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Looking for opinions on how to tackle our debt

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  • lisastevo
    lisastevo Posts: 78 Forumite
    Part of the Furniture 10 Posts Name Dropper Combo Breaker
    I have a £13k limit so all of it. I don’t use the card. The offer is for transfers made before 31st August. I could make all the August payments first, and then transfer the rest?
  • kimwp
    kimwp Posts: 2,938 Forumite
    Fifth Anniversary 1,000 Posts Photogenic Name Dropper
    Will they give notice of it disappearing? If you are likely to pay off the VM by the offer expiry time (and it feels like you can) then I would say don't transfer it - the 2.4% would be money down the toilet. 
    A possibility would be to do the balance transfer on some of the cards that are finishing the 0% in March/April. If your SOA is correct,  you'll be able to pay off 1300 including from freeing up the VM payments. Also your new contract will cut into this. So IF you will definitely  get the money from the contract and your SOA is correct, it would be worth balance transferring approx 4,000 from your credit cards due to offer expire march/April - probably the OH MBNA one. Note, this is just what I would do, run all advice through your own calcs!
    Statement of Affairs (SOA) link: https://www.lemonfool.co.uk/financecalculators/soa.php

    For free, non-judgemental debt advice, try: Stepchange or National Debtline. Beware fee charging companies with similar names.
  • BabyStepper
    BabyStepper Posts: 771 Forumite
    Fourth Anniversary 500 Posts Name Dropper
    In my experience, they don't give notice of deals disappearing, they just go. Annoying or what? 

    £13k is great, I agree with kimwp, definitely move some of the cards that would be ending in March/April too. Kick as much of it down the road as you can, as long as you can be disciplined and keep to a plan, despite having a bit of leeway. Don't make more problems for yourself by ignoring it because the immediate pressure is off. 
    Emergency fund £8,500/£8,500
    Mortgage overpayment £260
    Debtfree!
    £21,228.07 paid off in 22 months
  • enthusiasticsaver
    enthusiasticsaver Posts: 16,060 Ambassador
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    I would transfer maybe £4000 of your Virgin credit card on to the Barclaycard but given the BT fee is quite high and the promotional rate is only until November 2021 I would not put other cards on it.  You can pay the other £500 off before November 2020 and therefore incur no interest on it.  Moving your OHs cards or your Tesco card which expires in March/April 2021 will be pointless as it is only 6 months prior to November 21 and you will have to pay 2.4% BT fee on it and you probably will not clear it all by November 2021 anyway so would need to BT again.  Try and get out of this cycle of constantly BT cards but never actually paying them off. Any unused tax money once you have done your self assessment or the SE money can go towards the cards finishing in March/April. 

    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

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  • kimwp
    kimwp Posts: 2,938 Forumite
    Fifth Anniversary 1,000 Posts Photogenic Name Dropper
    Transferring 4,000 from the VM or from one of the cards that finishes the introductory rate in March/April will cost the same (assuming that the money not needed for tax will cover the shortfall) and is the same action - kicking 4,000 down the road to November 21 when it starts incurring interest, regardless of when it was originally going to start incurring interest. The difference is the impetus to get the debts paid off / wiggle room. I was in favour of a little self-pressure (given that it seemed achievable) to get the VM paid off.

    But @lisastevo given that it looks like 4,000 is the shortfall you will have in April, so the cost of BT is the same in either case, it probably makes sense to give yourself wiggle room on that amount from the VM account and then pay the cards off as quickly as possible. 

    (apologies, no pound sterling on my laptop and even the handy shortcut that should work...doesn't)
    Statement of Affairs (SOA) link: https://www.lemonfool.co.uk/financecalculators/soa.php

    For free, non-judgemental debt advice, try: Stepchange or National Debtline. Beware fee charging companies with similar names.
  • BabyStepper
    BabyStepper Posts: 771 Forumite
    Fourth Anniversary 500 Posts Name Dropper
    Given the cards will start making interest at around 20% (possibly a good idea to find out exactly what they'll go up to when the deals end) means around 1.6% per month. Over 6 months (April to November) that's 9.6%, more expensive than the balance transfer fee. Also some leeway will give OP time to find extra work, make some more plans, do whatever is required to find more cash. 

