The fact that a friend has text me saying 'Can I assume that with no blog in a week you can't afford the railcard to work?' kind of suggests I have neglected this getting out of debt mission.
To fill you in, things are definitely not that bad! I'm still here, I can afford to top up my Oyster card and eat... and yes, I have neglected my mission a bit (and you lovely readers with your tips. Thanks!).
By the way, throughout my blog, if I say I can 'afford' something, what I mean is: I have access to credit. I guess 'Diary of Young Debtor' makes that clear to you, you're not stupid, but I am still trying to get this to sink into my own brain.
I need to remind myself I don't have any money as that makes it much easier to feel good about spending as little as possible. The less I spend, the closer I am to maybe one day owning something. My debt is not a meaningless number, which is what it started to seem like when I lost control of my finances a bit. It is real.
So, enough of stating the obvious. Since my last blog I decided I would, as well as transferring my credit card debt from HSBC to Barclaycard Platinum's 0% interest offer, switch my current account from HSBC to Santander's Preferred Account interest free overdraft offering.
Since starting my mission I have found HSBC's online banking really helpful (now that I'm actually bothering to look at it, it doesn't take much time at all) and I have had no problem with HSBC, but I was enticed by an offer of 'up to £2,500' interest-free overdraft and £100 if I switched to Santander. Sounds great. Why not?
So I applied, quite excited by the prospect of not having to pay interest on my £1,500 overdraft with HSBC anymore or fees for going over that by a bit before pay day.
I knew Santander's interest-free offering would last only a year, and that the fees for going over the overdraft limit were a terrifying 50p per day, but I'm going to be out of debt in a year, right? So, that is no problem. This is just going to speed it up a bit as I won't be paying interest any more...
Well, no. Not really. Thankfully I didn't get as far as switching my salary over or all of my standing orders (although bizarrely half moved over and half didn't), because when details of my account came through in the post the overdraft Santander had given me was in fact only £500. It also said in the small print that they were increasing the 50p charge to £1 a day if you go over the overdraft limit, which, if it is only £500, not the £2,500 or so I was hoping for, will be all the time in my case.
I wanted to phone them up immediately and cancel the switch, and did try to, but I couldn't use their telephone banking service because I didn't have the pin which they sent in the post with me at the time. So, I left it for a while (see what I mean about neglecting my mission a bit?).
When I say I left it a while, I mean I still have a Santander account a week later, even though the whole process has irritated me...
....When I phoned Santander up to cancel switching the first thing I got was an automated message pointing out that if I was calling about the £100 they enticed me to join with, I won't get it for at least three months and then it is subject to their conditions. I didn't move specifically for £100. I'm not disappointed by that so much. It's just not a very encouraging welcome. 'Welcome to Santander. What we offer isn't quite as good as it seems...'
... And I have been bombarded with bumph through the post, including so many passcodes that when I tried to use online banking it took me a while to find the right bits of paper and then figure out what code was what. Regardless, the codes they have sent me don't work so I have had to request new ones in the post and can't use internet banking in the meantime. And in the meantime, I have had one of my standing orders go out of both bank accounts (this is not progress!).
... And I just hate the idea of not being able to speak to my bank on the phone without some overly-long and unrememberable telephone banking code, which I will inevitably one day lose, to hand. It gives me bad vibes!
So I phoned HSBC and asked them if they can get my standing orders back from Santander. A very polite and helpful girl on the end of the phone (good vibes! Very good vibes. New-favourite-person-in-the-world-vibes) - said that if mean old Santander won't let them take the standing orders back she can send me forms to do it that way.
Why do I still have a Santander account? After leaving it a while, I decided I might as well keep it open for the £500 interest-free overdraft as back-up. 'Decided' is a strong word. Maybe I am just kidding myself that I have made a decision here, when actually I have just carried on with two bank accounts. But it hasn't gone too badly...
As for the interest I'm paying with HSBC, someone suggested on my previous blog post that I try and get another 0% interest credit card. I'll see if I can...
Thursday, 9 February 2012
Monday, 30 January 2012
Transferring my credit card debt
If you read my first Diary of a Young Debtor entry, you may be wondering how on earth I am going to pay my rent which is due out on Wednesday... because I know I was.
Well, I found a solution. Admittedly, not an ideal one: I have opened up a new credit card. My rent HAS to be paid and I HAVE to be able to get to work. I don't know what else I could have done.
When I wrote that post my HSBC credit card was almost entirely at its limit (balance: minus £3,646, credit available: £104) and I was also paying loads of interest (about £50 per month).
So I have transferred my credit card debt to a new Barclaycard Platinum credit card which is O% interest (I found the offer via this article). I don't know why I didn't transfer it elsewhere before. It is just stupid and lazy that I didn't, because I'm now £50 per month better off without even changing my lifestyle.
