and as you clear the debts, phone up the lenders and cancel the accounts (as they affect your credit score sitting empty on the file).

nelbo009 wrote: »

Royal Scottish Assurance life assurance - £8.30 p/m
RBS Royalties account subscription - £6 p/m

What is the RBS Royalties account?
Why do you have life assurance when you don't have a mortgage or dependents?

Look forward to seeing your responses.

HairyHandofDartmoor

I'm afraid I agree with the others, you should ditch Sky and Setanta, and reduce your mobile bill as it is high. These things are luxuries.

With regard to the credit cards we need to know the APR's before we can advise properly. All my and oh's CC's are on low interest for the life of the balance ranging from 3.9% (M&S) to 6.9% (Barclaycard). If you are not up to the limit on any of them you need to empty one, then do a balance transfer onto the empty card at a low LOB or 0% interest.

My oh and I did this. We worked hard to empty one card then shuffled all 4 of the others until they were all on low LOB interest and they are now being paid off much quicker. See Martin's article on the credit card shuffle.

nelbo009

angelavdavis wrote: »

Hiya and welcome to MSE and well done for doing your SOA,

I am afraid I am also in the "don't go down the consolidation route club".

As many have, I have been there, done that, ended up running up additional credit card debts and eventually found that the only way to pay off debts is to stop spending and increase your income!:D

Consolidation is only ever any good if you are strong enough not to run up additional debts, but in my experience, most people after about a year or so realise they can afford to spent a bit of money on this or that, and before they know it, they are paying credit cards and consolidation loan payments!

Yeah, I'm not keen on consolidation at all, it was just one way I was considering reducing my overall outgoings. I'd much, much prefer to just pay everything off.

1) Start keeping a spending diary - what is the remaining £150 going on every month? The spending diary will help you keep track of the real cost of stuff so you can see areas where you can cut back.

Good tip - I'll make one up.

2) What are the aprs and total owed on your cards? Are the payments the minimums? You mention clearing the credit cards first, but I suspect the store card aprs are much much higher. You need to update the SOA with the total owed and aprs so people can make suggestions on moving these across to 0% or lower life of balance cards, etc.

When I said credit cards, I did actually mean both them and the store cards. Now, APRs and Totals owed...

Capital One - Owe £601.98, can't find APR, but monthly rate is 2.549%
Burton store card - Owe £671.20, APR is 29.9%
JJB Sports store card - Owe £698.68, APR is 30.9%
Sygma Bank Mastercard - Owe £860.75, APR is 24.9%
RBS Visa - Owe £3,546.25, can't find any interest rates
Barclaycard Visa - Owe £1,539.95, APR is 24.9%
MBNA Mastercard - Owe £2,108.19, can't find APR, but monthy rate is 1.8735%

Can the APR be calculated off the monthly rate? If so, how?

3) How good have you been at making regular payments to the cards? This will affect your options too.

About a year ago, the majority of my payments were made via cheque, and I missed a few. The last payment I missed on any account was in December 2006, since then they've all been made via Direct Debit, and I haven't missed a single one. All the payments made are minimum payments.

4) Davetrousers is right - I know you aren't keen but I think you should also get rid of Sky and Setanta and use freesat/freeview for a while - an extra £50 off the cards will clear them far quicker. Also the mobile could be reduced by £20 per month easy.

Well, I just found out that Setanta is now free with my parents' Virgin Media subscription, so that's not a problem, and I was considering ditching Sky anyway. Sorted.

With regard to the mobile, I actually just changed the tarriff I'm on. I had previously been on a £20 p/m tarriff, but my bills had been averaging around £65 p/m. This is because I have to use my mobile a lot during working hours for business, and that resulted in higher bills.

5) Enter your debts onto the snowball calculator, it will help you see what order to repay stuff off on and focus you, you can see how the £50 from the TV money will have an effect on your debt-free date, etc.

Thanks for that as well, as soon as I find out all of the APRs, I'll take a look at that.

6) Do you have anything to eBay? You can then put the money toward the debts too.

Old mobiles, books from uni, some DVDs etc. I'll have a look around and see. I've never actually used Ebay before (must be one of the few around these days!), is it easy enough to use? Any tips?

7) As mentioned, cut up the cards and as you clear the debts, phone up the lenders and cancel the accounts (as they affect your credit score sitting empty on the file).

Cards are already cut up. Didn't know that they affected the credit score even when empty, so I'll bear that in mind for when they are finally clear.

What is the RBS Royalties account?

Current account offered by the Royal Bank of Scotland. I got transferred to it automatically when I graduated. Looking at the website, it gives benefits such as discounts on overdraft rates, higher interest rates, and various discounts on travel, entertainment, etc. I'm not sure how changing would affect my overdraft, but that's something I'll look into.

Why do you have life assurance when you don't have a mortgage or dependents?

Honestly, I have absolutely no idea. It was something my parents insisted I get when I was at uni, but thinking about it, it makes no sense...

wyebird

You can stick this formula in a spreadsheet to calculate your APR from a monthly rate. Just put the monthly rate in cell A1.
=(((((A1/100)+1)^12)-1)*100)

nelbo009

Excellent, thanks for that.

In that case:

Capital One APR = 35.3%
MBNA APR = 24.9%

Still can't find any interest rate details for the RBS Visa...