Debt Advice Help

gallaghb

Hi,

I feel like my debts are out of control, I've always had a bit of debt but I never paid interest on it and managed it quite well but since a divorce a year ago and living a single life I am struggling.

I'm wondering what best to do about the credit cards. They're now costing me a lot in interest every month. My credit has taken a hit because of 4th address in a year and using up more of my available credit and I now can't balance transfer any of these.

The barclaycard was mainly interest free until I went over the credit limit by £40 and they took away the interest free on around £10k of the balance

I'm fortunate I do earn a good salary but living on your own and being single is expensive and so is where I live.

I think I'm just gonna be told to suck it up, stop spending so much on things that don't matter and pay more off the credit cards. I do pay the higher APR ones off. It's only recently there is anything on the Halifax card because of a holiday and then a big bill for my car.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 4040
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4040

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 1295
Management charge (leasehold property).. 0
Council tax............................. 170
Electricity............................. 50
Gas..................................... 0
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 15
Mobile phone............................ 0
TV Licence.............................. 13
Satellite/Cable TV...................... 25
Internet Services....................... 10
Groceries etc. ......................... 200
Clothing................................ 50
Petrol/diesel........................... 50
Road tax................................ 30
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
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................................ 20
Entertainment........................... 30
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1978


Assets
Cash.................................... 750
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 19000
Other assets............................ 0
Total Assets............................ 19750

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................12155.....300.......10.9
Halifax Clarity Card...........3722......100.......27.9
Tesco Credit Card..............4584......50........0
Uncle..........................1900......0.........0
First Direct Loan..............12000.....401.5.....4
Total unsecured debts..........34361.....851.5.....-


Monthly Budget Summary
Total monthly income.................... 4,040
Expenses (including HP & secured debts). 1,978
Available for debt repayments........... 2,062
Monthly Unsecured debt repayments....... 851.5
Amount left after debt repayments....... 1,210.5

Personal Balance Sheet Summary
Total assets (things you own)........... 19,750
Total HP & Secured debt................. -0
Total Unsecured debt.................... -34,361
Net Assets.............................. -14,611

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

EssexHebridean

OK, let's take a look. Comments in red as usual:

gallaghb wrote: »

Hi,

I feel like my debts are out of control, I've always had a bit of debt but I never paid interest on it and managed it quite well but since a divorce a year ago and living a single life I am struggling.

I'm wondering what best to do about the credit cards. They're now costing me a lot in interest every month. My credit has taken a hit because of 4th address in a year and using up more of my available credit and I now can't balance transfer any of these.

The barclaycard was mainly interest free until I went over the credit limit by £40 and they took away the interest free on around £10k of the balance Have you called and tried appealing to them on a "really really sorry definitely won't do it again" basis?

I'm fortunate I do earn a good salary but living on your own and being single is expensive and so is where I live.

I think I'm just gonna be told to suck it up, stop spending so much on things that don't matter and pay more off the credit cards. I do pay the higher APR ones off. It's only recently there is anything on the Halifax card because of a holiday I'm going to suggest you prioritise paying off debt over holidays in the future - and definitely DON'T take holidays on credit cards! and then a big bill for my car.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 4040
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4040

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 1295 You live in London, by any chance?
Management charge (leasehold property).. 0
Council tax............................. 170
Electricity............................. 50
Gas..................................... 0
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 15
Mobile phone............................ 0 No mobile? Or do you have a work one that you can use for personal stuff as well?
TV Licence.............................. 13 12.37 or thereabouts, I think.
Satellite/Cable TV...................... 25
Internet Services....................... 10
Groceries etc. ......................... 200 This is a lot for one person - I feel two of us for £50 less than this per month.
Clothing................................ 50
Petrol/diesel........................... 50
Road tax................................ 30 Do you actually pay this monthly? If so consider paying a year upfront as they charge a premium for monthly payments!
Car Insurance........................... 0 How does that work then?
Car maintenance (including MOT)......... 0 And again - how so?
Car parking............................. 0
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 Tsk. Get this sorted - false economy not to.
It'll cost you under £10 a month - just do it.
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 you never, ever buy a birthday or christmas present for anyone?
Haircuts................................ 20
Entertainment........................... 30
Holiday................................. 0 See if you'd budgeted something here that last holiday wouldn;t have gone on a card...
Emergency fund.......................... 0 You rent a home and own a car - you need to save towards a starter EF of £500.
Total monthly expenses.................. 1978


Assets
Cash.................................... 750 Is this an Emergency fund? If so I suggest using the extra £250 to sort out that car tax, then start putting money aside monthly for car costs etc.
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 19000 This is a high value car to never be spending anything on maintenance for?
Other assets............................ 0
Total Assets............................ 19750

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................12155.....300.......10.9
Halifax Clarity Card...........3722......100.......27.9 This rate is evil - prioritise this card to batter.
Tesco Credit Card..............4584......50........0
Uncle..........................1900......0.........0
First Direct Loan..............12000.....401.5.....4
Total unsecured debts..........34361.....851.5.....-


Monthly Budget Summary
Total monthly income.................... 4,040
Expenses (including HP & secured debts). 1,978
Available for debt repayments........... 2,062
Monthly Unsecured debt repayments....... 851.5
Amount left after debt repayments....... 1,210.5 Oh EXCELLENT news -
so where's that all going then?

