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bulldog5046

Original Poster:

1,191 posts

58 months

[news] 
Tuesday 2nd October 2012 quote quote all
Hi guys,

I'd appreciate some advice with this as i'm struggling to reduce my debts currently. Possibly just bad money management...

I've got around £2200-2300 on credit cards which over the last 10 months i've just not managed to reduce.

This all started when i lost my job and was out of work for a month, everything went on the credit card to pay for things and get me through with the full intention of paying it off when back in work, but this hasnt worked out as i planned.

Essentially, my income is equal to, or less than my outgoings.... not good.

While now & again i have overtime etc that allows me to clear some of the debt there inevitably seems to be some future expense that puts back where i started.

I did get this down to £1900 (from 2.5k) a few months ago with a large amount of overtime pay and moved £1700 to a 22 month interest free credit card leaving me £200 to clear on the other, but i've ended up increasing this to £550 rather than paying it off as the car needed servicing, and now needs a new set of tyres which is going to make atleast another £350 disappear frown

I've downloaded copies of my bank statements and categorised everything to look for money being wasted etc and i could find a small amount which is spent on food, lunches at work atc but it wasnt a huge figure.

I have considered selling some items to clear the debt but this looks like it would only be a short term win, i would eventually end up back where i started.

How do i beat this vicous cycle and get ontop of it all?

I hope the post doesnt come across all childish and whingy, I really think my problems are with money management and i just need some good advice for budgeting better.

Thanks,
Ryan

greygoose

2,414 posts

75 months

[news] 
Tuesday 2nd October 2012 quote quote all
Write down everything you spend for a month and then look at what is essential and what you could give up for a while until you have paid your debts off. Even making your own sandwiches for lunch and not buying a coffee but making your own can lead to quite big savings over time. If you have Sky then get rid of the expensive additional bits like sport/films, see if you can move on to a cheaper phone contract etc.

Martin Lewis's moneysavingexpert website has some good tips for people wanting to get out of debt.

LeoSayer

4,599 posts

124 months

bulldog5046

Original Poster:

1,191 posts

58 months

[news] 
Tuesday 2nd October 2012 quote quote all
Thanks for the pointers, i'll check out MSE further.

Ryan

nosittap

250 posts

25 months

[news] 
Tuesday 2nd October 2012 quote quote all
Adjustments to your life to reduce your expenses and pay them off the old fashioned way is an option. But credit card debts can spiral out of control when interest is applied.

A bank loan can sometimes be the answer, fixed monthly ammount is more managable than several irratic credit card payments. However, I'd be looking at an APR at no higher than 10% to even consider it, and only over 2 years maximum. Not really a good idea to pay off debt with credit.

But if you want some more thorough advice then give these guys a shout, I couldn't give them more praise.

www.cccs.co.uk

Completely free as they are a debt charity and specialise in this kind of thing.

A debt management plan with them could be the answer, they'll take care of everything and negotiate with your creditors on your behalf, get interest frozen in most cases, help you create a realistic monthly budget for your household expenses, and what is left over they will distribute to your creditors.

I don't work for them btw, but if I was struggling with repayments they'd be the first people I'd call.
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Newc

683 posts

62 months

[news] 
Tuesday 2nd October 2012 quote quote all
Yes, this is one of those times where a loan consolidation might make sense subject to all the provisos above. It’s the debt spiral that’s killing you here, not a ridiculous spending habit.

But, and I can’t stress this enough, if you do consolidate you must then CUT UP YOUR CARDS. That means if you need new tyres then actually you’re going to be selling the car and cycling to work. And you need to be looking into getting a Saturday job for a while.

SystemParanoia

9,637 posts

78 months

[news] 
Tuesday 2nd October 2012 quote quote all
cancel phone contract, sky/cable, landline, and all direct debits

then take things from there

oldcynic

1,653 posts

41 months

[news] 
Tuesday 2nd October 2012 quote quote all
Being a nosey bugger I thought I'd take a look at your profile and recent posting history.

