£23k on credit cards - help please...

pinkdot29

Hi

In desperate need of some help and or advice. Have got myself into a real bad situation where me and my partner have £23k on credit cards...

1st thought was to get a loan to clear it all - so we applied but I'm self employeed and he has a bad cxredit report so we have been declined but just about everyone - cant get a secure loan either as we recently remortgaged when the interest rates went up! ;-(

Phoned around to find out the rates we are paying and the worst in an MBNA card at 30% (which was orginally a 0% card!) - have tried to switch to other cards but been refused them too!!! Aksed MBNA to lower the interest rate but they just refused!

We dont really have any more cash to pay out other than the min payments!

Help - How are we ever going to pay this off!?!?

Any ideas?

Thanks in advance...

GeorgeUK

First of all, don't apply for any more credit. If you get more than about 3 credit checks on your file within 6 months, your credit score can be effected. Then it gets worse as the number of checks increases. Leave it for 6 months before trying to get any more credit.

Tell us what your expenditure is on and we'll see if there are any savings to be made. We need a SOA from you - link provided.
http://forums.moneysavingexpert.com/showthread.html?t=107280

Check your credit history (and also your partner) at experian (free)
Check how many credit checks have been made, the number of late payments and if there are any defaults or anything else that may have an advers effect on your credit worth.

If you have any other CC's, please tell us the limits as well as the APR's on them.

pinkdot29

Thanks for the speedy reply - right here goes...

Monthly Incomings:
My salary - £1700
Partners salary - £1700
Total - £3400

Monthly Outgoings:
Mortgage/Rent - £1000
Council Tax - £140
Gas - £20
Electric - £20
Water - £25
TV License - £10
Sky £40
Phone - £30
Food - £200
Petrol - £150
Insurance - £25
Car Loan - £300
Other Loans £200
Credit card minimum payment - £520
Student Loan £72
Mobile Phone - £40
Going out - £200
Gym - £40
TOTAL - £2920

Credit card detail
A&L £5021 29.9%
RBS £3979 0% till 12 july 08
Egg £9500 17.9%
Halifax £2100 17.9%
Amex £3200 (dont remember but is a low one for life of balance)

Have checked our history I had score of 600ish before we started applying - no missed payments no defaults etc - my partners was lower around 400ish and he has a 8 on there from a defaulted mobile phone contract with singlepoint (but we have been told by an underwritter that there is now value of money against it) its from 2003. Now I score around 450ish!

CLAPTON

well done for working out the budget

you say your income is 3,400
and your spending including all debt repayments is 2920 which leaves a massive 480 per month unaccounted for.

The first thing to do is to find out where that money actaully goes

a. start keeping a spending diary i.e. write down absolutely everything you spend ... amazing how quite small amounts can add... the odd takeaway, haircuts, work lunches / coffees, hobbbies/interests/sports, newspapers/magazines , gadgets etc

b. then look at all your annual and oneoff spends...work out a year total, divide by 12 to get a monthly aveerage and add it you your budget above...
so what do you spend car tax/mot/servicing/RAC/AA/repairs, what about clothes, weekends aways, holidays, odd presents, any xmas expenses, house insurances, house spending/appliances/ etc

c. once you have done that then you will be able to see how much you have 'spare' to pay those debts off faster... and of course you will see better how to prioritise your spending.

d. how did these debts arise? have you stopped the spending that caused them?

e. any spare money should be used to snowball the debts... i.e. pay the minimum on each debt except the one with the highest APR.(A&L card here)... on that pay the maximum possible... that way you will pay them off the quickest and with least interest.

f. depending upon the results of the revised SOA, can you increase your income... overtime or parttime jobs

g. otherwise you need to look at cutting down spending... gym can go, reduce going out costs.

h. can you down grade the car... sell it and repay the loan and buy a cheap runabout?

i. stop spending on CCs ..

best of luck

GeorgeUK

Council tax - over 10 or 12 months?
mobile - PAYG?

Credit scores are worked out differently for each organisation so your score could vary. Do you have a joint account? If your credit isn't linked to your partners, you should be ok.

pinkdot29

COuncil Tax is 10 months
Yes we have a joint account so will be linked - he also has another house in his name (with a friend) so in effect 2 mortgages - although he does not pay anything!
No contract mobile!
Thanks for the advice

cm233lh

Stop going out so much
cancel gymn membership and go running instead
cancel mobile contract, get a PAYG sim and stop calling people.
cancel Sky - you'll keep the kit and still get the free channels
Look at better phone providers - that looks high and stop calling people.
Drive less if you can.

