Best Way To Clear My Debts
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HP550
Posts: 22 Forumite
Hope someone can point me in the right direction here.
Situation.
I have circa £23k in 3 credit card debts run up over many many years. Mainly the debt increased through the period where we had a single wage as my wife stayed at home to raise a family.
Both of us are now working and between us we earn around £42k before tax.
Only other significant debt is car loan with circa 6 months to run on a 5 year deal at £250 per month.
We have around £30k positive equity on our home which has around 12 years to completion.
Payment history on everything is excellent so credit rating should be decent.
At present on the credit cards we are paying the min monthly payment which is not ideal but keeps things ticking over. Not a great deal of extra cash to pay more than the min.
Problem.
Paying min monthly payment will take what seems like decades to clear the balance and leave us tight every month for cash. Almost a never ending story.
Ideal scenario.
I would like to take some kind of consolidation loan. Consolidate all the credit card payments into one monthly payment (around £575) and get the whole thing cleared for example over say 4 years assuming 10% interest rate (I would obviously look for the best rate).
All three cards are in my name leaving me at the top end of my borrowing capability meaning any application for anything new see's me burst through the lending ceiling and ultimately I would expect refusal. My wife has zero debt so I would guess we could transfer an element to her as the borrower.
Any advice on the best way forward, On the face of it we can afford to service the debt as it stands, the car loan cash freed up in 6 months will give us a bit of leeway. I just want to make the monthly payment with some sort of light at the end of the tunnel.
A secured loan with our own bank or a renowned lender would be considered as both our jobs are reasonably secure for the foreseeable future.
Any advice most welcome.
Situation.
I have circa £23k in 3 credit card debts run up over many many years. Mainly the debt increased through the period where we had a single wage as my wife stayed at home to raise a family.
Both of us are now working and between us we earn around £42k before tax.
Only other significant debt is car loan with circa 6 months to run on a 5 year deal at £250 per month.
We have around £30k positive equity on our home which has around 12 years to completion.
Payment history on everything is excellent so credit rating should be decent.
At present on the credit cards we are paying the min monthly payment which is not ideal but keeps things ticking over. Not a great deal of extra cash to pay more than the min.
Problem.
Paying min monthly payment will take what seems like decades to clear the balance and leave us tight every month for cash. Almost a never ending story.
Ideal scenario.
I would like to take some kind of consolidation loan. Consolidate all the credit card payments into one monthly payment (around £575) and get the whole thing cleared for example over say 4 years assuming 10% interest rate (I would obviously look for the best rate).
All three cards are in my name leaving me at the top end of my borrowing capability meaning any application for anything new see's me burst through the lending ceiling and ultimately I would expect refusal. My wife has zero debt so I would guess we could transfer an element to her as the borrower.
Any advice on the best way forward, On the face of it we can afford to service the debt as it stands, the car loan cash freed up in 6 months will give us a bit of leeway. I just want to make the monthly payment with some sort of light at the end of the tunnel.
A secured loan with our own bank or a renowned lender would be considered as both our jobs are reasonably secure for the foreseeable future.
Any advice most welcome.
0
Comments
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Best thing to do is post an SOA so we can tell you, but the last thing you want to do is get another loan out, yes it may sound easier but it may be harder then you think..
anyways, post an SOA. (Statement of Affairs)
Sorry, also your mortgage you state you have around 30k positive? can you not borrow the extra cash of them and add it to the mortgage? (so again, just a simple monthly.)[STRIKE]1/12/16 - £152,599.00 [/STRIKE]
[STRIKE]11/11/17 - £145,990.00 [/STRIKE] <> Overpaid £3916.
11/11/18 - £142,074.00
Barclays Car (5.99%)£0/£8,832.370 -
I doubt you will get a loan for that size, it is over half your joint income.
You probably won't get a secured loan either if there is only 30K equity in your property and you want to borrow 23K of that, it will take you over the LTV guidelines.
As suggested above, post an SOA to give a clearer picture.
0 -
Don't get a secured loan on your property. If for whatever reason ou were unable to pay, you put your family home at risk.
Post an SOA so people can give you advice on where to cut back so that you can overpay on your credit cards, even a £1 over the minimm montly payment will make a difference.
Consolidation usually isn't successful because in most cases people clear the cards with the loan money & then spend on the cards again, so doubling the debt!
Good luck
x0 -
consolidation could be an option however it seems to me that BEFORE you think about that, you need to make sure you live well within your means, which doesn't seem to be the case at the moment. You mention that you end up being really tight at the end of each month, so the fundamental issue is balancing the books and having a consistent and healthy excess to repay your debt with every month, before you think of doing anything else.
