That’s the spirit girl….

The third instalment of my alternative look at the credit crunch (effectively borne out of a fatigue for seeing the same stories published time and time again), looks at the potentially positive aspects of narrowing credit acceptance criteria.

So how could these stringent conditions possibly improve one’s financial and social vista?

(1)   Dodgy Mortgage Brokers Tackled by the FSA – With the mortgage market in a state of disrepair and under the microscope as a result, the Financial Services Authority (FSA) has been able to wheedle out mortgage brokers who perpetually recommend sub-prime loans. After all, it was the US sub-prime crisis that imposed the credit crunch on us in the first place, so any operation that removes sub-prime peddling brokers from the financial food chain has to be of benefit.

(2)   Savers Get a Better Deal – With banks haemorrhaging money from their lending, current account and trading divisions, they need a stable incentive with which to entice customers, look generous and claw profits back. Enter the savings account, with Halifax, Icesave and Abbey all doing their best to offer some of the most attractive savings account deals ever entertained in the marketplace.

(3)   Property Bargains Aplenty – For those that do have money to invest, the credit crunch is likely to upturn a number of canny bargains in the property market. What’s more, with the housing market quiet and estate agents kicking their heels, you’re likely to get a more tailored and personal service if you do venture out house hunting.

(4)   Improved Customer Service and Incentives – While consumers have less disposable income to throw around, industries will have to try that little bit harder to snare your business. Expect attractive incentives, especially in retail, utilities and communications sectors, to become commonplace, and good old-fashioned customer service to make a welcome return.

(5)   Bad Mood, Great Songs – According to music recommendation site TheFilter.com, the gloom of the credit crunch is making more if its users download depressing songs by the likes of The Smiths and Joy Division. The Smiths and Joy Division are cool bands, so when we’ve finally wriggled free of the credit crunch stranglehold, there will be more cool people and fewer squares.

(6)   Don’t Borrow What You Can’t Afford – Strict lending criteria means there’s a reduced chance of individuals borrowing more and more money only to find themselves stuck in deep financial mire. The credit crunch will force people to face up to their debts and try to do something constructive about wiping them out.

(7)   Less Air Travel, More Good Air – With the credit crunch biting hard this summer, a significant number of UK holiday makers are swapping planes for automobiles and motoring off to some retro seaside hotspots. The airmiles saved will reduce the carbon footprints of one and all.

(8)   Unprecedented Credit Card Deals – If your credit record is blemish free, you have a balance to transfer and you’re confident you can clear a credit card balance at the end of each month, then this is the perfect time to be switching credit cards. Capital One blew the credit card market wide open last month with a card that offers both 15 months 0% on balance transfers AND 15 months 0% on purchases. Sure, one cancels the other out if the account is miss-managed, but use the card wisely and you could save a tidy sum.

(9)   Asda Goes Nutty on Staple Food Prices – The credit crunch has prompted all out price war between the nation’s main supermarket chains, with Asda pushing the boat out especially far. Bread, lettuce, butter, eggs, sausages and melons have all been reduced to 50p for limited periods. Catch them while you can.

(10) Annuity Rates on the Rise – That’s correct, some financial products are still thriving. An annuity is a guaranteed income for life, which most members of defined contribution or money purchase pensions buy with the majority of their pension savings. Due to falling corporate bond prices, anyone looking to cash in their personal pension this summer will be significantly better off than before the credit crunch kicked in.

 Yessss…i won that 1989 Shane Ritchie annual

Tuesday 6th May, 2008 - £9,485.54 in debt…..

Ebay is a funny old thing. How on earth does anyone make any money on it? Really? It takes me a day to take photos of all the stuff I want to sell, a further day and a half to list them all, and a day at the end to wrap it up and post it. And that’s assuming all my buyers pay up in the way they’re supposed to and I don’t have to enter into a week-long email conversation about why I don’t accept credit card payments.

So how much does the average person earn on Ebay, when you take all this into account? About 7p an hour, I reckon, but it’s better than nothing so here I go. I could report myself for exploitation.

Last time I sold anything on Ebay, I got into so many wrangles with buyers that eventually I gave up. It just didn’t seem worth the stress or hassle… maybe I have anger issues that should be dealt with. But now, I have a mission and a huge debt to pay off, so I’m giving it another go.

