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Make 2013 my special year

I want to make 2013 the year I pay off a bulk of my £13,000+ debt; and I want your help to do it. I'm going to be as detailed as possible with my outstanding debt and want to hear your suggestions for solutions. So here goes...(balances are inclusive of payments made in Jan 2013) (O/S = outstanding; M/P = monthly payment; I/R = interest rate; Op = option available) Student Loan: O/S - £869.42; M/P = £173 (currently on Direct Debit, Fixed payment) HSBC overdraft (with Debt Collectors): O/S - £341.10; M/P = £50 (currently on Direct Debit, Fixed payment); Op = settle at 20% of the outstanding balance NatWest ovedraft (with Debt Collectors): O/S - £5806.44; M/P = £190 (currently on Direct Debit, Fixed payment); Op = settle at £4000 - weirdly, this doesn't show on my credit file. Should I be worried? M&S Money Credit Card: O/S - 2972.80 (Credit limit = £3,000); M/P = minimum payment (currently on Direct Debit); I/R = 24.9% APR Barclaycard: O/S - 1767.05 (Credit limit = £4,080); M/P = ranges from £150 - £350 depending on how much cash I need; I/R 24.9%; Op = balance transfer max £1900 for 6 months Barclays O/D: 1391.53 (less £200 interest-free od = 1191.53); M/P = c. £15 interest; I/R 14.9% on balance over £200 OD. My total absolute minimum monthly payment is around £550. Realistically, this goes up to a max of £900 from month to month. Which options should I take/how best to pay this all off as quickly as possible?


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Clearing the whole lot would be very commendable. However, clearing a chunk of it would still be a success, provided that you carry on until you are clear. First of all you should never use a Credit Card for withdrawing cash. They levy a fee and charge interest immediately. Use a Debit Card on your current account for this purpose. The principle is to clear those with the highest effective interest rate first, whilst maintaining the minimum payment on everything else. You should make sure that you don’t go into default on any of them. If you have any spare Barclays overdraft left at the end of the month, you could use it to help clear the highest priority. HSBC overdraft - If that is only £68 to clear a debt of £341 then that has to be first. That is the easiest as well so you can get an instant result. NatWest overdraft – They have offered a discount but £4,000 is a lot to find in one payment. Would they accept installments? If so, that would be second. Barclaycard – This is the smaller credit card balance so clear this one third. Once that is clear you can start using it again but only if you can clear the balance in full each month by the due date. A Direct Debit would help you to do that. That way you would be able to take advantage of the interest-free period. M&S Money CC – This comes fourth. Barclays overdraft – This should be fifth. Student Loan – This comes last. It is the lowest interest rate. Mike

Thanks Mike! I never use my credit card for cash withdrawals anyway - so that's safe! HSBC O/D - my apologies on this; I wasn't clear. The settlement amount is £273 (20% discount!) as opposed to 20% of the balance. NatWest - I doubt they would accept instalments as they are talking about an immediate settlement of £4000 for a £5806 debt. As for it not showing up on my credit report, I'm not sure if I should be worried. Barclaycard/M&S CC - what do you make of the balance transfer offer up to £1900 for 6 months? Should I do this? The Student Loan will be paid off by April - £173 a month - at which point I can transfer this to some other debt.

OK, so the discount on the HSBC overdraft is now less than the discount on the NatWest overdraft. That means that you should be going for the NatWest overdraft first. With the Balance Transfer offer of £ 1,900 is there also a Money Transfer offer available? If so, maybe the NatWest debt collectors would accept £2,000 now and 2 monthly payments of £1,000? If not, maybe they would accept £2,000, £1,010 & £1,020 (i.e. £ 10 per month deferment per £ 1,000 which is over 12% interest). That would save you the £ 190 per month immediately. Do you have any spare overdraft capacity with Barclays to help here? Could you afford that? The HSBC overdraft would come next. You should be able to that the next month because the debt would be £150 lower so the settlement would be only about £150, which is less that the monthly savings from the NatWest overdraft. You would have higher minimum monthly payments to Barclaycard but you would also have the saving from the HSBC overdraft payments and the Student Loan payments. Because the M&S Money CC account would then be the smaller, that would come next and then the Barclaycard account. The Barclays overdraft would come last. Mike

well done for trying to pay this back! anyway, my advice would be to look at money transfers i have just had to try and clear a £7k overdraft that natwest was screwing me over on. i got an MBNA card that allowed money transfers at 0% for 22 months, i had to pay around £200 but that is peanuts compared to the natwest charges. fair play to you not declaring bankruptcy!

@SimpleGuy84. I do hope that you are making progress. It is worth the effort and life will feel better when you are debt free. I cannot better the advice above. I am wondering if there is any expenditure that you can cut down. You have probably already done this, but carefully examine all your expenditures and take cost reduction actions if possible: - shop around for insurance and utilities - don't smoke - cancel any regular subscriptions which are not absolutely necessary. Any consumer item which could in any way be described as aspirational... don't buy it. Also it helps to substitute "unnecessary" for the phrase "must have" in any advertisement!! Please let us know how you are doing from time to time. I am sure that we all wish you well.