New - feeling overwhelmed

lightisfading

Hi all *shy waves*

I am gradually coming to my own lightbulb moment that I'm in a slow, steady spiral into deeper debt.

I don't have a good reason - my debt is 'systematic overspend'. I'm terrible at self control.  I have always paid my bills but am terrible for spending every penny, then using CC on the tight months. I'm one of those people who doesn't have the foggiest idea where my money seems to go... yet it does.... My bills are sensible and pretty much at the minimum as me and housemate are both fairly savvy, so it's more that I'll spend money on buying 'stuff' or going out, or god knows what.

Feeling a bit overwhelmed by the sheer amount of information on this site and wondered if anyone could give me tips to get going?

My debts are:

• RBS CC - credit limit £3400, balance £2979, interest 17.44% (this is my 'spending' card), current min payment £74
  
• Barclaycard - credit limit £10,900, balance £2157.50, interest 18.52%, current paying fixed £75 pm (min is £54)
  
• MBNA - credit limit £7300, balance £5920, interest 0% til December - I'm not sure what it will be after this, current min payment £60
  
• Arranged overdraft £1100 which I'm always at the end of, each month.

- I can't really get a 0% balance transfer, as I've had a fair few of them (have had a quick look and doesn't seem to be any I've not had before that I'm eligible for?
- I'd love to get a loan and consolidate the lot and chop the cards up, but the only one that came back as likely on the calculator refused me

My income is £1700, my outgoings are around £1300. I don't really know where the extra £400 ish a month goes, which I realise is a tad worrying (though I managed to be tight enough on it this month to buy a much needed new mattress for £400!)

A couple of specific questions:

Overdraft: I know that interest is starting/ramping up on these from August, but I don't really understand how it will affect me in concrete/specific numbers. Can anyone shed any light? I'm with HSBC and have an arranged £1100 overdraft. Currently I transfer all my 'direct debits' money (about £1050) by standing order into a seperate account each month so I know they're paid - currently about £800 of this comes out in the last week of the month and I know Martin is saying about keeping money in the account as long as possible to minimise interest. Would/should I ask the bank to move my O/D to the bills account instead?

Should I reduce down my available balance on all my cards? Will this be affecting my elibility to get a consolidate loan?

Can anyone offer me any tips where to start - I'm really feeling quite overwhelmed by it all.

MovingForwards

Consolidation doesn't work and it's unlikely you will get a loan, they calculate it on the total outstanding balances plus the loan amount, a lot of people run the credit cards back up again.

You need to go through all your bank / credit card statements and see where you are actually spending your money. Find out what the apr will be on the 0% CC while looking through your statements.

Then create a statement of affairs (income and expenditure) based on what you have seen in your statements.

After that, you can then see where you need to stop excess spending. Stop using the credit cards as you are not currently able to manage / juggle everything.

You need to get out of your overdraft and stay out of it, your identified excess spending can clear that first as they tend to be just under 40% apr.

Once that is cleared, target either your highest apr CC, or the one with the biggest outstanding balance; that's personal preference. Keep picking them off one at a time.

BabyStepper

With 2.5k posts, one previous attempt at a debt free diary back in 2013 that you can find here https://forums.moneysavingexpert.com/discussion/4689957/rejoining-mse-and-a-lightbulb-moment#latest and a quick look at your signature, I'd suggest you've been around here a while and have some understanding of what needs to be done to get rid of your debt. Good to meet you! 

Post your SOA and we will try to help you cut expenses so you have more to throw at debt. 

40% overdraft fees means your bank will start charging you around £36 per month for your overdraft. This debt needs to be the priority. Keep your bills seperate from your overdraft account and leave your excess £400 in there every month until it's paid off. You can reduce your overdraft online in either £50 or £100 increments. Reduce it as you go.

You need an emergency fund so you can stop spending on cards. Start saving for one now. 

Thank goodness you didn't get a consolidation loan. These are practically never the answer. You need to learn to budget. Lucky you we're here to help.  Let us know how you get on.  

lightisfading

Hi both,

Apologies for the delay replying.