I’ve created a pile of things I can live without (CDs, books – including a couple of signed ones - unwanted presents, etc). By the end of yesterday, I’d calmly photographed and listed them all (complete with a slightly gruff “NO CREDIT CARDS” disclaimer), and I’m looking forward to getting rid of them and making some cash.

If I sell everything for the amounts I’m hoping for, I’ll be able to pay off my NatWest card within a week.

If you remember, my NatWest card is the one with only £123.99 on it. By paying it off first, it’s one in the eye for Martin Lewis and anyone else with half a financial brain, as the interest rate is by no means my highest. So why am I doing it?

Well, it seems like an achievable goal; it means I can add £10 to my monthly Barclaycard payment; and it will mean fewer cards to manage. I’m also doing it to prove that I can be sensible, bite the bullet and pay off a debt without spending all my so-called “disposable” cash on shoes. Hopefully. As soon as the NatWest card is paid off, I’ll start chipping away at them in the right order.

My listings end on Friday – I’ll keep you updated.

In other news…

After my last posting, I received a few comments about my credit card suppliers, telling me I should try calling them and asking if they can drop my interest rates. I had no idea that could be done, so I’ll be calling all my card issuers this week – watch this space.

By the way, you might have noticed that my debt has decreased since my last posting – YESSSS!!! This is because I’ve just received my Barclaycard bill. Last month I made my usual payment of £75, but my interest payment was so extortionate that my debt has only gone down by £13.91. Yes, it has cost me £75 to decrease my balance by less than £14. This has got to stop.

 Olivia Buck says ‘Hi’

Monday 1st May, 2008 – £9,499.45 in debt…

Let me introduce myself: I’ve just turned 28, I’ve been in debt for ten years, and now I’m desperate to pay it off. How did I get myself into this dungheap of a mess of a quagmire?

I’ve always been rubbish with money, and now I’m rubbish with debt. Being in the red was fine at uni - like so many students, I got used to spending money that wasn’t mine. After I graduated, I lived with my parents for two years and paid most of it off, but then I moved to London.

I’ll tell you this for nothing: Living in London is expensive. That’s the first of many shiny nuggets of wisdom you’re going to get from this blog, and I hope you appreciate it. It’s not like I was eating diamond-encrusted swans for breakfast, but an Ikea spree here and there soon adds up.

Over the last year or so, I’ve had the feeling I should be getting out of my debt-hole. My credit rating has gone past ‘high risk’ and into ‘extreme’ territory – only adrenaline junkies and the mafia would lend to me now - but mainly I want to cut up my credit cards because being in debt feels horrible.

So far, I’ve made the following efforts:

• Although I’m self-employed, I’ve got a second job as a part-time secretary. It’s almost unbearable, but it pays the rent.

• My biggest debt was on my Barclaycard at nearly 30% APR, so I’ve transferred half the balance to a Tesco card on an interest-free deal.

• After doing that, I cancelled my Barclaycard and set up a standing order to make regular payments. When I explained why I was doing this, the Barclaycard people were kind enough to drop my Standard APR by a couple of percent.

Even after that, I’ve still got credit card bills of £200 a month and those payments are covering little more than interest. I also have an overdraft limit of £3,000, which I was always straying past before I got the temping job (bad news at the time, but I might be able to claim back some bank charges – more on that later…).

So, here’s the bottom line: How much I owe.

Barclays overdraft: £3,000 (I’m always at the limit by the end of the month)

Barclaycard: £2,977.46 at 27.9% APR

Capital One card: £999.00 at 24% APR

Tesco card: £2,399.00 at 12% APR

NatWest card: £123.99 at 13% APR

That’s a total debt of £9,499.45 (plus interest), which I plan to eliminate completely by my 30th birthday at the end of April 2010. I then plan to fit Jupiter into a blender and become the first woman to unicycle across the Atlantic.

My first job is to pay off that pesky little NatWest card as quickly as possible. I currently pay off that card at £10 a month so, once it’s taken care of, I can add £10 onto my monthly Barclaycard payment.

I’m open to suggestions, so please help me out!

 I’ve got 24 months to get solvent and apart from Ebaying all my belongings and working overtime, I need to know: 

1. Can I make more money?
2. How can I save money so I can increase my card payments without feeling the pinch?
3. What have you done to pay off your debts?
4. What works and what doesn’t?

 Over the coming weeks I’ll be trying out any suggestions I’m given (apart from illegal ones) and regularly reporting back.