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  • FIRST POST
    • Kev224
    • By Kev224 13th Feb 18, 5:37 AM
    • 2Posts
    • 0Thanks
    Kev224
    Can't live off Credit anymore
    • #1
    • 13th Feb 18, 5:37 AM
    Can't live off Credit anymore 13th Feb 18 at 5:37 AM
    Hi

    I have a problem, I've been living off credit most of the time for years now. Having separated with my partner recently I can see how foolish I've been trying to make our lives work in this way, patching up our problems with spending.

    I'm a bit worried as I'm self-employed and suffer from depression (I could no longer operate in an office environment with all the anxiety it brought me). Not sure if the self-employment status will narrow my options. Glad to report I managed to give up smoking recently which helps lower the outgoings. The maximum limit on my 5th credit card is closing in though so I have to address this urgently somehow.

    Anyway, here's my SOA

    Statement of Affairs and Personal Balance Sheet

    Household Information

    Number of adults in household........... 1
    Number of children in household.........
    Number of cars owned.................... 1

    Monthly Income Details

    Monthly income after tax................ 1080
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 1080


    Monthly Expense Details

    Mortgage................................ 270
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 92
    Electricity............................. 8
    Gas..................................... 5
    Oil..................................... 0
    Water rates............................. 12
    Telephone (land line)................... 0
    Mobile phone............................ 11
    TV Licence.............................. 12
    Satellite/Cable TV...................... 6
    Internet Services....................... 29
    Groceries etc. ......................... 160
    Clothing................................ 15
    Petrol/diesel........................... 80
    Road tax................................ 21
    Car Insurance........................... 50
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 8
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 17
    Contents insurance...................... 0
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 20
    Haircuts................................ 5
    Entertainment........................... 100
    Holiday................................. 0
    Emergency fund.......................... 0
    Overdraft fee........................... 6
    Alcohol & e-cigs........................ 60
    Gym..................................... 10
    Total monthly expenses.................. 997



    Assets

    Cash.................................... 0
    House value (Gross)..................... 70000
    Shares and bonds........................ 0
    Car(s).................................. 1400
    Other assets............................ 0
    Total Assets............................ 71400



    Secured & HP Debts

    Description....................Debt......Monthly.. .APR
    Mortgage...................... 58863....(270)......3.99
    Total secured & HP debts...... 58863.....-.........-


    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    Overdraft......................1900......0........ .19.9
    Credit Card Barclays...........5768......130.......0
    Credit Card Tesco..............2469......25........0
    Credit Card Santander..........1409......25........17.9
    Credit Card Virgin.............2980......89........19.17
    Credit Card Halifax............1733......17........0
    Total unsecured debts..........16259.....286.......-



    Monthly Budget Summary

    Total monthly income.................... 1,080
    Expenses (including HP & secured debts). 997
    Available for debt repayments........... 83
    Monthly UNsecured debt repayments....... 286
    Amount short for making debt repayments. -203


    Personal Balance Sheet Summary
    Total assets (things you own)........... 71,400
    Total HP & Secured debt................. -58,863
    Total Unsecured debt.................... -16,259
    Net Assets.............................. -3,722

Page 1
    • enjoyyourshoes
    • By enjoyyourshoes 13th Feb 18, 7:38 AM
    • 1,034 Posts
    • 1,267 Thanks
    enjoyyourshoes
    • #2
    • 13th Feb 18, 7:38 AM
    • #2
    • 13th Feb 18, 7:38 AM
    Hi, good luck with the journey.

    Can you earn more money?

    Look at getting better mortgage rate, even if your on a fixed it might be calculating the reduced monthly pay,mrnts against any ERC they may charge?

    Watch out of post deal (0%) interest charges on the CC when you prioritise paying off the debts.

    Look at reviewing all the none essential cost and seeing if you can eliminate or minimise and ensure these savings can get thrown at the debt/ (entertainment, food (i know its essential but for 1 person its a smudge over the minimum), alcohol, edits, gym , subscription tv.

    Also look at increasing the rate per hour you charge to maximise income?

    Has the overspending generated stuff you can sell? if so try that as less clutter is often better?

