Here Goes...Starting Up on a Journey

enthusiasticsaver

Superhoop91 said:

enthusiasticsaver said:

I am not really sure why you are wanting to preserve a clear credit record as more borrowing will make your situation worse and given you have £53k debt to clear plus a deposit to save before you can even think of getting a mortgage it will be a while before you are in a position to apply for one. 

I have been trying to understand your plan and don’t really get it. To maintain a clear file you need to pay £2500 each month with no AP markers or defaults. Paying minimums will not reduce the balance os on the cards although the loans will eventually be paid off. In the meantime the interest continues to mount up and you are £300 short for essential expenditure. How long have you been trying to pay off these debts and how much was outstanding a year ago? 

When you make payments makes no difference as if you keep either spending on cards or juggling credit card spends to cover payments the only result will be an overall increase in debt. 

As I see it the only way you could deal with this is to get the interest stopped and an affordable monthly repayment to the debts so you can live within your income and not use credit so the debt starts to reduce.I suggest you look into a DMP rather than trying to keep juggling money around to make just minimums. Eventually you will have no option other than to default and use some sort of debt arrangement.  

Right so unless you are unaware, minimum payments these days are set to cover more than just the interest payments. I am not paying £2,500 a month in interests. I've stated that a few times. So meeting those will reduce my overall balances. Not to mention, as you have pointed out, some of these are loans which will fall off at some point and naturally reduce my balance with each payment.

That should cover all your points. My balances will go down not up.

Thanks

The bottom line is how long have you been trying to clear this debt and is it going up or down? 

 Minimums will cover interest but very little of the capital. Have you tried a snowball calculator? 

Ultimately you seem to have made your mind up so I hope your plan works. 

Superhoopza

enthusiasticsaver said:

Superhoop91 said:

enthusiasticsaver said:

I am not really sure why you are wanting to preserve a clear credit record as more borrowing will make your situation worse and given you have £53k debt to clear plus a deposit to save before you can even think of getting a mortgage it will be a while before you are in a position to apply for one. 

I have been trying to understand your plan and don’t really get it. To maintain a clear file you need to pay £2500 each month with no AP markers or defaults. Paying minimums will not reduce the balance os on the cards although the loans will eventually be paid off. In the meantime the interest continues to mount up and you are £300 short for essential expenditure. How long have you been trying to pay off these debts and how much was outstanding a year ago? 

When you make payments makes no difference as if you keep either spending on cards or juggling credit card spends to cover payments the only result will be an overall increase in debt. 

As I see it the only way you could deal with this is to get the interest stopped and an affordable monthly repayment to the debts so you can live within your income and not use credit so the debt starts to reduce.I suggest you look into a DMP rather than trying to keep juggling money around to make just minimums. Eventually you will have no option other than to default and use some sort of debt arrangement.  

Right so unless you are unaware, minimum payments these days are set to cover more than just the interest payments. I am not paying £2,500 a month in interests. I've stated that a few times. So meeting those will reduce my overall balances. Not to mention, as you have pointed out, some of these are loans which will fall off at some point and naturally reduce my balance with each payment.

That should cover all your points. My balances will go down not up.

Thanks

The bottom line is how long have you been trying to clear this debt and is it going up or down? 

 Minimums will cover interest but very little of the capital. Have you tried a snowball calculator? 

Ultimately you seem to have made your mind up so I hope your plan works. 

Minimums these days are between 2-3x the interest payment so I'm afraid that also is false information.

Hopefully you said that as a scare tactic instead of given out incorrect information. 

How long have I been trying to clear it? Whenever I posted on here, so about 5 days or so.

I'm very open to ideas, just want to base it on correct points. Not by saying paying £2500 a month will still make my balances go up when my monthly interest is £1000. 