I have in the past been able to make not very much money at all work. But I'm really pretty bad at dealing with it sometimes and am definitely feeling my debt will be around forever

I've only spent recently on the RBS card - the others are 0% transfers. And I should say the majority (though not all) of the increase since I Iast came here was buying a car. So while there's stuff been put on there (usually when feeling skint and struggling with mental health stuff), I'm not regularly using it now. Mostly it's just that I spend my wages every month *sigh*

You've both given really good advice here and I do appreciate it. And a good 'wake up' call. I reckon my first step as you say is to work out % on the last card (which annoyingly I don't think is on the statements, so presume I need to call them), start tracking my expenditure, start getting down the overdraft. Anything that isn't burrying my head in the sand will probably be a step in the right  direction!

Babystepper I am IN AWE of how much debt you cleared!

Kakiste

Honestly I found the best thing I did was just tracking what I was spending and on what. Once I started noting it down and making 'pots' for different things I suddenly realised how much money I was frittering away on stuff and then I could snowball it on debts.

BabyStepper

Thank you, lightisfading.  Paying off that debt was definitely one of my proudest moments. It was not easy but once you get started, the process builds a momentum of it's own. 

Sounds to me like you need a quick boost of confidence in your ability to do it. If you really go for it you could have your overdraft paid off in 3 months. How great would that feel?  Your account in positive numbers instead of negative? And you'd avoid the 40% fee when it comes (ouch). I'd advise nail that one first, you can do it, you really can. 

How are you doing with your budget/SOA? 

kimwp

If it helps, every £100 you reduce your overdraft by now is £140 you don't have to pay off next year!

ryanm8655

First things first, fill in an SOA: https://www.lemonfool.co.uk/financecalculators/soa.php

Then we can help you work out where you can cutback and how to allocate your spare cash against your debts.

First thing I would do is set all your DDs to slightly above the minimum (can see a few are already), this’ll help with budgeting but also make a bit more of a dent than just paying the minimum, every little helps.

Second thing. Set up a second bank account for bills etc. So that you can begin making a dent in the overdraft as that will be 40% soon.

It would be good if you could get some of the debt onto 0% offers but if you can, don’t waste it and work towards making a decent dent before the offers expire. Both MBNA and Barclaycard used to give me regular 12 month 0% offers, which I made use of. Worth checking if there are any on your accounts. Likewise, I had two cards with MBNA so even if you have a card with a provider it doesn’t necessarily mean you won’t get another.

I’d also stop using the credit cards going forward...

lightisfading

Thank you all,

- I do have a budget spreadsheet, so know what costs what bills wise - just don't have it in a forum-ready format at the moment and doing very long days at work at the moment so keep forgetting!
- I know what my bills are, just not my 'remaining £400' - so starting to track that is the priority. Though next month that'll be my MOT!

- I've dropped my O/D by £100 this month to make a start, and requested a savings account for £25 a month just to start building up a tiny emergency fund.

I didn't know I could get a second card with the same company? If offered 0% transfers, I'm guessing it's worth chucking as much as possible onto a lower interest card if possible and then getting the other cancelled?

@Babystepper, I think you're right about lack of confidence in it. I know my self control is rather rubbish sometimes so can never really believe that I can clear it, which doesn't help!

I will devote some mental energy to this next week, once my work 'silly season' calms down!

Naomim

A note about two cards with the same company, you generally can't do balance transfers from one to another, or certainly not with a 0% interest rate. I have two MBNA cards.  One was MBNA and one was Nuba but is now MBNA.  They do not allow balance transfers between them.  So it's best to investigate before you apply for anything.

Andyjflet

In all seriousness, I wouldnt have made the overdraft change yet until you understand where every £1 is going ? You cant account for 25% of your income which is worrying. Believe me once you understand every single penny then you will be more confident in the overdraft reduction rather than just going out on a whim and a prayer.