Advice needed

RezUK

Hi all,

I've read a few threads on here recently and it feels like a really nice community of people that could give me some good advice, that quite frankly I badly need...

I'm 31, single and live alone in a small Maisonette that I have a mortgage on. I've always had some sort of credit card debt, but it's gotten to the point where I fear it's spiralling out of control.

I work full time in a secure job, and during lockdown last year I started a side-business selling craft materials on Etsy. The business has really slowed down since lockdown ended, and I have considered closing shop after selling remaining stock. The business account currently has £5000 in it, but I have yet to pay tax and still need to speak to my accountant how much I can take away.

My financials:

I have 2 credit cards:
MBNA - £6539 - This was £65/month min payment on 0% interest, but this ended this month.
Barclaycard - £9249 - This is at 16% APR, min payment is £225

Monthly Outgoings:
Mortgage - £1013
Eon (Electric) - £110
EE (Mobile) - £20
Churchill (Home Insurance) -  £12
Council Tax - £113
Broadband - £39
Water - £80 every 6 months

Income:
Salary - £1743

I have other small assets around the house that I am willing to sell that I currently estimate to be around £2000 - £2500.

I think the first thing I need to do is move my CC debt onto another 0% interest account - I have never missed a payment and have a 999 credit score - but I am not sure how to go about getting a 0% interest account for such a large amount. I just applied for a 0% Sainsburys CC, and they could only offer me £2800...

My mortgage has 2 more years fixed rate left - I then hope to speak to someone about changing it so I don't have to pay so much every month. Unfortunately, when I bought the house they only gave me a 19 year mortgage, so it was always going to be a bit difficult.

Any advice would be great - I think I could switch my electric to get a small saving there - I'm probably spending too much on my broadband, but my contract doesn't end until December this year.

I'm getting myself really down about it unfortunately I'm not sleeping very well and often wake up in the middle of the night with my mind racing. Over the past month or so, I have made some lifestyle changes to benefit me health wise, but also financially (I've quit smoking, and I am not going to the pub as often).

Mimi_Arc_en_ciel

RezUK said:

Hi all,

I've read a few threads on here recently and it feels like a really nice community of people that could give me some good advice, that quite frankly I badly need...

I'm 31, single and live alone in a small Maisonette that I have a mortgage on. I've always had some sort of credit card debt, but it's gotten to the point where I fear it's spiralling out of control.

I work full time in a secure job, and during lockdown last year I started a side-business selling craft materials on Etsy. The business has really slowed down since lockdown ended, and I have considered closing shop after selling remaining stock. The business account currently has £5000 in it, but I have yet to pay tax and still need to speak to my accountant how much I can take away.

My financials:

I have 2 credit cards:
MBNA - £6539 - This was £65/month min payment on 0% interest, but this ended this month.
Barclaycard - £9249 - This is at 16% APR, min payment is £225

Monthly Outgoings:
Mortgage - £1013
Eon (Electric) - £110
EE (Mobile) - £20
Churchill (Home Insurance) -  £12
Council Tax - £113
Broadband - £39
Water - £80 every 6 months

Income:
Salary - £1743

I have other small assets around the house that I am willing to sell that I currently estimate to be around £2000 - £2500.

I think the first thing I need to do is move my CC debt onto another 0% interest account - I have never missed a payment and have a 999 credit score - but I am not sure how to go about getting a 0% interest account for such a large amount. I just applied for a 0% Sainsburys CC, and they could only offer me £2800...

My mortgage has 2 more years fixed rate left - I then hope to speak to someone about changing it so I don't have to pay so much every month. Unfortunately, when I bought the house they only gave me a 19 year mortgage, so it was always going to be a bit difficult.

Any advice would be great - I think I could switch my electric to get a small saving there - I'm probably spending too much on my broadband, but my contract doesn't end until December this year.

I'm getting myself really down about it unfortunately I'm not sleeping very well and often wake up in the middle of the night with my mind racing. Over the past month or so, I have made some lifestyle changes to benefit me health wise, but also financially (I've quit smoking, and I am not going to the pub as often).

Ok ...... I'll try..... 

For 0% Transfers - Whilst your credit score is good, you need to look at what ratio of income/debt is. They can only really offer you that amount. It may be worth while looking at a cheap loan? Try looking here: https://www.moneysavingexpert.com/loans/ 

You could also look at your outgoings: 

Your electricity per month is very high - is that figure correct? I have a 3 bed house with 3 people living in it and ours is £30 a month (I'm working from home still...) - Is this the best rate? Have a look here: https://clubs.moneysavingexpert.com/cheapenergyclub 

There's no mention of heating? 

EE - Depending on your package / contract date you may be able to haggle Mines £10 a month with unlimited calls, texts and 10gb data

What do you spend on food? Entertainment etc? Maybe complete a SOA: http://www.stoozing.com/soa.php as there will be things you haven't budgeted / thought about 

EssexHebridean

Hello - and welcome!

In terms of income -v- expenditure, your mortgage is eating up a good chunk of what you have to play with which is obviously not ideal. 

First thing that leaps out at me on expenditure is the electricity - that's HUGE! I assume you're using storage heaters for heating? Are you on an economy 7 meter? If not, you should be. We're in a decent sized 2 bed flat, using E7 electric for everything apart from cooking, and we pay a bit over half what you are each month. EoN are traditionally "not the cheapest" let's say - have you shopped around for deals?

Other bills then - 
Mobile - are you tied in to a contract? if not then it's haggle/switch time. I'm another EE customer - on a SIM only deal which gives me 10gb data, unlimited calls & texts and I pay under £9 a month. 
Broadband - yes, definitely too much - take a look at the MSE weekly email for good offers when you're approaching the end of your contract, and 30 days before ring your current provider with the cheapest you've found and tell them you'll be leaving unless they match it. Be prepared to follow through with that. 

Although usually we'd never suggest consolidating credit cards onto a loan, in your case it may be worth looking at at least. For now take the £2800 limit on the card you've already been approved for though, and move as much of the highest interest rate card onto that once it's set up. Then set the DD for that card to a rounded up amount on the minimum payment - so if they want £56.73 for the minimum round it up to £60 a month and leave it there. that way you avoid the thing of the minimum falling month on month and you then "losing" the saved money, and you also chip away a little more over time than you usually would. Check the new rate for the MBNA card to make sure that's not the one you need to balance transfer as well! 

Agree that putting together your SOA is a good plan - there is a LOT on your expenditure list you're not mentioning currently - food, travel, entertainment, TV license, clothing... 

Finally, you need to address how your debt has accrued to this level - it's clearly been an ongoing situation for a fair while and while it's great that you have now had your lightbulb moment and want to deal with it, you do need to address the behaviours that have got you there too!