Advice needed

Gethino

Hi all. I'm really hoping someone can help me or at least guide me to resolve my debt. I'm currently in full time employment earning about 30K a year. I'm with one bank only which is HSBC. I have one credit card with them which only has a £500 limit on it but I'm have about £450 into that. I'm not too worried about the credit card if I'm honest. In my current account I have a £3500 overdraft which I'm struggling to keep within every month. I just can't seem to clear it. My monthly income after tax is £1729. My bills total £1036.07 which means I have £692.93 to play with each month. I have tried saving each month but there always seems to be something. Last month it was the car which cost me £300 and this month it was the car tax. Is there anything I can do? Please help.
Thanks.

Profligate

Hi Gethino

If unexpected expenses keep cropping up, that indicates you don't have a full budget, which reflects your true spending needs.

Ideally, you would put some money away every month for car tax, so that you have the money available when you need it.
The same with car maintenance- money should ideally be put away every month so that you're not stung by big expense in 1 month.


On the face of it, your debt does not appear to be excessive. Although you need to keep an eye on that overdraft and the card to ensue you don't exceed the limits.

I suppose it depends how much of the £160pw you have left over, can be thrown at the debt?

If you post a full SOA, people will help you to see where you might cut back & raise 'extra' money to throw at your debt. Once you see the debt coming down, it will be a great boost and very motivating.

Good luck

Gethino

Thanks for the reply. I get what you're saying about the car tax and servicing. I should keep a bit of money each month so that it doesn't blow my budget for the following month.
Full SOA for a month:
Monthly Wage (After tax): £1729.25
Rent: £315
Car Lease: £164
Car Insurance: £67
Fuel: £80
Gym: £33
Phone: £52
Union: £16
Netflix: £7.99
Credit Card Minimum Payment: £11.43
Overdraft Charge: £43.28
Joint Account to pay house bills and food: £250
Summer Holiday: £100
Total: £1139.70
£1729.25 - £1139.70 = £589.55 left to spend.

To be honest what I've been thinking of doing is send £250 on pay day straight to my ISA with HSBC and then when I've reached £3500 clear the overdraft but that's a long process and I'll still be charged more than £40 a month by HSBC every month for being overdrawn.

Any other options?

Thanks,
Gethin

bobcat2

Really no point in paying £250 into an ISA, this is likely to just cost you more, leave the £250 in the current account to reduce the overdraft!
If it were me I'd probably apply for a long term 0% purchase card and put all normal spending, I.e fuel food and anything else you normally spend on that, just pay the minimum payment to that then leave the money you would have used in the current account to clear the overdraft. Once the overdraft is in shape you can tackle repaying the card.

Profligate

Hi again,

The SOA you've posted is a start, but it's not full -in that there's no monies allocated for things you've already noted (eg car maintainence, car tax, plus anything else missing). You could start by thinking of your yearly outgoings and divide everything by 12 so you have an idea of monthly costs.

The phone costs are very high - any chance of dropping a tarrif if you're still in contract, or getting a better deal if not?. The main MSE site has lots of info on cheap phone deals.

Paying only the minimum on a credit card is not a good idea generally (unless maybe on a 0% card, or if you have higher debt elsewhere) as it will take a long time to clear the debt (again look at the main site -info on minimum payment calculations )

Your overdraft is costing you a fair bit...

If you're serious about sorting out this debt, you could have a cheaper summer holiday, saving say £70pcm for the hol and putting the £30 to your debt...or maybe miss the holiday for a year and put the whole £1200 towards your debt?

Could you get a cheaper gym or cancel it?
I think you potentially have a fair few options; I suppose it depends on how quickly you want to get rid of it, and the short term sacrifices you're prepared to make, for longer term financial wellbeing...

Gethino

bobcat2 wrote: »

Really no point in paying £250 into an ISA, this is likely to just cost you more, leave the £250 in the current account to reduce the overdraft!
If it were me I'd probably apply for a long term 0% purchase card and put all normal spending, I.e fuel food and anything else you normally spend on that, just pay the minimum payment to that then leave the money you would have used in the current account to clear the overdraft. Once the overdraft is in shape you can tackle repaying the card.

Okay I'll take this on board. I'm quite clueless with cards and that sort of stuff so could you tell me what's the best option in terms of companies and stuff like that? Am I right in saying you're advice is to get this card and use it as much as possible (within reason obviously or there will be thousands on that within a few months) so that my wages will eventually bring down the overdraft as I essentially won't be using it? I suppose then the £600 ish I have to play with could be left to bring it down? Month 1: £2900, 2: £2300, 3: £1700, 4: £1100, 5.£500 6. +100

That looks doable when looking at it like that. During those 6 months though pay the minimum payment on the card and then bigger payments after getting rid of the overdraft so I get the credit card down? Is everything I've said correct roughly?