Post your SOA here and many people will give you good advice.
Best of luck! :-)0 -
Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 3
Number of children in household......... 1
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1660
Partners monthly income after tax....... 905
Benefits................................ 81
Other income............................ 0
Total monthly income.................... 2646
Monthly Expense Details
Mortgage................................ 672
Secured/HP loan repayments.............. 259
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 128
Electricity............................. 55
Gas..................................... 95
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 24
Mobile phone............................ 56
TV Licence.............................. 12
Satellite/Cable TV...................... 23
Internet Services....................... 30
Groceries etc. ......................... 400
Clothing................................ 100
Petrol/diesel........................... 150
Road tax................................ 12
Car Insurance........................... 55
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 15
Buildings insurance..................... 15
Contents insurance...................... 20
Life assurance ......................... 30
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2171
Assets
Cash.................................... 0
House value (Gross)..................... 115000
Shares and bonds........................ 0
Car(s).................................. 6500
Other assets............................ 0
Total Assets............................ 121500
Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 85000....(672)......0
Hire Purchase (HP) debt ...... 1500.....(259)......0
Total secured & HP debts...... 86500.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Egg............................13000.....360.......0
Virgin ........................5000......105.......0
Halifax........................5000......120.......0
Total unsecured debts..........23000.....585.......-
Monthly Budget Summary
Total monthly income.................... 2,646
Expenses (including HP & secured debts). 2,171
Available for debt repayments........... 475
Monthly UNsecured debt repayments....... 585
Amount short for making debt repayments. -110
Personal Balance Sheet Summary
Total assets (things you own)........... 121,500
Total HP & Secured debt................. -86,500
Total Unsecured debt.................... -23,000
Net Assets.............................. 12,000
Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using other browser.
The shortfall it shows for making payments to unsecured debt would come from the "other expenses". Lets just say I am waiting on pay day every month with the last week getting tight. All payments are covered regardless.0 -
gas seems very high, have you shopped around?
cut sky, you don't need it, freeview has plenty of channels
internet you can halve that, 10-15 quid per month you can get good packages
mobile phone seems too high, move to payasyougo with say giffgaff, 10 quid a month
plenty of room to cut on your groceries and clothing, you can easily save 200 a month
might not be easy to adjust to a lifestyle you're not used to, but it needs to be done... once you're debt free you'll reconsider
best of luck!0 -
Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 3
Number of children in household......... 1
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1660
Partners monthly income after tax....... 905
Benefits................................ 81
Other income............................ 0
Total monthly income.................... 2646
Monthly Expense Details
Mortgage................................ 672
Secured/HP loan repayments.............. 259
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 128
Electricity............................. 55 - that seems high, are you leaving lights on, equipment on standby as standby uses 90% of elec of item being on
Gas..................................... 95 - that seems really high, is there arrears
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 24
Mobile phone............................ 56 - high, consider pay and go, sim only, if contract ask of you can reduce a tariff
TV Licence.............................. 12
Satellite/Cable TV...................... 23
Internet Services....................... 30 - def high, shop around, or see if you can do a multi deal package
Groceries etc. ......................... 400
Clothing................................ 100
Petrol/diesel........................... 150
Road tax................................ 12
Car Insurance........................... 55 - 1 car?? shop around at renewal,
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0 - sorry to ask but no dentist, opticians etc??
Pet insurance/vet bills................. 15
Buildings insurance..................... 15 - at renewal shop around, some may be cheaper as joint, others single policies
Contents insurance...................... 20
Life assurance ......................... 30
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 - usually something in presents
Haircuts................................ 0 - is this right?
Entertainment........................... 0 (ditto till bottom)
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2171
Assets
Cash.................................... 0
House value (Gross)..................... 115000
Shares and bonds........................ 0
Car(s).................................. 6500
Other assets............................ 0
Total Assets............................ 121500
Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 85000....(672)......0
Hire Purchase (HP) debt ...... 1500.....(259)......0
Total secured & HP debts...... 86500.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Egg............................13000.....360.......0
Virgin ........................5000......105.......0
Halifax........................5000......120.......0
Total unsecured debts..........23000.....585.......-
Monthly Budget Summary
Total monthly income.................... 2,646
Expenses (including HP & secured debts). 2,171
Available for debt repayments........... 475
Monthly UNsecured debt repayments....... 585
Amount short for making debt repayments. -110
Personal Balance Sheet Summary
Total assets (things you own)........... 121,500
Total HP & Secured debt................. -86,500
Total Unsecured debt.................... -23,000
Net Assets.............................. 12,000
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using other browser.