If I miss a payment I will lose the O% interest offer, which lasts 24 months, so I have to keep a close eye on it, but it seems to have worked out so far.
...It also means my HSBC credit card has been freed-up for me to continue recklessly using it to pay my rent (erm, yes - I did say it wasn't an ideal solution). I'm committed to getting in credit now, though, and as soon as I can pay it off I will.
This month I have already saved money by smoking less (one packet of 20 and one packet of 10 cigarettes this entire month, compared to about one packet of 20 every two days last month), scavenging from my parents' fridge and cupboards (this is fine by them as long as I don't take the... biscuit) and cancelling my £30 per month Virgin Media broadband (and using my parents' connection at home instead for now).
I'm feeling like a bit of a paragon of virtue. One packet of cigarettes in a month! This seems semi-miraculous! I don't want to get too smug though, because I have a long way to go. It is much easier to cut back on spending when everyone is on a post-Christmas/New-Year-health-drive and the pubs are quiet (ahem, and when you are living with your parents and scrounging internet and food off them).
I am genuinely in this getting-out-of-debt-mission for the long-haul though, and I now have two lots of credit card payments instead of one, so I can't start celebrating yet.
@diaryofadebtor
diaryofadebtor@gmail.com
Well, I found a solution. Admittedly, not an ideal one: I have opened up a new credit card. My rent HAS to be paid and I HAVE to be able to get to work. I don't know what else I could have done.
When I wrote that post my HSBC credit card was almost entirely at its limit (balance: minus £3,646, credit available: £104) and I was also paying loads of interest (about £50 per month).
So I have transferred my credit card debt to a new Barclaycard Platinum credit card which is O% interest (I found the offer via this article). I don't know why I didn't transfer it elsewhere before. It is just stupid and lazy that I didn't, because I'm now £50 per month better off without even changing my lifestyle.
If I miss a payment I will lose the O% interest offer, which lasts 24 months, so I have to keep a close eye on it, but it seems to have worked out so far.
...It also means my HSBC credit card has been freed-up for me to continue recklessly using it to pay my rent (erm, yes - I did say it wasn't an ideal solution). I'm committed to getting in credit now, though, and as soon as I can pay it off I will.
This month I have already saved money by smoking less (one packet of 20 and one packet of 10 cigarettes this entire month, compared to about one packet of 20 every two days last month), scavenging from my parents' fridge and cupboards (this is fine by them as long as I don't take the... biscuit) and cancelling my £30 per month Virgin Media broadband (and using my parents' connection at home instead for now).
I'm feeling like a bit of a paragon of virtue. One packet of cigarettes in a month! This seems semi-miraculous! I don't want to get too smug though, because I have a long way to go. It is much easier to cut back on spending when everyone is on a post-Christmas/New-Year-health-drive and the pubs are quiet (ahem, and when you are living with your parents and scrounging internet and food off them).
I am genuinely in this getting-out-of-debt-mission for the long-haul though, and I now have two lots of credit card payments instead of one, so I can't start celebrating yet.
@diaryofadebtor
diaryofadebtor@gmail.com
Moving back with my parents: Progress?
I have decided to try and get out of my tenancy agreement for the flat I have lived in for the past year or so.
It swallows up more than half of my salary and - while it is not unusually expensive for a flat in London, it is about average - if I can find somewhere even marginally cheaper it would really help.
My previous flat was a little one bedroom place that I shared with an ex-boyfriend, so once split between us cost half as much as this, a two bedroom flat with a separate kitchen and living room, which I share with a friend.
Rent, especially in London, is astronomical. It doesn't surprise me at all to read articles like this one today saying owning a home has become more than £100 a month cheaper than renting. Paying rent really does feel like throwing money down the toilet. And, as anyone who has read my previous Diary of a Young Debtor entry knows, I definitely cannot afford a house!
But sharing properties with more rooms (e.g. four or five bedroom houses) works out much cheaper and I think I made a mistake to ignore that fact and move into a two-bedroom flat with a friend just over a year ago.
Anyway - back to my current situation. I’m still paying rent as the agreement is not up for a few months and I am liable to keep paying if a new tenant doesn’t replace me. But if new tenants are found then I can pay a fee to get out of the contract and find somewhere cheaper to live. Fingers crossed…
In the mean time I have moved back in with my parents(!)... Is this really progress!?
Well, yes, I think it is (for now!). I'm sure my parents don't entirely think so (I'm in my mid-twenties!), and I know I am really lucky that I have this option while I am between homes.
It seems to be a growing trend among people my age. I have friends that have moved back with their parents not just when between homes, but for months at a time to save money (for example for a deposit for a house or equipment for their career).