Edit: What's the benefits of this compared to a balance transfer? So what would be best for me? A money transfer credit card or a Balance Transfer credit card? I've looked and Virgin would accept me. They have both of those with 0% for 41 months 0% APR or there's 32 months or 24...

elsien

You say you have £589 left to spend. But there's a lot missing from your SOA - TV licence, council tax, utility bills, car maintenance, food, clothes, social life. Do you know how much you spend on these, or do you keep going till the money has gone then wonder why there's nothing left?

Until you know where the money is really going, it's harder to work out where you can save if you want to. So once you've accounted for everything, how much do you really have left?

Heather2603

HSBC will let you reduce your overdraft bit by bit so I'd do that monthly rather than transfer to an ISA, however, first of all you will need to do a full statement of affairs to make sure the amount you reduce by is within your budget.

bobcat2

Gethino wrote: »

Okay I'll take this on board. I'm quite clueless with cards and that sort of stuff so could you tell me what's the best option in terms of companies and stuff like that? Am I right in saying you're advice is to get this card and use it as much as possible (within reason obviously or there will be thousands on that within a few months) so that my wages will eventually bring down the overdraft as I essentially won't be using it? I suppose then the £600 ish I have to play with could be left to bring it down? Month 1: £2900, 2: £2300, 3: £1700, 4: £1100, 5.£500 6. +100

That looks doable when looking at it like that. During those 6 months though pay the minimum payment on the card and then bigger payments after getting rid of the overdraft so I get the credit card down? Is everything I've said correct roughly?

Edit: What's the benefits of this compared to a balance transfer? So what would be best for me? A money transfer credit card or a Balance Transfer credit card? I've looked and Virgin would accept me. They have both of those with 0% for 41 months 0% APR or there's 32 months or 24...

Hiya, if you can get a good money transfer card with a reasonable fee then do that. The problem is that as far as I know a lot of of the good offers for balance transfers will only allow you to pay off another credit card not an overdraft. The advantage of a card that has 0% on purchases is that you will pay no fee for this. If your normal monthly spend is a reasonable amount then you can get the overdraft cleared quite quickly just by spending on the credit card the money that you would have normally spent on your debit card. It goes without saying that you need to be careful to not spend anything that you wouldn't have normally spent on your debit card and not withdraw cash on a credit card.
There's an AA credit card offering 24 months at 0% that will also pay you £30 for opening it via Topcashback (there may of course be better offers available elsewhere). If the the 24 months is not long enough to clear the debt once all of the of the over draft debt is on the card you can do a normal balance transfer later down the line. Of course if you can find a credit card offering 40 months that will allow you to transfer to banks account this may be the simpler option.
It's also critical that you look at your SOA to make sure you're not getting further into debt each month first.

-taff

So you never go and have asneaky coffee, or snadwich or meal out, see a film, go to the pub?
Your SOA is incomplete.
I would get your bank account open in front of you, write down exactly what you spent and where, look for any receipts you have left and start seeing where your money is going.
Right now you're probably thinking, wooo, I have 500 odd quid I can spend each month on nothing, but that's not ture.
You aren't saving for the expenses that come once yearly in a lump sum, as already said above.


Your monthly budget needs to cover every expense you have currently throughout the whole year, not just the monthly ones, so again, as above, work out what you need to spend yearly, and add that to the monthly budget.

I wouldn't advise you to spend on your credit card unless you pay it off every single month [ and you get cashback for using it]
Instead, I'd advise you to take out whatever sum you need weekly after the bills, for petrol and sundries, and do not take any more than that out.[Also being aware that sometimes there are five weeks in a month]

I found this budgeting tool very handy, YNAB, but there are others that do the same thing, inclusing a pen and paper, and including spreadhseets if you're a wizz with excel, but you need to make sure you are actually budgeting properly, not just tracking what you spend.

datlex

Gethino wrote: »

Thanks for the reply. I get what you're saying about the car tax and servicing. I should keep a bit of money each month so that it doesn't blow my budget for the following month.
Full SOA for a month:
Monthly Wage (After tax): £1729.25
Rent: £315
Car Lease: £164
Car Insurance: £67
Fuel: £80
Gym: £33 (you don't need this! Walking is free. Cut it as soon as you can)
Phone: £52
Union: £16 (you don't need this either)
Netflix: £7.99 (Can be cut if you can cope with only watching 1 screen at a time. Indeed do you need it at all?)
Credit Card Minimum Payment: £11.43
Overdraft Charge: £43.28
Joint Account to pay house bills and food: £250
Summer Holiday: £100 (again you don't need this or to spend as much on it)
Total: £1139.70
£1729.25 - £1139.70 = £589.55 left to spend.

To be honest what I've been thinking of doing is send £250 on pay day straight to my ISA with HSBC and then when I've reached £3500 clear the overdraft but that's a long process and I'll still be charged more than £40 a month by HSBC every month for being overdrawn.

Any other options?

Thanks,
Gethin

For me you don't need the gym, union, Netflix whilst you have an overdraft or credit card. Use the money saved from those to pay off your credit card.