Credit card debt - advice on best approach

[SnowdropEirlys]

I'm facing £20k of credit card debt across 4 different cards and determined that this is the year that I will clear the balances. Balances are;
£11k
£800
£6k
£5k

I've been in denial and spend far too much, have ignored the total balances for too long, and just paid the minimum amount per month for years.

I'm now in the fortunate position of a temporary contract that pays well which should go on a few months so have the opportunity to pay off almost 4k a month, as long as this contract continues.

I'm willing to change my lifestyle, change my spending habits and will quite enjoy the challenge of finally bringing these balances down - I think the relief of seeing them finally come down will spur me on.

I'd be grateful for advice on how best to tackle this. Should I chip away at each balance, or aim to bring the largest down first?

I'm not sure that I want to take out a consolidation loan which means I will be paying less per month for longer, years even - I'd rather just tighten my belt for a few months and blitz this, once and for all, now I have this opportunity.

I'd be grateful if anyone has any other suggestions or has any experience of tackling large credit card balances and bringing them right down?
Thanks in advance.

@PermanentTemporary thank you.

It means a lot to me that this is also support and encouragement for you.

The interest rates will be horrendous each month on credit cards.
Consolidate them into one loan at 3ish %.
Pay the max you can afford each month and over pay against the term.
Any other way is slower / will cost you more as you’ll be paying more interest overall.

If you want to pay them off one at a time because it feels better (or whatever other bizarre reasons have cropped up on this thread) do so in the knowledge that it’s the longer, slower, more expensive option.

Thank you so much @talia66 - I quickly checked back at when I first posted which was 19 February - so in almost a month, that mammoth credit card is now well under control, as is my spending.

Next week, I will need to set aside payment for my rent so unlikely to be able to pay much off but will keep my spending to a minimum.

I find it very easy to not spend during the week - working all day, short drives on school run and child after-school activities which I can't avoid but activities themselves are a small cost - scouts and local sports. Only spend is on essential food shopping - which I have shifted to Aldi and reduced best before bargains at end of day at local Co-op.

Instead of expensive trips far afield, spending money on petrol and accommodation, entry to wildlife parks etc, we are enjoying local walks following guided maps on the coastal paths and in countryside free of charge - a wonderful way to spend and afternoon that costs nothing. Fresh air and exercise and much easier now the days are longer and winter weather is easing.

It sounds obvious, but we've also now discovered the library for no-spend books - I have no idea why it's taken me so long to make the most of this resource - and in a deliberate attempt at guiding my child towards better money habits, I've opened a child savings account and we'll spend this weekend walking to our local branch to pay his birthday money in. He'll get monthly statements so he can feel the enjoyment of seeing his money grow, as I am now seeing my debt reduce. All positive steps forward.

Just seen this, well done on the progress so far 👍

Onwards and upwards

Thanks @AdoraBell - it's rent week next week so will need to use my pay to pay that - will watch my spending again this coming week, and hopefully pay off another chunk the following week with that week's pay. Still only spending on essentials and wondering where my money used to go when I wasn't paying these credit cards off. (Expensive meals out, weekends away, clothes, I realise).

Managed another £200 off the 11k card yesterday - balance is now at £5500 so now half way there with that one!

This is fantastic OP. I would second other pp by saying you should start reading up on people like Dave Ramsey, the You Need A Budget crowd, Martin Lewis’s amazing household spending spreadsheet (I often resave this one every month to forecast spending.

The MOST IMPORTANT THING to me to get your head round is that mindlessly spending can be like a hobby, but playing around with your budget, goals and saving can be a hobby too. It’s just that the first hobby leaves you in debt and the second in stable security. Once the mindset is shifted then it can be fun to start saving, not just for big goals but little ones.

Probably the most important one is to put £25/50/100 whatever you can afford away from jan every year as a buffer against Christmas the next year. I think a lot of peoples spending just ends up going wild in nov/Dec. I use it to crush any credit card spending every jan.

Personal finance U.K. on Reddit is really good and helpful too.

Lots of banks offer the facility to create savings pots on their apps.

Also I really respect your ability to just plough through this debt, it’s incredible.

Thanks so much @meloncolic - your comment on spending as a hobby really resonated with me. You're exactly right.

Planning my next purchase, convincing myself that I did need that coat, expensive meal out, jeans, shoes, facial, £25 shampoo - and even going to the supermarket and spending on frivolous, excessive food items, along with the £12 handwash, was actually just a form of hobby. Whilst also being in complete denial about the HUGE amount of debt I am in.

Instead I have now replaced this with a new mindset of how 50p handwash from Aldi does the same job, and a determination to resolve this once and for all, and to stop WASTING MONEY. This is far more enjoyable and satisfying, and I finally feel in control of my spending.