Others have raised some very good points that it's all well and good paying off my debts but I also need to build up a mortgage deposit too, difficult with high interest payments. Difficult decision

TheAble

I make your average interest rate almost exactly 30%. So at the moment your monthly interest is £1325. That will reduce as the capital reduces but just be aware that in the meantime, £1000 doesn't cover it.

Superhoopza

TheAble said:

I make your average interest rate almost exactly 30%. So at the moment your monthly interest is £1325. That will reduce as the capital reduces but just be aware that in the meantime, £1000 doesn't cover it.

Some of the balance is at 0% rates for now. Another thing pointed out in the notes.

backinbusiness

Superhoop91 said:

How long have I been trying to clear it? Whenever I posted on here, so about 5 days or so.

Hi Superhoop - I suspect enthusiastic saver meant how long have you been accumulating this debt for / trying to chip away at it.  BiB x 

Superhoopza

backinbusiness said:

Superhoop91 said:

How long have I been trying to clear it? Whenever I posted on here, so about 5 days or so.

Hi Superhoop - I suspect enthusiastic saver meant how long have you been accumulating this debt for / trying to chip away at it.  BiB x 

Hi yeah my answer is the same, I only realised the scale of the problem a few days ago

Andyjflet

I am going to bookmark this thread, I'm finding it fascinating that we have the idea of borrowing our way out of debt. Take a look at a snowball repayment calculator for the debt and see how the rates will look 18 months from now once your credit stream dries up.

I'm talking from someone who has been there and done it, I snowballed my way out of debt by paying one card off at a time and it eventually took me 4 years, some weeks I didnt eat for two days to achieve this, take a look at my signature, at one point in 2019 I had more debt than you. 

Superhoopza

backinbusiness said:

4) @backinbusiness I set if I set up a repayment plan where the payments allow me to make the contractual payments with the interest frozen, would that still be a breach? 

Hi Superhoop,

Any variation of the contracted terms (those you signed when you applied for the credit cards) WILL breach your contractual agreement and be reflected as such on your credit file - whether negotiated or not. 

Defaults, (1 or 10), will affect your ability to obtain a mortgage although there are specialist brokers.

If it were me, I'd allow everything to default, pay nothing meantime, build an emergency fund to avoid the need for credit and enter a DMP. You may not currently qualify for a decent mortgage anyway due to affordability concerns. 

I'd put the mortgage to the back of your mind right now and get on top of your current financial situation. It makes no sense to continue struggling like this when a DMP could alleviate things AND save you a whole whack of interest.

Hope that helps.  BiB x 

thanks BIB appreciate the responses. So in reality 1 or 10 defaults makes little impact, any number is bad. 

Superhoopza

Just got all my finances onto a spreadsheet:

£54k total debt: £31k CC and £23k loans (final balances included here, if for any reason I can make early payments these will go down)

Income: 3100 (should go to about 3250 with NI contribution cut and expected small increase in March). Let's stick with 3100 for now:
Essential Spend: 400 (max)
Other Expenditure: 400
Holidays/presents/EF: 200
Subtotal Spend: £1000

Minimum Spend on Debt: £2300

Excess: -£200 (fine as payment timings can be managed)

Interest (Dec 23 - to go up and down with promo rates ending, loan balance interest payments being stacked to being higher at the start, balances going down etc etc): £900

Balance to reduce: £1200 a month

Those numbers used as I have some big events coming up. A normal month would see only about £600 spend.

Superhoopza

Andyjflet said:

I am going to bookmark this thread, I'm finding it fascinating that we have the idea of borrowing our way out of debt. Take a look at a snowball repayment calculator for the debt and see how the rates will look 18 months from now once your credit stream dries up.

I'm talking from someone who has been there and done it, I snowballed my way out of debt by paying one card off at a time and it eventually took me 4 years, some weeks I didnt eat for two days to achieve this, take a look at my signature, at one point in 2019 I had more debt than you. 

Explain to me please how I am taking on more expensive credit? You've obviously seen me say that somewhere?