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Grad accounts/credit cards- help! Watch

    • Thread Starter

    I was really stupid with money at uni, and didn't really think about the consequences. I just (wrongly) assumed that I'd be able to find work (even minimum wage work) of some nature to be able to clear some of the debt. Every single job that comes up in the town I've applied for and I've had 1 inerview. I've been looking for work in the city, and because I'd be reliant on public transport, places don't want to hire me. I signed onto JSA in July, and I'm currently working 1 day a week in a cafe.

    My student account is currently just short of being maxed out at £2k. I'm with the Co-op and I only have 1 year's grace period to pay it back, so I have until around August. I've looked at Grad accounts and they all seem to require a minimum transfer into the account of £500 a month-- are there any that don't?

    I also have a Co-op Bank credit card, I had a bit of a crappy term, and my laptop broke, we had a huge gas bill, and I had two field trips to pay for. My credit limit is £1000, and I currently have £867 outstanding on it.

    Fortunately, I have now been offered a job working overseas for 11months. Unfortunately, despite paying a excellent local wage, which is the equivalent to around US$400 and included accommodation, this is not going to help me pay my debts off any time soon.

    The job starts on early Jan and I've accepted it, but now, sitting down and working out what my debt stands at, I'm so bloody scared.
    I feel like such an idiot for getting into such a financial mess, and being so naive about the job market.

    I am very lucky and fortunate, to be living with my grandad (It's not really possible to live with my mum), rent free right now. I'm selling pretty much everything I own, both out of necessity (so I can try and clear some of this horrendous debt), and also practicality. My overseas contract is renewable, so in all likelihood, I'll probably be out there for more than 11 months.

    This is another thing that's worrying me, will the banks get funny about me not being a UK resident anymore, and try and close my account?

    Any help or advice? Worried

    As far as I know, I am afraid there isn't a silver bullet, but there are things you can do to get yourself realistically out.

    1) Check out how much interest you pay on your student acc debt and how much you pay on your credit card debt. You want the AER number.

    2) Likely there is 0% AER on the student acc debt and well into 'teens on credit card debt. This means that your main priority would be to make sure you can avoid running out of the credit limit on the credit card. Assuming the rate is 18% AER, if you have in debt ATM of 847 pounds, that will become 1000 in a year.

    4) 2k in 8 months works out to you needing to pay in 250 GBP per month. I assume that the 400 USD is weekly? In that case, you could manage the pay-off.

    5) If you can still withdraw any significant amount on the student loan account, ASSUMING IT HAS 0% AER INTEREST, it makes sense to withdraw it and use it ALL to pay off as much of the cc debt as you can. This is because the credit card debt costs you a hell more and so it makes sense to do the above even if later on, you will take whatever you withdrew back from credit card to the student account. This is because if the interest on the c card is 18 AER, for 8 months it will save you about 40 pounds on cc interest.

    6) So your priority is to pay down as much as you can from your c card debt UNTIL JULY only, then take out as much as you need (it should be below 1000) back from the c card and pay of the student debt that matures in August. After that, don't buy ANYTHING except essential life needs until you pay off all the c card debt. Having any credit card debt is, due to the high rate of interest, like if you woke up every week and threw (depending on the amount) a few pounds off into the bin just so.
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Updated: December 5, 2010
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