Saving a deposit and paying off credit card debt at same time

[Deleted User]

If you have £600 spare at the end of the month, why have you saved 'barely £100' in the last few months?

You need to do a complete income and expenditure, as your figures aren't what you believe them to be and it all appears to be on a wing and a payer at the moment.  Work out where all your money is going and which debts you need to tackle most urgently. 

The DFW board is great for helping you get back on track.

barrysmith2480

So i just did this to work out my DTI copied from nationwide website - my result was 28% now the credit cards are paid ! a LOT of debt

How to calculate your ratio

1. First, add up your recurring monthly debt – this includes rent or mortgage payments, car loans, child support, credit cards and student loans. Some banks and building societies will include the new loan, so it’s best to include your expected monthly payment.
2. Then tot up your monthly income. As well as your gross wages (before tax and national insurance contributions), don’t forget to include freelance income or child benefits.
3. Finally, divide the monthly debt by your monthly income and multiply it by 100. So, if your debts came to £1,020 and your monthly income was £2,916 your debt-to-income ratio would be a healthy 35%.

grumiofoundation

barrysmith2480 said:

i really dont understand , ive just asked every single person in my office if they paid cash or have cars on PCP all said PCP , i tend to wonder that as some of you spend a lot of time on this site your maybe very money focused ppl and as a result this isnt an accurate representation of what the general public have. 

If thats a lot of debt and i tend to have 500-600 quid spare at the end of the month it must mean that most ppl are better off than me and saving thousands every single month.  I cant understand it i really cant , everyone i know gets a sofa on HP , has a contract mobile  and maybe a loan knocking around. 

Who cares what other people are doing? 

Whether that be people who have multiple cars on HP or the people on this site who are (unsurprisingly) “money focused” who will have £0 (non-mortgage) debt. 

Focus on your own situation, which will be unique. 

As post above says posting a statement of affairs on the debt free wannabes board may help. There are always ways to save money - sometimes you just have to decide if it is ‘worth’ it.

I would suggest looking through your different loans and focus on paying off the highest interest one first - as this will be costing you the most money (factor in any early repayment charges you may face to this). 

Some easy ways to reduce costs buy second hand furniture (charity shops, gumtree), phones etc, switch energy, internet etc suppliers into cheaper deals whenever you can. Also look at easy ways to pick up some extra cash, bank switches (few around at the money), cashback sites (when buying something you need), 


In your first post you said you don’t feel secure in your rental property.
you don’t need to worry about being kicked out any time soon. Current notice period (if you aren’t in a fixed term) landlord must give us 6 months. Even if the property is sold this doesn’t end your tenancy, the new buyer becomes your landlord. If you have questions/worries about this there is a great guide on the housing board - have a read of that (can then post any further questions for more help if needed).  

https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants/p1

MWT

barrysmith2480 said:

If thats a lot of debt and i tend to have 500-600 quid spare at the end of the month it must mean that most ppl are better off than me and saving thousands every single month.

... as I said in my first reply, the lenders do not expect you to be completely debt-free.

From what you've posted so far, the problem you are facing is that you don't in fact have '500-600 quid spare at the end of the month' if you did, you wouldn't have the credit card balances that you do...

Nothing wrong with having a car on PCP as long as you can afford the payments and still meet their affordability criteria for a mortgage...

At some point though you have to switch mind-set from getting all the things you want for a small collection of monthly payments resulting in a bunch of financial commitments and deciding to get a house as the main focus of your spending.

Your current commitments are not individually large, but added together they take about £600 a month out of your net income that will not be available to pay a mortgage. That equates to about half your partners take-home pay gone on servicing those debts alone.

Still not a huge amount but it will reduce the amount you can borrow.

Get rid of the credit card debit, build up at least a little buffer of cash so a tough month doesn't force you back into debt and save hard as the deposit is only one part of the costs you will have in buying your first home...

Capri84

Yep. To back up what MWT says above, a few years ago I got tired of renting and counting down the days til payday. Essentially I switched on ‘dad mode’ - or more simply, I began to live within my means. 

A few years ago I had a PS4 from curry’s, a sofa from Harvey’s, a phone and Apple Watch from O2. Also had a car financed via a tesco loan. 

Once all the newness wore off these things, the monthly payment just became an absolute burden. As did the £200-300 monthly credit card payments I was making on balances on my cards. 

3 years later all those agreements have expired, 

PS4: £20
Sofa: £25
Phone: £35
Apple Watch: £15
Car: £250
Cards: £300

£645 per month extra in my pocket. I just service my car properly instead of grabbing a new one, and I don’t just grab the latest phone/watch simply because I’ve come to the end of an agreement so can get the latest gadgets etc. 

Last month I was in the position to pay my car insurance outright in full for the year, again - that’s £30 per month not going out the door. 

My credit file is immaculate. And granted, some of that is probably due to me having/servicing debts/credit over the years. But there comes a time where they become an absolute shackle and will hold you back. All those micro payments for shiny new ‘stuff’ will haunt you. Paying for stuff 3-4 years after the newness has worn off is no fun at all. 

Also have saved £19k and are working through mortgage steps with the bank to get a 95% mortgage deal after years of throwing away rent money. I know without clearing all that debt I’d have failed the affordability. And even if I hadn’t, I’d have been buying a house worried about living penniless in it. 

Make the change. You’ll never look back.