Track car shredding its rear tyres, brand new iPhone 5 last week, unmanageable debt? Lay up the track car until the cards are cleared. If you haven't bought the phone yet then don't. And that's just based on your recent posting history.

I know exactly where you're at because I've taken debt to the next level. Start living within your means now rather than waiting until things get properly out of control.

Newc

683 posts

62 months

[news] 
Tuesday 2nd October 2012 quote quote all
Newc said:
It’s the debt spiral that’s killing you here, not a ridiculous spending habit.
oldcynic said:
Being a nosey bugger I thought I'd take a look at your profile and recent posting history.

Track car shredding its rear tyres, brand new iPhone 5 last week, unmanageable debt?
I should have checked the profile before posting.

OP - Seriously ? Running a track car and a modern BMW and somehow spending too much ?

Sell the track car. Sell the daily if it's yours. Buy a bike, or if it must be a car get a shed. Sell the ipad. Don't get a new phone. Pay off your debts overnight. Open a savings account. Calculate how much interest you've paid on credit cards in the last twelve months (I'll bet it's getting on for £400) and feel good that that money is now going towards your new car.




bulldog5046

Original Poster:

1,191 posts

58 months

[news] 
Tuesday 2nd October 2012 quote quote all
I can't deny i do have spending habits. Although i would like to point out the track car i only paid £25 for those tyres it shreadded and the track days themselves were free.

It's easy to say 'sell the car' but with things like these, i'll only see half what i've spent on it back if im lucky.

Also, an 80 mile daily cylce is a little off putting :P

I'm sure i must be overlooking some thing, i'll go back over my statements and see where i can find some money to free up.

EDIT: I'm possibly making thing's sound worse than they really are. I have around £400 of overtime coming in at the end of this month, an iphone 4 for sale for £175-200 which combined will make a considerable dent in the debt, i've just been feeling a bit like as soon as i pay anything, another bill comes along.

Edited by bulldog5046 on Tuesday 2nd October 17:25

SystemParanoia

9,637 posts

78 months

[news] 
Tuesday 2nd October 2012 quote quote all
you dont seem to want to listen to good advice...

goodbye, enjoy your spiralling debt problem...


..im out

hornet

5,863 posts

130 months

[news] 
Tuesday 2nd October 2012 quote quote all
Let A equal secondhand value of 118d
Let B equal purchase cost of something 5+ years old and Japanese or Korean
Let C equal credit card debt

If A-B > C, there's you answer.

Trade down the car, pay off the debt and maybe use any surplus to build some reserves.

zcacogp

10,676 posts

124 months

[news] 
Tuesday 2nd October 2012 quote quote all
SystemParanoia said:
you dont seem to want to listen to good advice...

goodbye, enjoy your spiralling debt problem...


..im out
So am I. Thankfully I read to the end of the thread before posting (a rarity for me, but it paid off this time! smile )


Oli.

hornet

5,863 posts

130 months

[news] 
Tuesday 2nd October 2012 quote quote all
bulldog5046 said:
It's easy to say 'sell the car' but with things like these, i'll only see half what i've spent on it back if im lucky.
It's a depreciating asset with an expected life and running costs, why on earth would you expect to get back what you put in? Think about it this way, if you don't trade down now, you're only adding more running costs and more depreciation to the mix. This time next year you'll have more debt and a less valuable asset, so if you want to maximise the contribution the car can make to your debt predicament, the time to sell it is now.

ETA - I can understand the reluctance, but here's another thought. Let's just say the depreciation difference between now and +1 year is £1k. That's £1k you could take out of your debt now that you'll have wasted. That means a year of interest on an additional £1k of debt you could quite easily avoid by swallowing your pride and trading down now.

Edited by hornet on Tuesday 2nd October 18:00

fandango_c

1,106 posts

66 months

[news] 
Tuesday 2nd October 2012 quote quote all
bulldog5046 said:
I can't deny i do have spending habits. Although i would like to point out the track car i only paid £25 for those tyres it shreadded and the track days themselves were free.

