Credit card debt has spiralled

JadedAngel88

If you want a little assistance with the snowball method.

whatsthecost.com has a snowball calculator and you put in all information of debts and how much you have to pay towards them and it will calculate the best way. Takes out all the guessing and will tell you when you'll be debt free. 

Brie

I'm not a fan of emergency funds myself but that's because I have credit that could be used instead.  On that basis I would ensure that any spare penny (& I mean that literally) is thrown at the most expensive store card and when that's clear do the same to the next.  As others have suggested start closing cards down once you are confident of have sufficient credit to cope with sudden spikes of any sort. 

Also - do you need a tv license?  If you're not watching live TV or BBC iplayer its not necessary.  Lots of people are using streaming services exclusively so if you like those more then get rid of the tv license.  

CreditCardJunkie

Is £300 p/m realistic for groceries including nappies etc? I've two young kids also, albeit the youngest is formula fed but even still we'd spend significantly more than this with the cost of everything at the moment!

My advice is to use a spreadsheet to track every single spend, particularly what you're putting on the cards every month. I had been paying £500 a month off my card and then spending thereabouts £500. When I looked at it on a spreadsheet, it was obvious to see that the odd £10 here and there was adding up to £500p/m very quickly!

Also with the kids try vinted etc instead of buying new all the time. Do free days out and take picnics at weekends instead of all the paid activities. 

Good luck, as you say yourself you've a good salary between you both and it I'd totally manageable. Just make a budget and stick to it! 

AnnieB2018

How much time before your mortgage rate expires, you may need one plan up until then and a new plan after?

MrFrugalFever

Hi Bluemanc,

Back in 2017 I managed to wrack up £36k worth of debt, mostly credit cards and a loan. It all started with a few hundred here and a few hundred there. I wasn’t on this website and the only thing I could think of doing was entering an IVA which changed my life significantly in many ways. The silver lining (I always try to find a positive in things) was that it taught me an incredibly good lesson of money management as I had to live off of about £300pm with access to NO credit at all, it was pretty much forbidden during the process.

I earn just under £50k per year and have minimal outgoing now (taken several years to get to this point) and I would be incredibly nervous over £17k worth of CC debt. So I think the fact that you’ve taken to coming on here and even asking about it means to me that deep down inside you are nervous about it to and to be honest, that’s a good thing because you’ve acknowledged it at a point (from your SOA) whereby you’ve got a chance to deal with it.

If I was to post my SOA from back in 2017, it would be able -£250 per month, credit was servicing credit and I drowned.

A couple of top tips as an ex-insolvent who’s spent the last 6 years turning my money life around and learning some big lessons;

- Clothes for you and your partner - new clothes aren’t a priority and do not need to be purchased. Make do and even consider selling some (Vinted)?
- Draw up a shopping list, use Aldi/Lidl and STICK to the list
- I don’t mean to sound disrespectful but your GF is at home so can she not batch cook and ensure you have packed lunches, use a slow cooker ALOT, it’s very cost effective
- Mobile phones and entertainment etc - move to SIM only if phones are paid off, shop around for best tariff. What entertainment do you pay for? I find Freesat and Netflix to be more than suitable and sufficient
- Set yourself challenges each month, where can you save an extra £10, can you earn some interest on your salary for the days it is sat in your account (easy access savings accounts now paying up to 3.8%), any interest earned can be paid further towards CC’s
- Get your GF fully onboard with debt and if she is more responsible with money, give her the credit cards
- Pay £5 over the minimum payment on each CC so it doesn’t register as minimum payment and become part of the ‘persistent debt’ cycle
- Scrutinise your gas/electricity/water, you can save £10+ here there
- Always ask yourself NEED or WANT, do not buy impulsively, take time, days even to make a final decision and if it is a NEED, can you get it cheaper elsewhere, does someone you know have a coupon, voucher code etc
- do eligibility checks on lenders own websites for 0% balance transfer cards and transfer what you can, using snowball effect and either lower credit limits drastically or close accounts

It is going to feel like you’re trapped for a good few months, as you will need to have incredible self discipline with knowing where your money is going but when you start making a dent in your debts you’ll realise it will be worth it.

I account for pennies now, I set limits, budgets and I try to get cashback, points and interest on my money at every possible opportunity. I use discount codes/vouchers and whatever I can to get a better deal. 