The shortfall it shows for making payments to unsecured debt would come from the "other expenses". Lets just say I am waiting on pay day every month with the last week getting tight. All payments are covered regardless.
What I would suggest keep a spending diary and list every penny, at the mo the car loan jumps out as the fore runner, ok theres 6 mths left, but getting through the 6 mths
i've popped a few suggestions, on, it may seem like I'm adding extras, but want you to be sure that everything is accounted for.
Groceries, gas, sky, internet, phone, if you could tackle these then that would certainly make a dent in the £110. xxxx rip dad... we had our ups and downs but we’re always be family xx0 -
Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 3
Number of children in household......... 1
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1660
Partners monthly income after tax....... 905
Benefits................................ 81
Other income............................ 0
Total monthly income.................... 2646
Monthly Expense Details
Mortgage................................ 672
Secured/HP loan repayments.............. 259
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 128
Electricity............................. 55 - this seems very high have you shopped around like places such as utlity warehouse? they offer duel services on one bill.
Gas..................................... 95 as above.
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 24 again, you can reduce this to a one of fee (including phone and internet) from utlityware house (i reconmened them as I am with them and pay no more then £73.90 a month for phone, broadband, gas and electric)
Mobile phone............................ 56 again very high, when does your commitment end?
TV Licence.............................. 12
Satellite/Cable TV...................... 23 what's this sky? If so cancel your contract normal tv is enough now-a-days
Internet Services....................... 30 you could reduce this to 19.99 with utlity warehouse
Groceries etc. ......................... 400 seems high! Have you gone to cheaper supermarket brands?
Clothing................................ 100
Petrol/diesel........................... 150
Road tax................................ 12
Car Insurance........................... 55
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 15
Buildings insurance..................... 15
Contents insurance...................... 20
Life assurance ......................... 30
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0nothing here?
Haircuts................................ 0no hair cuts?
Entertainment........................... 0no fun in your life??
Holiday................................. 0
Emergency fund.......................... 0put something in here ASAP!
Total monthly expenses.................. 2171
Assets
Cash.................................... 0
House value (Gross)..................... 115000
Shares and bonds........................ 0
Car(s).................................. 6500
Other assets............................ 0
Total Assets............................ 121500
Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 85000....(672)......0
Hire Purchase (HP) debt ...... 1500.....(259)......0
Total secured & HP debts...... 86500.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Egg............................13000.....360.......0
Virgin ........................5000......105.......0
Halifax........................5000......120.......0
Total unsecured debts..........23000.....585.......-
Monthly Budget Summary
Total monthly income.................... 2,646
Expenses (including HP & secured debts). 2,171
Available for debt repayments........... 475
Monthly UNsecured debt repayments....... 585
Amount short for making debt repayments. -110
Personal Balance Sheet Summary
Total assets (things you own)........... 121,500
Total HP & Secured debt................. -86,500
Total Unsecured debt.................... -23,000
Net Assets.............................. 12,000
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using other browser.
The shortfall it shows for making payments to unsecured debt would come from the "other expenses". Lets just say I am waiting on pay day every month with the last week getting tight. All payments are covered regardless.
look @ above you can try and save, try going for a loan to get a one off monthly payment or one card for all your debts..[STRIKE]1/12/16 - £152,599.00 [/STRIKE]
[STRIKE]11/11/17 - £145,990.00 [/STRIKE] <> Overpaid £3916.
11/11/18 - £142,074.00
Barclays Car (5.99%)£0/£8,832.370 -
Clothing - £100 per month!! Really high. Go without for a few months
x0 -
Hi
Well done on realising you need to sort the problem out, I read a while ago that over half of consolidation loans lead to more debt than orginally. I made this mistake too and it ended up with me doubling my debt because like yourselves my lifestyle was unsustainable on my budget.
I took the advice like you've been given above and its amazing how much you can cut down when you really put your all into it and the debt will be gone much quicker than if you take out even more debt.
Use www.whatsthecost.com to work out your "snowball" it shows you which debt you should concentrate on paying off first, work on them one at a time and before long you will see a differnce.
If your wife can get credit a 0% balance transfer might be adviseable as long as you do cancel the card you clear, this will reduce the interest you're charged
Good LuckSantander 0% £1,529.94
Sainsbury's 0% £4,371.31
Total 0% £5,901.25
AIM: Pay off debt & simultaneously save for deposit to buy a house by Oct 2020.
Mar Challenge: Stay within groceries & eating out budget.0
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