best way to tackle credit card debt

jagger86

Hi all,
So really want to clear our credit card debts this year and have had to rely on them far too many times last year due to one thing or another. 

We have 3 credit cards and 1 loan. We never miss any payments etc not struggling with the debt so to speak but just want to get rid of it in the quickest and cheapest was possible. Am I best just to snowball the credit cards or should I look at getting a loan to consolidate everything?

Credit card 1 - £3,400 with HSBC and is 0%
Credit card 2 - £4,350 - Santander 16% 
Credit card 3 - £650 - Fluid 19.9% I think?
Loan was for new windows we had couple of years ago, repayment is £114 a month and it was for 10 yrs in total at 9.9%

I have printed off a sheet for the 1% challenge so following that. I have got a lot of credit in my name so not eligible for any further 0% balance transfers yet and the top two cards are both near their limits. So shall I wait and try and balance transfer or shall I look at a loan and consolidate the payments. Homeowners too btw.

Thanks in advance! 

Willing2Learn

The most MSE way is to snowball the cards whilst waiting for a juicy BT promotion.

BTW, your signature needs updating (the formatting is different on the new forum) 

jagger86

Willing2Learn said:

The most MSE way is to snowball the cards whilst waiting for a juicy BT promotion.

BTW, your signature needs updating (the formatting is different on the new forum) 

thank you for replying!

Yes I haven't logged in for a while, will get that done thanks.

EssexHebridean

jagger86 said:

Hi all,
So really want to clear our credit card debts this year and have had to rely on them far too many times last year due to one thing or another. 

We have 3 credit cards and 1 loan. We never miss any payments etc not struggling with the debt so to speak but just want to get rid of it in the quickest and cheapest was possible. Am I best just to snowball the credit cards or should I look at getting a loan to consolidate everything?

Credit card 1 - £3,400 with HSBC and is 0%
Credit card 2 - £4,350 - Santander 16% 
Credit card 3 - £650 - Fluid 19.9% I think?
Loan was for new windows we had couple of years ago, repayment is £114 a month and it was for 10 yrs in total at 9.9%

I have printed off a sheet for the 1% challenge so following that. I have got a lot of credit in my name so not eligible for any further 0% balance transfers yet and the top two cards are both near their limits. So shall I wait and try and balance transfer or shall I look at a loan and consolidate the payments. Homeowners too btw.

Thanks in advance! 

Definitely do OT consolidate the cards - the reason? The bit I have highlighted in bold in the post quoted above... 

Your first step is to get a budget in place, and start living by it - you might find the SOA calculator that we point people towards is helpful for this. Once you are budgeting for costs, then you are on the right path to no longer rely on the cards - and once you have made budgeting work for you for a while you *may* be a decent candidate for consolidation. 

Santander - keep your eyes peeled for a 0% BT for this one.
Fluid - depending on what monthly surplus you have it may not be worth the hassle of BT'ing it - how much per month could you scrape together to throw at this? Either way it is your current priority to throw your surplus at. 

All the cc's - even the 0% one - set the monthly standard payment to a fraction above the minimum payment and leave it there - so maybe round up to the next £10 for example. This then increases the amount that you pay off over time. HOWEVER doing this replies on you NOT using the cards - otherwise you will run into trouble. 

As for that loan - I'd personally be looking to see if you can get a loan at a lower rate to pay this one off - might be worth exploring what the MSE Credit Club suggests for you on options for this as it may be with your other debt you're not a good candidate for applying for another loan right now. 


First thing though - that budget. Once you have completed the SOA why not post it into this thread and we can see if we can spot any savings you may have missed. 

MasterG83

Simply in this case I would use the Dave Ramsey method, save £1000 in an emergency fund and then do some plastic surgery, cut up your cards. The start with the lowest balance first for quick motivational wins, in your case the interest is stacked that way anyway. Then I would attack the loan snowballing from the cards to the loan to clear off quicker. 

On_my_way

I would use the Dave Ramsey method- see the post above as it helps to change behavioural financial issues too

jagger86

Sorry guys i missed these replies not logged in for a while!

Thanks some great advice. The fluid card has been including an optional extra payment anyway so been doing that, going to start snow balling it soon though and reassess in 6 months and see if we can get a better loan rate for the loan.

jagger86

EssexHebridean said:

jagger86 said:

Hi all,
So really want to clear our credit card debts this year and have had to rely on them far too many times last year due to one thing or another. 

We have 3 credit cards and 1 loan. We never miss any payments etc not struggling with the debt so to speak but just want to get rid of it in the quickest and cheapest was possible. Am I best just to snowball the credit cards or should I look at getting a loan to consolidate everything?

Credit card 1 - £3,400 with HSBC and is 0%
Credit card 2 - £4,350 - Santander 16% 
Credit card 3 - £650 - Fluid 19.9% I think?
Loan was for new windows we had couple of years ago, repayment is £114 a month and it was for 10 yrs in total at 9.9%

I have printed off a sheet for the 1% challenge so following that. I have got a lot of credit in my name so not eligible for any further 0% balance transfers yet and the top two cards are both near their limits. So shall I wait and try and balance transfer or shall I look at a loan and consolidate the payments. Homeowners too btw.

Thanks in advance! 

Definitely do OT consolidate the cards - the reason? The bit I have highlighted in bold in the post quoted above... 

