Need advice on which debts to focus on and how

A question about : Need advice on which debts to focus on and how

Hello all.

I am a recent graduate currently employed for 1 month. I have several debts that I need to focus on clearing (aside from that looming student loan that I don't need to pay until next year...) but I don't know what the best way to tackle them is.

Debts:

Ј500 Barclays overdraft. Interest free until July 2015
Ј1800 Natwest overdraft. It drops in stages. Next July 2015 only Ј1000 is int free. Then 6 months after that none is int free.
Ј800 on Barclaycard 34.9% APR
Ј1000 on my Mums credit card (foolish I know, but what's done is done) at 34.9% APR

I also owe Ј1400 to Student Loans because they overpaid me. I'm currently battling with them to delay it until next year when my SL starts coming out but who knows if they will agree or how much they will want me to pay monthly.

I take home Ј1490 a month and my outgoings (rent, food, bills and travel) equal Ј895 pm.

My question is, should I focus on paying off a little of everything or just focus on one debt?
Is there anything that can be done to help the CC interest?
Can I transfer my Mum's debt to my own? I feel really guilty about it.
Any other advice?

I'm cutting back on our food shopping. I'm considering cancelling my Ј15 a month charity contribution but really in the grand scheme of things I don't know how much impact it would make and I've love to keep contributing.

I have a car, which we use quite regularly and my partner contributes to the insurance for but nothing else. I'm not sure whether to get rid of it but it has proved so useful for the last 6 months I've had it I'm reluctant to let it go, but if it means being able to sort my debt out then maybe I should...

Best answers:

• Morning Greensalad!!
  Firstly, well done to you for facing up to the fact you need to tackle these debts head on!! That's half the battle!
  In terms of which to pay off first, the general advice would be to pay those with the higher interest rates.
  Is it a possibility you could transfer some of the debt to a 0% balance transfer and buy some time that way??
  You've given a rough idea of your income/outgoings... Really, for people to help you most effectively, a full SOA (statement of affairs) is really useful... It helps you see what you're really spending and allows others to suggest where you could cut back....
  That way, you can assess if the car is a luxury or if there's other things you would rather do without...
  On the positive side, you're taking home a decent amount of money every month, so it won't take long to sort your debt out if you really put your mind to it!! Your figures suggest you have just shy of Ј600 a month "disposable" income after outgoings... If that is the case you will knock this debt off in no time at all!!
  Good luck!
  Shoot x
• Could you not just put it all into one consolidation loan, that way you are only paying one loan off then and it would probably work out cheaper.
• OK here is my SOA! I have calculated this based on my expenditure only. I live with a partner, however we don't pool our incomes together and we don't pay 50/50 on everything. Some things I pay more for (e.g car as it is mine) and some things he pays more for (e.g Sky Sports as I don't watch it).
  Statement of Affairs and Personal Balance Sheet
  Household Information
  Number of adults in household........... 2
  Number of children in household.........
  Number of cars owned.................... 1
  Monthly Income Details
  Monthly income after tax................ 1490
  Partners monthly income after tax....... 0
  Benefits................................ 0
  Other income............................ 0
  Total monthly income.................... 1490
  Monthly Expense Details
  Mortgage................................ 0
  Secured/HP loan repayments.............. 0
  Rent.................................... 590
  Management charge (leasehold property).. 0
  Council tax............................. 87
  Electricity............................. 35
  Gas..................................... 0
  Oil..................................... 0
  Water rates............................. 0
  Mobile phone............................ 12
  TV Licence.............................. 9.4
  Satellite, internet and phone...................... 41
  Groceries etc. ......................... 100
  Clothing................................ 50
  Petrol/diesel........................... 20
  Road tax................................ 16.6
  Car Insurance........................... 54.25
  Car maintenance (including MOT)......... 0
  Other travel (cycle to work scheme x 8 months) .................... 43
  Pet insurance/vet bills................. 0
  Buildings insurance..................... 0
  Contents insurance...................... 5
  Presents (birthday, christmas etc)...... 24
  Haircuts................................ 15
  Entertainment........................... 60
  Holiday................................. 0
  Emergency fund.......................... 50
  Total monthly expenses.................. 1212.25
  