    A little self pressure, why not? Just don't give yourself more than is neccesary. 

     
    Emergency fund £8,500/£8,500
    Mortgage overpayment £260
    Debtfree!
    £21,228.07 paid off in 22 months
  • TheAble
    TheAble Posts: 1,676 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    kimwp said:
    regardless of when it was originally going to start incurring interest
    Well, no. The closer the existing 0% expiry is to the new 0% expiry, the less point in transferring it. Eg you wouldn't pay a 2.4% fee to move an Oct21 0% to to a Nov21 0%. But moving a Nov20 to a Nov21 could be worth it as you get 12 months of 0% in return for your fee.
  • monetxchange
    monetxchange Posts: 552 Forumite
    500 Posts Third Anniversary Name Dropper Photogenic
    lisastevo said:
    kimwp said:
    I've never been self employed so this question might just be my lack of knowledge - how come you have 4,000 to pay tax in January but might not have to pay any tax? Do you not save the amount that will need to be paid in tax as the income comes in? If you don't need the 4,000 for the tax bill (and assuming that the rates once off the introductory 0% rate are similar), I would pay that towards the debt and put aside money for the tax man as it comes into your account. Clearly ignore this if it doesn't make sense.
    I put 30% of every bit of self employed income I get into a savings account to cover any tax bill I owe in January. For example if I get paid £250 for a job, I won’t think of it like that. I think to myself that’s £175 and £75 goes straight into savings and I forget about it. I do that for everything. So less personal allowance and business expenses I’ve always got money left after I’ve paid the bill. Plus being self employed for so long, over a certain threshold you have to pay in advance for the next tax year. So for example I’ve already paid £3000 towards my 2019/2020 tax bill that’s due in January 2021. They base it on the previous year. So that bill is covered already because I know what I made and the profit is roughly the same every year. I would then owe payments for 2020/2021 in January 21 and July 21. Because I already know I will not have earned enough to pay much tax for 2020/2021 because I’ll be under my personal allowance and minus expenses, I can defer the advance payments on account and not owe anything until January 2022. It’s so confusing. I hate it but over the years I’ve got better with my understanding and money management of my self employed earnings. 
    Also self employed and having spent years in debt to HMRC, I'd just watch yourself here as you're effectively saving in arrears. Next January's (2021) tax bill is for work carried out from April 2019 to April 2020, so I can't see how you won't owe anything if you worked in 2019 and at the start of 2020. 

    Just a bit of caution as if I saved 30% for my tax bill this year month to month (bad year for work) to pay my Jan 2021 tax bill for work done in year up to April 2020 (an exceptionally busy year) I'd be really underestimating.

    Once you're debt free you can get on top of it month to month by using Martin's tax calculator as a guide. What I've done for the next tax bill is submit my 19-20 return already so I've got the figure I need to pay in Jan 2021 in mind and have made sure I've saved up at least that amount before thinking about other stuff to pay for (debts in your case). 

    You can do it!
    Debt Free: 06/03/2020 Highest Debt: £37,514
  • kimwp
    kimwp Posts: 2,938 Forumite
    Fifth Anniversary 1,000 Posts Photogenic Name Dropper
    TheAble said:
    kimwp said:
    regardless of when it was originally going to start incurring interest
    Well, no. The closer the existing 0% expiry is to the new 0% expiry, the less point in transferring it. Eg you wouldn't pay a 2.4% fee to move an Oct21 0% to to a Nov21 0%. But moving a Nov20 to a Nov21 could be worth it as you get 12 months of 0% in return for your fee.
    Well, no. I was talking about that specific situation - comparing a balance transfer of 4,000 from one card with a balance transfer of 4,000 with another card. The final result in both cases is the due date for the 4,000 shifted to Nov 2021 and a 2.4% BT fee paid. 

