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Hi, to boil it down to the immediate point I have some standing debt in the form of credit cards and an overdraft that I want to kill.
If I were to put it into perspective I owe roughly 25% of a years salary on credit cards, and a small amount on an old graduate overdraft that is now accruing interest.
To put some flesh on the issue, I lived like an idiot as a student and immediately following, plus didn't earn the amount expected straight out of Uni. The upshot is I have 5 credit cards currently, and an overdraft on an account I don't use.
I'm in a position where I am spending all of my money that's not 'spoken for' on paying off these cards, and then spending on one of them again (my 'living' card) - then going through the cycle again.
My issue is recently a couple of 0% agreements expired - so my debt is now accruing interest. I am now earning enough to make it so that IF I could pin these balances down in a single location at 0% again I could have them paid off within 4 months, then I could turn my attention to the overdraft, and basically by the end of this year have my debt gone.
The problem is I have recently moved (for the new job and salary) and thought i'd registered on the electoral roll (a guy came round with a clipboard) but apparently had not (according to an Experian report) so my initial strategy of applying for NEW card, with a 0% on balance transfer for 9 months or something, and switching the balances onto it an crunching through them in a matter of months - died. The applications were rejected leaving me scratching my head, as I have no CCJ's, maybe the odd late payment, no defaults, and the total amount of credit card debt doesn't amount to like a years salary or something.
It's getting harder by the month at the moment as i'm finding i'm paying more on interest and getting more letters etc about being late or over limit when I thought I was fine - so I want to get it in one place and kill it. I'm extremely comitted to killing this debt and paying what I owe, I just need some advice on how to pin it down, how to 're-structure' it without being screwed over.
So;
1) Is my strategy for condensing the balances onto one, new card (and not spending off it, just paying them off) the correct one, or is there an alternative?
2) Is the failed applications due to not being on the electoral roll (which I will be as of April 1st) going to be a big issue in pursuing the above?
3) Oh and having read a few more posts I see mention of people requesting CCA's and having charges refunded, i'd be very interested if someone could fill me in on the criteria for getting these as i'm sure it would reduce the burden significantly
OK, I think the best advice anyone can give you is to dump all of the Credit Cards, and never, ever, get another one. They are a complete rip off, and the reason you are neck deep in Debt and spending most of your current income to service that Debt.
This was all intentional, they did not give you 5 Credit Cards by accident. They knew full well what they were doing by giving a Student enough Debt to hang himself with, because they knew you would one day cease being a Student, and would end up working for a living, where upon they would have you trapped and spinning around in a little Debt Slave Hamster Wheel they had pre-booked for you.
Just to prove my point, get a Spreadsheet out, and sit down soon and bang in all the big numbers for each Card. Note down what you spent, what you repaid, then note every Charge they made, any mis-sold PPI they added, and then all the interest.
I suspect you will be quite shocked at how little you have spent by comparison to the flow of hard-earned that has been extracted from you to them.
Note also any Interest Rate increases, and any Credit Limit increases you never asked for but got.
Soon, you may see a picture developing, and when you realise what their game is, you may be less inclined to ever have a Credit Card ever again.
Now is a damned good time to get your affairs in order and, once you do, you can look forward to moving on to enjoy the rest of your life never being bogged down by Debt ever again.
The Basics
It's VIP to get a firm handle on your money. Until you do, trying to sort this will be hard, because you will just be setting off without a map or a direction.
I would strongly recommend getting a basic Accounting Package, such as Microsoft Money, or any of the similar packages that are out there. Intuit used to do one called Quicken, but I gather that's no longer available.
I've used both, and MS Money does the job, so if you can't find anything else, that'll do.
It's dead easy, just grab all of your Statements, grab a cup of Coffee, and sit down to bang the numbers in. If you don't have your Statements, than just start from the next one in each case, because it at least gets you on top of the numbers for each Card and also any bank Accounts you have.
Once done, then keep them all up to date from that point onwards. I suspect this will be hard initially, but make it 2nd nature, and soon you will always know exactly how much you have at any one time.
Then use a Spreadsheet to run side by side, and start to look ahead at what is coming up. Work out all of your regular bills, and start to increase your ability to see further and further ahead, so you will get fewer and fewer nasty shocks.
All of the above could be done in a weekend if you set your mind to it, it's not Rocket Science!
By that stage I think you will be pretty unhappy at the amount of interest you are paying on the Cards. More than unhappy, I think you will feel somewhat furious that they have taken you for a ride. I'm sure you had a nice ride while it lasted, but it will prove an expensive ride that could also have been just as fun and cost you less, had you only known.
What to do
At this stage, I won't even start to suggest fighting them, and looking to see if the Agreements are enforceable, because the first step is to get your head around the money, as outlined above.
I think you should examine every Agreement, and to do that you should investigate sending them all a CCA Request to see what the Agreements look like. But keep paying them for now.
OK, on the assumption (for now) that all the Agreements are tight as a drum and you are stitched up like a kipper, then the plan for now has to be how best to get these blood sucking vampires off your neck.
The slowest way to pay them is to continue using the Cards. The 0% deals are only there to entice you to stay, because they know that 99% of people will blow it and end up trapped, not having managed to use the 0% deal as they planned.
So, I would investigate other alternatives, such as, perhaps, a Loan of some sort. Go for the lowest rate you can find, and make sure the repayments are affordable. Then dump the Cards, learn from the experience, and thereafter move ahead on just the spare Income you have left after you pay the Loan each Month.
By all means then reclaim any unlawful Charges and mis-sold PPI, but by then you are doing it from a position of strength, because you won't owe them anything, so they cannot touch you or harm you such as, say, by trashing your financial reputation.