That'll give you a little more to play with

Lavendyr

pinkdot29 wrote: »

Thanks for the speedy reply - right here goes...

Monthly Incomings:
My salary - £1700
Partners salary - £1700
Total - £3400
- any chance of extra income here? perhaps a part-time/weekend job? Also check the "Up your Income" forums for some easy ways to make a bit of extra cash!

Monthly Outgoings:
Mortgage/Rent - £1000 - I hate to say it but can you downsize at all? This is really quite high - not quite half your income but close to it. Especially if you are renting, it could be relatively easy to move to a smaller/less expensive place. Just a thought
Council Tax - £140 is this over 10 months or 12? If over 10, can you ask them to spread it over 12?
Gas - £20 have you checked USwitch etc to see if you can save money at all? Though this isn't too high as an average over the year
Electric - £20 ditto
Water - £25 have you got a water meter?
TV License - £10 probably more like £12, in fact!
Sky £40 - you could cancel this entirely and get a Freeview box for the cost of one month's subscription, which is what I'd recommend - but if you can't do without it, at least call them and see if you can cut down the cost - I hear threatening to leave can work a treat alternatively why not get your phone through Sky too, thus saving you the £30 a month on the phone bills
Phone - £30 as above, this is high - maybe see if you can get it bundled with your Sky. Also do you not have broadband?
Food - £200 you can cut down here for sure, try the "Money Saving Old Style" boards for some meal planning suggestions and advice, you could probably reduce this to £100 with some careful budgeting and planning ahead
Petrol - £150 I sympathise with high petrol costs as OH and I both have to commute to work in opposite directions, but is there any way you can cut this down - e.g. car sharing? Also you've not mentioned MOT, tax or repairs/servicing on this SOA so that's another cost to consider.
Insurance - £25 have you shopped around for the best deal?
Car Loan - £300
Other Loans £200
Credit card minimum payment - £520
Student Loan £72
Mobile Phone - £40
Going out - £200 you really do need to cut this down, how about more nights in? This is a clear area where you are spending heavily and can be cut back.
Gym - £40 if you can, cancel this as it is a luxury
TOTAL - £2920

I expect that if you cut back going out, food and gym and shopped around for better utilities deals, you could save at least an additional £250 per month, and probably much more. But it would take a bit of a change of lifestyle for a while.

As others have said you definitely should start a spending diary as well, as I think you are missing some things in your SOA - day-to-day spending, hairdressing, dentistry, cosmetics/bathroom stuff, etc.

Good luck sorting out the debt, I wish you all the best

arfster

You can save on mobiles with a 12mth free cashback contract, from a reputable provider (eg cpw owned companies like e2save, or p4u companies like mobiles2yourdoor). As long as you obey the cashback conditions exactly, send claims via recorded, they're a great deal.

It'll have 300/400 minutes per month; try make all your calls on it so your landline bill is minimal. Should save you that 40/mth contract, and a fair chunk off your landline bill too. For the latter, look at the guides in the phone forum. If you make long calls, particularly international ones, investigate computer-based voip, as you can call from those for near nothing to most destinations.

You also get a new phone, so ebay off the old one (and actually, ebay off anything in your home you're not using or don't need)

jinkssick

Honestly:

Give up anything to do with contract phone. PAYG it is for you.

Sky and seriously in debt, slap yourselfs twice, sorry but you shouldnt even have a dish anywhere near the home. thats a £480 saving a year.

arfster

jinkssick wrote: »

Honestly:

Give up anything to do with contract phone. PAYG it is for you.

Sky and seriously in debt, slap yourselfs twice, sorry but you shouldnt even have a dish anywhere near the home. thats a £480 saving a year.

PAYG is more expensive than a cashback contract - you have to put 10 quid in every few months. I've not paid for a mobile call in 5 years, and every year I get a new phone, sell the old one on ebay, and get 40-50 pounds from quidco to boot.

Agree about Sky though, when you're in that much debt sat TV is a luxury.