    Again good luck
    Debt is a symptom, solve the problem.
    • fatrab
    • By fatrab 13th Feb 18, 7:52 AM
    • 336 Posts
    • 632 Thanks
    fatrab
    • #3
    • 13th Feb 18, 7:52 AM
    • #3
    • 13th Feb 18, 7:52 AM
    Hi and welcome to the forum

    A few areas I'd say need immediately addressed:

    Have you applied for single person discount on your council tax?
    Your gas and electricity are £13 per month?
    You should be able to slightly reduce the grocery shopping by using discount supermarkets if you have one locally?
    Can you make do with the clothes you have for the rest of this year without buying any more?
    If you only spend £20/week on fuel do you actually need to run a car? Could you sell it, reduce those costs and clear your overdraft with the proceeds? You've nothing in there for car maintenance either, your car will need routine wear and tear items, tyres, oil change etc.
    Your spending on entertainment, alcohol and gym almost cover your monthly shortfall - To be blunt, you need to stop spending on "wants" and concentrate on the "needs" in your life.

    Stop using and cut up the credit cards immediately and learn to live within your means.

    Regarding the credit card debt, you need to address those with the highest rates of interest first. If possible get them onto new 0% deals, if not - any savings from the above need to be thrown at the debt.

    Can you earn more money either by taking a second job or seeking alternative employment? Would taking a full time job relieve any of the stresses of self employment and pay a higher salary?


    Best of luck
    Last edited by fatrab; 13-02-2018 at 7:55 AM.
    Make a plan. Stick to the plan. If it's not in the plan - DONT DO IT!
    February's Goals - 12/18 NSD - 12/19 Lunches - 19/28 AFD - 15/28 TAFD (take away free days)
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    • Mahsroh
    • By Mahsroh 13th Feb 18, 8:39 AM
    • 302 Posts
    • 262 Thanks
    Mahsroh
    • #4
    • 13th Feb 18, 8:39 AM
    • #4
    • 13th Feb 18, 8:39 AM
    The obvious ones, as others have said, is entertainment, alcohol, e-cigs, gym. I would review those first and foremost and see where you can save. That's ultimately where your shortfall is coming, and the main reason why you're reliant on credit each month.


    As others have said, check about the single person discount on your council tax. If you don't claim that already, that will reduce your bill by 25%.


    You almost certainly could get a better deal on your mortgage if you're not a fixed deal.


    I know it can vary massively depending on age, previous claims etc, but £600 a year for car insurance seems potentially high, without knowing your specific circumstances. Possibly something to look at.
  • National Debtline
    • #5
    • 13th Feb 18, 11:20 AM
    • #5
    • 13th Feb 18, 11:20 AM
    Hi Kev


    Welcome to the forum and well done on taking steps to deal with your debts. Your statement of affairs (SOA) shows your outgoings are reasonable, although some areas seem exceptionally low (gas and electricity, nothing budgeted for car maintenance) and other areas could be reduced if you chose to (entertainment, smoking).


    Could you rent out a room in your property for an extra source of income? You need your mortgage lender's permission to do this, but the government allows you to earn £7,500 per year tax free by doing this.


    Based on your SOA your debts are not currently affordable, and the situation could get worse once the 0% interest period come to an end on your credit cards. To deal with that you may be able to consider self negotiating reduced payments and a freeze on all interest, or an option like an IVA where a large proportion of your debt is written off. I'd recommend you speak to Business Debtline for some free and impartial advice on your options as a self employed person. You can call them on 0800 197 6026 or visit www.businessdebtline.org. Good luck with it all.


    Susie
    @natdebtline
    Last edited by National Debtline; 13-02-2018 at 11:22 AM.
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • EssexHebridean
    • By EssexHebridean 13th Feb 18, 11:37 AM
    • 8,479 Posts
    • 45,252 Thanks
    EssexHebridean
    • #6
    • 13th Feb 18, 11:37 AM
    • #6
    • 13th Feb 18, 11:37 AM
    Comments in red...

    Hi

    I have a problem, I've been living off credit most of the time for years now. Having separated with my partner recently I can see how foolish I've been trying to make our lives work in this way, patching up our problems with spending.

    I'm a bit worried as I'm self-employed and suffer from depression (I could no longer operate in an office environment with all the anxiety it brought me). Not sure if the self-employment status will narrow my options. Glad to report I managed to give up smoking recently which helps lower the outgoings. The maximum limit on my 5th credit card is closing in though so I have to address this urgently somehow.

    Anyway, here's my SOA

    Statement of Affairs and Personal Balance Sheet

    Household Information

    Number of adults in household........... 1
    Number of children in household.........
    Number of cars owned.................... 1

    Monthly Income Details

    Monthly income after tax................ 1080 This is low - any way of boosting it?
    Second job? Overtime?

