The shit state of my finances

[andrewducker]

For various reasons I have debts stacked in a few places.  As of Christmas I had a mortgage, a student loan, an actual loan. an overdraft and a credit card bill.  This is obviously not good.

However, the christmas bonus and the overtime have successfuly cleared the overdraft.  The student loan is finished as of March.  The mortgage is safely under control and the loan is on track to be paid off at the end of next year (and is at an affordable fixed rate).  The only thing that was bothering me severely was the credit card debt.  When I took it out they offered me 'protection', which meant that if I was made redundant I wouldn't have to pay any of it back until I found a new job.  I hadn't done my sums (idiot!) and therefore hadn't realised that the protection premiums were nearly as high as the actual interest rates.  This meant that on my £5000 debt (yes, I know) I was paying £60 a month in interest and £40 in protection.  Yes, £100 a month just to stand still.

So I've applied for a new credit card that's offering me no interest at all for the next 9 months.  Which means that, continuing to pay £150 a month as I have been, I'll clear the debt amount by £1350 rather than by £450.  Which will, in turn, reduce the amount that interest costs me.  Oh, and I haven't taken out the insurance this time round, on the grounds that if I _am_ made redundant, (a) I'll have a payoff and (b) I'll just renegotiate until I can get a new job.  Oh, and I'll probably just take out a loan in 9 months time, at a lower rate of interest, and put the remaining debt into that, thus sorting myself out for the long term.

I actually hope to be debt free in 18-months.  Which would be nice, as I'd then have a fair bit more money to play around with.

Comments

[stillcarl.livejournal.com]

I was paying £60 a month in interest and £40 in protection.

Ouch! More a major rip-off than protection.

The only remotely sensible credit-card rates I've ever noticed was for one card here where your interest would be reduced by 6% if your spent $1000 or more on a purchase, but for some reason they dropped that after a while. Can't think why... :-)

And everybody thinks they'll be out of debt in 18 months Andrew - don't pay no heed to the thought. ;-)

[code-delphi.livejournal.com]

I guess there's no point in extending your mortgage or fixed rate loan to pay off your credit card? Presumably it'd work out worse overall than the 9 month interest free on your new credit card.

Is redundancy that much of a problem in the UK? If the market is anything like here, the vacuum left when the .com bubble burst and the Uni students found non-IT courses to do is starting to bite... and is only going to get worse (for employers; wonderful for us). It appears that demand may outstrip supply for some time to come.

Of course, that assumes that all the IT jobs don't get out-sourced to India. Or China.

[andrewducker]

Actually, the employment situation here is pretty good. Iwas just being cautious.

[perceval.livejournal.com]

Indeed - your company is one of the few that are likely to offer generous redundancy packages.

And credit card debt is really insiduous. I ran up a lot of mine when commuting to Newcastle and ordering tickets via the Trainline. Borders in Glasgow (or book shops, for that matter) are also a BANE.

[channelpenguin.livejournal.com]

I'm sure you must have suffered at least one of my conversations on the evilness of debt and the stupidity of getting caught in it back when we were students. Just goes to show that you never did listen to me :-)

I mean, Credit card debt??? Should have extended your overdraft to pay it off the moment you couldn't meet the bill - much cheaper rate. Sticking it on the mortgage, if you can, is a way to make it vanish almost painlessly. I know all this 2nd hand, as I've never been in that position.

In fact, just don't spend money you don't have. Personallly, I'm utterly mystified as to why people can't do this. Not much other than shelter and basic food and transport to work (if it's out of walking/cycling range) are actually *necessary* if it comes to it. I've been there.

Work situation in the UK. Seems fine to me - I have had no problems getting jobs even in all the times when people say it's hard. Even the contract market seems to be picking up. Hell, I'll go and work in a bar or on a boat if it goes tits-up.

[andrewducker]

Yes, I should have been living more cheaply. There are a variety of reasons why I wasn't, but I could, by cutting out my comics, books, cinema trips, etc. have done so. Most fo the loan came from moving house (when I couldn't get more than a 90% mortgage), and the credit card debt came from a mixture of supporting Erin and going on holidays with Lilian (about half and half, although not at the same time).

But I'm now in the midst of paying it all off, and hopefully will be there soon.

[the-gardener.livejournal.com]

Well, you could always do with your credit card what I did with mine over ten years ago: cut the thing in half and send it back with an offer to repay the debt at so much per month until it's all gone. It successfully got me out from under that 20% APR nonsense, and I've never missed it.

[andrewducker]

The APR isn't that bad - if I didn't take out the repayment protection.

And I'll be on 0% for the next 9 months, then I'll move it to a loan, so I'm effectively doing that.

[allorin.livejournal.com]

I swear I remember a similar post to this about a year ago.

£5000 credit card debt? You're mental.

Oh, and switch cards again in nine months time. There should be no adverse affect to your credit rating, as long as you continue to make the minimum payments. There was an article in "This Is Money" (Daily Mail's finance pages) a few weeks back where a guy had basically maxed out his credit cards, to the tune of £22,000, to plough it into his mortgage, and was then switching card providers quite merrily to keep a 0% interest rate. I'm not suggesting you do anything that dumb/risky, but I would happily switch cards again.

Si checked our finances yesterday. We have enough money in the bank that we could afford to buy a decent, new BMW should we fancy one. Feel free to hate me. Actually, we're extremely frugal. We figure the kids will go through it all soon enough.... ;+)