Finally going to solve this debt once and for all

abaka

Hello - I had previously had a debt free diary about 4 years ago, I think I was in about 40k debt but then cleared it down by about 10/15k but never addressed the underlying issues and of course the debt just ramped up again. A big promotion and then another secondary promotion really gave me a false sense of being invulnerable financially and the debt ramped up again.

In the meantime since my last debt free diary, I've lost my father suddenly in 2024, welcomed a second daughter last November and had a very troubling time in my marriage this year due to my own wreckless and selfish behaviour. Me and my wife are working through it but I'm also having to pay the financial cost for the marriage counselling. I think part of finally being held accountable in all regards is enough to finally make me tackle the debt situation.

I'm also determined to post here regularly to hold myself to account.

Now onto the debt.

Credit Cards:

Virgin - 3979 (Interest free until July 2027)
Virgin - 949 (Interest free until Feb 2028)
Halifax - 2503 (Interest Free Until Feb 2028)
Barclay - 7290 (Interest free until 31 March 2029)

Loans:

Nationwide - 15,480 (7 Year loan, 6 years remaining) - £245 per month
Credit Union - 2173 (10 year loan, 6 years remaining - £70 per month (split with wife)
Credit Union - 21,240 (10 year loan, 9 years remaining) £300 per month

Total:

£53,614

Savings / Emergency Fund:

£3546 / £4000

So that's the state of the nation. A fair bit of work to do

The Nationwide Loan was for a few things that needed done around the house. The CU loan of 2173 was a 10 year loan to fund a new bathroom that was desperately needed. Me and the wife pay this together but it's in my name.

And the final Credit Union loan was for an attempt at Debt Consoliation last year. It would have freed up all my debts bar about 5000 which you can see didn't go well, what people say about consolidation is correct!).

I have also for the first time in my life got a bit of savings behind me. Last year I did decide to start putting some money away, roughly about £200 a month. Mad I decided to save £200 a month whilst continuing to spend £5-600 a month.

Although it's my wife's 40th birthday in October and will be eating into the savings for this (I do have a small pot of money set aside for this already) and I have some work needing done on the car and some other things to save for. But this time 6 months ago and deffo last year, I'd be just putting this stuff on credit so now I'm putting money aside for these things is a big game changer.

I want to always have at least 4k in my savings/pot so whenever I spend on this, I'll be replenishing the amount as quickly as possible. My aim is to put £200 into savings and then when I hit 4k. I'll maybe start saving £50 into savings and pumping the extra into debt but will see what happens there.

Of course my disposable income will drop significantly come Jan when my daughter has to start daycare and the price for childcare for two kids is actually going to be twice my mortgage cost!

Luckily me and my wife are in good positions. Both public sector and well paying jobs. We have a household income of about 75k per year.

On paper, I firmly believe that I can pay off the credit cards before the 0% is done on these. I'm focusing on doing the snowball method at this moment in time. I know I'll have to likely do a balance transfer next year for the current Virgin card but I'm showing as pre-approved for decent cards now and come next year I should be in an even healthier spot. Although I'm tempted to apply for a Santander card now for 33 months but I think I'd be better waiting.

So far this month, my two CU loans are paid and my Virgin/Halifax minimum payment. Barclays should be paid in the next few days and the other Virgin payment should be made tomorrow. My Nationwide loan comes out middle of the month, so will update balances as and when payments are made.

Thanks for sticking around to read this wall of text. Hopefully I can do it this time.

MasterG83

Dont forget to close the accounts down when paid off, resist temptation more than anything.

abaka

Thank you for this - I had actually meant to mention that in my opening post. I am planning to cancel cards as I go along. A) to remove temptation but B) to avail of new offers for longer Balance Transfers.

I'm also mindful of impact on Credit Utilisation. I don't want to bring it above the 30% utilisation. I have closed three accounts in the last few weeks. Two with Tesco which had a credit limit across two cards of £26k and then an MBNA Card(6k limit) and an M&S Card (5k) I plan to keep my Lloyds card open as it always has good offers for Balance/Money transfers and has a high limit.

I do have a HSBC Card with 10k which I've never used as I could never get the App working, I'll cancel that in a few months as I believe cancelling 4 cards this month will have a big impact on my credit file (I know the scores are meaningless).

As I pay off the Virgin Card which will hopefully be in a few months, I'll close that account immediately.

