Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • emmamc77
    • By emmamc77 14th Mar 17, 9:52 PM
    • 15Posts
    • 7Thanks
    emmamc77
    will be able to fix this?
    • #1
    • 14th Mar 17, 9:52 PM
    will be able to fix this? 14th Mar 17 at 9:52 PM
    Hello everyone,

    Basically after a few really awful years of IVF and other catastrophes, we have found in self in a large amount of debt (65k). Me and my husband are now both back working full time and we feel that this is our time to sort out this mess, before it robs of our future., I will do a proper SOA tomorrow when I am more awake! Here are our basic figures -

    We take home £4,300 per month between us

    our mortgage, all household bills and direct debits ( excl debt payments) comes to £1500

    our minimum debt payments are around £1300

    We need around £600 a month to cover food and fuel and childcare

    We would like to save £150 as we have no emergency fud

    This means that we have about £750 to add to our debt repayments. This is doable now that we are both working full time. This means that we can potentially pay 2k a month off the debts.

    The debts are spread across credit cards and a loan, some at 0% and some at higher rates - we have learnt about how to do the snowball method and we are going to do this to clear the debt asap.

    We have £75k equity in our house, however we don't want to use that.

    Neither of us want to have to enter in to an DMP/IVA or bankruptcy - please tell us that this won't happen if we can afford to pay?? We just want to pay it off and then get on with the next stage of our lives. We don't want to trash our credit files.
Page 2
    • angelpye
    • By angelpye 16th Mar 17, 12:16 PM
    • 993 Posts
    • 3,634 Thanks
    angelpye
    You can do this. Honestly once you have a plan that suits your situation you will feel so much better. The low feeling will pass
    Happiness is wanting what you have...
    Debt Jan 2017: £2589.22 DFD: Sept 2022 April 2022 but this Marching Minimalist can beat that!
    Use it or Loose it gym target: Feb'17 5/6 Mar 4/6
    EF £0/£4200
    • emmamc77
    • By emmamc77 16th Mar 17, 4:48 PM
    • 15 Posts
    • 7 Thanks
    emmamc77
    I hope so. I sit and listen to colleagues moaning about their 2k credit card bills or 8k car loans and I think to myself "if only you knew!" Nobody in our circle has a clue that we are in debt crisis
    • worriedDan
    • By worriedDan 16th Mar 17, 5:10 PM
    • 168 Posts
    • 480 Thanks
    worriedDan
    Hi Emma,

    I am not sure that you are in debt crisis. I actually watched a Martin Lewis video about this as part of my own LBM process. Apparently if you can afford the minimum payments, regardless of the size of your debts AND still afford normal living expenses then you are not in debt crisis. I owe a similar amount to you, with a similar income. My debts FEEL like a crisis to me, however I am acutely aware that someone earning £1000 per month and owing £20k is much more of a crisis that my 57K debts on a 70K salary.
    • emmamc77
    • By emmamc77 17th Mar 17, 8:09 AM
    • 15 Posts
    • 7 Thanks
    emmamc77
    Thanks Dan,

    I just need to get a bit of perspective I think. It all feels very 'heavy' at the moment.
    • enthusiasticsaver
    • By enthusiasticsaver 17th Mar 17, 8:39 AM
    • 3,544 Posts
    • 6,174 Thanks
    enthusiasticsaver
    Definitely snowball. Tackle creation card first then Asda then the 0%(if still 0) cards in order of first with deals expiring.
    Debt and mortgage free and saving for early retirement
    • nkkingston
    • By nkkingston 17th Mar 17, 11:22 AM
    • 419 Posts
    • 457 Thanks
    nkkingston
    Can you shift any of the high interest debt to the 0% cards without incurring high fees? There's a calculator somewhere that checks whether the money transfer fees would wipe out the benefits. It may depend on how long the deals are and the interest once they expire as to whether it's worth it, but even a few month's interest saved could be worth it.
    Mortgage
    June 2016: £93,295
    June 2017: £82,116.67
    • emmamc77
    • By emmamc77 17th Mar 17, 12:54 PM
    • 15 Posts
    • 7 Thanks
    emmamc77
    Can you shift any of the high interest debt to the 0% cards without incurring high fees? There's a calculator somewhere that checks whether the money transfer fees would wipe out the benefits. It may depend on how long the deals are and the interest once they expire as to whether it's worth it, but even a few month's interest saved could be worth it.
    Originally posted by nkkingston
    I can't right now as I have just done a shuffle. Because I have applied for a few things my credit score has taken a dent. I don't want to run the risk of doing further damage as I will need the 0% deals later on.

