Help! Wedding / Honeymoon debt

Sub1989

Hi everyone,
My wife and I have recently had our wedding / honeymoon and though both were amazing they were also very expensive!

We are currently in credit card debt of £4,600 ( spread over two cards both at approx 80% limit), and additional £4,000 to family members (2,000 to be paid by March 2018, the other 2k is flexible though I wouldn’t want to neglect it).

We are both self employed in our late 20’s and our income is very seasonal and sporadic. We average a profit of approx £900 p/m between March - September and less than that in the winter. Our monthly expenses are around £1,500. This makes it very hard to save money, which we have never managed to do. Our original plan was to pay these debts of bit by but as we go along but with a %29 APR on the CC I can’t live with £75 of interest a month and would like to eliminate the credit card debt ASAP. My wife has considered getting a full time job to help pay these off but even then we’d be looking at least a year of credit card debt before we can be close to being debt free.
I have a good credit rating and am eligible for a 33 month 0% balance transfer card. Alternatively, I have got a provident fund that has got about 15k in it. This account was intended to be more an emergency ‘don’t touch till retirement’ accounts and it earns a decent interest but if you put that up against my current credit card interest I’m paying, I am definitely losing!
We would like to start thinking about buying our first house in the next few years, as stated my credit is good (and I intend to keep it that way) but wife’s Credit is bad due to defaults history which we are in the process of resolving. So we’d like to start building up our credit and saving for a deposit.
Additionally, I am due to be making a business expansion that will cost me an additional £500 p/m but should start paying for itself after the first two months or so.

All things considered, I have looked at the following plans -

1. Use £4,600 from the savings fund to pay off the credit cards all at once, then start saving for the business expansion (maybe have a two month advance of £1,000 saved up prior to starting it to take off the pressure of paying it out of the monthly cash flow), pay off family as we go.

2. Go for the 0% balance card, pay it off within the interest free time period while also paying off the family debts, use £1,000 - £1,500 from the savings as an advance for the business expansion

If anyone has any tips or thoughts that would be very helpful, thanks!

Sub1989

Just to clarify - the £900 profit is after monthly expenses!

Helvetica_Van_Buren

The first suggestion will be to complete an SOA - there's an online form but I can't post a link to it at present.

But as a rule of thumb, you should never have savings if you're paying interest on a debt.

If you really don't want to use your savings, transfer to a 0% interest free credit card.

kram

Hi Sub1989,

Here's the link to the SOA:

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

Could either of you get any part-time work especially in the run up to xmas to help at all.

Good luck I hope you get things sorted.

K

enthusiasticsaver

If you need to clear existing debt and want to save up for a house it seems that an easy way to achieve this would be for your wife to do a full time job. £900 a month does not sound a huge amount but is this after all expenses?

Dobbibill

Without a SOA we won't be able to see exactly what the circumstances are, how quick you may be able to clear the debt but that APR is not good.

Fill it in accurately (don't create a wish list, that won't help ) format it for MSE and post it up - you will get tailored suggestions.

[Deleted User]

Helvetica_Van_Buren wrote: »

If you really don't want to use your savings, transfer to a 0% interest free credit card.

Agreed, but I'd suggest using the savings instead.

The problem with transferring to a 0% card is, while you might start out with the intention of paying it off by the end of the 0% period, it's easy to get sidetracked, and still have a balance on it, when the 0% ends.

Also, what if your circumstances take a turn for the worse?

Paying it off with the savings means it is definitely gone.

BTW, to clear the £4,600 BT in 33 months (I'm assuming the family loan can't be added to the BT), would require payments of £140 per month, not counting the BT fee.

Do you really want to be paying out £140 a month, for almost 3 years?

theoretica

Does your current business really need either of you working full time all the year? When it is slow, I wonder if both of you have time for a part time job in addition, especially if slow season is predictable.

[Deleted User]

OP you seem to want to do too many things, how can you expand the business, pay down the debt and be thinking about buying a house?
My advice would be to use the "savings", for your partner to get a full time job then you can be debt free and start saving again for your new home.
Good luck with it all.