I need help!

tootst

Hi all,
first time poster so I hope I’m posting this in right place etc. 

I’ve managed to get myself in a mess financially. Over 8 credit cards I have debts totalling £24k of £32k available. I also have a couple of shopping accounts with another £4000. And finally a car on PCP for the next 40 months.

I haven’t missed any payments. And have a solid credit history. No CCJs are anything negative.

However 5 of the cards are now out of 0% interest with only a few months remaining on the others. I’m struggling to make a dent in any of the balances and I don’t know what to do. When I’ve paid the minimum, there’s not much left to pay anymore.

in desperation I applied for a consolidation loan today and have been approved £8k. However the interest is double that over 60 months and the monthly payment is slightly more than I would be making on minimum payments to the 3 cards that will pay off.

The broker has told me that if I clear the “revolving debt” ie credit cards then banks will find me a more attractive loan candidate in 6-9months and I will be able to get a loan at a better rate.

I’m now so confused and don’t know if I’m making a mistake.

Any advise would be great fully appreciated.

thanks in advance 

fatbelly

I don't like the sound of that consolidation loan
I would normally say to post a statement of affairs (calculator here) and then you may have to consider a debt management plan.
I'm still going to say that - but you now  have another option that you can implement straight away, which is to contact your credit card lenders and ask for three months interest free. Letter here
https://www.nationaldebtline.org/EW/sampleletters/Pages/Hold-action-on-your-account-Coronavirus%28sole-name%29.aspx

tootst

Thanks 
Am I able to do that when my finances haven’t been impacted by COVID?

tootst

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 1

Number of children in household......... 1

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 2756

Partners monthly income after tax....... 0

Benefits................................ 82

Other income............................ 0[b]

Total monthly income.................... 2838[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 238

Rent.................................... 750

Management charge (leasehold property).. 0

Council tax............................. 108

Electricity............................. 20

Gas..................................... 50

Oil..................................... 0

Water rates............................. 0

Telephone (land line)................... 46

Mobile phone............................ 10

TV Licence.............................. 13

Satellite/Cable TV...................... 57

Internet Services....................... 0

Groceries etc. ......................... 300

Clothing................................ 50

Petrol/diesel........................... 50

Road tax................................ 12.5

Car Insurance........................... 29

Car maintenance (including MOT)......... 0

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 20

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 0

Life assurance ......................... 24

Other insurance......................... 0

Presents (birthday, christmas etc)...... 30

Haircuts................................ 30

Entertainment........................... 30

Holiday................................. 30

Emergency fund.......................... 50[b]

Total monthly expenses.................. 1947.5[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 0

Other assets............................ 0[b]

Total Assets............................ 0[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 0........(0)........0

Hire Purchase (HP) debt ...... 18021....(238)......0[b]

Total secured & HP debts...... 18021.....-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

VISA 4280......................4836.39...48........0

VISA 8997......................6161.42...82.69.....19.45

VISA 8795......................1286......40.29.....27.95

VERY...........................4210......70........54.9

PAYPAL.........................1800......70........19.9

VISA...........................470.......26........25.84

VISA 9304......................1701......25........23.9

VISA 6518......................3040......30........23.9

VISA 8577......................3419......104.......27.93

VISA 4061......................4099......124.......27.93[b]

Total unsecured debts..........31022.81..619.98....-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,838

Expenses (including HP & secured debts). 1,947.5

Available for debt repayments........... 890.5

Monthly UNsecured debt repayments....... 619.98[b]

Amount left after debt repayments....... 270.52[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 0

Total HP & Secured debt................. -18,021

Total Unsecured debt.................... -31,022.81[b]

Net Assets.............................. -49,043.81[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

Theroadtoruin

I'm not going to lie and say it seems an easy situation to get out of but you're in the right place. There are people here who are considerably more knowledgeable than I. I just wanted to comment and say that I wish you the very best of luck and to remind you that no matter how large a problem seems there's always a solution and there's always hope. Stay positive. 

enthusiasticsaver

Don't consolidate.  It rarely helps with paying off debt and often leads to it increasing as before long the credit cards have been run up again and there is also the loan to pay. It is more expensive and does not address the reason for the overspending habits. £8k will only cover a fraction of your debts anyway. What interest rate have you been offered? 

