7.5k debt and not sure what to do ...

fairylights_2

Right, so I'm new here and am finally going to post. I've been so inspired by everyone else on here that I think we're on the right track, but any extra help anyone could give us as to the best way out (if we've not yet found it) would be great.

Monthly incomings:
£750 salaried (oh's) income
£350 tax credits
£110 child benefit
£100 assistance from family (long story, they set up a direct debit when my husband moved in with me as they were saving £100 a month in their grocery bills, so thought it was only fair that we had it too. That was about five years ago and we think they've forgotten they're still paying
Approx £200 my earnings (I work from home selling children's books and so the income isn't the same every month. In a good month it can be as much as £400, and I'm hoping this Christmas season will be even bigger)
Total income: £1510 pcm

Monthly outgoings:
24 Home ins
84 Car ins
121 council tax
39 life ins
8 Amazon dvd rental (with two under threes we DO NOT go out - this is our social life - so sad!)
18 broadband
22 phone (between bt and call18866)
10.50 tv licence
30 electricity and gas - we already swapped and got cashback for it
180 groceries/homethings
100 bus fare for oh to get to work
150 diesel
100 playgroup fees & childcare
150 to mastercard
100 to barclaycard
The outgoings (not including clothing and sundries): £1136

The debts we have are:
£6700 to Lloyds TSB mastercard (16% APR)
£620 to Barclaycard (18.9% APR - I know, I am STUPID )

Admissions to make:
1. I have no clue what happens to the gap between the in and the out £374 :eek: we have started writing down everything we spend in the hope of pinning it down. OH is taking packed lunches and making his own breakfasts, and buying the faresaver bus ticket. I am walking as much as I can to save on diesel, but lots of things are a car journey - supermarket, most book events I do, both sets of family - which means we still do about 14000 miles per year - so servicing is more frequent than I'd like too. I know I spend too much on my kids - clothing especially as our youngest is 7 months so seems to be going through clothes ever so quick. I'm trying to stop myself going near shops as a result. If I don't see it, I can't get tempted.

2. I've not accounted for rent/mortgage as we don't have one. I know, we're stupid to be in debt to cc companies when we could afford our own home, but it was a gift, and we were not going to turn it down.

3. OH has student loans of 3k, but these are deferred still as he's not earning enough ...

4. The debts occurred when we were studying separately and then setting up home. I didn't realise that oh wasn't able to cover our spending and he put it on the card to worry about later. I had hoped the books would pay better when I first started, and only now are they paying enough to make up for my loss of salary. Another job is not possible as I would have to pay out massive amounts in childcare, so would bring nothing home. I am working harder to make more money, and it is getting better. We are not spending more and neither card has been used in six months. We've cancelled the payment protection on the mastercard, so nothing is going up.

So what are we best doing? I'm currently working hard at paying off the barclaycard in the hope that it will be clear by Christmas, but by snowballing we're still looking at a date near November 2008. If I could find some of that spare money I know we could cut it right down, but I genuinely can't work out where it goes.

Should we mortgage the house to pay the cards? sounds like a weird solution, but we really can't find more than £250 a month until we work out where the rest of our pennies go ... Taking out a loan seems like we're robbing peter to pay paul.

Help and advice please? and PLEASE! be gentle with me ...

robnye

have you tried applying for a 0% interest credti card, then transferring the barclaycard and some of the lloyds card to it..... whilst that is on th 0%, you could be hitting the remainder (if there is any ) or paying of the 0%

have a look at the halifax latest deal 0% for 12 months

stustu92

Hi Fairylights,

You've made the best start to getting out of debt by posting here. The peeps on here have loads of advice and tips to give people who want to get debt free. So heres my two penneth...

How is your credit rating? have you missed any payments or been refused a credit card etc in the last 6 months?

If the answers no then i'd be tempted to do the following:

treat your debts as seperate if you think you can pay off the barclaycard by xmas. Get a zero % apr card and do a balance transfer from baclaycard onto new card, cancel barclaycard. This should help you pay this off by xmas. If you don't think you could get the card paid by xmas then lump it all together and follow the next bit.

Next i'd apply for the flexible egg loan for the amount remaining on your mastercard, the rate on the egg loan would be at about 6.9% i think.

So once you paid off the 0% credit card, you could up the payments on the egg loan until its done for.

Using this flexible loan would be good in your circumstances as your income varies by month. You could have the monthly payment set at something you could afford easily, but when you have good months with the books you could hit the loan with a big payment with no penalty. Also this loan allows you to change either the monthly payment of the length of the loan when you've overpaid.

However if your credit record won't allow you to do the above, i'd read Martins atricle on doing the credit card shuffle and see if you can get a deal off your current cards for doing balance transfers, that is if your credit limits on these cards allow.

