Can't afford to repay debts whilst on Mat Leave. Any suggestions?

Kaloloke · 4 April 2017 at 3:14PM

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 4
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 1250
Partners monthly income after tax....... 600
Benefits................................ 348
Other income............................ 0
Total monthly income.................... 2198

Monthly Expense Details
Mortgage................................ 322
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 109
Electricity............................. 60
Gas..................................... 60
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 45
Mobile phone............................ 45
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 450
Clothing................................ 50
Petrol/diesel........................... 160
Road tax................................ 70
Car Insurance........................... 75
Car maintenance (including MOT)......... 50
Car parking............................. 20
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 150
Medical (prescriptions, dentist etc).... 5
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 0
Life assurance ......................... 20
Other insurance......................... 41
Presents (birthday, christmas etc)...... 40
Haircuts................................ 20
Entertainment........................... 0
Holiday................................. 50
Emergency fund.......................... 0
Xmas.................................... 20
Annual tickets.......................... 25
Labour.................................. 6
Union................................... 6
Total monthly expenses.................. 1954

Assets
Cash.................................... 0
House value (Gross)..................... 140000
Shares and bonds........................ 0
Car(s).................................. 6300
Other assets............................ 0
Total Assets............................ 146300

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 60000....(322)......3.29
Total secured & HP debts...... 60000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
MBNA...........................3300......25........0
Tesco..........................1600......70........0
Santander Loan.................6500......147.......8
Mum............................2000......0.........0
Total unsecured debts..........13400.....242.......-

Monthly Budget Summary
Total monthly income.................... 2,198
Expenses (including HP & secured debts). 1,954
Available for debt repayments........... 244
Monthly UNsecured debt repayments....... 242
Amount left after debt repayments....... 2

Personal Balance Sheet Summary
Total assets (things you own)........... 146,300
Total HP & Secured debt................. -60,000
Total Unsecured debt.................... -13,400
Net Assets.............................. 72,900

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

My income is going to fall to approximately £600 per month in September 2017 and then £0 in February 2018 until May 2018. Wages will then be £1100 per month from June 2018.

This is a deficit of approximately 8250 on our income.

I think my child benifit will increase by £13 per week. So 676 for the year

We obviously won't be able to spend on anything but the absolute essentials whilst on leave.

My phone contract ends in June so I will get a much cheaper deal. I am hoping to save at least £180.

We are converting our van into a 7 seater so that we can sell our car in June 2017. We should make approximately 1500 from selling the car and save approximately 1500 per year on not having a 2nd vehicle. So hopefully a £3000 saving

I want to get a better mortgage deal in June as that is when my current deal ends. So there will hopefully be a saving of £360 per year there.

I have got email advice from stepchange who have suggested that I pay £1 a month to each debt. My concern is that if I do this I will then end up owing far more money to my debts because of defaulting and the creditors trying to get their money via debt recovery, charging me interest and for the debt recovery.

I really don't want to add the debt to my mortgage but it is an option that would probably end up costing another £15000 on top.

Would we be better off going into our £3000 overdraft and paying £60 a month OD fee so that we don't default on the loan and cards? Or should I try to get another 0% card to see us through the next year? Or both?

I could pay £25 a month to the tesco card but at £70 it is paid off before the end of the 0% deal. At £25 I would start to get interest before I can pay it off.

Any advice would really be appreciated.

System · 4 April 2017 at 3:56PM

If you cannot afford to survive the full maternity leave period, why not shorten it to say three-six months and then go back to work full or part time with a child care top up.

This 12-month maternity leave, although I completely agree with if you can afford it, is a relatively new thing and isn't mandatory.

McKneff · 4 April 2017 at 4:17PM

Your shopping bill is astronomical....

Kaloloke · 4 April 2017 at 5:01PM

Is £450 really astronomical for groceries for 6 people?

Kaloloke · 4 April 2017 at 5:08PM

I am trying to find a way to take the 12 months off. Hence why I am asking for advice. I would rather go into our overdraft, get another 0% card or put it on the mortgage than go back early. I have a job which would be very difficult to accomodate breastfeeding. Although they might put me on paid gardening leave. It may be something to ask them. We don't get child care top up as we work shifts so as not to use child care.

warby68 · 4 April 2017 at 5:27PM

Unless I am missing something, your financial position is relatively precarious (£2 surplus with some debt on minimum payments) prior to any coming fall in income so its very hard to see a manageable way to afford your proposed £8250 income drop.

Even with all your proposed savings, you are planning to run up more debt to achieve your 12m of leave. When you go back your income looks to be £100 lower than it is now (net of child benefit) so I just don't see how you can 'risk' more debt and how you will service it once back at work.

Presumably you have explored any benefit options and your partner increasing their income?

I'm sorry but it does look as if you are heading to a formal debt solution even if not immediately.

PS this might be a little healthier if yours is the £600 second income in the SoA but your post reads as if it is the first.

Kaloloke · 4 April 2017 at 6:00PM

Unfortunately mine is the first income.

The MBNA is on minimum on a 0% for another 26 months. Hence I want to keep the Tesco at 70 to pay it off before it gets interest costs. Then I could pay the MBNA £95 a couple of months and then move what's left to another 0%..

I am considerind taking out another 0% card on purchases to make up the rest of the loss after savings over the next year. I think I may get more in tax credits due to the loss in income but not entirely sure as no one can tell me whether I will have moved to universal credit or not as my area is changing this year and after numerous phonecalls to both tax credits and uc I cannot get an answer. So I am basing my benefits on the tax credits we are getting now.

Kaloloke · 4 April 2017 at 6:07PM

I'm just trying to figure out if financially it is better to use our £3000 OD, a 0% credit card or to stick all the debt and a bit more to get through the next 12 months on the mortgage which whilst it doesn't increase my monthly payments by much will cost more in the long run. Or get a new mortgage deal and take a mortgage payment holiday whilst on leave which again will cost me more in the long run.

January2015 · 4 April 2017 at 6:10PM

I just read your signature - are you really 56 and just about to embark on maternity leave? I am in awe of you if you are. Congratulations on the forthcoming baby

Anyway all I really wanted to say was that I wouldn't recommend taking on another credit card, or going into the overdraft to achieve the maternity leave. If you can't afford something - taking on more debt is not the answer.

I'm not saying don't take the maternity leave - but perhaps you need to take advice on your position from one of the debt charities. That doesn't mean you will need a debt solution from one of them, but they will help you think about your income and expenditure and give you options. Whatever those options are - increasing your debt should not be one of them.

Edit: thinking about it a bit more, if you are 56 you are likely to be thinking of retiring or slowing down the employment in the next ten years or so and you should definitely not be thinking of increasing your debt now, but should be planning to clear it over those years. Definitely talk to one of the debt charities. If you do need a solution such as a DMP - they are not hard to live with, in fact our life has been so much better since embarking on our DMP.

Kaloloke · 4 April 2017 at 6:15PM

Definitely not 56. Typo.

January2015 · 4 April 2017 at 6:17PM

Kaloloke wrote: »

Definitely not 56. Typo.

:rotfl: Thank you for clarifying. I am still in awe of you regardless of your age. I would want to take as much time as possible with a new baby. There will be a solution, but it shouldn't mean increasing your debt.

Can't afford to repay debts whilst on Mat Leave. Any suggestions?

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