    I actually called Stepchange last night and spoke to an advisor. I felt that I needed to talk to someone who dealt with this everyday. The man I spoke to was amazing but told me quite clearly that we don't need a debt management plan as we are easily able to afford the contractual minimum payments. I bombarded the poor guy with questions but he was very obliging! He told me that our level of debt is something he deals with everyday and that the only thing that made us unusual was the fact that we are able to manage it and we are not in arrears.He also told me that our level of debt was not uncommon amongst people on far lower incomes than us. As much as I wouldn't want anyone to suffer hardship, there is some reassurance in knowing that we are not alone.

    I was more relaxed after this conversation. I was totally convinced that my debts were totally extreme and that somewhere along the line we would be forced into an IVA
    bankruptcy - totally irrational I know as we are paying it off BUT I have not been in a good place.
    • emmamc77
    • By emmamc77 21st Mar 17, 6:30 PM
    • 15 Posts
    • 7 Thanks
    emmamc77
    Hi Everyone,

    I have done a new SOA which I think is more realistic. I have increased the amount that I had previously allocated for presents and entertainment etc as I agree that my first SOA was unrealistic. The last thing I want to do is make it so unachievable that I ended up giving up.

    I am going to use the £1120 surplus to snowball the debts, starting with the 2 credit cards with the high interest rates. This effectively means that I could be paying well over 2k a month at the debts.

    Can I really do this?

    Household Information[/b]
    Number of adults in household........... 2
    Number of children in household......... 1
    Number of cars owned.................... 2

    Monthly Income Details

    Monthly income after tax................ 2100
    Partners monthly income after tax....... 2120
    Benefits................................ 82
    Other income............................ 0
    Total monthly income.................... 4302


    Monthly Expense Details

    Mortgage................................ 450
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 0
    Electricity............................. 20
    Gas..................................... 50
    Oil..................................... 0
    Water rates............................. 35
    Telephone (land line)................... 12.99
    Mobile phone............................ 50
    TV Licence.............................. 12
    Satellite/Cable TV...................... 0
    Internet Services....................... 20
    Groceries etc. ......................... 250 This will be achievable if we meal plan.
    Clothing................................ 20
    Petrol/diesel........................... 160
    Road tax................................ 15
    Car Insurance........................... 50
    Car maintenance (including MOT)......... 20
    Car parking............................. 10
    Other travel............................ 0
    Childcare/nursery....................... 140
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 20
    Contents insurance...................... 0
    Life assurance ......................... 28
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 50 - £600 per year is surely enough?
    Haircuts................................ 10
    Entertainment........................... 150 - Not sure about this. Perhaps too high??
    Holiday................................. 0
    Emergency fund.......................... 50
    Total monthly expenses.................. 1622.99



    Assets

    Cash.................................... 0
    House value (Gross)..................... 145000
    Shares and bonds........................ 0
    Car(s).................................. 7000
    Other assets............................ 0
    Total Assets............................ 152000



    Secured & HP Debts

    Description....................Debt......Monthly.. .APR
    Mortgage...................... 68000....(450)......0
    Total secured & HP debts...... 68000.....-.........-


    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    cc1............................15000.....300...... .0
    cc2............................8500......180...... .0
    loan...........................20000.....489...... .0
    dh cc..........................10000.....350.......6. 9
    asda...........................4500......100...... .19.9
    creation.......................3000......88....... .27.9
    hallifax.......................4400......50....... .0
    Total unsecured debts..........65400.....1557......-



    Monthly Budget Summary

    Total monthly income.................... 4,302
    Expenses (including HP & secured debts). 1,622.99
    Available for debt repayments........... 2,679.01
    Monthly UNsecured debt repayments....... 1,557
    Amount left after debt repayments....... 1,122.01
    - This will be thrown at the debts using the snowball method ( I might save £100 of it)

    Personal Balance Sheet Summary
    Total assets (things you own)........... 152,000
    Total HP & Secured debt................. -68,000
    Total Unsecured debt.................... -65,400
    Net Assets.............................. 18,600
    • worriedDan
    • By worriedDan 21st Mar 17, 7:58 PM
    • 168 Posts
    • 480 Thanks
    worriedDan
    Welcome back Emma. Glad to see that you are working through this.
    • Lumanous
    • By Lumanous 21st Mar 17, 9:09 PM
    • 107 Posts
    • 255 Thanks
    Lumanous
    Hello Emma I agree so much with what others are saying here, it can seem daunting at first but you will feel better once it settles, it's that realisation/panic moment that can bring you down but you are in a good enough place to fix it and you are definitely not alone!

    Look forward to reading more on your journey if you feel like sharing. I wish you good luck and lots of positive energy in your clearing mission you can do this!

