Always thought "I'll pay my debts off eventually" and now I really have to.

babaghanoush348

Hi moneysavingexpert,

A couple of years ago I came to London for work after graduating, with a £2000 student overdraft and a debt of a month's rent + deposit to my parents (around £1200). I started on £23000 (which I thought was a decent amount until I started to know London better!).

Anyway, I got a credit card to be able to live and have worked my way up in work to £30000. I've paid back my debt to my parents and had to pay more deposit for my next flat, but I still have my overdraft (£2000) and amassed a credit card debt over the years (£2800).

The problem is, my student overdraft is gone in January and I'm now paying interest on my credit card, as the interest free period is over. I know I've been terrible with money and should have thought about this alot sooner (in fairness I have, but it's now that debts are terrifying me, I'm a "leave it until I have to taken action NOW" type of person).

My question is, where do I go from here? Of course, I need to hugely cut down on spending and amass some money to pay off these debts. Which do I pay off first? My bank overdraft or my CC? I'm not entirely sure how interest works as I've always had interest free. I feel like a bit of an idiot letting things get this bad and now I feel sick.

I've applied for some balance transfers, mostly to no avail, but managed to get a £1500 over 18 months, which I'm in the process of setting up. I don't think I should apply to anymore as this will cause me much bigger problems down the line...

Rambling over, any advice on anything would be great!

Money_maker

Start off with a Statement of affairs so we can see where the money's going.

ShakeItOff

I would look at which has the higher interest and work towards paying that off.

From (bad) memory, when I graduated and my 0% overdraft came to an end, it just turned into a charged overdraft, so it didn't disappear, it just started to accrue interest and charges.

Playing_with_Fire_2

Hey there, good work on taking the first step in acknowledging that it is time to do something. I would check out Martin's Budgeting page http://www.moneysavingexpert.com/banking/Budget-planning

Go through all your receipts and bank statements and understand where you money has gone, then go through all your expenses and figure out if they are necessary and if they can be achieved more cheaply. As you have run up debt you will need to spend less and this will involve some sacrifices, you should prepare yourself for this.

Some pain free quick wins could be checking for cheaper energy, mobile phone, cancel TV packages, and buy the value brands at the supermarket. Other wins will be not buying what you normally buy, less food out, takeaways, computer games, whatever your vices are. The default should be to spend NOTHING, then identify what you really need, then pay off your debts, then and only then decide what your wants or luxuries are.

Look for stuff you can sell on eBay (or elsewhere) to make some more cash to go towards the debts. Are there any Christmas jobs you can get to boost your income?

Best of luck