New user with 30K debt

Kigu

Thought I'd start a new thread in case I got lost in the old one. I posted last week saying I needed advice and said I'd come back with facts. £30 K is an underestimate - it's nearer £34K for a start. I was wondering whether to take out a consolodation loan - a flexible one - to cover £25K. But Mr Cow suggested snowballing. This was such good advice that I have been considering it. Along with moving debt onto a 0% credit card, and juggling it. But I am still confused and ask you experts out there for your views.

We owe:

£1692.12 to Laura Ashley.I pay at the moment almost £70 a month to them on a direct debit. This is 35.70 interest and 25.01 account cover.

£1200.25 to Principles. I pay at the moment £50 a month which is 26.79 interest and 17.74 account cover. This isn't a DD.

About £1000 to La Redoute. Sorry forgot to bring my statement in. This isn't a DD.

£7773 to Visa. We pay 18.78 per annum.

£9666 to Access with 1.466 per month.

£9632 to Egg with 1.167 per month.

Our Overdraft is £4400.

Our outgoings are (monthly):

Council tax £71
Denplan £26
Rent £520
Life Ins £5
Contents ins £20
Legal & Gen £7
Electricity £80
AUT subs £12
Food on average £350
Visa (as above) £160
Access (as above) £230
Egg (as above) £192
La Red (as above)
Principles (as above)
Laura Ash (as above)
Christmas club £12
Necessaries at chemist £40


We pay £60 per annum for the TV license
Phone bill £80 per annum
Birthdays/Christmas £350

Coming in we have:
£1466 from him
£992 from her.

I am starting a small business to work at whilst full time but that isn't bringing in any money yet. In fact it has cost me over £2K so far but I have hopes for it.

Oh dear that looks awful. And no I am not the best dressed woman on the planet although you'd think I must be!! My husband smokes but can't give them up yet - too stressed. We do buy the odd book or CD, but rarely go out as such. Perhaps once every 6 weeks. Anyone out there with good advice? I am so stressed with it all.....

debtbuster2K5

Hi Kigu,

I am just about to nip out, so I will make some quick observations then come back later.

Consolidation is rarely considered to be a wise move, unless you fully understand the reasons why you are in debt in the first place. Consolidation does NOT clear debt, it simply moves it.

Having said that, you have large debts at high apr. What is your credit rating like? would you get accepted for a 0% card?

I would suggest snowballing as the best option for you, but you need to have a reasonable credit rating to start this. Have a look at https://www.whatsthecost.com/snowball.aspx for more details.
You really need to get your debts on lower interest rates, especially the Laura Ashley, La Redoute etc, as I guess these will be larger than your cards.

Looking at your outgoings, do you need to pay into denplan?, your £40 at the chemist per month looks on the high side, do you have a regular prescription?. If so i think you can get a prepaid prescription a lot cheaper than £40.

Food looks high at £350, how many of you?. We feed a family of 4 for £200 per month.

Thats all for now, be back soon with more if required

Good luck and keep posting

Kigu

We have only once had any trouble with credit and when I investigated someone else's details had got onto our file so that was corrected. We have never been in trouble ourselves.

We could cancel my husband's Denplan as he has stopped going but I'd like to continue with mine as I was hit by a huge bill a few years ago.

The chemist includes girly things like sanitary products, and the cheapest beuty products like cleanser. I admit it also includes painkillers - yes I do have an issue there.

Yes food is high, and there are only 2 of us! We don't eat like pigs but food is dear where we live (rural) and we are a captive community. We try to buy offers etc, and have a freezer going to buy cheaper veggies but we can't get it down very much. (freezer is on the blink now too!) £70 is a top priced week I'd say. I am trying to have beans on toast a couple of night a week - or baked potatoes, but we do need to keep healthy so I don't want to go too far.

Thanks for your comments about loans. This is exactly the sort of advice I need. If you have time please get back in touch!