Do you budget at all as that soa says you have a surplus and you clearly do not? Have you done a spending diary for the last few months to see where your money is going?  Have you stopped using credit cards now as that is the only way you will get out of this debt spiral? Paying minimums only will mean you are saddled with this debt forever so finding a budget that will enable you to start making a dent in the debts is essential.  Failing that some sort of debt solution but as you have a surplus and can meet minimum payments I would suggest you try sorting this out by using a debt snowball method.  There is a calculator online you can input your debts  into and the rates and it will tell you how long before you repay them and how making just a small overpayment over the minimums can make a massive difference. 

On the soa I would say that the groceries is high for one adult and one child unless the child is a teenager. Even then it could be trimmed by using a budget supermarket, meal planning etc etc. Can you get better deals on your landline phone deal and can you cancel the cable tv and maybe use Netflix which is much cheaper or just freeview? Although you say £50 is for emergency savings, you do not have any at the moment so is that aspirational or what you intend going forward? Can you stop buying clothes for you for  a while and just buy your childs school uniform/shoes etc. At the moment things like haircuts, holidays and entertainment are not happening anyway so an ideal opportunity to cut back as far as you can on these things and focus on building emergency savings and paying down debt. PCP is a very expensive way of leasing a car (and never owning it) and presumably unless you can find the balloon payment at the end of the 40 months to buy it outright it will have to go back and you will have to start again.  I would urge you to look at other ways of financing a car in the future. You need to be saving something in car maintenance. 

The Very card is charging you horrendous interest rates so you should be targeting that first.  

Karonher

A couple of initial points. DO you have the £270 left at the end of the month? If so I would hammer  the Very account due to the interest. Groceries are high for 2 people so that could give extra to throw at the bills. Is the holiday likely to happen as that is another £30 to go to bills plus putting away the hair cut money. That wont happen for a while. Also you should have contents insurance. Sorry to be personal but could the other parent be of some help?

Magsmx5

well done for starting your debt management journey, it is a bit scary at first but best to work out why the debt accrued and what options you have to reduce it. Look back on your bank and CC statements for the last 6 months and analyse your spending patterns. Cut up the cards and begin to overpay the highest interest bearing debts first. Look at where you can make savings in your budget. I notice that you have no provision for household insurance and your fuel expenses are very low.

curlytop12

hi,  the loan does not sound like a solution. Looks like you could manage this though ? bit of jiggling, cutting back etc
stop, for now, haircuts/clothing/presents/ holiday= £140 plus the £270 surplus in addition to what you are paying now a month to debts..Have you looked at the eligibilty thing on here which will tell you chance of switching to a new 0% interest card?
life assurance seems a lot when you don't have a mortgage to cover? check this out, get some contents insurance out of the savings (£5-10 a month) use a cashback site for insurances.
gas is high, be more aware of when you are using it, summer now so hopefully will lessen.telephone and satellite is high- go freeview, look at new deal for telephone.eg I pay £22.50 per month with TalkT@lk for unlimited broadband and landline ( I use mobile for all telephone calls)
good luck, you can do this 

Andyjflet

Please don't take the consolidation loan. I've been in a similar place to you but getting sorted.
Check out Dave Ramsey and the baby steps on you tube and podcast. this involves building an emergency fund, never borrowing again, and then paying off the debts smallest to largest for quick mental wins.
Think how amazing it would be to have that £600 a month on debt payments to do what you liked with, thats a mortgage. 

Andyjflet

So, in this order....pay the minimums on the rest until the first one is paid, then put that £25.84 into the next Visa 8795 and so on. Its called snowballing.

VISA...........................470.......26........25.84
VISA 8795......................1286......40.29.....27.95
VISA 9304......................1701......25........23.9
PAYPAL.........................1800......70........19.9
VISA 6518......................3040......30........23.9
VISA 8577......................3419......104.......27.93
VISA 4061......................4099......124.......27.93
VERY...........................4210......70........54.9

VISA 4280......................4836.39...48........0

VISA 8997......................6161.42...82.69.....19.45