Evergrowing debts and evershrinking credit rating

luelle

Hi all

First post. Excuse if it’s long and rambly and in the wrong place. I just need some advice.

My partner and I are desperate for a baby, and I’m not letting myself try until my finances are sorted out. However it just isn’t happening for me. I have a TSB loan at 29.9% APR of £7500, a Barclaycard credit card with £4500 and about 19% interest and PayPal Credit with £1500, I pay £421 a month to my loan and just about the minimum on the other two. I’ve just been getting on with it for 2 years but bar the loan, none of my debts feel like they’re getting smaller. I have a good credit rating, of 919 on Experian. Until today atleast

My Experian recommended 3 different debt consolidation loans at 3%, enough money to close all my other debts and a monthly repayment of £20 less than I currently pay just for my loan and I was so excited. Perhaps too excited as I applied, and got rejected. Three times. Now I’m sitting here just feeling gutted because I got so excited at the thought of all my debts being together, more manageable and my credit rating being good.

Now with 3 hard searches, plus me buying a wardrobe and sofa on (interest free) credit from DFS the other day it’s bound to be a lot lower next month. Right? Have I done as much damage as I think?

This is rambly and I’m sorry. I’m not good at talking about money but I just want to consolidate my debts into one, manageable loan. Experian says I’m good enough to get accepted yet then I’m not? I’m just upset and fed up of having to put my life plans on hold to get rid of debt I stupidly racked up when I was young.

I will live like a pauper to get there if I need to, I just want to be out of debt and to start my family. Please can someone help

January2015

Hi and welcome

Consolidation rarely works. I was the queen of consolidation loans and I ended up with almost £100k in unsecured debt. I didn't learn to manage within my means, I just spent, consolidated, spent, consolidated, and to make it worse I ended up consolidating by securing debt against my home.... and still I spent and ended up with almost £100k secured debt. I used to think I am moving from high interest credit cards to lower interest loans.... I could talk myself (and my poor husband) into believing the claptrap I was spouting.

I can sit in my home and wonder what on earth I spent all that money on.

You say you will live like a pauper to get rid of your debt, but reading your post you are still spending. Did you really need the new sofa and wardrobe? Even if you did, secondhand items are fantastic value - I know because that's the way I have purchased almost all my furniture over the last 3 years. No-one else needed to know it wasn't new because it all looks fab - but I tell everyone with pride about my bargains

Forget what experian or any other credit agency says about your ability to get credit. Seriously think about working out a plan to clear the debt you have now rather than take on new debt. If you can post a statement of affairs you will get great advice on here about things you can do to improve your options to throw money at your debts.

You've taken a massive first step in posting here and seeking advice. You will find most on here would not recommend consolidation, which may not be the answer you want to hear, but please take on board the advice and support you get on here and keep posting. I've found one of the best ways to keep myself focussed on clearing my debts is to keep visiting this forum and getting support, guidance and encouragement from others who are either going through similar or have actually completed their debt free journey.

Welcome to the forum

luelle

@january2015

You are so right. I have a spending problem and it’s just getting worse. Please can somebody help me budget.

I missed out some details in the first post so here is literally everything.

All my debts:
TSB Loan: £7500 (Paying £421 a month, 22 months left)
Barclaycard Credit Card: £4500 (Paying whatever I can afford each month. Normally not much)
PayPal Credit: £1100 (Minimum payments every month. Interest piling on like crazy)
Very: £278 (Minimum payments every month, again interest is killing me)

All my monthly outgoings other than my debts:
Phone contract: £15
Fuel: £120
Parking permit: £35
Internet: £37
Food/Household Shopping: £70

A bit of background: Live with my boyfriend, he is manager at holiday resort and we are provided with live in accommodation. He pays £100 a month for rent (the resort covers council tax, gas, elec, literally everything else) He also pays for sky.

I try and create budget plans for myself, but then I’m pay too much off a debt and get myself in debt by using credit card to survive until the next payday. Please can someone help me. I feel like I’m losing grip on my spending

January2015

luelle wrote: »

@january2015

You are so right. I have a spending problem and it!!!8217;s just getting worse. Please can somebody help me budget.

I missed out some details in the first post so here is literally everything.

All my debts:
TSB Loan: £7500 (Paying £421 a month, 22 months left)
Barclaycard Credit Card: £4500 (Paying whatever I can afford each month. Normally not much)
PayPal Credit: £1100 (Minimum payments every month. Interest piling on like crazy)
Very: £278 (Minimum payments every month, again interest is killing me)

All my monthly outgoings other than my debts:
Phone contract: £15
Fuel: £120
Parking permit: £35
Internet: £37
Food/Household Shopping: £70

A bit of background: Live with my boyfriend, he is manager at holiday resort and we are provided with live in accommodation. He pays £100 a month for rent (the resort covers council tax, gas, elec, literally everything else) He also pays for sky.

I try and create budget plans for myself, but then I!!!8217;m pay too much off a debt and get myself in debt by using credit card to survive until the next payday. Please can someone help me. I feel like I!!!8217;m losing grip on my spending

I may have missed it - what's your monthly income :huh:

Also your budget is very weak. You pay for fuel - what about the rest of your vehicle costs. Tax, mot, maintenance etc?

What about clothing, hairdressing, dental/opticians?

What about presents for birthdays and Christmas?

