Debt clearing advice

greenlightluke

Hope someone can help,

I have a loan with first direct which is costing £389 a month (this was for debt consolidation) - I took the loan out for 12 months and because I'm an idiot I haven't given myself much breathing room in terms of left over income per month.

My total income is £1600 and my total fixed costs (rent, loan repayment etc) total £1022. Once I take £200 off trying to pay off my AMEX card (I have £1300 left on it) It doesn't give me a lot left over when I factor fuel (which I do need for work).

I have switched where I shop for food, I have shopped around for a better mobile deal.

I contacted first direct to talk about possibly extending my loan period which means taking out a 2nd loan (then the interest rate goes from the 7% I'm currently on to 12% - which means an extra £400 in interest (so not keen).

With it being Christmas time too this exacerbates the worry especially with Dec-Jan pay feeling so far away I'm not sure what to do.

I have a Barclaycard which is offering 0% on money transfers until Aug 2017 and I can transfer up to £4900 of my balance (I am currently not using this credit card) or do I shop around for loans, or third option just carry on paying what I'm paying and do nothing.

I'm aware there are lots of numbers flying around but any advice is welcome. I am determined to be debt free.

Thanks in advance,

Luke

sourcrates

Hi Luke,

Oh dear, debt consolidation loan, not working out as expected, sorry to hear that, but there are no miracle cures unfortunately.

You have two distinct paths you can go down here :

(1) You cut back on your outgoings, and try to increase your income, maybe a second job, evening work etc.

(2) You accept you cant live within your present means, and use a debt management solution.

Now if you can do the former, all well and good, if not, your only other option is the latter, which will mean defaulting on your credit payments, and will affect your credit file.

Bear in mind that your essential bills come first, any credit repayments are always bottom of the pile to pay, it just depends how far you want to take things, really.

Try filling in a statement of affairs (SOA) then you may get some better advice :

http://www.stoozing.com/calculator/soa.php

nkkingston

The first thing is to ensure you're not running up any further debt. Consolidation loans are a dangerous thing, because most people who take them out then run the debt up again on the cards they were meant to clear, so end up with double the debt. Each time you apply for one you're making pushing up the interest, making it harder to clear the debt.

What's the interest rate on the Barclaycard? Are you going to end up paying off more in the long run?

Completing an SOA will make it easier for people to help you. There may be ways of moving around other payments (like paying council tax over twelve months instead of ten) that will help you get buy while you're clearing the current loans. With Christmas looming you need to figure out a present budget and stick to it - make your peace with the fact that some people will be getting well wishes instead of gifts.

greenlightluke

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household.........
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1600
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1600

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 550
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 20
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 80
Clothing................................ 0
Petrol/diesel........................... 160
Road tax................................ 12
Car Insurance........................... 38
Car maintenance (including MOT)......... 0
Car parking............................. 70
Other travel............................ 0
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)...... 0
Haircuts................................ 25
Entertainment........................... 17.99
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1015


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 170
Car(s).................................. 1700
Other assets............................ 0
Total Assets............................ 1870

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Loan...........................4100......389.......7.9
AMEX...........................1300......24........18.9
Total unsecured debts..........5400......413.......-


Monthly Budget Summary
Total monthly income.................... 1,600
Expenses (including HP & secured debts). 1,015
Available for debt repayments........... 585
Monthly UNsecured debt repayments....... 413
Amount left after debt repayments....... 172

Personal Balance Sheet Summary
Total assets (things you own)........... 1,870
Total HP & Secured debt................. -0
Total Unsecured debt.................... -5,400
Net Assets.............................. -3,530

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.


Here is the SOA - my rent includes all bills - I'm moving in December which reduces it to £340 instead of £550

I haven't purchased clothes since Summer

I give myself £100 in a want account which is for the month

greenlightluke

nkkingston wrote: »

The first thing is to ensure you're not running up any further debt. Consolidation loans are a dangerous thing, because most people who take them out then run the debt up again on the cards they were meant to clear, so end up with double the debt. Each time you apply for one you're making pushing up the interest, making it harder to clear the debt.

What's the interest rate on the Barclaycard? Are you going to end up paying off more in the long run?

Completing an SOA will make it easier for people to help you. There may be ways of moving around other payments (like paying council tax over twelve months instead of ten) that will help you get buy while you're clearing the current loans. With Christmas looming you need to figure out a present budget and stick to it - make your peace with the fact that some people will be getting well wishes instead of gifts.

Thanks for your reply.

Yeah, I only keep my current account card in my wallet to avoid using and running up debt on other credit cards.

The Barclaycard is 18.9%

I have completed the SOA

Thanks,

Luke

MrsTinks

Whilst not ideal then what about balance transferring the AMEX to the 0%?

Be blunt with family and friends about Christmas, seriously you can fix this pretty easily so long as you are realistic about what you can spend

Lower rent will obviously be better - I'm assuming both include all your bills and rates

sourcrates

With the extra £200 a month you'll save in rent, from December, you should have no trouble keeping this on course.

greenlightluke

MrsTinks wrote: »

Whilst not ideal then what about balance transferring the AMEX to the 0%?


Be blunt with family and friends about Christmas, seriously you can fix this pretty easily so long as you are realistic about what you can spend

Lower rent will obviously be better - I'm assuming both include all your bills and rates

Thank you for your reply,

Yeah, I thought about transferring that balance and pay that off over a longer period of time? Is that the thinking?

I only use my want account through the month which is £100 for the month. Fortunately my girlfriend and her parents are very good with money so they keep me in check for the most part.

Yeah they do fortunately. I think it's probably the pre-Christmas worry for the most part.

greenlightluke

sourcrates wrote: »

With the extra £200 a month you'll save in rent, from December, you should have no trouble keeping this on course.

Thank you for your reply,

I hope so, I think I'll be perfecting beans on toast through the month of January.

sourcrates

greenlightluke wrote: »

Thank you for your reply,

I hope so, I think I'll be perfecting beans on toast through the month of January.

Well better to eat beans, than ruin your credit file unnecessarily i suppose.

Good luck with it !!

Money_maker

There should be loads of bargains end of day on Christmas Eve if you're around the shops at all and have a freezer.