I haven’t managed to post anything on this site for weeks now. I do have an excuse though. I’ve been considering doing a Debt Management Plan to try and pay off my debts. I am desperate – ever since I came back off the holiday I didn’t want to go on in May, that my other half booked as a ‘nice’ surprise last Christmas, I’ve been really struggling financially. The reason for this is that the 300 quid extra expenditure incurred during my holiday has pushed me right to the limit with all my credit cards.

You see what I normally do is pay two credit cards off and then with the balance I’ve cleared on these two cards, I do a balance transfer to pay off two of my other cards. I then pay the minimum payment on all my other cards and then re-spend on these cards to take me back up to my credit limit. In this way, I can just about find enough money to have a comfortable, though quite frugal, life. The trouble is, I usually spend up to my credit limit less next month’s estimated interest. Thus, when they bung the interest on at the statement date, I’m still within my credit limit and the minimum payment is just the usual percentage of the outstanding balance. Unfortunately, to release enough cash to cover our expenses on holiday, I spent right up to the credit limits on the cards, which means that now, when they add on the interest at the statement date, I go over my credit limit by the amount of the interest. This makes the next month’s minimum payment a sum equal to the usual percentage of the balance, plus the amount over my credit limit. This not only makes the minimum payment extra large, which leaves me short of money, but it also means that the space I clear after the payment isn’t that great, so I can’t re-spend on the card to anywhere near the amount of the minimum payment and if I’m really skint, I end up spending right back up to my credit limit again, meaning I have the same situation re-occurring the next month – it’s one of those vicious circle things and I’ve been stuck in it since May.

Unfortunately, my car isn’t very well at the moment and needs a visit to the garage to sort it out and a bill of probably 300 quid at a guess, so I really am struggling. Add to that that it’s my niece’s 18th birthday in October, our friends 40th in October and Christmas is only 3 months away and you can see how a Debt management plan is looking all the more appealing.

But despite all that, I’ve been prevaricating, unable to decide if I should take the plunge or not. In essence it all seems so straight forward – just phone up some company who cut your payments and sort everything out for you – how could it possibly go wrong?

The trouble is that once you start, it really isn’t quite as simple as it first looks. First of all, you have to select a company to help you and here, I did the right thing – well, almost! You see, I’d considered a DMP a year or so ago, read the ‘Money Saving Expert’ website, absorbed all the advice and made a few bookmarks to relevant sites. The trouble was that I’d somehow bookmarked one of the companies that it’s not a good idea to use!

The reason they’re not a good company to use is that, although they contact your creditors on your behalf and negotiate a reduced payment and try to get your creditors to freeze the interest on your debt, they want to charge you a 15% fee for their trouble. Since this is actually higher than the interest rate I’m paying on some of my credit cards, this makes using a company like this somewhat less than sensible, not to mention a little unfair to the credit card companies who have provided you with a relatively low interest rate, (it’s good for the one’s who haven’t, mind!)

But that’s not the half of it – these people are high pressure sales people, who phone you back within half an hour of you filling in the calculator on their website and discuss getting your payment down, but seem quite reluctant to discuss their fee until you pin them down to telling you. They then send you some forms to fill in whether you really want them to or not and then hassle you constantly by phone till you let them know that you’re not going to use them.

The other option are the charity organisations, who do the same as the company mentioned above, but don’t take 15% for themselves – they do it for free! There’s a couple of them – The Consumer Credit Counselling Service (CCCS) and Payplan, (you can also contact the Citizen’s Advice Bureau)

I filled in the calculators on both sites and Payplan have phoned me several times to discuss my problems, but I’ve managed to avoid them so far, which is a little rude of me, but I just don’t feel ready to commit myself at the moment. CCCS have been brilliant for me as they have a calculator on their website which actually tells you exactly how much you would have to pay under the DMP and they don’t contact you at all – it’s up to you to contact them, which suits me as nothing puts me off more than the hard sell approach.

The downside is that I’m worried that the amount of money they allow you is unbelievably miniscule in some categories e.g. lunches while at work. They rightly point out that it’s much cheaper to take sandwiches to work rather than buying your lunch, but the amount they allow you is ridiculous as it works out at something like just over a pound a day each for you and the missus, which doesn’t buy much when you consider the price of food in supermarkets. And don’t forget you’re doing this long-term for several years – just how many fish paste sarnies can one person eat?

And that’s really what’s putting me off. Even though at the moment, I’m paying virtually nothing off my debts, whereas under a DMP I could be paying off quite a sizeable chunk each month, it seems much harder to go for it if it’s going to leave you even more strapped for cash than you already are. I’ve been on the forums at Money Saving Expert asking for advice and people have been really supportive and encouraging – to be honest, I feel like I’m letting them down by prevaricating, but for now I really can’t seem to make the jump – I’ll let you know what I decide………………………