I’m saving for a house so for me I’m trying to ensure I’ve got £30k sat in my account so I’m treating it as if I owe a debt, it’s soon building up

BlueManc10

HI all, cheers for all your advice since I last posted. I think I have formed a short term plan, to help me tackle this, but would welcome your thoughts before I commit. 

I think one of the overwhelming factors in all of this, is the amount of different creditors I have and keeping a track of them all. So, I have looked into the possibility of an updraft loan, and they are willing to give me £8k at a rate of 17.9%. This would mean over the next 47 months I pay £230 a month. it sounds strange to say, but the amount of money i pay back over the time isn't my main priority, it's more managing all the different outgoings and DDs and feeling more in control. 

I suppose my first question is, am I best off paying off the 2 cards with the lowest debt, and then a large chunk of one of my cards with larger amounts, or split the reminder after the smaller two over the bigger two....if that makes sense?

I have also been accepted for a 0% balance transfer card for 22 months with a 3k limit, so I can effectively pay off my 2 smaller cards, and a chunk off the next biggest, and transfer the remainder onto my new card. I can then close down the 3 cards and all I will have to pay monthly is my updraft loan - which I cannot then reuse as the cards are gone, as this is what happens currently, I pay off and then respend, my balance transfer card and the CC with the largest amount. This will reduce my monthly outgoings and I will be making serious inroads into that first £8k and the next £3k, and I can see a path to the end. I can also increase my monthly amounts on my updraft loan when my financial position improves with the other half back at work. 

Does this sound like a sort of plan, or am I just robbing Peter to pay Paul to end up no better off?
 

BlueManc10

AnnieB2018 said:

How much time before your mortgage rate expires, you may need one plan up until then and a new plan after?

August 2024, I have thought of that, and aware I may need to revaluate then. 

kimwp

BlueManc10 said:

HI all, cheers for all your advice since I last posted. I think I have formed a short term plan, to help me tackle this, but would welcome your thoughts before I commit. 

I think one of the overwhelming factors in all of this, is the amount of different creditors I have and keeping a track of them all. So, I have looked into the possibility of an updraft loan, and they are willing to give me £8k at a rate of 17.9%. This would mean over the next 47 months I pay £230 a month. it sounds strange to say, but the amount of money i pay back over the time isn't my main priority, it's more managing all the different outgoings and DDs and feeling more in control. 

I suppose my first question is, am I best off paying off the 2 cards with the lowest debt, and then a large chunk of one of my cards with larger amounts, or split the reminder after the smaller two over the bigger two....if that makes sense?

I have also been accepted for a 0% balance transfer card for 22 months with a 3k limit, so I can effectively pay off my 2 smaller cards, and a chunk off the next biggest, and transfer the remainder onto my new card. I can then close down the 3 cards and all I will have to pay monthly is my updraft loan - which I cannot then reuse as the cards are gone, as this is what happens currently, I pay off and then respend, my balance transfer card and the CC with the largest amount. This will reduce my monthly outgoings and I will be making serious inroads into that first £8k and the next £3k, and I can see a path to the end. I can also increase my monthly amounts on my updraft loan when my financial position improves with the other half back at work. 

Does this sound like a sort of plan, or am I just robbing Peter to pay Paul to end up no better off?
 

I need to think a little about this, but two things-

Are there any penalties for overpaying/early paying off the loan?

You say about only having to pay towards the loan- I think you might need to pay a minimum every month on the 0% card.

BlueManc10

kimwp said:

 

I need to think a little about this, but two things-

Are there any penalties for overpaying/early paying off the loan?

You say about only having to pay towards the loan- I think you might need to pay a minimum every month on the 0% card.

Yes, that's correct, sorry, I meant I would need to pay the loan and the minimum payment on the 0% interest card at least, but I plan to split the £3k over the 22 months and pay £136 a month off this too, so the £230 for my updraft loan, £136 on this and the minimum payment on my 1 remaining card. This just feels more manageable and easier than paying a minimum payment on 4 cards whilst effectively not making a dent as I pay £500/£600 and then spend this if not more the following month, but that option to respend is almost all taken away. As the one card remaining is near it's limit and I will cut up the 0% one. 

BlueManc10

kimwp said:

Are there any penalties for overpaying/early paying off the loan?
.

No there are no penalties, the interest is then just calculated on the remaining balance and the amount of monthly payments reduced.