Is there a better way to do this?

frugglewump

Hi semi-newbie here, :wave:

I've been lurking for a couple of months and have just worked up the oomph to post a few questions. Below is my current debt situation & I would appreciate if someone could reassure me that i've gone about this the right way. i really want to get this sorted so my OH and I can look more seriously at buying a house.

Cahoot flexible loan 8.5% (risen from 6.9% start rate in 2003)
Balance = £5534.84 Limit = 6k
Min payment=£118, but paying £175 thanks to budget sheet from this site.

Barclaycard 6.9% Life of balance
Balance = £1517.70 Limit=2k
min payment £45

Egg (green) 0% 5 months from 1st September
Balance = £1885.01 Limit=2k
Min payment £40
Possibly my last anniversary month offer? I opened the card in 2001

HSBC mastercard
0 balance 6k limit, no special offers right now

HSBC graduate account Overdraft
Usually up to £1500 by end of the month % = ??? but about £8 monthly charges

and £2500 borrowed from my parents when I was a student in 1997 that I feel *so* bad about not paying back yet.

Total debt = £11612.55
Total payments = £260

I've been accepted for a Mint card - no idea of the limit yet, but i intend to transfer the barclaycard balance.

I could possibly tighten a bit more to get another £50/month into this lot, but i *really* want to start giving money back to my parents - it's way beyond a joke that it has been this long, although they are fine about it.

What I'm concerned about right now is the Egg balance. I'm putting my squeezed extra money into the loan because it made sense to address the higher %, but the Egg balance will go up to 14.9% in Feb/March so would it be better to overpay there instead? I could only take the payments up to £90 ish which wouldn't get anywhere near paying it off completely

I had thought to open another card in Jan - possibly virgin. if I do open it though i'm concerned about the sheer number of cards. Especially since i want to keep the egg card open for possibly transfering some of the loan balance to lower % offers later.

All advice very gratefully accepted.

mountainofdebt

I think that you should have another 0% anniversary offer from egg so I would keep that card.

You also need to find out your APR on your overdraft.

I think I am right (but can some confirm this!) but you should have some cheques from mint, which are 0% until 1st July.

If they are 0% then you need to use them to pay off the debt with the highest APR.

Cancel your HSBC mastercard...this will make you more attractive to new deals....I reckon its not so much the number of cards you have, its the amount of credit is available to you.

What's the other aspects of your expenditure like?

YorkshireBoy

Some comments...

HSBC
As MoD said, close the HSBC card and ensure it's marked as settled on your CRA files, because it could hinder future applications. It has almost certainly affected the limit that you'll get from Mint, and that's a shame because you could have had more of your debt on 0% for longer. EDIT: Forget this - I've just seen your second post.

Mint
Be very careful with the Mint cheques and do your sums, because I believe they attract a 2% (max £49) fee until the end of November - details on the Mint website.

Egg
The Egg interest is 15.9% APR, not 14.9% APR as you stated in your first post. A little pedantic maybe, but it pays to be accurate when you're deciding "which way to go".

Parents
If they're genuinely "fine about it", then I'm sure they'd rather you were paying off your high interest debts than paying them back so they can save it at 4.75% gross. Give them ALL their lost interest back when you're in a position to pay them the loan back.

frugglewump

mountainofdebt wrote:

I think I am right (but can some confirm this!) but you should have some cheques from mint, which are 0% until 1st July.

If they are 0% then you need to use them to pay off the debt with the highest APR.

I hope so - I applied because of the 0% offer. I was approved online and sent off the paperwork this Wednesday so maybe i'll find out towards the end of next week.

Cancel your HSBC mastercard...this will make you more attractive to new deals....I reckon its not so much the number of cards you have, its the amount of credit is available to you.

The HSBC card isn't on my experian or equifax reports for some reason. I was given it automagically when i changed my account to a student account in 1993. Possibly because i've been with the same branch since i was 5. I've already chopped it back from 8.5k

What's the other aspects of your expenditure like?

Net monthly income = £1,160

Direct Debits:
Rent = £297.50
Council Tax = £113
Student loan = £67.67 (didn't include earlier since there's nothing i can do & only approx 2 years left)
Contents insurance = £13.41
BT line rental = £10.50
NTL dial-up internet (includes £15 of free calls) = £15
Gym = £41
Gas = £24
Electric = £25
I need the landlord's permision in writing to switch suppliers.
TV license = £10.49
Debt payments (from 1st post) = £260
Overdraft charges = £7.70
---
Food = £125

---

Total = £1010.27
Remainder = £149.73


Travel isn't in there as my annual travelcard is an interest free loan from work that is taken out of my pay.

