Debt Crisis or Not?

Chezza71

I've just been reading Martin's article about whether I am in debt crisis or not. I am on the verge of going through a DMP with CCCS but I don't want to ruin my credit rating which I don't think is too bad. I have never defaulted on any payments and am not behind with anything apart from not being able to pay off a couple of overdrafts. But Lloyds Bank have offered me a £900 overdraft with which I could pay off First Direct (£600 o/d) and Alliance & Leicester (£300 o/d) which accounts I would then close. This would leave me with £900 o/d on Lloyds but with money swinging in and out, would I be disciplined enough to lower the o/d facility?

Lloyds Personal Loan £7765 (repayments £192 per month)
Lloyds Credit card £1048 (min repayment £35 per month)
Marks & Spencer credit card £3912 (min repayments £100 per month)
Alliance & Leicester £300 o/d
First Direct £600 o/d

Total Income £1275

Outgoings:
Food £240
Rent £420
Council Tax £78
Water £41
Electricity £38
Car Insurance £24
Car Tax £10
Car MOT & Service £25
Petrol £40
Mobile Phone £25.00
Landline £15
Broadband £15
American Life £14.00
TV Licence £12
Life Insurance £11
Specsavers £8
Contents insurance £6
Christmas £25
Sundries £25
School meals £8
total spendings: £1080

That leaves £195 to pay off debts.

Perhaps I have answered my own question - this doesn't seem enough. But going through CCCS seems drastic. What should I do? If I go down the DMP route, CCCS would take this difference each month to pay off the 5 creditors.

GeorgeUK

Not sure if something's gone wrong in the layout, but i'm guessing you have Income of £1275 and financial expenditure of £715
Leaving about (£560 - £330 = £230) for food, travel and other stuff.

If this is right, then i think you might be able to tackle it without a DMP.

First thing i would suggest is look at you credit report free on experian (don't bother trying to get your credit score - not worth it)
If there is nothing bad showing (defaults or late payments) then you should have a fairly good chance of getting some CreditCards and be able to take advantage of their promotional offers.

How many credit checks have been done in the last 6 months? This could impact your credit score if too many close together. About 2 in 3 months and you should be ok. (3 within 6 months though)

Can you tell us the APR's of the cards and loans?

If you don't feel like trying to chase 0% offers every few years, some cards do a Life of Balance and other low interest options.

Is it possible to overpay on the loan? or would you get penalised?

Conor_3

If you go with a DMP, your credit will be shafted. To lower the overdraft, you need to have more spare money per month than the interest on it.

Your SoA isn't complete enough as it doesn't show any amounts for food and petrol etc. Can you give us a better one for outgoings?

Chezza71

Thanks for your replies.

The Lloyds Loan is 5.9% life of balance. The Marks & Spencer card is 3.9% life of balances. The Lloyds Mastercard is 0% til March 08. I don't think I can overpay on the loan. The £230 is for food & petrol etc. My petrol is about £10 a week, food I just go in for bits & bobs - never really a "full shop". If I do it is usually around £40.

tallyhoh

Can I ask what American life is? Its not one of those "illness" insurance things where they pay out if the second toe on your right foot falls off in the 2nd week of June every leap year?
I see you already have life insurance.

If you could be disciplined enough the O/D seems a fairly good start. You dont seem to have anything down for petrol & car tax etc. Do you have to pay these?

Chezza71

American Life is for women's problems/cancers. It would pay out if I was to get ovarian cancer or suchlike. I will get the money back when I'm 60! Which seems a lifetime away!

I do pay for petrol & car tax but I'm terrible at budgeting! I just pay for these things as and when. Sorry I'm so hopeless!!

CLAPTON

you need to reorganaise your SOA

1. you need to show your income (OK as it is)

2. next you need to show your essentail spending (excluding your debts) so that needs to include things
like
food, clothes, car tax, car maintenance, MOT, RAC/AA repair fund, petrol, kids expenses, presents, haircuts or whatever you actually spend.
For many of these you need to work out a monthly average by dividing by 12 .

3. then whats left over can be used to pay your debts...if its not enough then you need to consider

a. can you increase income
b. can you decrease spending
c. if it still doesn't balance then you need to consider a DMP.

but get the essential spending right first.

GeorgeUK

Hey!!
Less of that.
Nobody is allowed to call you hopeless - not even you.

Can i ask why you were thinking of doing a DMP? Your credit could be screwed for quite a while if you did it, but was there something in particular that was prompting you to enquire? I only ask as it seems that you've been paying all your bills and seem to have things fairly well organised.

Rent - are you entitled to housing benefit? look at http://www.entitledto.co.uk/
Council tax - are you paying this over 10 months or 12?
Utilities - go to uswitch and see if there are any better offers. (Not sure if you can get cashback from switching via Quidco)
Mobile - switch to PAYG?
specsavers - do you have any old glasses you could wear instead?

Any old things you can ebay?

Chezza71

Thought about a DMP as I never seem to have enough money to see me through to the end of the month (I know - doesn't everyone??!!). I'm constantly overdrawn (apart from the account where my d/ds and s/os come out of) and just saw this as a sensible solution. Housing Benefit - I used to claim but the amount I was getting was so low and then my salary went up so assumed I wouldn't be getting much anyway. I should put in a new claim. Just recently switched electricity from nPower back to Powergen - tesco clubcard points! I pay Council Tax over 10 months so will have a couple of months respite soon. Mobile - I like being able to use my phone to talk to people without worrying about the cost. I never go over my "free" minutes allowance. Specsavers - this is for my monthly contact lenses which I suppose if push came to shove I could forego (it's a vanity thing!!). I never have anything worth selling on ebay - have sold a few bits and bobs over the past couple of years.

GeorgeUK

Not sure what else to suggest.

Just done some quick calculations and with you paying 330 towards the debts, if the Lloyds card goes to 18% after March, you can clear the 2 cards in about 2 years. If the loan is flexible and you can pay more, you can pay off the cards and loan in 3.5 years if paying only 330

Have a look at the snowball calcualtor http://www.whatsthecost.com/snowball.aspx
and try to find out about that loan.

Have you tried the survey sites or AQA for some extra athome income?

EDIT: Get a spending diary so that you can budget a bit better.
Also for the food - have a look at the Moneysaving Old Style board - they may be able to come up with suggestions for cutting the bill.
I usually don't mention this, but have you looked at the introduvtory gambling loophole forum? You need to be acreful and never risk your own money, but it seems to work for some people.

Chezza71

Thanks GeorgeUK. It's very helpful to read other people's viewpoints/opinions. I do surveys with Pinecone (£4 worth of luncheon vouchers for each completed survey which come in handy) and Brain-juicers - am collecting a nice sum to spend at Amazon for Christmas. I have been writing down what I spend in a notebook so I can see where my money goes!