Your first step is to get a budget in place, and start living by it - you might find the SOA calculator that we point people towards is helpful for this. Once you are budgeting for costs, then you are on the right path to no longer rely on the cards - and once you have made budgeting work for you for a while you *may* be a decent candidate for consolidation. 

Santander - keep your eyes peeled for a 0% BT for this one.
Fluid - depending on what monthly surplus you have it may not be worth the hassle of BT'ing it - how much per month could you scrape together to throw at this? Either way it is your current priority to throw your surplus at. 

All the cc's - even the 0% one - set the monthly standard payment to a fraction above the minimum payment and leave it there - so maybe round up to the next £10 for example. This then increases the amount that you pay off over time. HOWEVER doing this replies on you NOT using the cards - otherwise you will run into trouble. 

As for that loan - I'd personally be looking to see if you can get a loan at a lower rate to pay this one off - might be worth exploring what the MSE Credit Club suggests for you on options for this as it may be with your other debt you're not a good candidate for applying for another loan right now. 


First thing though - that budget. Once you have completed the SOA why not post it into this thread and we can see if we can spot any savings you may have missed. 

Thank you for this. Yes our main thing was not sticking to a budget and also my husband does overtime and sometimes gets 5 week pay months so we were always spending that before we had it! So taking a different approach this year and have allocated a set salary which we are going to live by, then any extra to that is going to be used for things that cost extra (such as weddings, hen do's etc which we have this year for family members) and all surplus is going onto debts. Some months it can be £300 extra and some months £900 extra so doing it this way we should be able to snowball quite a bit once we have outstanding commitments paid. Once all the debts are paid off as well this will also set us in good stead for saving this surplus money! 

I will do an SOA when i get chance but i know roughly.
All our direct debits are £1800
I budget £350 for food and household supplies
£100ish for fuel depending on where we go that month (husband bikes to work)
Our minimum income is £3200 a month but can sometimes be as much as £4000. 
I have also started a new job which is part time so i am earning less but not paying any childcare and there is also commission available so will start having that soon! 

We relied on the credit cards too much before when working away and not paying it off, changing jobs and paydates and then not being prepared for emergencies as had no emergency fund. All cut up now though! 

tealady

I would get out your last 6 mths CC statements and look at what is on them.
If it is "luxuries " such as takeaways then you know where to cut back.
If it is essentials such as food, rent, transport then you need to look at EVERYTHING you are paying out and either cut out or see if you can get better deals.
If you are feeling brave post an SOA, there us nothing like a fresh pair of eyes to help identify potential savings.
HTH

jagger86

Household Information
Number of adults in household........... 2
Number of children in household.........2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 1010
Partners monthly income after tax....... 2500 average sometimes more
Benefits................................ 0
Other income............................ 137 child benefit
Total monthly income.................... 3647

Monthly Expense Details
Mortgage................................ 597
Secured/HP loan repayments.............. 147 for car and 114 for windows loan 
Rent.................................... 
Management charge (leasehold property).. 0
Council tax............................. 105
Electricity............................. 
Gas..................................pay 115 for both on set DD 
Oil..................................... 0
Water rates............................. 39 
Telephone (land line)................... 0
Mobile phone............................ 56 for both
TV Licence.............................. 13
Satellite/Cable TV...................... 45 with broadband
Internet Services....................... above
Groceries etc. ......................... 350
Clothing................................ 10
Petrol/diesel........................... 120 
Road tax................................ 12
Car Insurance........................... 33 + 26 total 59
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 24 adventure ASC and 14 football club 40 for both swimming lessons
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 3
Buildings insurance..................... 
Contents insurance...................... 33 for both
Life assurance ......................... 35
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 45 every 6 weeks
Entertainment........................... 100
Holiday................................. 200
Emergency fund.......................... 0 (will start putting 50 a month away as want to pay cc first)
Total monthly expenses.................. 2296


Assets
Cash.................................... 
House value (Gross).....................
Shares and bonds........................ 
Car(s).................................. 
Other assets............................ 
Total Assets............................ 

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
HSBC .......................3400.......   85........0%
Santander                 4350          105        16%    
Fluid                            650           39         19.9%
other pp's                                     90
Total debt repayments 319


Monthly Budget Summary
Total monthly income.................... 3647
Expenses (including HP & secured debts) 2296
Available for debt repayments........... 1351
Monthly UNsecured debt repayments....... 319
Amount left after debt repayments....... 1032




not sure if I have done this right, couldn't find a link to an SOA when I searched so just copy and pasted someone else's on another post.

Please note this is the current situation which is much better, i now work part time however last year was working full time (as this was the only job offer I could get) for 1500 a month but spending 700 a month on nursery etc. My youngest qualified for 30 free hrs in September so that made a big difference but I didn't; go part time until November when I changed jobs. I was also out of work for 6 weeks last year and was unpaid for that period.

prb1984

There's nothing obscene in that SOA.
And with your current situation I would just say get cracking on smashing those debts down the 1k left over.
If you wanted to hell for leather you could skip a holiday this year and also shave the entertainment budget a bit. But to be honest either way I would be funding a 1k emergency fund before I put anything towards a holiday!!
Do you have a smart meter - the elec/gas might be a touch high. 
Just be clear with yourself you are being totally honest with the figures and there is nothing you're missing off. You should be able to be debt free in 5 or 6 months if this is all accurate (depending on the loan? I couldn't see it here unless i missed it)
EDIT: Are you really only spending 240 a year on birthdays and xmas presents? Great if you are, I just suspect this figure probably isn't right?