help a financial osterich in trouble!

inntenso

Basically I never look at my bank statements or balance and I've really suffered from it now!

A few months ago, my girlfriend and I moved into a flat together and we went a little overboard with the spending. I assumed that we had the money available for it, however, I was wrong and when the dust settled I realised I'm in quite deep.

I discovered that I had gone into and past my overdraft, which has been set by my bank at £1000. I was forced to look through my statements and find where I was going wrong. The bills etc are fine, between the two of us we earn enough to cover the bills, however, it was the one off payments, ikea shopping trips £200, very expensive supermarket shopping £80-£100, clothes shopping £150 etc that really smacked me hard. My wages each month comes in at £1300, but with the state of my account, I'm be fighting the tide for some time.

I of course cut back on the spending, the one off were one offs, but it's also meant that I'm incredibly cautious now of spending anything other than the essential (correctly so), for fear of a dd to fail and then bank charges to add on to the ever increasing debt. However there was one recurring charge being taken from my account that I was not expecting, my HSBC gold credit card.

I took the card out and was initially very good with it, however, I must have bought something expensive and changed my payback from paying it all off in one, to pay minimum. Since then, some 3 years ago, I've added and added and now looking at a figure on my card at £3500, which I'm paying back £150 a month. A figure which shocked me as I could take out a loan that would cover this debt and my overdraft and pay less per month and be in no worse a state.

Basically, what I'm after is some advice. Would a loan be the best course of action? It could give me the breathing space I need, and as I've been terribly burnt by this experience, I will not be spending as I have been, but this would afford me some allowance to budget for the unexpected without having to worry about paying off the essential and not having a nasty letter and a charge added to my account for a failed dd. Or should I stick with the way I am now, I would say, that as this has come at the worst time as christmas looms, I don't want our first christmas to be memorable for all the wrong reasons, so I would prefer to look at my finances without worrying.

Any advice would be welcome, and yes I've learnt to open my statements now!

london_fox

Hey inntenso

Can you post an SOA and then myself and the other DFW can see if there is anywhere you can save some cash before looking at the debt option.

Also what is the interest charge on your card? Apart from the card and your over draft, have you got any other outstanding debts?

dsljfreeman

Ditto above with posting SOA, have a look at the newbie sticky at the top of the board.

There will be ways to cut back on your outgoings then working on reducing your debts, getting more credit is rarely the answer.

Hope to be helping you out soon xx

Shineyhappy

A SOA is definatly the way to go, but would it be possible to take back any of these one offs for a refund?

inntenso

No, the one offs are now permanent fixtures, so no to the returns option I'm afraid

my SOA, which I'm not sure what it stands for, but from what I've read it's outgoings (?)

Rent - £500
food shopping - £80-120 (ish) depending on what needs to be bought, we rarely go over a hundred, just when we need to buy cleaning products or something dear.
Council Tax - £100
Mobile - £35
Car inc Ins - £200
Fuel - £40
Sky TV & Internet - £27
Phone - £10
Electricity - £30
Contents insurance - £10
TV License - £12
Northern Rock loan - £100
hSBC card - £150+

We live in a flat so a lot of the options to switch provider is out the window, ie ideally I would have cable over sky, but they don't cover the building. Electricity is the only fuel we use in the building and all appliances are energy efficient, economy 7 heater & boiler & we use energy efficient light bulbs. I occasionally leave things on standby, a habit I'm trying to work out. We're on bare bones to be honest. If we would realistically cut something back it would have been done. ok the sky package is perhaps a potential, but as we've stopped going out, the tv is a necessity I'm not wishing to reduce

The loan was taken to cover a distant learning course, only "recently" taken out, about a year ago. This was the thing that caused a short or a spark on my brain to say, "wait, I'm paying this much for the loan and more for a credit card, which currently shows no signs of ever being paid off."
My card APR, I'm not sure currently. I need to dig out the paper work to check. It's not the best though I'm sure. Ideally I would get another card, egg or other better rate

Incoming, as I mentioned, £1300, my girlfriend gives me £400 to cover her side of the bills. So doing the maths, we have more than enough to cover the bills (around £400), but as we've had a few months of overspending we're now in the situation we're in.