    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 1080


    Monthly Expense Details

    Mortgage................................ 270
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 92 Single person discount applied and spread across 12 months rather than the standard 10?
    Electricity............................. 8 Nope - sorry, don't believe this - both this and the gas figure look suspiciously low - the gas could be close if you only use it for cooking but in that event you're paying too much!
    Gas..................................... 5
    Oil..................................... 0
    Water rates............................. 12 Metered I assume. Good work.
    Telephone (land line)................... 0
    Mobile phone............................ 11
    TV Licence.............................. 12 12.37 I think?
    Satellite/Cable TV...................... 6 Bin this & use a free service
    Internet Services....................... 29 This includes landline I take it? Is this the best deal you can get?
    Groceries etc. ......................... 160 You can nail this down a bit as it's just for one. The Old Style board will be of help here.
    Clothing................................ 15 A "socks & pants" only regime for a while can cut this a bit.
    Petrol/diesel........................... 80
    Road tax................................ 21 Do you pay this monthly? If so you need to save to pay annually to avoid paying the premium.
    Car Insurance........................... 50 This is high - is this the best value policy you could get for your requirements?
    Car maintenance (including MOT)......... 0 How so? Even if the car's brand new (which is clearly isn't) it must need servicing, tyres, screenwash, wiper blades?
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 8
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 17 Assume this combines contents cover as well?
    Contents insurance...................... 0
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 20 Where do you save this? You're not showing any cash assets?
    Haircuts................................ 5
    Entertainment........................... 100 You could cut this a bit.
    Holiday................................. 0
    Emergency fund.......................... 0 As a homeowner you need something here - use some of the savings from elsewhere to start building this.
    Overdraft fee........................... 6
    Alcohol & e-cigs........................ 60 Bluntly - give up. It'll do your health the world of good anyway!
    Gym..................................... 10
    Total monthly expenses.................. 997



    Assets

    Cash.................................... 0
    House value (Gross)..................... 70000
    Shares and bonds........................ 0
    Car(s).................................. 1400
    Other assets............................ 0
    Total Assets............................ 71400



    Secured & HP Debts

    Description....................Debt......Monthly.. .APR
    Mortgage...................... 58863....(270)......3.99
    Total secured & HP debts...... 58863.....-.........-


    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    Overdraft......................1900......0........ .19.9
    Credit Card Barclays...........5768......130.......0 definitely 0%? Have you got a note of when this finishes?
    Credit Card Tesco..............2469......25........0 definitely 0%? Have you got a note of when this finishes?
    Credit Card Santander..........1409......25........17.9
    Credit Card Virgin.............2980......89........19.17
    Credit Card Halifax............1733......17........0 definitely 0%? Have you got a note of when this finishes?
    Total unsecured debts..........16259.....286.......-



    Monthly Budget Summary

    Total monthly income.................... 1,080
    Expenses (including HP & secured debts). 997
    Available for debt repayments........... 83
    Monthly UNsecured debt repayments....... 286
    Amount short for making debt repayments. -203


    Personal Balance Sheet Summary
    Total assets (things you own)........... 71,400
    Total HP & Secured debt................. -58,863
    Total Unsecured debt.................... -16,259
    Net Assets.............................. -3,722

    Originally posted by Kev224
    Some good points have already been made here but bluntly there is just not enough scope in that SOA to increase the surplus to the amount you need to make a serious impact on the debt - you have to work out a way of increasing your income.

    I'd suggest going through and making whatever savings you can as well as correcting things like the gas/electric figures which aren't right at the moment clearly.

    Take a look at the boost your income board for ideas for adding a small amount to your monthly income, and consider options for a second job, can you do extra hours within your existing part time employment? Are your mental health issues diagnosed and are you under treatment? if not then consider taking that path as the last thing you need is more stress from the debt as well so if the root cause could get dealt with that might open up all sorts of possibilities for you.

    Gym could go - fair comment, but actually as a monthly sum it's not huge and if you're making use of it a couple of times a week that's possibly good value and the savings would be better made elsewhere. I'd definitely look at ditching the ecigs/alcohol though - maybe take a view to either be healthy (gym) or not (the others) and choose one or t'other - but in any event that alcohol & related spend needs to fall, and fall a lot. One thing I will say is that exercise and sport is FABULOUS for mental health - far FAR better than alcohol...

    As things stand your entertainment figure is inaccurate - as there's stuff on the SOA that is also "entertainment" - if you add up gym, ecigs etc, TV as well that comes pretty close to making your entertainment spend double that £100 you estimate which I suspect feels less sensible to you that when it's broken down into sections.
    MORTGAGE FREE 30/09/2016
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    • Kev224
    • By Kev224 13th Feb 18, 5:16 PM
    • 2 Posts
    • 0 Thanks
    Kev224
    • #7
    • 13th Feb 18, 5:16 PM
    • #7
    • 13th Feb 18, 5:16 PM
    Hi all and thank you so much for so many detailed and thoughtful responses. It feels better already.