I thought moving out of my flat and in with my parents would feel like a step in the wrong direction, but actually I just feel relieved that I am taking action and getting things in order.
As I packed up my things I didn't feel sad, even though I have had great times in that flat, but excited about my life which I am taking control of.
@diaryofadebtor
diaryofadebtor@gmail.com
It swallows up more than half of my salary and - while it is not unusually expensive for a flat in London, it is about average - if I can find somewhere even marginally cheaper it would really help.
My previous flat was a little one bedroom place that I shared with an ex-boyfriend, so once split between us cost half as much as this, a two bedroom flat with a separate kitchen and living room, which I share with a friend.
Rent, especially in London, is astronomical. It doesn't surprise me at all to read articles like this one today saying owning a home has become more than £100 a month cheaper than renting. Paying rent really does feel like throwing money down the toilet. And, as anyone who has read my previous Diary of a Young Debtor entry knows, I definitely cannot afford a house!
But sharing properties with more rooms (e.g. four or five bedroom houses) works out much cheaper and I think I made a mistake to ignore that fact and move into a two-bedroom flat with a friend just over a year ago.
Anyway - back to my current situation. I’m still paying rent as the agreement is not up for a few months and I am liable to keep paying if a new tenant doesn’t replace me. But if new tenants are found then I can pay a fee to get out of the contract and find somewhere cheaper to live. Fingers crossed…
In the mean time I have moved back in with my parents(!)... Is this really progress!?
Well, yes, I think it is (for now!). I'm sure my parents don't entirely think so (I'm in my mid-twenties!), and I know I am really lucky that I have this option while I am between homes.
It seems to be a growing trend among people my age. I have friends that have moved back with their parents not just when between homes, but for months at a time to save money (for example for a deposit for a house or equipment for their career).
I thought moving out of my flat and in with my parents would feel like a step in the wrong direction, but actually I just feel relieved that I am taking action and getting things in order.
As I packed up my things I didn't feel sad, even though I have had great times in that flat, but excited about my life which I am taking control of.
@diaryofadebtor
diaryofadebtor@gmail.com
Tuesday, 3 January 2012
The crunch: Bank says 'no'
So this is it. I have had to take a cold hard look at a problem I have been pushing to the back of my mind for months. I have reached a point where I do not know how I am going to pay next month's rent for the flat I share with a friend. I know the figures won't add up, but now at least I am going to face them.
Here they are:
Current account overdraft limit: £1,500.
Current account balance: Minus £1,386. Credit available: £114.
Credit card limit: £3,750.
Credit card balance: Minus £3,646. Credit available: £104.
Bank loan: £1,799. Possibility of extending the loan: Nil.
Student loan: I have no idea! Huge, probably.
Savings account: 43p (In credit. Hurrah!).
Oyster card balance for travel to work: Zero.
Fridge: Empty.
What a mess! It looks blatantly alarming when you write it down like this, but this is the first time I really have.
For the past few months I have had to pay my rent on a credit card and I have been getting whacked with interest payments and charges on my current account.
It is embarrassing to admit this, but I have got myself into this situation where I pay for everything through loans and credit cards, and it has now reached a breaking point.
I cannot pay next month's rent on my credit card again as I am almost at the limit. I have already taken out a loan and the bank will not let me extend it. And they won't let me extend my overdraft, which I am permanently living in, either.
How have I got myself into this mess? My financial situation hasn't suddenly changed ... other than that I have reached the point where the bank says 'no'. Thankfully, I still have a job.
I don't think I have an extravagant lifestyle, but I admit I have been sleepwalking into a spiral of ever-increasing debt. I didn't think I was a reckless person. My bank statement says otherwise.
It is not as if I have been out buying expensive clothes and shoes. I haven't been out drinking until the early hours (ok, I have a little bit). I don't run a car.
The problem is I never got out of living in my £2,000 interest-free overdraft after I finished university. And as that interest-free overdraft limit shrank when the bank gradually withdrew it, my outgoings stayed the same. The high cost of living and renting in London has kept me overdrawn. (London did it, it wasn't me!).
Now I have a £1,500 overdraft (thanks to the bank agreeing not to remove it), but it is no longer interest free. I pay about £20 a month interest on the current account and charges on top of that. For example my current account charges, due out later this month, are £92.87 (£50 informal overdraft fees, £25 fee for a rent payment which bounced and £17.87 interest). I pay about £65 per month to pay off my bank loan and £70 per month credit card payments (£50 of which is interest). Paying fees like these over the past year has gradually tipped me further and further into the red.
Yes, I know. It is my fault. And I am going to do something about it.
Now I am on a mission to get out of debt within a year and I will share the journey through this blog. It is all very embarrassing. But if I learn anything from this, then you can learn with me...
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