The food looks like a lot but it is for 2 people - one of which has low blood sugar problems.

i would drop the gym except that we very rarely go out, the doctor has ordered more exercise and the steam room is good for making me feel human after a day teaching. They've just started offering pole-dancing classes - sounds like fun but i don't have the £95 for the 6 week course.

Other half can't help with council tax or food due to paying off a loan from a failed business start-up.

As I said I can put in another £50 to paying off debt. That would still leave me with £100 unaccounted for sudden expenses (this month: my boss insisting I get office 2003 at home for marking but will only give me money on production of a receipt) and possibly some clothes as my work-quality stuff is wearing out. I can tweak my journey so I pass through Golders Green on the way to work and there are 9 charity shops there.

I was planning on paying whatever is left in my overdraft onto whatever the highest % is on the 27th of each month. Based on my payments i think my overdraft is 6.16% apr so maybe that isn't such a good idea - it looked one though since i pay only about £8 per month in charges.

I didn't feel as bad last year but I've run out of things to eBay and i don't really have money to play with buying things from the charity shops. Except for Doctor Who books as they always sell well.

musey

frugglewump wrote:

Gas = £24
Electric = £25
I need the landlord's permision in writing to switch suppliers.

I'd just like to point out that you can change the suppliers whenever you like. Your landlord may say you can't (may even have written it into a contract) but it is an unfair term and carries no weight. The bills while you reside in the property are your responsibility and it is for you to decide who supplies you. If you have a landlord supplied coin operated meter be aware that they can only charge you what they are charged for the gas or electric they are not allowed to "re-sell" to you at a higher rate. I'm not saying you can get it cheaper with another supplier but the option is open to you. The suppliers will not inform the landlord of the change (unless the bills are in the landlord's name) and so I can't see a problem.

frugglewump

Huh. According to the call centre my overdraft rate is 14.8% apr. This does not tie in with my maths based on my normal charges of £7 to £8.

I know it's not charged on the entire 1500 for the month, but since I never have any money past the 10th I figured it might as well be.

Edited to add:

So based on apr I would be better off getting rid of the overdraft before the loan. Looking at the amount charged per month though £8 overdraft vs £39 loan it's the other way round. Arrgh!

frugglewump

Apparently HSBC are starting to share more information with the credit check companies. So I called today to cancel my card. They told me I will be eligible for a low % balance transfer in Dec/January. I did get a letter last year, but wasn't counting on it happening again. Anyway I reduced my limit to 4k instead.

Some very good news today - I had my appraisal at work today. I am overdue for a promotion by a year and when my appraiser found out I still hadn't got it she was livid and has gone straight to management to sort it out. :dance:
Hmm wish there was a crossed-fingers smiley

Also I have found a new charity shop haul of Doctor Who books for 50p each. Just before the gallery promotion at eBay too.

frugglewump

Well my mint card hasn't arrived yet but the balance transfer I requested when asking for the card has gone through. This means all but £115 of my credit card debt is now on 0%.

Using the snowball calculator at whatsthecost.com I've worked out that if instead of concentrating on my loan i put all the extra money onto the Egg card then by the time the 0% runs out (1st feb) i will have reduced the balance enough to transfer it onto barclaycard using the 6.9% life-of-debt rate - assuming they still offer it to me.

Also, i started up a spreadsheet & found all the amounts & payments for the last 2 years - it looks like i've been able to reduce the debt by 2k per year, but with the snowball & other budget-advice form here i shoudl be able to reduce it by 3k by next september. (my budget years run sept-sept as that's the academic year & when my paygrade is re-negotiated)

frugglewump

Well my mint card arrived today with a limit of £5125 - rather higher than i anticipated.
They say I can only use 50% on advances - I don't think this means balance transfers though.

frugglewump

Today I have closed 2 of my credit cards. Admittedly one was the HSBC with 0 balance but it still feels better to be able to say 2 cards & a loan rather than 4 cards & a loan

Alleycat

Just seen this thread, well done at reducing your debt and getting rid of some of the dreaded credit cards! Just a word of caution though, just because your Mint card has a good credit limit, don't be tempted into purchasing things on it!!

I've been advised to get a Capital One card to try and repair my credit rating, but I really don't want a credit card! I got rid of my cheque book, credit card, and 'proper' debit card and now just have a Visa Electron card. I can still use it in many shops but am not in danger of over-spending as I was before. I've grown up a bit since then though, so should be safe enough to just use cc for shopping.

Anyway, good luck getting things sorted!

Alley