Hello, I'm new and need some advice :)

LEWKI

Hi Everyone

OK, this is the 3rd time I have tried to write this - I keep rambling!
I am in debt to about £16,500, shown below. I am also well paid and my wife works part time, cash is never an issue - everyone appears happy to lend us money. The debt has come from house improvements, the 2 cars we need and general overspending on unbudgeted items. I have read so many of the threads people have posted and I realise how lucky we as a family are. That said, I want to clear my debts and be free. All advice will be very gratefully recieved.....

In summary, I have about £16,500 debt:

1. Bank Loan (Natwest 9.9% I think) - £155/month (£10,000)
2. Barclaycard - £2,200 - £100/month. I pay about £35 overpayment (6%APR fixed for lifetime)
3. O/D - £4,000 - do not know the APR% but probaly high
4. My wife's student Loan - about £500 left - paying £55/month - About 6 monthly payments left.

The good bits
1.I also have about £4,500 in savings
2. My salary is paid on Friday and is £3,660. My DD's are about £2,000 so will be overdrawn again within days

My questions are:

1. What shall I pay off with the Virgin CC?
2. Do I use my savings to clear some of the debt?

All help is very welcome and I look forward to your advice. I think once I have had the advice I will work on my budget to clear the debt...thats the next bit!

Thanks again

waddy_2

hi, im no expert but i would use a chunk of those savings to pay off whatevers got the highest apr. hope this helps but im sure loads of others will offer advice as well. good luck,

LEWKI

Thanks waddy. I guess the OD will be the highest, but it would be great to clear 1 or 2 of the debts with it. I could use the 4k to clear the Barclaycard and SL and put 1k towards the od. I know I am not supposed to as these are the cheapest apr but it would free up £150/month to go to other debt and it would feel great!

Its strange but I have never seen the OD as debt! Stupid I know

stapeley

hi , can not understand why when you are only gettin a small % on savings ,but paying high % on debt . I would start with S/L I know rate is low but just get it out of way . Clear the BARCLAYCARD low % but another one out the way !. But you must cut it up ! So extra £155 a month. Put £1000 to overdraft , but make sure you get them to reduce the limit .

GeorgeUK

DEFINATELY use some of the savings. You have money earning possibly 5% interest while you are being charged more than that - probably 3 times more for the CC APR, and you are about to be charged for being overdrawn???

You need to look at the snowball calculator.

Take a look at how much money you are giving to the bank by the time you become debt free. Also, think about how long you have been in this situation for and think how much money you have made the bank. If you had that money yourself i'm sure it would probably pay off all your debt and give you a very nice holiday too.

You say getting credit is no problem? Great!!
Lets make it work for you.

Have you ever thought of becoming a tart?
Virgin Money currently have a Credit Card offering 0% on balance transfers for 15 months. If you get a good limit, you can clear part of your overdraft with savings, part by BT and possibly even clear the loan. (This card allows balance transfers to both CC and current accounts)
After 15 months - get another 0% card and keep paying it off.

If you post up a statement of affairs (SOA) we may be able to show you some other savings you can make.

Note - There is an early settlement fee when paying off a loan early. This is not as much as you would pay in interest if it went full term, but you should be aware of this.

You should NEVER spend on a card that you do 0% balance transfers with. Any payments you make will go towards the lowest interest rate first so any purchases made will gain interest until the full balance of the card is paid off.

LEWKI

Thanks everyone, this is giving me the kick up the wotsit I needed.
GeorgeUk, the good news is that having been reading the MSE boards I applied for and got the Virgin CC. It arrived in the post on Friday and I have a £12,000 limit.

So, I have the :
1.£12,000 available with Virgin to Rate Tart.
2.£4,300 available in savings
3. There is NO early repayment charge on my Natwest Loan. Its called a flexiloan that I can overpay on. The reality is that for the last 18months I have been overpaying my mortgae by £150/month rather than my loan

I have £12k cc for a balance transfer and £4,300 in savings = £16,300 in total

I then have debt of 1. Bank loan £10,000, 2. Barclaycard £2200 3. Student Loan of £500 and my overdraft of £4,000. Tota debt of £16,700.

ARGHHHH - I am confused as to what order to do all this

onedayiwill

For me, I would pay off the overdraft with my savings. It may not be the most MSE of all... but to me paying off my overdraft was a huge boost ...

It allowed me to see a positive bank balance every month, which in turn helped me to make sure I was living within my means (there was no way I was going to see that account go negative again).

The day before payday I now see how much money is left in the account and use that to pay towards my debt.

Might not be the same for you though. Just my personal experience.

LilacPixie

What is the apr on the virgin card and for how long?? is it the 15 months at 0%??

In general you should clear debt starting with the highest APR first. O/D then loan = 14k Then look at what rate your getting in savings account. If its higer than Bcard then keep the money in savings adding small amounts. Look at your wifes student loan, depending on the type sometime the apr is very low 6 payments left of £55 is £330 not £500 so i'm guessing you have miscalculated somethere.

