Best plan forward?

BengalTilly

Hi,

I'm just after some advice please on the best way forward for sorting out my finances. My husband and I are currently living in (and occasionally!) beyond our £1500 overdraft but we've each got our own individual debts and I wondered how best to tackle mine in the first instance. I have the following:

Barclaycard £9000 (with no promotions due to mistakenly going over my balance once)
Current monthly minimum payment is around £230-£250 per month

MBNA (Fluid) total of £3364 made up of ...
£1777 (balance transfer promotion until 14-Jul-2017)
£291 (money transfer promotion until 14-Nov-2016)
£1296 (cash purchases non promotion)
Currently monthly minimum payment is around £60 per month

Sainsbury Loan
£163.28 per month with the last payment in Feb-2019 (so £4572 outstanding including this month)

So excluding the overdraft I have £16,936 in credit cards/loans (luckily my husband's loan comes to an end this month but he does have one credit card himself). I'm not looking for a lecture - I appreciate how irresponsible this is - but I'm just looking for genuine advice especially what the best plan forward is especially as the last "promotional period" comes to an end next July. I hear of people switching but with such high balances obviously I'm not going to be able to just do that.

Any genuine advice?

EssexHebridean

OK - first step is to complete your SOA (Statement of Affairs) - you'll find the link in the "Sticky" post at the top of this board. From there we'll be able to look and see if there is anywhere that savings can be made, which will free up more money for you.

For the time being, count the loan as a straight outgoing, but don't worry about it - let it trot on as it is. Once the more urgent stuff is dealt with you can factor in how best to handle that.

Have you cut up your credit cards or at least removed them from your purse so you're not tempted to spend on them? That's vital - otherwise you're only going to dig yourselves in deeper.

You need to get together the interest rates on all the cards - plus where they are at 0%, when that expires. You also need to note what the monthly charges are on the overdraft - often these are worse than cards!

Get all your figures, income and outgoings, in one place, and it will all become a lot easier to tackle, so that's your starting point.

BengalTilly

Thanks for this, really useful to see it all identified however it feels like it's painted a rosier picture than is as the "surplus" isn't really there as we are already in the overdraft (fees about £12 a month):

Summary of Monthly Income, expense and surplus
Total monthly income: £2,627
Expenses (incl. HP & secured debts): £1,304.4
Available for debt repayments: £1,322.6
Unsecured debt repayments: £230
Surplus (shortfall if negative) £1,092.6

Personal Balance Sheet Summary
Assets: £680
Secured & HP Debt £-5,829.75
Unsecured Debt £-11,068
Net Assets £-16,217.75

Ben75

It looks as though you don't need to default, which is good news. I would suggest seeing if you can get some 0% balance transfer offers to reduce the balance your Barclaycard. If so, remember to close down the old accounts once they are zero as there is a temptation to run the balance back up (speaking from experience here). Otherwise overpay on the highest interest debts first.

EssexHebridean

BengalTilly wrote: »

Thanks for this, really useful to see it all identified however it feels like it's painted a rosier picture than is as the "surplus" isn't really there as we are already in the overdraft (fees about £12 a month):

Summary of Monthly Income, expense and surplus
Total monthly income: £2,627
Expenses (incl. HP & secured debts): £1,304.4
Available for debt repayments: £1,322.6
Unsecured debt repayments: £230
Surplus (shortfall if negative) £1,092.6

Personal Balance Sheet Summary
Assets: £680
Secured & HP Debt £-5,829.75
Unsecured Debt £-11,068
Net Assets £-16,217.75

No - you're missing the point there, the surplus "is" there - the excerpt you've posted from the SOA shows it - so the overdraft should be cleared in 2 months, which some left over, yes?

Except that I'm guessing you currently DON'T really have that surplus each month, do you? If you did, I don't think you'd be here asking for suggestions...

If you feel brave enough post in the full SOA - it's the only way we can really offer targeted help. Other than that, that's one heck of a big surplus to just be "losing" each month - so you need to work out where it's going. First stop on that front is a spending diary - literally a notebook in which you write EVERYTHING you spend - online, face to face, the lot. If you "fritter" a lot on your debit card - the odd coffee here and there, buying lunch, etc, then maybe switch to using cash, and to a set budget each month.

On the Barclaycard - sounds simple I know, but as a first port of call, have you tried ringing them to see if there are any deals they are willing to do? They may be wiling to transfer you to a low life-of-balance card if nothing else?

BengalTilly

Thanks again ... yes you are completely correct in your thinking about the "surplus" being lost each month and we have just come to the conclusion that it is the debit card "fritters". Like you say odd coffee, lunch, maybe a takeway, trips to the local co-op everyday rather than the cheaper supermarket etc so what I've decided to do (unless there is a better option?) is withdraw the food budget in cash and petrol budget in cash etc and literally use that. Even leave the debit card at home (credit cards are getting locked away!).

Willowpop

BengalTilly wrote: »

Thanks again ... yes you are completely correct in your thinking about the "surplus" being lost each month and we have just come to the conclusion that it is the debit card "fritters". Like you say odd coffee, lunch, maybe a takeway, trips to the local co-op everyday rather than the cheaper supermarket etc so what I've decided to do (unless there is a better option?) is withdraw the food budget in cash and petrol budget in cash etc and literally use that. Even leave the debit card at home (credit cards are getting locked away!).

This is exactly what I did. I got csh out at the end of every month on payday and literally spent that. It stopped my frittering straight away and meant I actually had money to pay off my debts.
I can 100% recommend this method.

EssexHebridean

BengalTilly wrote: »

Thanks again ... yes you are completely correct in your thinking about the "surplus" being lost each month and we have just come to the conclusion that it is the debit card "fritters". Like you say odd coffee, lunch, maybe a takeway, trips to the local co-op everyday rather than the cheaper supermarket etc so what I've decided to do (unless there is a better option?) is withdraw the food budget in cash and petrol budget in cash etc and literally use that. Even leave the debit card at home (credit cards are getting locked away!).

Keep one credit card as your "emergency fund" if you don't have any cash available, but as you say, lock it safely away at home.
As you say, switch to using cash if this helps you to keep track better.
Allocate a small sum each per month for personal spending - withdraw that in cash, and agree that will be it for the month.
Meal plan, write a shopping list, and stick to it.
Consider online shopping if you get tempted towards buying extras when walking round the store - you'll save the delivery fee easily if that is the case.
Shop once a week, don't be tempted into the supermarket more often than that.
Include in your shop the makings of packed lunches.

A four figure sum is a truly terrifying amount to just be "losing" in the course of a month - scale it up, and in the course of a year, that's a small car you're frittering, if that helps? And again, if you can track that down, then that overdraft can literally be gone in a couple of months, can't it.

National_Debtline

Hi BengalTilly,


I think there have been some great tips on here so far, and hopefully that has helped you. I would add that the overdraft could be throwing your budget off each month and could contribute to where you are 'losing' money. I would suggest opening a new basic account with a banking group you owe nothing else to and no overdraft.


Have your income(s) paid into there and then using your new SOA you will be able to work out what money you have spare to pay instalments to the overdraft. Think of the instalments like the payments on your credit card. This is very useful for people to get back on track, but be careful that the bank can recall the overdraft at any point.


Laura
@natdebtline