University Student - Struggling with CC debt

Grap3fruit

Hi all,

I am 19 years old and currently study at University.

To give some background, I left school at the ripe old age of 17 years old and got an apprenticeship. I worked my !!! off and got a pay rise over the course of a year from around £400 /mo to approximately £1300 a month. When I had turned 18, I was finally allowed to get credit in my name (what a stupid young mistake that was) and started taking what I could. My job was very stable and I would still be working there if I was not at university. My stupid young ideology was that because my job was very stable, no matter how much debt I got into, I could manage it because I had £1300 coming in each month with only around £200 of outgoings. By the time I had decided I was going to university, I had around 7 months to pay off my debt... and only managed to get rid of about £800 of it. I truly messed up... My finances were so out of control and I had no idea!

I'm now at university with around £4.5-£5k of debt in total. This is from overdrafts and credit cards. I understand this was very stupid and trust me when I say I won't be using credit again without proper reasoning!

I feel very ashamed to have got myself in this financial position but I have accepted my mistake and now wish to try to fix it. Only issue is, the minimum payments I just simply can't afford. I paid the first few months after leaving my job, but this month is just too much

My main income currently is from my student loan, which I am already running extremely low on. I also earn £170 (approx) a month by running two of my own small companies. I have just emailed my old boss to see if I can get some remote work (IT guy) and he's come back saying he'll look to see if he can find some for me. This should bring in around £400 a month, which is great! Only problem is.. what to do with the minimum payments?

I was thinking of writing to each of my creditors, explaining the situation and that I am getting a job soon and paying them a £1 token payment until my income increases (which will be NO MORE than 2 months). Is this what I should be doing?

I did the DebtRemedy thing on StepChange and it seems I have a total monthly income of £1127 and payments of £1225, a deficit of £-98 a month which means I have no money to pay my creditors.

My debts are:
Aqua Credit Card - £1,045
Capital One Credit Card - £189
Lloyds TSB Overdraft - £2200
MBNA Credit Card - £480
PayPal Credit Card - £982

Total debt: £4896 :eek::(:(

One of my credit card payments of £65 was due two days ago and I've missed it. Should I pay this ASAP even though it may leave me short on money for other things?

Another thing, I have a £2200 overdraft with Lloyds TSB. I used to pay roughly £40-£50 a month on interest/fees, but recently they have changed it so that interest is charged daily.. and it's taking £3 a DAY! How has this happened? It's now costing me roughly £90 a month for that overdraft... almost double what I was paying!

What am I to do?! Any help will be appreciated, this is really affecting my mental health and I'm struggling to keep on top of my life with this constant burden

starting_again_in_the_sun

Hi and well done for asking for help!

I'm sure someone more helpful will be along soon.

One thing; as a university student you should be able to apply for an account with an interest free overdraft, although I guess you may not be accepted due to the debt.

Try to post a SOA when you can so people can advise on any cutbacks you could make.

National_Debtline

Hi Grap3fruit


At this stage, making sure you can afford to cover your essential living expenses is the most important thing to do. That means you shouldn't struggle to pay the missed credit card payment when you have already worked out you can't afford it.


In the first instance send all of your creditors a hold action letter. This will ask them to hold action (and freeze interest) for 30 days, giving you some breathing space to think about your options. You can find a hold action letter here https://www.nationaldebtline.org/EW/sampleletters/Pages/Hold-action-on-your-account-%28sole-name%29.aspx.


It's also really important to bank somewhere you have no debt. If you use the account with the overdraft your income is going to be swallowed up by the bank charges which you also can't afford to happen at the moment.


You'll need to consider what your position looks like when you have the expected increase in income. If the debts are still not affordable you could consider negotiating a reduced payment plan, either yourself or through a free debt management company. You can contact one of the free debt advice agencies for more detailed advice on this. Good luck with it all.


Susie
@natdebtline

Grap3fruit

Hi,

Here is my SOA:

Housing Amount Comments
Rent £1,000
Telephone/mobile/internet £25
Public transport £40
Food, toiletries, cleaning £100
School meals/meals at work £10
Medicine/prescriptions £10
Hairdressing £10
Laundry/cleaning £15
Sports/hobbies/entertainment £15

Take home pay £150
Any other income received (student loan) £977
Total Income £ 1,127
Total Expenditure £ 1,225
Surplus (Deficit) (£-98)

I have already quit smoking as this was costing me roughly £50-£60 a month, and I now get all the health benefits of not smoking! It is difficult with all of this stress though!

My debts are (with APR rates now... very high ):
Aqua Credit Card - £1,045 - 34.90%
Capital One Credit Card - £189 - 30.54%
Lloyds TSB Overdraft - £2200 - 22.00%
MBNA Credit Card - £480 - 17.00%
PayPal Credit Card - £982 - 17.90%

Thanks in advance

spadoosh

Lloyds and TSB are now seperate. Find out who your account is with and go in and speak to them.