Also look at your mortgage rate. Absolutly no point in overpaying on your mortgage at 4.99% if your getting 6.75% on savings and paying out 6% on your b/card.

Please look at the whole picture rather than individual debts.

KiKi

Before you do anything else with credit cards, please post your Statement of Affairs (ALL your incomings and outgoings - including money put aside for savings, Christmas, birthdays, haircuts etc) so that we can give you some sensible advice on where changes can be made.

Is your wife aware of the debts and supportive of changing this??

KiKi

GeorgeUK

Is there 10k left of the loan, or was that the original amount?

available : 12k CC - 4300 savings
Use 2300 savings on o/d
Use 500 savings on student loan
Clear loan with CC
Clear barclaycard with 2000 CC + 200 savings

available : 0 CC - 1300 savings
outstanding : 1700 o/d

Then after the barclaycard is clear and you have a statement showing this, contact them to close your card. Sometimes they will try to offer an incentive for you to keep it open. If possible, try to get a 0% offer of more than 6 months. If they don't offer that then try to get the transfer fee free.

If you do not want to try to move everything at once, i would keep the barclaycard as this will be the lowest interest rate and leave you with some savings still.

Then tackle the highest interest debt first, then the 0% that finishes first.
If you have debt, but only at 0% you may want to try stoozing. You will still need to pay the minimum monthly payments (Virgin money = £25 from 2nd month onwards) but you can keep your usual payment rate the same. The difference you would put into a high interest account so that you are gaining the interest on a debt instead of the bank. This way you would be finishing the debt quicker by gaining the interest, but you would not be paying out any more than you currently are.

Just be careful to watch the 0% rates. Make sure you leave 3 weeks before transferring to another 0% deal to ensure you aren't caught out and need to pay interest, make sure that the minimum payments are made monthly - if you miss a payment you lose the 0% and need to grovel to get it back. Doesn't always work so setting up a DD may be helpful (and check that the first payment goes through on time).

If you then keep saving at the same rate you are currently making the payments for after this is all cleared, you should have your money back in about a year.

Edit: You could probably have a look at the stoozing/mortgage board to see if tarting can help you clear your mortgage quicker too. (After you're debt free)

LEWKI

OK, I have just done my SOA:

Monthly income after tax................ 3660
Partners monthly income after tax....... 500
Benefits................................ 172.5
Other income............................ 0
Total monthly income.................... 4332.5

Monthly Expense Details
Mortgage................................ 1131.58
Secured loan repayments................. 0
Rent.................................... 0
Management charge (leasehold flat)...... 0
Council tax............................. 167
Electricity............................. 55
Gas..................................... 55
Oil..................................... 0
Water rates............................. 62.17
Telephone (land line)................... 15
Mobile phone............................ 10
TV Licence.............................. 11.61
Satellite/Cable TV...................... 0
Internet Services....................... 22.5
Groceries etc. ......................... 450
Clothing................................ 100
Petrol/diesel........................... 400
Road tax................................ 30
Car Insurance........................... 73.06
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 16.91
Contents insurance...................... 17.83
Life assurance ......................... 85.65
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 10
Entertainment........................... 50
Holiday................................. 150
Emergency fund.......................... 0
Total monthly expenses.................. 2993.31

Assets
Cash.................................... 4300
House value (Gross)..................... NaN
Shares and bonds........................ 0
Car(s).................................. NaN
Other assets............................ 1000
Total Assets............................ NaN

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 142000...(1131.58)..5.5
Total secured debts........... 142000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................2200......70........6
Student Loan...................500.......55........5
Natwest Loan...................10000.....155.......9.9
Total unsecured debts..........12700.....280.......-

Monthly Budget Summary
Total monthly income.................... 4,332.5
Expenses (including secured debts)....... 2,993.31
Available for debt repayments........... 1,339.19
Monthly UNsecured debt repayments....... 280
Surplus(deficit if negative)............ 1,059.19

Personal Balance Sheet Summary
Total assets (things you own)........... NaN
Total Secured debt...................... -142,000
Total Unsecured debt.................... -12,700
Personal net worth...................... NaN


This has not pasted very clearly. I have estimated a number of things here, for example haircuts, Xmas and holidays. We do not budget for these items, they just happen. Also, my £4,000 od does not show.
Finally the value of our property is about £300k with £140k mortgage. I overpay this by £150/month. If needed I can draw this money back so would be about £1,800 if I needed it. (I really don't want to but if that the advice I will look closely at it).

As you can see, we should have plenty of money left. I think most months we do, but then we will need to upgrade a car or we will have not budgeted for our family holiday.

I really like the idea of clearing the OD and not going into red again. That appeals to me. And yes, My wife is fully aware of our finances. She is brilliant and works very hard with our 3 young children and works part-time. We have a joint bank account and running everything from there - she wants to be sorted as much as me - big family effort coming!
Holidays are not big, normally a campsite in france. We do not have Sky (but I can have Sports apparently once we are DF!!). Also I smoke, that accounts for about £100 month:mad: .