Kigu

I have looked at the snowball site and played around with it - thanks so much for suggesting it. It's great. True I had to take some punts on APR - it is so hard to find it out if you were stoopid enough not to take notice at the beginning but I have erred on the side of caution.Thought of a few other points to throw in:

My husban'ds job is only secure until Dec 2006.
Is it best to tackle the overdraft first as without that we can cope with no emergencies at all? My husband believes this strongly.
Should I ask for a lower APR with store cards? I think this can be done. Will that affect my credit rating?
Our Egg card has payment protection - as have my store cards - can this be got out of without consequences?

Thanks again

debtbuster2K5

Hi Kigu

It depends on the rate of interest you are paying on the overdraft. Just remember that an overdraft is repayable on demand, so may well be worth doing that 1st.

There is definately no harm in asking for a lower interest rate on the cards, and as far as I know it does not affect your credit rating.

Cancel the payment protection, it is expensive and rarely pays out when it should. The amount you pay on the protection can then be added to your snowball, helping to clear the debt quicker

Regards

ashmit

Other people will be able to give you better advice on snowballing, APRs etc, so this is just a couple of thoughts.

Kigu wrote:

We could cancel my husband's Denplan as he has stopped going but I'd like to continue with mine as I was hit by a huge bill a few years ago.

Is your dentist NHS? If not could you swap to one? The maximum payment on the NHS is currently £380-odd but will drop to about £186 next April. Or instead of paying into a plan could you 'self insure' - pay this money into a savings acccount so that it's there if you need it but if not it could be used for something else.

The chemist includes girly things like sanitary products, and the cheapest beuty products like cleanser. I admit it also includes painkillers - yes I do have an issue there.

You may want to look into reusable sanitary protection - i use the mooncup. It's not for everyone but I loves it Painkillers - I hope you're buying the basic 16p ones and not paying out £££s!

Yes food is high, and there are only 2 of us! We don't eat like pigs but food is dear where we live (rural) and we are a captive community. We try to buy offers etc, and have a freezer going to buy cheaper veggies but we can't get it down very much. (freezer is on the blink now too!) £70 is a top priced week I'd say. I am trying to have beans on toast a couple of night a week - or baked potatoes, but we do need to keep healthy so I don't want to go too far.

You may want to visit the old style board - I'll bet they can help you get the food bill down!

Leccy looks sky high - are you paying off underpayments? have you checked if you're with the cheapest provider? Or that doesn't seem to include gas - have you got electric heaters?

Christmas club *and* birthdays/xmas seems pretty high - can you cut this back? I'm sure you could! Home made pressies are a great way to do that. Again old style board could help.

Sure more people will be along with suggestions for you soon. The more you can cut back, the sooner you can pay it all off

Kigu

Thanks so much for taking the time to write - I really appreciate all your comments.

I will provide some answers.

There are no NHS dentists in my area that are taking on patients. I live in Wales and it's really bad around here! But your idea of putting money on one side is a very good one.

I have considered the mooncup - though I use liners every day too. Frankly it spooks me but maybe I should give it a go if you have used it to good effect. I buy solpadeine which are dear - I know I have a problem here. I promise to work on it for all sorts of reasons!

Electricity is fixed. We have a meter run by our landlord and he sends us the bills. We have moved to energy saving light bulbs and are careful what we use but I don't know if I can do anything positive here.

I guess I could cut birthday money back but we've all got into this habit of cheque sending. We both get £40 from our relatives, so we send them £40 too. Bit embarassing to cut back. But we do/will put any incomings into the pot so it should balance out. Christmas club is £3 a week so comebacks.

Once again thankyou. I am so grateful for you taking the time to advise a stranger...

louise1234_2

I've got much the same as the others to say.

Christmas Club - usually aimed at low-income families & generally bad value for money. Get out of it if you can & save money if you need to instead.

£350 birthdays/christmas - who is this for?? Do you have large families or spend a lot on each other? Can you both agree to go without gifts to save money?

£40 at chemist seems extravagent. Moisturiser/cleanser/toner/eye make up remover are all available at £1-£2 each which will last a few months. Own brand sanitary products save a few pennies on branded. For painkillers, check the incredients of what you are buying. Then buy shops own brand. These are usually much cheaper, and usually only miss things like caffeine. Take cheap ones with tea/coffee.