Tell them you are now a full time student. Ideally they will offer to switch your account to a student account and your overdraft will be fee free. You could try going a step further and asking them to backdate any charges you have recieved as a result of using your overdraft from when it shouldve been a student overdraft.


That seems like a crazy amount of rent for a student?!

My_Own_Back_Door

The biggest issue is your rent. Have you considered alternative arrangements to bring that down drastically?

Grap3fruit

Hi all

I am with Lloyds Bank not TSB. I already have a separate bank account that is a student account with Natwest, and I currently only have an OD of £50 on that one (which I could increase but due to my current situation I chose against!). This is a student overdraft which is interest free.

I will send all of my creditors a hold action letter.

The rent situation is expensive, however it is actually £600 p/m split over 10 months, but I am paying £1000 a month over 6 months... So it's £6k for the year in my university halls accommodation... two thirds of my entire maintenance loan! Wish I'd chosen cheaper accommodation now.

My dad is helping with my accommodation payments and I do not expect to not ever be able to pay for this as it is my priority every month. I will finish my uni accommodation payments in May, and then will be moving out into a shared house that I expect will cost around £450 a month including bills.

Would it be possible for my creditors to freeze my interest for a period greater than 30 days?

Thanks for all of your help guys!

CapricornLass

Hi there, can you take a sandwich/cooked pasta or rice with bits in for your school meals?

Meat tends to be the expensive bit in main meals, are you happy to consider using vegetarian/vegan receipes a couple of nights a week? (Only make sure that you are eating veg in season! Veg out of season isn't usually as good, and will cost you a bomb besides.) I think there is a thread on cooking for one on the Old Style Moneysaving board, which might give you some ideas https://forums.moneysavingexpert.com/discussion/5680849
Also look at the Cooking on a bootstrap website, https://cookingonabootstrap.com/
Its worth working out exactly what you are going to eat for what meal each week, then working out what ingredients you need, make a list and finally buying only what you need. So if you only need one onion, then you only buy one onion. I imagine you don't have a great deal of space for storing food anyway.

Public transport - consider walking. My son used to walk for 45 mins each way in order to get to work and only considered a bus when it was raining heavily. Very good exercise too.

Hair - can you extend the number of weeks between haircuts? Is there anywhere else where it can be done cheaper? Is there a training college locally which is training hairdressers and beauticians? They need people to practice their skills on, and are often cheaper. Dont worry, they will be supervised!

This will help to shave off pennies and pounds off your existing bills. I know its only a little here and another little there, but they will mount up and give you more money to pay off your cards. I would put that etra money on the Aqua card first, as that's the one charging you the most interest.

One thing - are your meds prescription drugs? These should be free if you are a student.

System

Get a job or get more hours if you're working. Both my brothers did full time jobs when they did their degrees working in a call centre on the twilight shift/weekend. One studied law the other business, both passed their degrees. A couple of years doing 60-70hrs a week between study and work won't kill you - many do that for their entire working lives.

Running_On_Empty

Yes, work more to earn more and spend less. You will graduate with a massive debt anyway so need to get this down now while it is still manageable.
I worked full time while studying part time, and have had a part time occupation as well as a full time professional job for many years.
At your age I was working six days a week every week, did that for two years solid, and spending very little.
You may not have been brought up to be frugal but it is never too late to learn the basics of it and you will thank yourself for it in years to come after the debt has gone.
Well done for asking for help here.

lonelyrat

Hi

If you have a student account with Natwest and there is an option of taking a larger interest free overdraft I would strongly suggest doing it in the short term. An interest/ fee free overdraft is definitely better than one that does charge. Maybe use the funds from that to pay off whatever is costing you the most in interest. Be sure to still make sure you have credit passing through your student overdraft though (you don't need to keep it there, you can transfer it out again) as if you max your overdraft and don't make any credits in then it may be taken off you which would cause a whole other host of problems.

If would lean towards opening a basic bank account for all your outgoings to come out of. That way you know that you can't incur any horrid arranged/ unarranged overdraft fees.

If things are really bad at the moment one avenue could be contacting your university. Most have an emergency fund for students who are struggling. If you explain to them that you have fallen into difficulty with debt and currently cannot meet payments AND survive day to day they may be able to provide a small loan (probs max around £300) which could be interest free. If you advised them that you should have income in in the next few months then they should be able to arrange a repayment date that suits. It isn't a long term solution obviously, however it could help if things get really bad.

I'm not so sure about freezing interest - it's not something I have knowledge of, but I'm sure someone else can advise about that.

One thing I would reiterate from previous posts is having a look to see if you can get a job, even just something on a weekend. It saved my bacon while at uni. I worked in a bar and a club and the wage was rubbish at both places but the tips were solid and helped massively. Working in that kind of environment was fun as well.. so it didn't even really feel like work. Just needed to stock up on coffee for the lectures the day after!