Our double debt problem!!! Do we need help?

JVenture · 12 March 2017 at 7:16PM

Ok, Well looking over the information you have have provided I would have a serious chat with your partner about restructuring payments on some on the unsecured debt, essentially most firms or credit providers will not seek court action if you make a contribution towards the balance in your case you are spreading yourself to thin.

Hard Truth:
You could always default on the unsecured debt which is not optimal but doable, effectively you will freeze interest and yes most likely not be able to get credit for the next 6 years but the current items you have will stay, most credit cards track the bank of england rate which will eventually rise which could increase the cost on all your debt by %1-2 in the next year which is alot across the board.

BEST OPTION:
Resolve loan, simple quick and effective, if you or your partner still have a good enough credit rating to take a larger long term fixed payment loan then do it and pay off the debt now rather than later.

Hope that helps,

Unsecured Debts
Description....................Debt......Monthly.. .APR
credit card 1..................15400.....300.......0
loan (consolidation)...........15000.....304.......4.5
SOFA FINANCE...................1200......25........0
ITG credit card................2000......40........0
halifax CC.....................7650......150.......0
barclaycard....................9750......200...... .0
credit card ( wife)............4370......600.......27.9

LabRatty · 12 March 2017 at 7:33PM

Hi,
I too think you will be OK without a DMP if you can stick to the budget, plus I'd suggest a few tweaks to help you along the way.
- I'd agree that council tax seems high, but paying it over 12 months would drop the monthly cost a bit and may be make the budgeting simpler.
- Does your buildings insurance figure include contents cover? I assume it does but if not, you need some.
- Definitely ditch the appliance insurance. We've had this in the past and when we added up what we'd paid out in insurance, we could have bought 2 washing machines for the same money. This is what your emergency fund is for; if you want peace of mind you can even pay the same amount into the EF instead so it's put aside but remains your money.
- On the clothing front, local f'book selling pages are your friend, and can also be a good source of baby equipment. Last week, we acquired a bundle of clothes aged 18-24 months for £5, a good carrier bag's worth. Previously, we bought a high chair for £8, used it for 18 months and sold it again for £5. Shoes are often very cheap with almost no wear as kids' feet grow so quickly. A stair gate can be had for about £10.

This is not only good on the cost front, but cuts down on the clutter associated with babies - if you've not paid much for something you're less likely to feel you need to hold onto equipment that's no longer needed and more likely to sell/pass it on.

Finally, don't know where you're getting your nappies but we've found Aldi's own brand to be both good and cheap.

All the best,
LR

FatVonD · 12 March 2017 at 7:42PM

What are your savings for, is it your emergency fund? That 27.9% rate IS your emergency!

I think you should pay what you are currently saving off that card, in the worst case scenario and, say, you need a new boiler or your car needs work, you will have available credit on that card so it becomes your emergency fund (but only if you need it) and you will have still saved yourself a ton of interest in the interim.

dad2twins · 12 March 2017 at 7:44PM

JVenture wrote: »

Ok, Well looking over the information you have have provided I would have a serious chat with your partner about restructuring payments on some on the unsecured debt, essentially most firms or credit providers will not seek court action if you make a contribution towards the balance in your case you are spreading yourself to thin.

Hard Truth:
You could always default on the unsecured debt which is not optimal but doable, effectively you will freeze interest and yes most likely not be able to get credit for the next 6 years but the current items you have will stay, most credit cards track the bank of england rate which will eventually rise which could increase the cost on all your debt by %1-2 in the next year which is alot across the board.

BEST OPTION:
Resolve loan, simple quick and effective, if you or your partner still have a good enough credit rating to take a larger long term fixed payment loan then do it and pay off the debt now rather than later.

Hope that helps,

Unsecured Debts
Description....................Debt......Monthly.. .APR
credit card 1..................15400.....300.......0
loan (consolidation)...........15000.....304.......4.5
SOFA FINANCE...................1200......25........0
ITG credit card................2000......40........0
halifax CC.....................7650......150.......0
barclaycard....................9750......200...... .0
credit card ( wife)............4370......600.......27.9

Thanks for posting. I would find it almost impossible to deliberately default on any of our debts, I do feel a sense of responsibility towards these debts. We spent the money so we need to pay it back! Based on our current finances there is no reason why we should not be paying at least the minimums.

I take your point about taking our a larger loan, however consolidation has worked for us before. We are far more disciplined now so we wouldn't simply run up the cards again, in the way that we have done previously, however it doesn't make sense to me to consolidate the debt over a longer period when we can deal with it now, in just a few years.

dad2twins · 12 March 2017 at 7:47PM

LabRatty wrote: »

Hi,
I too think you will be OK without a DMP if you can stick to the budget, plus I'd suggest a few tweaks to help you along the way.
- I'd agree that council tax seems high, but paying it over 12 months would drop the monthly cost a bit and may be make the budgeting simpler.
- Does your buildings insurance figure include contents cover? I assume it does but if not, you need some.
- Definitely ditch the appliance insurance. We've had this in the past and when we added up what we'd paid out in insurance, we could have bought 2 washing machines for the same money. This is what your emergency fund is for; if you want peace of mind you can even pay the same amount into the EF instead so it's put aside but remains your money.
- On the clothing front, local f'book selling pages are your friend, and can also be a good source of baby equipment. Last week, we acquired a bundle of clothes aged 18-24 months for £5, a good carrier bag's worth. Previously, we bought a high chair for £8, used it for 18 months and sold it again for £5. Shoes are often very cheap with almost no wear as kids' feet grow so quickly. A stair gate can be had for about £10.