Personal Balance Sheet Summary
Total assets (things you own)........... 19,750
Total HP & Secured debt................. -0
Total Unsecured debt.................... -34,361
Net Assets.............................. -14,611

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

OK - another nice easy one - they're flooding in today!

Do you have £1200 odd left every month? If not your first task is to track it down - some of it is going on the car stuff you're not budgeting for - so open a savings account and divert £50 every month to there - or more if you think paying your car insurance annually when it;'s due s a good plan as well. (I'd say it probably is, on that income and surplus). Start a spending diary - you NEED to find where this money is going - that's over FOURTEEN THOUSAND POUNDS every year that you're not accounting for - and that needs to stop.

Putting it into context - if you can find that surplus, and make a few other tweaks, you can potentially have that horrible 27% rated card gone inside three months. you then divert the surplus, plus the £100 a month that was going there, to the Barclaycard meaning you're paying £1600 per month to that...once that's gone you attack the next thing. And to put into further context, once you're debt free (which could be inside 2 years by the look of it) you will have over 2k per month which is a great sum to start saving towards a deposit on your own home or whatever your long term aims are.

You can sort this situation remarkably quickly - I wish all who post here were so fortunate! Good luck with it!

National_Debtline

Hi gallaghb


The good news is you should easily be able to afford your debts, and as EssexHebridean points out, you can actually clear them in a relatively short amount of time. However it sounds like this budget may not quite be accurate. Do you know why you went over your Barclaycard limit when you have a large amount of spare money each month? A spending diary is a really good idea in this situation to see where your money is actually going. There also seem to be some important outgoings missing, which have already been pointed out above.


The general rule is target the debt charging the highest rate of interest first. Paying off the debt that costs you the most is the most effective way to deal with the situation. It doesn't seem like there's any cause for alarm here, but it is very important to work out where your spare money is being spent. Good luck with it all.


Susie
@natdebtline

lika_86

I agree with the comments above.

Also, is your council tax right? Are you claiming single person discount and spreading it over 12 months? We pay slightly more in rent for a one bed flat in zone 2 (just) and it's £104 a month with no single person discount.

fatbelly

If you really own a car worth £19000, bear in mind that the depreciation will be around £500 per month at the moment.

You don't need me to spell out the options but there's plenty of room to be smart around the car

gallaghb

I’ve spent money on the car, before I had this debt, I did this all before and became debt free. When I had even more debt than this but then I had partner and out income was higher and rent was lower.

Yes I live on the outskirts of London/Essex.
Yes work pay for my mobile and I use that.
Just started to shop at Lidl 3 miles down the road rather than the Waitrose which is on my walk home so groceries should come down.

My car insurance is annual and this year I’ve not been able to put away for it. Or previously I’ve been able to put it on a 0% card. But I won’t be able to that when it’s due in January.
Road tax is monthly. I used to pay annually but not since this debt. I’ve only run this up in a year due to having to move to rental due to divorce and furnish a whole house. And yes stupid things, nights out etc.

I don’t know what my car maintenance is. I would normally end up putting this on a card as and when it comes up. Just had to do £700 on 3 tyres after my holiday. Yes it’s an expensive car, it’s 3.5 years old, At the time I bought it I was debt free and got a promotion and got a £5k car allowance which is included in my income.


I should do contents insurance. I thought that when I entered 0! I’ll get on it

Christmas and presents yes agree. I just feel now that how can I open a savings and divert money there for no interest when I’m paying interest on cards and then not paying it off there. I end up using those for that stuff and then net result is the same debt on the card.

I went over the barclaycard limit cos I’d paid the maximum off my cards. Ran out of money for the month so used my card. Stupid I know. I was out and thought I had the money on it but because of pending transactions not showing on my balance I ends up going over. I haven’t tried to appeal but I will do. I’ve been a customer of barclaycard for a long time and they’ve always in the past lowered my rate gave me the cash back card and additional interest free periods so you never know. I just assumed they wouldn’t.

I’m disappointed I’ve got myself back in this situation. It all started when I got a cashbafk card that I used to pay in full and take the cashback. But it got out of control again once I got divorced. I know I can sort it but normally I’ve always been so on top of it and kept it always on 0%. I know I can get on top of it again and be debt free and save a lot monthly.

I’ve just got a Monzo card and I’ve put £500 on it as my months spending. Work expenses, lunch, out etc. Which is a lot less than when I was just using cards and paying the max I could from my salary. All my credit cards have been cut up last week and I’m not using the £500 from my salary. Monzo will track where every bit goes so should help.

I know the things to do to sort it. Really what I wanted was a miracle to get the credit card debt sorted back to 0%!!! Wishful thinking I know. I know you can ask them to freeze interest etc but didn’t know if that was possible or wise in my scenario or not.