There are more budget categories you will be missing, but these are just a few to show you that what you think are your monthly outgoings are not the full picture.

You really need to do a full statement of affairs to get a real picture for people to give you advice.

luelle

Oh I don’t fully understand I’m sorry.

I earn £1200 a month. My dentist is NHS so I pay about £15 for a check up every 6 months. I get my hair done maybe three times a year for £60. My MOT was £40 and is due again in May. My road tax is £10 a month. Is there a template I can find?

I’m so overwhelmed. I don’t even know where to begin. I just need things to change.

January2015

Hi

The statement of affairs (SOA) that's usually used for this forum is on this link. However, I think from reading other posts this week that it has been broken for a few days. It will give you an idea of what budget categories you need to think about though.

However, even just those few bits you added in your last post are impacting your budget. When you first listed your monthly outgoings you forgot about the £10 p/m road tax. The MOT may only have been £40 this year, but what about servicing and maintenance costs for your vehicle? If you don't look after it, it will end up needing something major repaired. You need to factor in costs like these and allow for them in your budget.

If you get your hair done 3 x a year at £60, that's £180 a year. If it's not calculated for in a budget where do you think that £180 is going to come from?

katie4

i was rejected everywhere but then i applied for a loan with my local credit union and they accepted i now have one monthly affordable payment and im saving so much interest i made sure i cancelled all my credit cards once they were paid off so i wasn't tempted to spend on them again. I can't praise credit unions enough!

EmmaMicawber

The good news is that you have a very strong defined reason to get out of debt- wanting a baby! And you've shown you're responsible by wanting to get debt-free first.
Every time you are tempted to spend on a "want" rather than a "need" say to yourself - will this get me nearer my baby goal or further away from it?". It works for me though my personal goal is different)

There are lots of people on here who have been where you are and are happy to share their experiences.

It is so overwhelming at first it's hard to know where to start, I know.

Here are the things that really helped me to get our debt and spending organised (we're making good progress a year on) :

The 7 baby steps of Dave Ramsey- I know it's all so overwhelming right now but his plan shows you how to tackle the messy debts and your spending bit by bit. So many people have followed his system and have got out of debt and changed their whole attitude to money so that you end up not just debt-free but wealthy and giving your future kids a great start in life.
There are loads of people on youtube who've paid off huge sums and go on to his show to do their debt-free screams- it's a bit American but really gave me hope that we could do it to.

https://www.daveramsey.com/get-started/debt

The budgeting tool I use and find amazing is YNAB
https://www.youneedabudget.com

- it has literally transformed my spending habits.

I have seen the light regarding "payments" for cars/ sofas etc.- in fact a lot of these companies are actually in the debt business rather than the car or sofa business- they make more money from the credit agreements than the product they sell! And the quality of some of the furniture means that it needs replacing by the time you finish paying for it, but of course that is exactly what the buy now pay later companies base their business models on - their ideal customer is one who stays in perpetual debt to them.

If it's not too late, start getting nearer to your goal by invoking the cancellation clause of your DFS agreement and getting rid of x years of future payments.
You can get some real secondhand bargains for sofas and furniture either on ebay or bigger charity shops- I've done both in the last year or so and have been really pleased with what we've got.

Best of luck getting started. If you want it enough it will happen

National_Debtline

Hi luelle


First of all well done on taking steps to deal with your debts, I'm sure you'll find lots of support and inspiration from the forum. As January2015 says, it's a really good idea to post a detailed statement of affairs (SOA). There's so many things that you might not think to account for, but for your budget to work it needs to be detailed and accurate, and take into account all the things you'll pay for during the year.


Don't worry about your credit score at the moment, just concentrate on paying off your existing debts rather than taking out new ones. If you can afford to pay more than the minimum payments on your debts, it's usually best to overpay on the ones that are charging you the most interest. That way you pay off your most expensive debts quickest.


When you use the SOA link posted earlier it will ask you for information like how much interest each debt is charging and we can really get a better idea of your situation. Good luck with it all.


Susie
@natdebtline

Dobbibill

Welcome to the forum.

You have had brilliant advice already and I would echo that good advice.

Post a SOA - http://www.stoozing.com/calculator/soa.php
format it for MSE then paste it here.

You have to account for everything, I mean everything.....even the odd coffee with a friend.

Forget consolidating - this is merely moving debt, not paying it off and won't get you any closer to your baby goal.

Once the SOA is posted, we will help to look where savings can be made. If you have anything you don't use sell it and put that towards your debt. If you can do overtime, do it and put that towards your debt.
These little steps will get you to the end goal. Don't forget that the debt didn't arrive overnight and it isn't going to disappear that way either. It will be a hard slog, but one that is worth it in the end.

Also address your overspending and how you got into the debt - without addressing this at the start there's a good chance it could happen again.
If it makes it easier, work with cash only for spending - withdraw the money, leave the cards at home and work on the basis of when it's gone, it's gone.

You can do this - get that SOA done and we'll help you

January2015

luelle wrote: »

plus me buying a wardrobe and sofa on (interest free) credit from DFS the other day

If you bought the wardrobe and sofa on credit 'the other day' then there's a 14-day cooling-off period when you can cancel your agreement. Seriously think about how much you need a new sofa and wardrobe..... I would honestly cancel this new credit agreement as you cannot afford the ones you already have.