    I'll try to answer all points raised in one go

    Income
    It's an average of what I've received over the last few months. In the next few days I'll receive over £1300 which is a pleasing improvement but I've no assurances this will last. My rate is fixed with my main client but if I improve performance I can source more work from elsewhere. It can be a bit unpredictable, not just how much I get paid but when. Since I went self-employed last year I feel far less anxious and stressed about other parts of life but the separation is taking it's own toll. I know I have capacity to do more work though, just getting a good night's sleep and focusing the next day is a battle in itself (see my post time on the OP!)

    A second job is a daunting prospect but could be filed under last resort.

    Mortgage
    No longer fixed rate as of December 2017 but I checked with my existing lender and they wouldn't consider a new deal due to my credit rating. Also this is a joint mortgage and my ex-partner, who I still see regularly and am on good terms with, currently has no income (her non-financial issues are worse than mine to be honest).

    I have a few bits that I will gumtree to get £100 or so but most of it was racked up on other things.

    Credit Cards
    The 0% rates are made up of many balance transfers over time but the offers have all stopped. They will start to hit the 17%-18% range gradually over the next 2-15 months. I hope to make enough payments to get another deal offered to buy me some more interest free time while I make regular payments.

    Single Person Discount
    I have applied for this and the council messed up, effectively giving me a month in arrears so I'm effectively paying the same as before until April, where it will drop by £20 or so.

    Gas/Electric
    Been on a £13/month direct debit since I signed up via Cheap Energy Club, I split it arbitrarily for the SOA. I tried logging in to Solarplicity to check my account but having some trouble there.

    £6 satellite/cable
    Netflix. As much as I use it every day, I have to consider cancelling it.

    Internet Services
    I've checked this and I'm out of contract. Will look for a new deal today, could probably save at least £10/month

    Gifts
    Yeah that essentially goes onto the credit card, mostly for my nephews and nieces plus a modest christmas

    Car
    Perhaps I shouldn't have listed this as an asset. It was paid for by my father in law when my old car was written off, my ex was to pay him back in monthly instalments but only got halfway before this became untenable. I pay for tax, insurance, fuel, repairs. It's registered in my name and I still have it as she doesn't actually drive. Not commuting has saved me £60-£70 per month on fuel but I use it pretty much every time I leave the house.
    The type of car and the on street parking in our area means it's a lot to insure and tax as well. But I'm not sure it's exactly mine to sell...

    Clothing
    I don't spend a lot on this and it shows! I'm down to 2 pairs of jeans on rotation! I don't intend to splash out at all but I've tried to be realistic that I will need something to wear. Laughed at the socks and pants regime comment though. On reflection £10/month will probably be manageable.

    Gym
    As EssexHebredian says this is quite important for me. Getting myself upright and physically there is another task, but the doctor instructed me to do this (also prescribed anti-depressants since you asked). I am determined to make it work as I am not in good enough physical or mental condition.

    Groceries/Entertainment/Alcohol/E-cigs
    To be honest some of this is conflated. I checked my statements for the last 30 days (spend everything on card) and food and alcohol are always mixed in together. I know this is the main area where I can cut down. Like I said I quit smoking last month, finding it really difficult but I frankly had no option. Alcohol has to be next. Some of this is also social stuff that I will need to cut out. I need to find a way of answering 'do you want to join us in a nice pub for sunday dinner' with something along the lines of 'yes but no!'.

    Thanks again for the comments. I'll try calling this business helpline, I assume it's not relevant that these debts are built up personally and nothing to do with my work? An IVA is not something I've considered, I wonder what the potential drawbacks of this are. I kind of expect they'd look at my SOA and tell me to stop trying to enjoy myself and work more hours of the day, which in principle doesn't seem at all unreasonable but in practice feels like a hell of a challenge.
  • National Debtline
    • #8
    • 14th Feb 18, 11:40 AM
    • #8
    • 14th Feb 18, 11:40 AM
    Hi again Kev


    It's good to see you've considered some of the useful ideas offered above. Some may work, some may be tougher. As it stands at the moment, your outgoings would be considered reasonable. Be careful not to cut back too much and be left with something you can't stick to.


    One of the difficulties of being self employed, which you've touched on above, is that your income can vary and it may not be guaranteed. That in turn can make it harder to deal with your debts. Business Debtline offer specialist advice to self employed people, even if you only have personal debts. They'll be able to explain the best way to deal with your variable income, and your best options moving forward.


    Susie
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
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