Now, if the Loan doesn't appeal, at least investigate it. Then go back and see if you can hack this another way such as, say, sticking with one or two Cards that offer 0% interest, and using them instead.
But do realise that if you keep the Cards, you will be tempted to use them, and no matter how good you think you will be, something will come up and you'll probably give in, knowing the easy Debt is there waiting to be used. That's the whole point of these nasty Cards.
In summary, the starting point is to take charge of your money, and do that straight away. What you do next will then be a lot easier, and if you get it right from here onwards, you will never look back. You will be better off in the long run, and you will be so glad that you escaped their clutches at an early stage.
Thank for the comprehensive response! You'll be happy to know that although not using an Accounting packages I have been following the process of getting a far tighter handle on my finances already, using my trusty friend Excel.
I'd say i'm at the point now where I have eliminated or reduced any non-essential bills, and now wish to turn my attention the more complex issue of paying off these cards forever.
I hadn't immediately considered a loan as a decent option as I have actually got a small amount (£155, final payment next month) left on grad loan i took out to buy a car a couple of years ago - sadly I wrote off said car in an accident last winter and, when approaching my bank to 'top up' the loan to help cover the cost: they said no (because all my disposable was going on paying these balances off
I do like the idea of a loan as frankly I would feel far more comfortable with a single fixed sum and fixed rate with planned re-payment, allowing me to squirrel away my other excess income to pay it off early.
So further investigation needed in the loan dept then I think, then I can fire out the CCA requests and start fighting from a strong position!
(P.S if anyone has had a good experience with a particular lender on loans it would be good to hear about them?)
A Spreadsheet is useful, but if you can stretch to a small Home Accounts type of package, that will give you access to all your Historical Data, and from that you can generate any number of reports.
I tend to use both, and also more onerous packages for business. But for Home Accounts, I find using a Spreadsheet ideal for Cash Flow Projection, i.e. looking ahead and also keeping a handle on the current balances.
The two combined cross-check that you have not missed anything, and will help you to get 100% on top of the numbers. Once there, it is the secret of happier times and greater long term wealth.
The key at the moment is to find the best way to get these Debts off your back, as fast as possible. The sooner they are gone, the better off you will be. A Loan is an option, but there may be faster ways if you can juggle 0% deals on the Cards.
The danger there is you must be resolute, and not be tempted to use the Cards ever again, other than to pay down the balances while enjoying 0% interest.
If you can manage that, then perhaps keep one or two Cards, but only use them to make key purchases that you will pay off in full at the end of the Month. That way you get to enjoy the CCA s75 benefits if the thing you buy is faulty or does not turn up.
But, as I keep saying, Credit Cards are, almost invariably, bad news. Just having them means the temptation is there to use them, and few people can resist that temptation.
Life without any Debt should be your goal, because you will be happier and much better off in the long term.
Hi again - small update and some further advice needed.
So i've taken complete stock of my financial comings and goings, and worked out what amount I can pump into paying off my debt.
My next step has to be delayed - as I have to wait until April 1st for my name to be added onto the electoral roll - at which time i can decide what avenue to go down.
My questions this time revolve around credit score. I have an experian report, however it doesn't actually list ANY of my credit agreements. Just my mobile phone and a bank account with an overdraft. How can I gain visibility of my total picture, as I have late payment and overlimit fees on a few cards having miscalculated or hit by a charge I wasn't expecting etc?
The second thing is, I have several cards all with low balances (relicts of student days) how can I best classify who they belong to, as in linked organisations (MBNA etc)
I'm worried really that even with my name on the roll and a proven and very decent amount of cash I can spend per month servicing the debt, I wont be able to get a loan to consolidate it or a new 0% balance transfer card (again to consolidate) due to 'unseen' factors to me such as overlimit or late payments.
My ideal scenario really would be, at the end of April after again paying my bills and minimising the balances, getting a loan and killing it all then planning my financial future on the loan repayment basis and quietly squirelling away my excess to pay it off early. I don't want that to be jeapordised by a poor record with certain companies if i've forgotten to pay, or gone over limit etc (which has happened a lot recently due to charges, and it being very slim financially since christmas - only just got a hold of things)
Advice on likely lenders would also be a godsend (loan approx 5-6k)
I have been looking into 'Full and final Settlements' as a way of getting out of debt and have read all the above threads with interest but the situations are different from my own and I want to know if it would be a realistic option.
I currently owe £22,500 to 3 creditors (CC - £7,500, Loan - £7,000 & Loan - £7,000). I haven't missed a single payment yet, but I can no longer afford the monthly payments as I earn less now than I did when I got the debt. I may also be made redundant over the next couple of months. My husband was helping me out to cover all the debt payments, but he is also earning less than before and has a lot of debt in his name which he is struggling to pay.
I filled in the CCCS - Debt Remedy online and the result was to offer a final settlement as I have one asset (my car - £7,000) that I could sell and offer to the 3 creditors. Does this sound credible at this stage?
I have created the 'Full and Final Settlement' letters to the creditors, using the template and want to add a 'statement of affairs' to show that I have no surplus money to pay debts with. If I am married, so I have to show partners financial affairs if my 3 debts are unsecured and in my name only?
Lastly - I don't want to wait to get into arrears before dealing with the debt, and it is already keeping me awake at night. Am I acting too prematurely with the settlement offer? Does the debt have to be in arrears for a specific time period for this kind of offer?
Any advice would be greatly appreciated! Many thanks in advance!
Strategy for paying off debts..
that I want to kill.
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