Cutting down monthly debt

LL198585

Hi all,

looking for some advice.

ive not got the best credit history, and struggle to get credit at many places. Looking for the best option for me.

loan-435 per month for next 4 years (high apr). Company MBNA 
credit cards x3 approx 150 per card
total monthly payments are about £900. Barclays, MBNA and marbles cards 

I have a good job and wage, with overtime available etc. But what do you think is the best plan off attack for me? 

I’m really needing advice,

thanks 

LL

EssexHebridean

First up, put the thought of any more credit firmly aside. Your first step is to work out what money you really have available to you, and where that is going. The SOA (Statement of Affairs) that we link to here is a great place to start. Fill it in openly and honestly - it needs to reflect your actual situation not what you *think* it should look like! Post that into here (both the options there are links for have "format for MSE" options) and we can take a look. 

For actual paying off, most   likely your loan will be the last to tackle, as the cards will probably have higher APRs. Find out what the APR for each of them is, then start diverting your surplus income after all priority bills, other necessary spending, and minimum payments have been paid to the one with the highest interest rate. Once the highest interest rate debt is cleared, take the amount you were paying to that including its original minimum payment, and divert ALL that money to the next in line. If you have the possibility of overtime that may even mean you can get the cards cleared pretty fast as they are low balances.

Getting a good solid budget in place is always the best place to start. You need to start making sure your money works for you - after all you have to work hard enough for it in the first place! what is the reasons you have run up the debts, is the other question - knowing the answer to that will help you tackle it and avoid running up more. 

Just starting to pay things down and not taking out any more borrowing will in itself start to help your credit history. 

LL198585

Thanks for the reply. 2 credit cards are 0% just now, the loan it’s totally crippling me. Do you think it’s possible to combine all into one loan? As for my credit history, I don’t have any negatives on any reports bar over spending 50% on a card, but I had a default 7 years ago which is well cleared etc. 

EssexHebridean

I think it's probably not a good idea to combine it all - or consolidate, which is what it's usually known as.  What's the APR on the loan? And how long are the 0% periods on the cards? The fact that you had a default previously is another good reason not to consolidate actually - this has been an ongoing pattern for a little while by the sound of it?

First port of call is the SOA. It may be that in fact you have enough disposable income to deal with the loan in the short term, but you're currently "losing" money in small areas that you don't need to. Common areas that we often see high spends in are things like memberships for various things that it turns out the person doesn't even use, overpaying on insurances where comparisons haven't been done, and grocery spending which is sky-high purely because bad habits have crept in... 

Once the basics are in place, then we can start to think about how you can manage what's being paid out on the loan. (and it may even be that at that stage, and with less available credit if the cards are gone, you're credit history will look good enough to get a different loan at a lower interest rate).

LL198585

Thanks for reply. 0% is up in the next couple of months. Yeah this is an on going saga, loan was borrowed In a panic for an extension the other debt was from gambling but I’m in GA just now and haven’t bet for over a year, all I want is finances in order and I’ll be happy.

EssexHebridean

Well done on your year gambling free - that's a great achievement! 

You've definitely taken a good first step in sorting things out by asking for help.

Ebe_Scrooge

OP, you've had some really good advice already from EH.  The gambling thing - you have my sympathies.  (Thankfully) many years ago, I was in a similar situation - gambling with money I didn't have, relying on credit cards to buy bread and beans so I could eat beans on toast every night, preferring to spend any cash I had (or really, didn't have) down the casino.  I can understand what you went through, and well done for taking the bull by the horns.

Put simply, the best plan of attack is:
1. Take all the overtime you can get
2. Throw every spare penny at the debt with the highest interest rate
3. Cut down expenses to the bare minimum

An SOA is a "must-have" starting point.  You say you earn a reasonable wage - there's no reason you can't bury this debt six feet under with a bit of discipline and some advice from the friendly folk on here.  EH has already mentioned it - it's not until you put every last penny down in black and white that you suddenly realise "Blimey, I could save a packet every month on <such-and-such>".

The reality may be that you have to live like a hermit for a few months.  Again, I've been there, done that.  I had about 2 years of no socialising, no holidays, buying food an hour before closing time at the supermarket so that I could cobble something together from the "Reduced to clear" buckets.  But you know what?  I look back, and it was well worth it.  Yeah, of course it was bloody hard.  Did I enjoy it?  No, of course not.  Am I glad I did it?  You betcha.  No, I'm not rich now, never will be.  But I'm "comfortable".  My salary pays for all the bills without a moment's though, we can afford to go out for a meal or to the beach for the day without worrying, Christmas is just another routine expense that doesn't need any special planning.  Holidays to the Seychelles?  Dream on.  But after having been at rock bottom all those years ago, I can honestly say that a short period of pain gives a lifetime of gain.

Right ....... enough rambling !  Get your SOA sorted, and lets start to see where we can trim the fat :-)

LL198585

Really appreciate it. I’m going to sort everything out later on. It’s weird when I put my mind to it I can do it, for example when We bought our house only way we could get a mortgage was a big deposit And I done it, so hoping to get everything straightened out ASAP, it’s hard taking all the OT, cause our son is only a few months old and i miss not being there but there is defo scope to do more 

TripleH

If your son is only a few months old, then it is a good time to tackle this.

I appreciate you feel you are missing out on his life, but he won't think that. Put it this way, if you can clear your debts now, when your son is older, awake a lot more and able to appreciate you being around, you won't have the cloud of debt over you and will be able to spend quality time with him.

Good luck.