    When you feel up for it I would definitely recommend checking in on other stories here there are a several people who have either come back already from a similar level or they are just starting out and working on bringing down those monthly outgoings too. Might help with some ideas and help with seeing steps others are taking to make small changes to bring forward that date doesn't have to be on every front all at once but little bits here and there can all help.

    No, my username is not a typo
    • emmamc77
    • By emmamc77 22nd Mar 17, 2:12 PM
    • 15 Posts
    • 7 Thanks
    emmamc77
    Just been number crunching and I actually think that I can do this in 30 months by paying between £2200-£2400 per month off the debts. This will leave us with a small surplus that we can add to emergency fund. 30 months doesn't sound too bad! At the start of my journey I thought it would take me at least a decade.
    • angelpye
    • By angelpye 22nd Mar 17, 2:19 PM
    • 993 Posts
    • 3,634 Thanks
    angelpye
    Hi Emma,

    Did you use whatsthecost? Or something similar? Makes planning payments so much easier.

    With your question about entertainment, Might be worth leaving how it is now and working with those figures. I found in he first couple of months I needed to adjust things for things I had forgotten and one off things but also spend less as much more conscious about it. Well done for getting a plan
    Happiness is wanting what you have...
    Debt Jan 2017: £2589.22 DFD: Sept 2022 April 2022 but this Marching Minimalist can beat that!
    Use it or Loose it gym target: Feb'17 5/6 Mar 4/6
    EF £0/£4200
    • emmamc77
    • By emmamc77 23rd Mar 17, 6:34 PM
    • 15 Posts
    • 7 Thanks
    emmamc77
    Hi Emma,

    Did you use whatsthecost? Or something similar? Makes planning payments so much easier.

    With your question about entertainment, Might be worth leaving how it is now and working with those figures. I found in he first couple of months I needed to adjust things for things I had forgotten and one off things but also spend less as much more conscious about it. Well done for getting a plan
    Originally posted by angelpye
    Hi,I used the stoozing.com one. It's amazing to see how the snowballl effect really accellerates your debt payments. I have been watching a lot of Dave Ramsey on You Tube. He recommends paying the smallest balance first but I think I am going to do it in order of interest - high to low. Is this a decent strategy?
    • emmamc77
    • By emmamc77 23rd Mar 17, 7:01 PM
    • 15 Posts
    • 7 Thanks
    emmamc77
    I'd pay off the creation card and then the Asda card, you can do this is six months. Those two cards might offer you a 0% deal so as the others run out you can do transfers. With those 2 paid you then have £1,500 a month to throw at the other debts. By Christmas you could have the Halifax card clear and another £50 a month for the debt. At that rate this time next year you could be sub £50k and it starts to sound much more doable. Good luck with it.

    Just seen the second SOA so not quite as above but you get the idea. Of course the payments on all the 0% cards will also be reducing so a bit more complicated but it will be going down fast.
    Originally posted by mumps
    We are gonna throw at least 2k a month at the debts. By this time next year I need down in the 40k's!!! We really do have to just do it now. We have talked about doing it for too long but it always felt unachievable
    • mumps
    • By mumps 23rd Mar 17, 7:14 PM
    • 6,092 Posts
    • 12,719 Thanks
    mumps
    We are gonna throw at least 2k a month at the debts. By this time next year I need down in the 40k's!!! We really do have to just do it now. We have talked about doing it for too long but it always felt unachievable
    Originally posted by emmamc77
    Yes I forgot the regular payments you are already paying which are £1,500 already. I agree with you that you should do it under 3 years. That sounds great.
    Sell £1500

    2831.00/£1500
    • mumps
    • By mumps 23rd Mar 17, 7:16 PM
    • 6,092 Posts
    • 12,719 Thanks
    mumps
    Hi,I used the stoozing.com one. It's amazing to see how the snowballl effect really accellerates your debt payments. I have been watching a lot of Dave Ramsey on You Tube. He recommends paying the smallest balance first but I think I am going to do it in order of interest - high to low. Is this a decent strategy?
    Originally posted by emmamc77
    For you the highest interest ones are pretty well the smallest anyway, Halifax is £100 lower than Asda but that's not very significant so I think it is a no brainer to get rid of the Creation and Asda first. You can make such good overpayments it really makes a difference very quickly.
    Sell £1500

    2831.00/£1500
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,851Posts Today

8,174Users online

Martin's Twitter
  • RT @kcbelsham: @MartinSLewis . This Account would have to pay at least 12% to achieve £1 million in 35 years . Any ideas ( think it is impo?

  • Really? The highest interest rate amount for that volume of cash currently is 2%? You'd need an interest rate explo? https://t.co/6YRk1wLdTl

  • Today's Twitter poll: Is it acceptable to take your shirt off and go topless in the street when it's scorching in the UK?

  • Follow Martin