Starting My Debt Free Journey

Reverso · 2 March 2006 at 10:26PM

Ok..

Here is where I am at right now. I'm a 3rd year undergraduate student, I finish this degree in June and would like to study for a masters come September for one year. There is a problem, I owe MONEY.

It cuold be worse and I'm trying not to get to scared over it but it has been getting gradually worse to the point that I received a debt collection letter today for an overdraft.

Basically..

1500 = Current Acct Overdraft
1500 = Student Acct Overdraft
866 = Student Acct Overdraft #2 (The one I am getting debt letters for)
400 = Credit card
400 = Credit card #2
300 = Tuition Fees (not due yet)
700 = Rent (not due yet)
20 = A book
130 = Bank fees (I reckon these are valid, I made a budget mistake and went WAY OVER to about 240 quid past my limit, I was back within it a month later)
= 5816

(Student Loan not Included)

Monthly outgoings if I spend nothing else

35 = Phone & Insurance
80 = food
10 = TV
30 = Bills
20 = min repayment on cards

= 175

Taking into account that i will have to cut back a little to revise for my finals, I can earn about 400/month on average. Say I have about 200/month to start paying back debt. How should I go about this

i've read a little on the site about loans v credit cards but I'm unsure about my credit score. Egg refused me a loan in November 2005, not because of the score but because the adviser felt I would be 'over exposed'. Weird, I wanted the loan so I would be paying money back at a lower, surely that was a good thing?

I'm going into the banks tomorrow to make appointments and make all the phone calls etc. I'll update this post then. hopefully, I can get some advice here and at home and when I am out of the water a little, help pass it on. I'm a fast learner usually, shame I didn't learn about my finances sooner.

CLAPTON · 2 March 2006 at 10:47PM

Firstly you need to establish a real budget, monitor and stick to it..your £175 doesn't seem real to me...have you actually lived on that for a month?

Next determine the surplas of income over expenditure.
Use this to pay the debts with the highest APRs or those costing you charges etc.

On the matter of the bank charges, you should challenge them. There are various boards about this plus a case going through the courts. Basically they can't charge you a penalty only recover their costs (which are obvious very small i.e. interst is ok but not penalty charges)

see http://www.bankactiongroup.co.uk/

see wishes in your exams and live below your means.

Feej_2 · 2 March 2006 at 10:56PM

Congrats on deciding to get a handle your finances. Best way to proceed depends on the terms/conditions under which you have your overdrafts. If they are charged at a higher rate than the cards until cleared, they become your prority - but the banks may be willing to consolidate them into a loan at a lower rate as you're a good bet for the future in their terms (masters degree equals future high earner worth hanging on to).

You'll be in a better position once you know what the banks' position is/are. I'd try for attainable targets until you've got your degree: put your energy into studying and once that's out of the way look to maximise your income and really attack the debt over the summer.

Let us know how you get on. This is an intimidating figure but very vulnerable to a determined assault from you. Egg decision is frustrating but not unusual. In your current position a better deal from current lender/bank may be the best way forward.

Good luck!

Starting My Debt Free Journey

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