This is not only good on the cost front, but cuts down on the clutter associated with babies - if you've not paid much for something you're less likely to feel you need to hold onto equipment that's no longer needed and more likely to sell/pass it on.

Finally, don't know where you're getting your nappies but we've found Aldi's own brand to be both good and cheap.

All the best,
LR

Thanks for your post. I will look at the council tax again. I may have put the wrong amount on the SOA form. I think that the figure I put might be over 10 months.

Yes, it does include contents cover. I don't know the amounts for each element so I just put one figure in.

I take your point about the applicance insurance. I just worry that the day I cancel it is the day that oven, dishwasher, washing machine and freezer pack up

I also think that we can do this without DMP.

January2015 · 12 March 2017 at 8:02PM

JVenture wrote: »

BEST OPTION:
Resolve loan, simple quick and effective, if you or your partner still have a good enough credit rating to take a larger long term fixed payment loan then do it and pay off the debt now rather than later.

Hope that helps,

Unsecured Debts
Description....................Debt......Monthly.. .APR
credit card 1..................15400.....300.......0
loan (consolidation)...........15000.....304.......4.5
SOFA FINANCE...................1200......25........0
ITG credit card................2000......40........0
halifax CC.....................7650......150.......0
barclaycard....................9750......200...... .0
credit card ( wife)............4370......600.......27.9

Do not consider a loan to consolidate your existing debts. This is invariably a road to more debt. Consolidating rarely works, and then when it does work it only works for people who are really focussed/regimented. Many folk on this forum (me at the top of the list) have consolidated, borrowed again on those credit cards they didn't close (or opened new ones) and £10k of debt became £20k which became £40k and so on and so on....until in my case I hit over £100k at one point. Clearly I was not focussed or regimented.

The general advice on this forum is do not borrow to consolidate debt. Yes - identify a solution that works for you to sort the debt out, but not borrow more to solve existing debt problems.

Edit: you mention you have consolidated before and it worked for you. If it worked why have you got so much debt, as well as the consolidation loan, again. Being honest with yourself - did it really work, or did it just stick a plaster on a problem that then grew bigger and bigger....as is often the case with consolidation loans.

mark55man · 12 March 2017 at 8:37PM

Good luck. Not disimilar situation - except our kids (4) are all 17+. Don't underestimate how much they cost when they are older. And don't overspend when they are younger.

We had lovely overseas holidays when they were up to 10, then 2008 hit and it all went batsh1t and then just when the kids would really have enjoyed more active holidays - more cultural stuff, we were deep in our own LBM.

I can abdolutely recommend the british seaside - lovely memories - and if you don't eat out too often can be very reasonable - as teachers you are limited to school holidays but easter or October (or even february) are good if you are hardy - much much cheaper and less crowded

dad2twins · 12 March 2017 at 10:12PM

January2015 wrote: »

Do not consider a loan to consolidate your existing debts. This is invariably a road to more debt. Consolidating rarely works, and then when it does work it only works for people who are really focussed/regimented. Many folk on this forum (me at the top of the list) have consolidated, borrowed again on those credit cards they didn't close (or opened new ones) and £10k of debt became £20k which became £40k and so on and so on....until in my case I hit over £100k at one point. Clearly I was not focussed or regimented.

The general advice on this forum is do not borrow to consolidate debt. Yes - identify a solution that works for you to sort the debt out, but not borrow more to solve existing debt problems.

Edit: you mention you have consolidated before and it worked for you. If it worked why have you got so much debt, as well as the consolidation loan, again. Being honest with yourself - did it really work, or did it just stick a plaster on a problem that then grew bigger and bigger....as is often the case with consolidation loans.

It was a typo! It should have said that consolidation HASN'T worked for us before. I really don't want to go down that road again.

dad2twins · 12 March 2017 at 10:14PM

Thanks for all of the posts this afternoon/evening. It's good to get different takes on our situation.

To be honest, my initial goal isn't even to be debt free. If we owed 10-20k then I probably wouldn't have posted on here. I DO wan't it all paid off but I will be happier to get it right down to a more manageable level.

I think that the only real option for us is to carry on doing what we are doing now, that being, paying as much off as possible each month, keeping spending in check and not using any form of credit at all. I have actually got used to not using credit cards. It would feel strange to go back to that type of spending now.

January2015 · 12 March 2017 at 10:25PM

dad2twins wrote: »

It was a typo! It should have said that consolidation HASN'T worked for us before. I really don't want to go down that road again.

Thanks for clarifying :beer:

As a seasoned consolidator who eventually learnt the lesson far too late, I'm glad you've realised consolidating doesn't work.

Good luck with your debt free journey :wave:

Our double debt problem!!! Do we need help?

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