It's easy to say 'sell the car' but with things like these, i'll only see half what i've spent on it back if im lucky.

Also, an 80 mile daily cylce is a little off putting :P
Sell your track car and you'll still have your 1 series for your commute. It may only give you half what you spent on it, but if do don't sell you won't get anything from it and you'll have to pay the running costs for it.

bulldog5046 said:
I'm sure i must be overlooking some thing, i'll go back over my statements and see where i can find some money to free up.
Perhaps you're overlooking the advice being given in this thread...

bulldog5046 said:
EDIT: I'm possibly making thing's sound worse than they really are. I have around £400 of overtime coming in at the end of this month, an iphone 4 for sale for £175-200 which combined will make a considerable dent in the debt, i've just been feeling a bit like as soon as i pay anything, another bill comes along.
Sell your iPhone 5 instead of your iPhone 4 and that's £500+ coming in.

walm

4,069 posts

82 months

[news] 
Tuesday 2nd October 2012 quote quote all
Obviously you don't need the iPhone5 - that is £500 no matter what contract you go on.
Keep the 4.

On the debts though - you need to 100% focus on getting rid of that £550 or whatever that is stuck on the interest bearing credit card. Forget about the interest free balance for now.

The way I would do this is to set up a standing order to take £1-200 a month out of my account THE DAY MY SALARY COMES IN.
And any time I get an unexpected windfall (such as overtime) that goes straight on paying off the debt.

And then - this is the most important part.
CUT UP THE CREDIT CARDS.

Do not allow yourself to rack up more debt. In other words - guarantee that the flow of money on the credit card balance of £550 is ONLY ONE WAY!!

I am simply terrible at budgeting but no matter what I do, I find that I live very close to whatever I have to spend.
So if there is an extra £400 coming in from overtime - I will spend it if it isn't sent beyond my reach super fast.

You may find yourself running out of funds towards the end of the month - BUT THAT IS LIFE!!
Then you will realise that you HAVE TO CUT BACK.

hornet

5,863 posts

130 months

[news] 
Tuesday 2nd October 2012 quote quote all
walm said:
Obviously you don't need the iPhone5 - that is £500 no matter what contract you go on.
Keep the 4.
Or sell both and just buy a regular PAYG phone...

walm

4,069 posts

82 months

[news] 
Tuesday 2nd October 2012 quote quote all
OP - I really tried giving you the benefit of the doubt despite the comments above.
I took your OP at face value.

Then I read this.
bulldog5046 said:
I'm leaning towards O2, £26/month £249.99 handset. Then if i can carry my F&F discount for a lump sum that would be a bonus....
Did you buy it?
Jesus wept.

You're right though Hornet he should sell the 4 - he'll need the cash for the new iPad mini. rolleyes

bulldog5046

Original Poster:

1,191 posts

58 months

[news] 
Tuesday 2nd October 2012 quote quote all
walm said:
Did you buy it?
Jesus wept.
No, i moved to Three.

Thanks for some of the more helpful replies above.

walm

4,069 posts

82 months

[news] 
Tuesday 2nd October 2012 quote quote all
bulldog5046 said:
No, i moved to Three.

Thanks for some of the more helpful replies above.
But you still spent £80 on a handset plus increased your monthly outgoings by £9 over a what, 24 month period?
That's £300.
Plus say £150 on selling the 4 as hornet suggested and going PAYG on a cheaper deal than £25 would have wiped your CC debt with ZERO effort.

[Other than the crippling shame of not having the very latest bleeding edge product from Apple!]

I think the point of this is that if you are even considering blowing £80 (really £300+) on a completely unnecessary purchase, then you aren't even close to serious about reducing debt and you will continue to live beyond your means.

If you are serious about reducing debt - send the iPhone5 back NOW.
You are still in the 14 day cooling off period.

If you do that - send us a photo of the credit showing on your statement next to a tin of Bird's finest - you will win PH, nay the entire internet!
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