I'm still torn as to if I should move the larger Virgin to a new Santander card now (I'm showing pre approved for 6k limit so could move the balance) and then means I have 33 months before I have to worry about my two larger cards. I'm seriously tempted to do it now as I know that the offer might not be there come July

MFWannabe

https://forums.moneysavingexpert.com/discussion/comment/82123071#Comment_82123071

Are you likely to be able to pay the larger Virgin card off by the time the 0% ends? If not the. I would move it and give yourself the maximum amount of time you can to pay it back.
Then I would pay as much as I can each month off the lowest debt until that’s gone and then move on to the next and so on. You need a plan and to feel like you’re achieving

abaka

https://forums.moneysavingexpert.com/discussion/comment/82123586#Comment_82123586

Even if I focused on that and paid minimum to the other smaller balances, it's unlikely I could pay it off when the 0% ends, and I am focused on paying the smallest amount on each debt and pumping everything into the smallest and then snowballing from there.

But do I want to balance transfer it now when I've got more than 6 months on 0% and run the risk I can't get an offer come July when I need it. Going to mull it over the weekend.

In other news, I today got confirmation my pay award is agreed in work, and after all deductions should give me an extra £60 in my wages. Likly to be implemented in my pay at the end of this month but will be backdated to April 1st so can expect a bit of backpay also.

vampirotoothus

Hi my approach would be BT some of the Virgin less the minimum payments you can make on it to the end of the 0% deal. That way you will only pay the BT fee on what you need to move and it will save you a bit of money.

Make sure you can afford the monthly payments if you go this route as you will be paying for an extra card for a bit. V x

daisy_1571

That sounds like a sensible halfway compromise vampirotoothus

abaka

https://forums.moneysavingexpert.com/discussion/comment/82126601#Comment_82126601

That’s actually a very good idea. One I’d usually consider as a great approach. However one of my wants is to reduce the amount of payments I’m making. Currently paying 4 credit cards and three loans.

Only the loans are charging interest. Whilst I’m paying over 200 a month into the smallest debt when the minimum payment is only £25, I’m not stretched thin by any imagination. But having 7 payments each month is really killing my motivation.

I have had a bit of an idea. The smallest Virgin card is interest free on purchases for 18 months. I have considered sending a payment to my wife via PayPal using the Virgin card as a funding source for the full amount on the Virgin card that expires next year. It’s still unlikely I’d pay that full amount within the 18 months but it still gives me one less card to pay.

The minimum payment I’d pay on that card will be £50 which is what I’m paying at the minute anyway. Then it means I have one less card to pay each month and it means all my debts are secured interest free until January 28.

I would 100% have paid off the Halifax by Jan 28 but in Jan 28 I’d still have to pay off the Virgin card but it will be a lesser amount than what I would have to transfer next July.

Another plan me and my wife have discussed. My loan with Nationwide, my wife has been approved for a loan in her name for the amount it would take to clear the loan. That would be for 10 years and the minimum payment would be a lot less than what the payment is now.

our thoughts process is that with the money I’d be saving by paying less now. It gives me a chance to pump more money into the credit cards.

Because once they are gone I can start focusing on the loans.

I don’t like the thought of my wife taking on 15k of mum debt in her name, and we’d also be looking at me retaking the loan out myself with Nationwide again for the exact same terms.

One of my biggest failings was not realising Nationwide allowed you to do 10 year loans when I took this loan last year.

Whilst the loan decision will take a bit more thought and consideration. I think doing the 0% Virgin payment via PayPal to clear the other Virgin card is definitely a plan I’ll be following.

it just means I’ll have two cards using over 50% of the credit limit and the associated damage it will do to my credit file. But I won’t have to do any more “shuffling” for 18 months and the picture should be drastically different by then!

abaka

Glad I done some research. Looks like PayPal will treat this as a cash advance and I’d end up paying way more in fees. Guess there’s a reason why aren’t more people doing that!

Could have done it as G&S but the fees would be more than what a balance transfer fee would be.

Back to trying to decide if I want to do a balance transfer to one of my existing cards or else apply for the Santander card which I’m pre approved for.

Although I have been pre approved for a AA loan across 8 years which would allow me to clear the loan and 3 credit cards. It would be 350 a month which is almost £100 more than the current loan minimum payment but I’m also paying 50 pound each to two of the three cards I’d be clearing off so I’d be no worse off and it means I’d be reducing the amount of debts by 3 (Virgin cards and Halifax).

But of course, that means I’d be swapping three debts which are interest free to an interest paying debt which in theory means less of my money is going to debt each month.

Some decisions will give me more flexibility but they don’t solve the problem and make it go away.

MFWannabe

Personally I wouldn’t do any more taking out new loans; especially if they are in place of 0% cards

Neither would I transfer current loan into wife’s name for longer period; unless you’d be getting better interest rate?

I understand the need to have less cards but I think you need to concentrate on paying them off; make that your plan

What is the transfer fee for the new card you’ve been pre approved for?

DancingInTheRain

I've definitely had a greater sense of achievement by clearing one debt at a time then rolling that payment over to the next debt. Appreciate we're talking about different amounts of creditors and debt though but, having been debt free once before, this approach is really working for me, can't wait to apply the same discipline to building up savings once the debt has gone!