  Assets
  Cash.................................... 0
  House value (Gross)..................... 0
  Shares and bonds........................ 0
  Car(s).................................. 500
  Other assets............................ 0
  Total Assets............................ 500
  
  No Secured nor Hire Purchase Debts
  Unsecured Debts
  Description....................Debt......Monthly.. .APR
  My CC..........................800.......0.........34 .9
  Mums CC........................1000......0.........34.9
  OD Natwest.....................1800......0.........0
  Student Loan overpay...........1400......0.........0
  OD Barclays....................500.......0.........0
  Total unsecured debts..........5500......0.........-
  
  Monthly Budget Summary
  Total monthly income.................... 1,490
  Expenses (including HP & secured debts). 1,212.25
  Available for debt repayments........... 277.75
  Monthly UNsecured debt repayments....... 0
  Amount left after debt repayments....... 277.75
  I can already see some areas that I need to improve on, but it's difficult as it's not always just me but also my partner, e.g:
  1) We could have much cheaper internet, satellite and phone. My partner is a tech freak and wants the fibre speed, top sky sports package etc. I would be happy with standard internet and freeview. Currently we split the cost apart from the Sky Sports add on which he pays
  2) Car is a biggish expense I think. My insurance is high as I am 23. But I can see if being very frustrating without it (e.g, how would we get to see family at Christmas? There are no trains running on xmas day and my mum works night shifts so I worry if we stay at hers we'd be disturbing her, things like that).
  3) Haircuts? I currently get it cut every 2 months and spend Ј30 in one of the cheaper salons.
  4) Groceries etc. We shop with Sainsburys. Maybe Aldi instead...
  5) Emergency fund, I've currently put away Ј50 a month for the last 2 months only. Maybe I should not be saving but instead be paying off debts...
• I don't see any need to consolidate those debts. Half of them are interest free at the moment!
  I think you should talk to your partner about the car. If it isn't needed, then lose it. But if it is needed, then if your partner uses it as much as you do, then they should be paying half the road tax, petrol, servicing.
  Your top priorities need to be the expensive credit cards. If it was me, I would want to pay my Mum's off first, so pay the minimums to your other debts.
• How about declaring the next six months a No Spend On Clothes period? It's worth trying to zap the expensive debts now, because the Student Loan company get themselves sorted out.
  When the Cycle to work scheme ends, that will be another Ј42 to wards your debts.
  Have you stopped spending on the cards?
• I've just looked up my credit report as I haven't done it for a year. Last year it was Poor and this year it is Fair. So I guess that's good!
  I wonder, with a Fair credit rating would it be better for me to try and get a CC with a lower interest rate and then move all debt (Mums and my CC) to that? Even if I do not manage to pay it all off before the interest rate goes up, as long as it isn't higher than 34.9% APR then no harm?
• OK I just got off the phone with student finance, they want Ј150 a month until the Ј1400 is paid off. That's quite a big blow for me financially but they won't accept anything less. I'm so frustrated, but I don't think there is anything I can do. I asked for Ј50 a month instead and they said no. I'm so gutted, I didn't ask them to pay me too much, it was their mistake. Argh.
  I think selling the car is a good option. My partner has agreed it would be best and suggests instead of me spending Ј850 a year on tax + insurance + Ј?? on MOT, repairs and breakdown cover we instead invest Ј100 between us for the year to sign up to the car club in our town. It will give us access to several cars in town for only Ј17 per 24 hours (hourly rate available too) including fuel. I've worked out the amount of time we spend in the car in a month is enough to warrant the Ј8.30 spend a month to have access to it and it'll still bring us in way under what I'm currently spending on my own car. Plus that will be Ј100 between us, so only Ј50 for me. Less than I spend in just one month.
  So essentially I have managed the following:
  Car sale should net Ј475 (Ј500 minus advertising fees and cleaning supplies)
  Ј54.26 a month in insurance saved
  Ј8.50 in RAC cover saved
  Ј20 p/m in petrol saved
  Ј16.60 in tax saved
  However, costs incurred:
  Ј50 cancellation fee for insurance
  Plus a new monthly outgoing of Ј8.30 in car club fees per month
  So I should now be saving about Ј800 a year on car expenses. Hopefully I can use any money from the sale of the vehicle to keep the SLC at bay and try to convince them to let me drop payments to Ј75 per month so I can continue to sort out my credit cards.