Compounded to the situation is Christmas, a time where the phrase "over -spending" is synonymous with the festive season. We want our first Christmas to be nice and not be on a shoestring, although at the same time we're not booking flights to Manhattan for a weekend either. My girlfriend has started a new job and there is a concern that it may be a long wait for her first payslip to cover her side of the bills, so ideally all we're after is breathing room. Adding extra credit is not my first choice, but the more I think about it, the more it makes sense

Tustastic

Hello and congratulations for joining the DFW board. Use this great website
http://www.whatsthecost.com/ to calculate how long it would take you to pay off your credit card at your current payments. You can play about and enter different amounts to see what difference it makes.
You could also calculate how much you would have to pay on a loan if you decided to take one out, depending on how much interest is charged and how long it lasts.
It's your decision whether you do take a loan or not.
But your first post said you 'could take out a loan that would cover this debt and my overdraft and pay less per month and be in no worse a state'
and now you are talking about wanting Christmas to be 'nice and not on a shoestring.'
January is a dismal dark month with a long wait till payday. Do you want to be facing it with even more debt than is worrying you now?

inntenso

I suppose what I mean that I want christmas to be nice, is not having the constant worry of not being able to do anything, always fighting this debt, which I understand isn't going away overnight. I know the money is coming soon, just I know it's not this side of christmas. I won't have the lavish festive time that I wish, but at the same time, I don't want to be exchanging £20 gifts...

I think I know what I want to do, I'm just looking to bounce ideas off people who know. It took a short while to spend the money that will take a long time to get back, but looking at the figures, the money is coming back.

My credit card bill alone is £150, of which £45 is interest, based on that site mentioned, it'll take me something like 12 years to pay it off, so obviously, my money isn't being spent wisely

splishsplash

Hi Inntenso,
I'm new to this, so not the most qualified to offer advice, but now that you've recognized there is a problem, you're halfway to clearing it.
I wonder if you've thought about a spending diary? It can be a very illuminating thing to do for a month (if a little tedious!). You'd be amazed how much money drains away in so many little ways - really quickly too! Just carry a notebook around, and write in every single penny spent. It can help put your spending in perspective (i.e. learning that you're spending 10% of your disposable income on takeaway coffee...:o oh wait, that was me:rotfl: ).
I wonder if you thought about getting a 0% card for 12 months, then you could balance transfer your cc debt, and let it sit there while you tackle the overdraft and loan - it would mean you could avoid increasing your debt load (as long as you cut up both cards and don't spend on them!).
A new loan now is very tempting, and you can rationalise it really well, but I would worry that it might lull you into thinking everything is fine, and that you can afford to 'spend' Christmas without thinking about it... which could mean a problem for next Christmas!
You might want to have a look at the Statement Of Affairs or Budget Planner on this site (I can't do the link, sorry), and spend a little time filling it in really accurately (maybe your gf could do it with you?). It might clarify things for you... especially if you then play around with the debt snowball tool and the demotivator tool - interesting stuff! (but a little addictive:shhh: )
Best of luck - you sound like you're determined to deal with this, and I hope you have a lovely Christmas (within budget, of course:rotfl: )

In_Search_Of_Me

welcome! You're right the debt isnt going to go away overnight and having a splurge over Christmas will just leave you with even more feelings of dread in Jan...Re taking out a loan I wouldnt personally - been there done that & it just lulls you into a false sence of security & you dont stop spending so have more debt and a long running loan to deal with! Much better to pull in the spending reighns and sort it now while its manageable. Yes this will mean sacrifices but worth every but of stress and toil to get it paid off. Is your OH on board with stopping spending BTW?
You can maximise income and start doing surveys etc, use clubcard points etc to make the best of what you have & get some extras for free.
Lots of support on here from people who understand. Welcome & keep posting!

Robflh

Hi inntenso

Unfortunately, people that abbreviate words often forget that people that are new to this site will not know what they are talking about when they say things like SOA (Schedule of Affairs)

This is a breakdown of what you have for incomes like, wages, tax credits, and girlfriend. What you have going out each month, which is the amount you pay for anything per year divided by twelve.

The spending diary is for everything you pay for with your spending/pocket money. Record this in your SOA as an average amount per month and do the same for other things like food and petrol.

The last part of your SOA is what debts you have, loans, credit card/s (CC) and so on.

Can you please amend your SOA. Click on the link below to see an example of one.
http://forums.moneysavingexpert.com/showthread.html?t=107280

You can either include your girlfriend’s income and expenditure or just yours but if it is the later of the two remember to half all the bills you pay together (Rent electric, water rates and so on). The other option is to put the £400 she gives you as an income and put the full amount for all the utility bills.

It is easier for people to look at your SOA and make suggestions if it is all in one place. If you remember something you missed, it is better not to just announce it in a new post but for you to edit your SOA as well.

Hope this helps.