Financing postgrad and getting out of debt

[Deleted User]

Hi guys

Apologies for the long text in advance.. This is such a big step for me.
Wanted to share my situation and get your thoughts. If you have any ideas, please share, any help is welcome.

I have embarked on a road of getting a Masters. I have already started the course and wired a down payment to the school and have GBP 7,300 left to pay. At present I'm on a low salary, so need to do some tight squeezing for the next year. I know the amounts are ridiculous, but I was left with a minus GBP 5,000 in the bank following my divorce last year, so every penny counts...

Options to pay the uni:
in one go
monthly - spread over 10 months starting Nov 2014
per term - half in Jan 2015 and the rest in Apr 2015 (which sucks because the end of year is actually Oct 2015, but such is life..)

My money at present, after the initial payment to the school:
ISA GBP 5,000
GBP 2,400 in e-savings (which I have saved for smth, but could use as emergency fund if need be)
salary after tax GBP 2,270/ month (could increase in Jan 2015, but I'll not plan that in)

Current debt:
GBP 5,000 on credit card (0% until Feb 2015 so am hoping to get that down to at least GBP 3,500 by Feb 2015 when the APR would be 20% if I don't manage to get Barclaycard bring that down.. or if I'm very lucky I may try for another 0% card to transfer the amount, but I doubt for success there). Limit on this cc is GBP 8,000.

My basic regular monthly expenditures (no clothes, food or fun etc budgeted in here _pale_ ) GBP 750. I would like to start an emergency fund and plan a GBP 100/ month for that.
So I have GBP 1,420 disposable income. From this I would like to pay GBP 500/ month towards my cc bill. I really cannot do more.. I think. Realistically, I doubt I'd be able to save more than GBP 300/month for uni. loan from that.

Plan:
take out GBP 5,000 Career and Development Loan from Barclays and work really hard to manage the rest from the salary.
I have also budgeted in GBP 500/ month to pay off the Barclaycard, which will take until Nov 2015. (I have been a customer and my saving accounts are with Barclays.. but I have never taken out any loans before, so am unsure of my chances of getting approved for the loan..)
I have also looked at Sainsbury's bank for a loan, but doubt I'd get a good deal if any with my history. If of any interest, my credit expert score is 840.

So my finances would look smth like this for the next 12 months (oh dear..):
Salary: + GBP 2,270
- GBP 750 rent+gym+commute+phone..
- GBP 100 emergency fund
- GBP 500 Barclaycard bill
- GBP 300 towards career dev.-nt loan repayment (the actual payment period would kick in in Dec 2015, but I would like to pay off as much as possible as soon as possible, so by October I would have saved a little over GBP 3,500 from salary and have GBP 1,500 left to repay at 10% interest. I am also hoping to receive GBP 1,000 - 1,500 Christmas bonus, and if I do - this would take care of some of the loan, the rest I'd have spent on study materials, so cannot be sure of the amounts here)

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Total: GBP 620/ month for all living expenses :eek: (sounds so scary, but I must do it!! ..I am planning to make greater contributions to cc if I happen to have any money left each month..although it would be quite hard to keep to this budget as it is, so I doubt I'd have any cash left). I am also being realistic about my expenses, so I think my "emergency fund" would be used for toiletries and other girlie necessities.

So my ultimate goal is to stay in employment, get my Masters degree and be debt-free by Dec 2015. ..sort of a Christmas present for me, now that I have made a decision to miss out on all of this year's fun.

Do you think above is plausible? Any improvements?

Big question is.. what the hell to do if I am declined the loan

thebritishbloke

In regards to the CDL, so long as you don't have any bad credit history, you shouldn't have too much of a problem getting it. Also the government pays your interest for the first year on a CDL, so there's no point in putting payments towards it during that time.

You're probably earning ~1.3% interest on the £5,000 in your ISA, take that out and pay off your credit card, then you don't have to worry about that debt and affording your day-to-day life because of it. You'll still have £2,400 saved up as a sort of emergency fund.

Now for the next 12 months you have £1,520/month to live off (before contributing to any savings, emergency fund or CDL). You shouldn't much struggle to manage all this. Given that your BarclayCard will be paid off, you can take out the CDL, don't make any payments for the first year (0% interest) and put the £500 a month you were going to use to pay off your CC, into a savings account and by the end of the year you'll have enough to pay off your CDL and have £1,000 left over. That way you're debt free when you've finished your masters, and don't have months of scraping by just to try and pay off your credit card.

[Deleted User]

Thank you!!
This scenario was my plan B. Why not A? - I am looking at my ISA as "what if I loose my job" fund. Yes I'll still have the GBP 8,000 credit card for worst case scenario.. It's just that I am trying to avoid any bad case scenarios
But you have a very very valid point about those GBP 500/ month..

I think I'll do just that - but shall wait until January to see if I get a Christmas bonus, my cc would still be on 0%.

Will apply for the loan on Monday, fingers crossed I get it.. till January when the next payment to uni is due