    There is less point the closer the existing 0% expiry is to the new 0% expiry, but that doesn't mean there is necessarily no point. You'd choose a 2.4% fee to move a balance to a 0% expiry year later over a 2.4% fee to move the same balance to a 0% expiry one month later. But if your interest was going to be 30%+ and you had a bond covering the balance due out a month later, you might consider it worth it. If it was a few strokes of the keyboard and 50,000 pounds balance, it might be worth 50 pounds to you. 
    Statement of Affairs (SOA) link: https://www.lemonfool.co.uk/financecalculators/soa.php

    For free, non-judgemental debt advice, try: Stepchange or National Debtline. Beware fee charging companies with similar names.
  • lisastevo
    lisastevo Posts: 78 Forumite
    Part of the Furniture 10 Posts Name Dropper Combo Breaker
    lisastevo said:
    kimwp said:
    I've never been self employed so this question might just be my lack of knowledge - how come you have 4,000 to pay tax in January but might not have to pay any tax? Do you not save the amount that will need to be paid in tax as the income comes in? If you don't need the 4,000 for the tax bill (and assuming that the rates once off the introductory 0% rate are similar), I would pay that towards the debt and put aside money for the tax man as it comes into your account. Clearly ignore this if it doesn't make sense.
    I put 30% of every bit of self employed income I get into a savings account to cover any tax bill I owe in January. For example if I get paid £250 for a job, I won’t think of it like that. I think to myself that’s £175 and £75 goes straight into savings and I forget about it. I do that for everything. So less personal allowance and business expenses I’ve always got money left after I’ve paid the bill. Plus being self employed for so long, over a certain threshold you have to pay in advance for the next tax year. So for example I’ve already paid £3000 towards my 2019/2020 tax bill that’s due in January 2021. They base it on the previous year. So that bill is covered already because I know what I made and the profit is roughly the same every year. I would then owe payments for 2020/2021 in January 21 and July 21. Because I already know I will not have earned enough to pay much tax for 2020/2021 because I’ll be under my personal allowance and minus expenses, I can defer the advance payments on account and not owe anything until January 2022. It’s so confusing. I hate it but over the years I’ve got better with my understanding and money management of my self employed earnings. 
    Also self employed and having spent years in debt to HMRC, I'd just watch yourself here as you're effectively saving in arrears. Next January's (2021) tax bill is for work carried out from April 2019 to April 2020, so I can't see how you won't owe anything if you worked in 2019 and at the start of 2020. 

    Just a bit of caution as if I saved 30% for my tax bill this year month to month (bad year for work) to pay my Jan 2021 tax bill for work done in year up to April 2020 (an exceptionally busy year) I'd be really underestimating.

    Once you're debt free you can get on top of it month to month by using Martin's tax calculator as a guide. What I've done for the next tax bill is submit my 19-20 return already so I've got the figure I need to pay in Jan 2021 in mind and have made sure I've saved up at least that amount before thinking about other stuff to pay for (debts in your case). 

    You can do it!
    Hi. Thanks for taking the time to reply. Although I haven’t filed my 2019/2020 tax bill yet I’ve done the calculations and I know I won’t owe a balancing payment. I’ve already paid just over £3000 in payments on account for 2019/2020 so that covers the bill which will be generated once I file the return.

    With regards to the 30% savings, my income from Self Employment only ever varies slightly year to year as I would rather know where I stand. If I were to take on considerably more work I would know to save accordingly. I don’t think my profit has varied more than a few £100 is the last 5 years. So with the significant drop in income from Covid, I already know I’ll be under my personal allowance minus business expenses so therefore can reduce my payments on account for 2020/2021 in January. I hope that makes sense, sort of haha
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