To add, I also check my bank account online several times a day (there was a time I would avoid looking at my balance at all) - and move money across to my online savings account to preserve it there - and discount that from available funds for me to spend.

This has helped me put that £200 across this week, despite my rent being due. Aim is to pay off another £1000 next week, extra if at all possible.

You're absolutely smashing it OP. I'm not sure if you're aware but there's a HUGE debt free community on Instagram with encouraging accounts like yours :)

I agree, also remember that there is a huge industry that is designed entirely to make you believe that you need to consume things. Unsubscribe from anything that makes you want to buy stuff and as pp says join all the groups that are about saving / getting out of debt / creating financial security. Unfollow any ‘influencers’ so that when you idly open social media you have a feed full of people celebrating independence rather than debt.

It’s like, womens magazines used to tell us that a £1500 handbag is an investment. Now to be fair, some if kept immaculately do resell for a lot! But for the vast vast VAST majority of women, a £20 bag from M&S and £1480 in an emergency fund/premium bonds/low cost ISA fund/pension is a far far far better investment and one that will help them have two irreplaceable things: dignity and self respect. The joy I felt when I could ‘afford’ my own home (which was a share in a one bed housing association shared ownership scheme - not exactly luxe!) was insane - I had a home where there was a point to me investing in it, where I could overpay the mortgage and benefit the future me, where I could not be chucked out of at a whim!

It’s crap that in this country you should have to be a homeowner to afford this dignity of stability, when plenty of other European countries seem to follow a very different model successfully, but that seems to be where it’s at.

Weekly update - I’ve just paid another £1200 off the 11ker - I’ve put £300 aside which I hope to also pay off later this week if I can keep my spending as low as possible for the whole week.

I hope it's ok if I keep updating here as it helps me to keep motivated if I feel I'm 'reporting in' my debt payments and am kept 'accountable'. It also helps to write this down.

I didn't spend the £300 last week that I had put aside so I paid that off the 11ker straight away this morning knowing I was going to be paid today - and have just paid another £1000 off that same card so now that's at £3300. I've put another £300 away this week to try and 'save' to pay this extra off if I can by the end of this week.

An update on my balances below with paying minimum payments on the other two cards:

From when I started on 19/02/22:
£11k
£800
£6k
£5.6k

To the following on 04/04/22:
£3300k
£0
£5.8k
£5.4k

I am really hoping to have paid the vast majority off that 11k card by the end of April by continuing on this pattern of spending only on the essentials. Challenge is to continue this through the Easter holidays.

This current work contract is only guaranteed to run until beginning of July so am trying to pay off every penny that I can whilst I can.

That is really brilliant work OP.

Reading this is MASSIVELY inspiring!

You are so inspiring op!

Please keep going and keep reporting in.

Wow I have just come across this thread and you are doing brilliantly OP.

Getting out of debt is so so hard (especially taking that first step as it's so easy to bury your head in the sand) and it would have been so easy for you to see this contract as an opportunity to treat yourself to some nice holidays and handbags so WELL DONE .

As a pp has mentioned there are lots of great people on Instagram and TikTok to follow who are on debt free/low spend journeys.

Thank you so much everyone.

Another Monday, another payment off the 11k card. I didn't spend the £300 from last week, so together with my pay today, I've just paid £1500 off. With an interest payment coming out on the card (grr) this one is now down to £2000. I've got my council tax, electricity and gas bills due next week and it's the Easter holidays so won't be able to keep any extra back to add to next week's payment but hopefully will still be able to pay another £1000 off. Getting there...I just want this card gone now to start tackling the others! Feeling impatient to get there whilst just being really utterly thankful for this contract.

Popped to our large library this afternoon which is in the centre of town surrounded by shops and it actually hit me how much my attitude towards shopping and buying and consuming has changed in just a month and a half. All I could see was just unnecessary, expensive 'stuff' everywhere. It feels like a huge shift in perspective and thinking and long may it last.

I think once you've changed your mindset on unnecessary spending then you've cracked it. Well done you 🙌

If they are interest free/very low interest I’d just pay them off at 4K a month and get it cleared in the year. Otherwise take out a low interest consolidation loan to pay back over the year or another option could be to take a loan over 5 years and save everything you can towards your house deposit

Very inspiring OP, please do keep logging in your repayments as so incredible, I love reading about them!

Gosh OP you are inspiring! Really great progress good for you

OP this is amazing, well done! Please keep updating!

Paid later this week due to BH - as soon as it landed in my bank account, I sent £900 straight across on the 11k card. Boom!

Rent is due next week but I hope to pay at least something off so psychologically still making progress, even if it’s a small amount.

Keeping. On. Going.