You seem to have taken out protection on a few things. I'd advise cancelling as these are bad value for money and rarely pay out. Eg, if you are self employed, changed job recently, been to see doctor before with same codition, leave your job out of choice etc...

I'd be tempted to put your business plans on hold - you are putting yourself more in debt for a new business which is risky.

You don't mention any travel expenses - do you have a car/ get public transport?

Can you afford all your min payments at the moment? Do you have any spare cash to start snowballing with?

ashmit

Kigu wrote:

Thanks so much for taking the time to write - I really appreciate all your comments.

No problem - hope we are helping you!

I have considered the mooncup - though I use liners every day too. Frankly it spooks me but maybe I should give it a go if you have used it to good effect.

I think the idea spooks a lot of people to start with! However if you order one and are not happy with it after three cycles they will give you your money back. Def worth a try. A lot of people think of menstrual blood as somehow dirty but it's no more or less so than blood if you cut yourself. And some people find they are lighter using this than they were using tampons.

I buy solpadeine which are dear - I know I have a problem here. I promise to work on it for all sorts of reasons!

If you have a medical problem could you get painkillers cheaper on prescription?

Electricity is fixed. We have a meter run by our landlord and he sends us the bills. We have moved to energy saving light bulbs and are careful what we use but I don't know if I can do anything positive here.

Could you ask your landlord if there is any chance of switching? Does what he charges you tally up with what the bills say or is he on the make?

I guess I could cut birthday money back but we've all got into this habit of cheque sending. We both get £40 from our relatives, so we send them £40 too. Bit embarassing to cut back.

Why not send them an actual gift next time - worth rather less than £40, but still something nice? £40 is a lot, especially considering that it's pretty impersonal! I don't even spend that amount on my mum and dad! How do you know that the other people aren't going 'gawd, we could really do with cutting back, but we've got in this cheques habit....' Or even just say 'this has got silly, can we put a limit on it?' Do you know the money is used to buy the recipient something special? Are they just using the money to pay off *their* debts?

But we do/will put any incomings into the pot so it should balance out. Christmas club is £3 a week so comebacks.

If you're £34k in debt, you should be putting any spare money towards that, not presents - which are, at the end of the day, extravagences. It's going to take me 5 years or to pay off my £12k-odd - you're earning more than us, so you should be able to pay it off quicker, but it's still going to take a while.

Once again thankyou. I am so grateful for you taking the time to advise a stranger...

you're not a stranger - you're just an online friend we only just met!!

i'm sorry if any of this sounds a bit harsh, but you have big debts. If you don't get on top of them now, they'll only get worse. But you've made the first step in finding out how bad it really is and posting here to ask for help. We can give moral support any time you start to waver....

Kigu

Thanks for your comments.

The Christmas club is run by my office and would be hard to get out of at this stage. The good thing is that I get the money back at Christmas when I need it most.

We could agree to forgo gifts but as they send us the same size cheque as we send them we actually end up evens, or even better off.

I only use Simple beauty products as it is which are pretty cheap and don't affect my skin, but I agree I can cut back on painkiller costs and sanitary wear. Good point.

I am at the moment trying to get out of payment protection etc.

The business is virtually ready to go. I have two customers (shops) and am planning to get more, plus a web site. I think the expense is mainly over. I am not seeking loans from banks or anyone for this. It's entirely self funded, and I have already had some money in. I went to some business seminars and have a business mentor and am taking sound advice.

I get a lift into work and walk home so no travel expenses.

Thank you so much for your excellent points,and for taking the time.

Kigu

Sorry forgot to answer one point from Louise1234.

Yes we can afford all our payments at the moment, but need to take action before we can't! If we decide to snowball, as opposed to a loan, finding extra money to snowball won't be easy but with a combination of the business, selling on ebay, moving debt to 0% cards, and good husbandry I think we can find some extra.

I need to decide which is best for us - loan or snowball. Or both....