I need to pay my uncle back £1900 by January or he will add 7%... so is it still best to divert all cash to Halifax. I don’t know how to work that out.

I’ve got a spreadsheet which tracks all my incomings and outgoings each month. On a broad level though, like what I’m paying off each card and loan, and what is bills and what is just misc spending. But Monzo should help me track what I’m spending my surplus money on. And I’ve always paid highest Apr cards first.

Council Tax would be £130 a month with single person. But in my first month I wasn’t in time so I’m paying day 7 months but over 6 months.

EssexHebridean

Well in an ideal world it would be the expensive card first but if your Uncle is getting unhappy then in order to keep family peace it may be best to deal with that debt first. Realistically it's less than two months to get it sorted - so long as you track down that surplus.

You also need to get your head around what budgeting means - the idea of a budget is that you set aside all your expenses for the month - including a months proportion of the things you pay annually - when you get paid. In an ideal world what is left is then yours to do as you will with - once debt free most of us choose to save a good proportion. When NOT debt free the surplus left after the routine monthly expenses goes to debt-busting. So for you this means putting aside 1/12th what you would spend on presents, car maintenance, haircuts or whatever else. The debt is not relevant in the fact that you MUST put that money aside - otherwise when those things come up your first reaction is to flash the plastic, and that's not helping.

Honest straightforward best advice I can give you is what you've already done - ie to cut up the cards - use cash for everyday spending, and a debit card for bigger purchases. Until such time as you've got your budget sorted out you can;t trust yourself not to use the cards - but if you don't have that safety net any more then you have no choice - you HAVE to make your money stretch.

On the car maintenance side - try listing everything you expect to pay in a year with the amount next to it - and remember to include a proportion of that next set of tyres too! Then divide by 12 and pop that amount aside each month, preferably into a savings account dedicated to the purpose. Include your insurance etc as well - that way you'll be able to pay upfront next time you renew. On your salary and surplus it's crazy to be saying you can't afford to do that - of course you can!

That £500 you've put on the monzo card - I'm slightly confused as to what that's for - is that all spending that doesn't go out by DD? So all groceries, fuel, clothing spends etc?

itchyfeet123

Are you really spending just £30/month on entertainment? If so, well done. If it's aspirational I wonder if it's too tight.

gallaghb

EssexHebridean wrote: »

Well in an ideal world it would be the expensive card first but if your Uncle is getting unhappy then in order to keep family peace it may be best to deal with that debt first. Realistically it's less than two months to get it sorted - so long as you track down that surplus.

You also need to get your head around what budgeting means - the idea of a budget is that you set aside all your expenses for the month - including a months proportion of the things you pay annually - when you get paid. In an ideal world what is left is then yours to do as you will with - once debt free most of us choose to save a good proportion. When NOT debt free the surplus left after the routine monthly expenses goes to debt-busting. So for you this means putting aside 1/12th what you would spend on presents, car maintenance, haircuts or whatever else. The debt is not relevant in the fact that you MUST put that money aside - otherwise when those things come up your first reaction is to flash the plastic, and that's not helping.

Honest straightforward best advice I can give you is what you've already done - ie to cut up the cards - use cash for everyday spending, and a debit card for bigger purchases. Until such time as you've got your budget sorted out you can;t trust yourself not to use the cards - but if you don't have that safety net any more then you have no choice - you HAVE to make your money stretch.

On the car maintenance side - try listing everything you expect to pay in a year with the amount next to it - and remember to include a proportion of that next set of tyres too! Then divide by 12 and pop that amount aside each month, preferably into a savings account dedicated to the purpose. Include your insurance etc as well - that way you'll be able to pay upfront next time you renew. On your salary and surplus it's crazy to be saying you can't afford to do that - of course you can!

That £500 you've put on the monzo card - I'm slightly confused as to what that's for - is that all spending that doesn't go out by DD? So all groceries, fuel, clothing spends etc?

Ok I've got an everyday saver with my bank with nothing in so I will work out a sum to save into that monthly.

The £500 on monzo is my everyday spending yes for the month. Everything bar that I have paid towards cards - paid £1465 off this month.

With my car insurance in January, I think will be cheaper to put on my 10.9% card than pay monthly to insurer? I haven't got enough time to save up for it.

EssexHebridean

How much is the car insurance?

You can't put it on a credit card - you cut them all up last week, remember...? Cutting up the cards means NOT USING THEM!

If the amount of the insurance bill is less than your surplus for the month, pay it upfront. Then start setting aside the relevant amount each month so that when you need to pay it next year, it's there.

enthusiasticsaver

An expensive car costs more to maintain and insure. Sell or part exchange the car for something cheaper although I doubt you will get £19k for it. Also no holidays until you are in control of the debt. If you sell the car and buy something cheaper you could pay your uncle back and clear the Halifax clarity card and maybe have something to pay off the Barclaycard. Was the First Direct loan for the car? £34+k of unsecured debt and just the car to show for it suggests overspending for some time. As you have a decent income this should be reversible but it will take some discipline.