Wait to see what others suggest... maybe my approach may be wrong...

stustu92

robnye wrote:

have you tried applying for a 0% interest credti card, then transferring the barclaycard and some of the lloyds card to it..... whilst that is on th 0%, you could be hitting the remainder (if there is any ) or paying of the 0%

have a look at the halifax latest deal 0% for 12 months

I think this card has a fee of 2% for balance transfers, there are cards out there with 9 months 0% with no fee. Check Martins article for the latest bestestest...

robnye

stustu92 wrote:

I think this card has a fee of 2% for balance transfers, there are cards out there with 9 months 0% with no fee. Check Martins article for the latest bestestest...

true, but capped at 2% or £50 max..... as the OP is already paying high interest on the lloyds card, this will be approx 1.5 months interest......
also more people likely to get the cards that have a bt fee.........

was looking a the length of time of the 0% as the priority

Dammam

A few possibilities come to mind, looking at your outgoings:-

£84 - That's a hell of a car insurance. Do you have endorsements on your licence or is it because you're young and considered a risk? I'd check to see if you can get a better price.

Bus fares look a pain as well - maybe you could tell OH he's putting on a few pounds and encourage him to get a bike! Actually, that's only half in jest - would a moped or something work out cheaper in the long run, or a pushbike if the distance isn't too great.



Being on tax credits with a lower income, are you not entitled to any kind of council tax relief? Don't be proud, I've paid a fortune in taxes over the years and I don't begrudge you using it :-)
Playgroup / childcare - Is there no way around this? Obviously, I don't know your situation so it's hard to assess. Are there other mothers who you trust who would share babysitting duties with each other? This way, you would all save money.

It's nice to have all that equity in the house if required - even nicer if you don't have to use it though.

fairylights_2

Thanks for the suggestions. Between us we have pretty poor credit history so chances of another card are slim ... although we could find out about bt my barclaycard on to his mastercard. There's not much difference but every little bit might help ...

Dammam wrote:

A few possibilities come to mind, looking at your outgoings:-

£84 - That's a hell of a car insurance. Do you have endorsements on your licence or is it because you're young and considered a risk? I'd check to see if you can get a better price.

We had two cars written off in six months. One nicked (grrrr) and one crashed into by someone else. Add to that we're both under thirty, and this is quite a good deal ... especially since it's better than the insurance for the last car!

Bus fares look a pain as well - maybe you could tell OH he's putting on a few pounds and encourage him to get a bike! Actually, that's only half in jest - would a moped or something work out cheaper in the long run, or a pushbike if the distance isn't too great.

We live a 30 mile round trip from where he works - even though the exercise might do him good, I can't see how that would be feasible! A moped would be a bright idea, but then we have to find the spare cash to buy one and find somewhere to park it in town for free ...

Being on tax credits with a lower income, are you not entitled to any kind of council tax relief? Don't be proud, I've paid a fortune in taxes over the years and I don't begrudge you using it :-)

I checked this last year and I'm pretty sure we're not entitled. Although we are entitled to free NHS treatment, which is a godsend.

Playgroup / childcare - Is there no way around this? Obviously, I don't know your situation so it's hard to assess. Are there other mothers who you trust who would share babysitting duties with each other? This way, you would all save money.

good news is in six months my son will be eligible for free playgroup places, so that problem will be solved ... we're not using as many sessions as I'd like because we don't have the cash to pay for it. Better a content boy and a broke mum than a little boy strangled somewhere for getting too cooped up at home!

It's nice to have all that equity in the house if required - even nicer if you don't have to use it though.

We're pretty much getting our heads round the fact that we'll probably need to do it. Just seems a bit daft. can you take out a secured loan on a house without taking a mortgage? Rookies at this ... can you tell?

Thanks for the advice so far ...

johannamse

I dont think you will be able to get a secured loan for less than 25k, and with a not too good credit history you will not be able to get an unsecured one?? mm?? I dont know what to suggest. I am pretty sure you will not get a secured loan that small.

Anyway...whats wrong with Nov 2008. May people have debt free dates further than that. I know it seems a long way, but it will come and the more you get into money saving, the more you will find it easier to cut back. And when kiddies are at School you have the potential to earn more. I would not get a loan. I know it seems like it would solve all your problems, but I think generally it just leads to more debt. Hope this helps.

wisbech_lad

"I know I spend too much on my kids - clothing especially as our youngest is 7 months so seems to be going through clothes ever so quick. I'm trying to stop myself going near shops as a result. If I don't see it, I can't get tempted"

What about the eldest kid's clothes? Wasn't s/he 7 months at some point? At that age, they don't care about hand-me-downs!

Sounds like you have supportive & close family - are there any relatives that have had children that can pass you bundles of clothes/toys/equipment? In my family, (and we are well off by most peoples' reckoning) we do this.

fairylights_2

Yes, he was! and as much as we can pass over, we do ... Unfortunately the only person I know who COULD pass on clothes sells all her stuff on Ebay and then car boots the rest - so I get offered nothing. Still, with birthdays and Christmas coming up, we're asking for clothes for both of them as they don't need any more toys - we can hand them down easier than clothes.

We've been and set up this morning a joint bills current account so all the money we HAVE to pay can be paid without us worrying about whether there's enough in there. What's left in the current account can be for groceries and diesel and whatever's spare is to go on the cards.

I know november 2008 is not a bad debt free date, but we just want to see if we can make it any earlier.

Dammam

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