Trying to make sense and find a way out of debt..

Leeoss · 23 September 2019 at 12:11PM

Hello to the members of this forum.

This is my first post and I guess it is a cry for help and time for me to acknowledge and lay bare my self created (with some bumps on the way) travesty that is my financial affairs.

Being honest I have always lived above my means, using credit, store cards, loans, overdrafts you name it.

In a way I saw this as helping me in the early days of starting a career in London, buying the suits, the car, the going out the lifestyle, as I became more successful the cost of these items went up and I spent more, rather than paying off or saving. I could go on and most of you have probably heard / seen this all before, and I am not here for sympathy as this isn't a poor me post, I have made these mistakes, I took advantage of credit and I am now paying the price. My mental health also and indeed continues to suffer with the constant worry - Yes I have a well paid job, this comes with it's own stress of targets and management - I can't afford to take a step change even if i wanted to, in turn creating a vicious cycle.

Following an expensive divorce where I waked away with enough equity to just about clear one of may many loans, here I am, earning a £100k a year salary with no disposable income to speak of left at the start of each month after pay day, as it is nearly all swallowed up by outgoings and debt

I feel embarrassed and ashamed by my state of affairs.

Four credit cards with a total of around £25k on various % rates
Overdraft of £4k that I max out every month (i live permanently in this facility).
Consolidation loan took out 3 years ago (balance of £28k)
Car finance £21k left (car in negative equity so cant sell and pay off) this a PCP with 3yrs left to run with balloon payment at the end.
Maintenance payments of £1k per month to my ex wife (plus pocket money and trips, clothes, mobile phone support for two children)

Mortgage with new wife plus two step children
Food
Bills
and so on..
PS my new wife is incredibly supportive, and understanding of my history and my debt, however her ex is not around, so she gets no maintenance, and no tax credits or benefits as I earn too much..

I have finally accepted my situation, listed all my outgoings, changed my spending habits, avoid using the credit cards, have looked for lower interest loans and balance transfer cards, but cant get these now, although never missed a payment and have a good income my credit score is shockingly low due to my ratio of debt v income.
just going to have to stay strong, stay employed, pay what I can afford, spend less and play the waiting game - unless anyone has any suggestions or support they can offer me.

Thanks for listening - it feels better to talk.

Leeoss

sourcrates · 23 September 2019 at 12:28PM

Hi,

Thats all you can really do, the positives are you have a great income compared to many, better budgeting will help, try snowballing your card accounts, don`t attempt to consolodate again, it never quite works does it !!.
Time will help enourmously, throw all you can at the debts, 21k on a car, in your situation, is not something i would tend to recommend, where will the balloon payment come from ?

Leeoss · 23 September 2019 at 12:41PM

Hi Sourcrates

Thanks for the message - Yep agree with that!

I'll get rid of the car, my intention was to just roll it into another pcp so i don't pay the Balloon..
What is Snowballing credit cards..?? and do you think a self managed DMP would work..?
Thanks

sourcrates · 23 September 2019 at 1:03PM

Leeoss wrote: »

Hi Sourcrates

Thanks for the message - Yep agree with that!

I'll get rid of the car, my intention was to just roll it into another pcp so i don't pay the Balloon..
What is Stoozing credit cards..?? and do you think a self managed DMP would work..?
Thanks

Snowballing is basically where you pay the minimum on your cards but pay more on the one with the highest balance, or interest rate, so that one clears quicker, then the next one, then the next, and so on, people like the idea of doing this, because you see a debt actually go down.

Any form of debt management will impact your credit record, it depends if you are ok with that, or not, it would clear your debts quicker if creditors agreed to interest freezes etc, but you credit file would suffer as a consequence, it could be you can control this just by better budgeting, but if debt mangement is nessessary, then there is plenty of advice available to you on here, as well as other free sourses.

Suseka97 · 23 September 2019 at 6:10PM

Hey there.

I left a comment on the DMP support thread - hadn't then noticed you'd posted this thread.

As I said there - I think it would help you to go onto the National Debtline website, or the NEDCAB one. Both have very good resources about debt budgeting and management. You could also pop your I&E details into their debt remedy tool and see what it throws up in terms of options.

Lots of us arrive at this point at different times in our lives and for different reasons - but the good thing is you are now ready to tackle it and everything starts with that first step. Having to pay child maintenance and help support your new family is tough, I can imagine - but there's a solution to all debt issues, you just have to find the right one for you.

You raised a query about being 'blacklisted' and I'm not sure what you meant by that - but as I said in the DMP thread, any informal or formal debt solution with have a negative impact (to a greater or lesser degree) on your credit file. Looking at the figures you've mentioned - it does seem like some form of debt management is likely, but if you can do the snowballing method (mentioned above) - that might be your answer. Also, if you cannot pay the balloon payment on your car in 3 years, can you just hand it back?

A self-managed DMP is definitely doable - again the NEDCAB site has all you need to know about that. Just takes a little organising. Whatever you choose there are always people on this forum who can help guide you along the way.

Good luck.

enthusiasticsaver · 23 September 2019 at 7:58PM

I would suggest you put up a statement of affairs. I would hesitate to recommend a debt solution without looking at that first.

http://www.stoozing.com/calculator/soa.php

Certainly it sounds like you need a mindset change. The car was an expensive mistake as was consolidating old debt but on the salary you are on with debt of around £88k it should be sortable if you can apply some financial discipline. The £1k maintenance is presumably linked to your salary so that is not changeable and this is the only thing which might make a DMP the best option depending on the interest rates you are paying.

My advice would be tackle the overdraft first and build up some emergency savings. Stop using the credit cards.

Kentish_Dave · 23 September 2019 at 9:34PM

It may help to remember that you chose to have a good time up front, and that you always knew that you’d have to pay it back later.

You’ve come out ahead in the end, as when “later” arrived you are earning enough to comfortably pay back what you spent, and the charges for having the option to do it that way around.

Rather than blowing money that you don’t have on another new car, how about getting something a good few years old and putting the money saved into reducing your debts?

gr1340 · 23 September 2019 at 9:41PM

sourcrates wrote: »

Stoozing is basically where you pay the minimum on your cards but pay more on the one with the highest balance, or interest rate, so that one clears quicker, then the next one, then the next, and so on, people like the idea of doing this, because you see a debt actually go down.

I’m pretty sure you mean snowballing.

sourcrates · 23 September 2019 at 10:27PM

gr1340 wrote: »

I’m pretty sure you mean snowballing.

Yes I do, thank you for the correction !!

I will edit my post to avoid confusion.

Leeoss · 24 September 2019 at 9:39AM

Thanks for the advice offers up so far, yes a real long hard look in the mirror required.

I cautious of DMP, and I agree with the snowballing suggestion, so I have now produced a spread sheet to embark on this.

I’ll have to keep the car for now and will plan to hand it back at the end of the term.

I’m hoping within 2yrs my loan finished the car has gone, and maintenance reduces I can use the additional cash to blitz the rest..

Thank you for hearing me,

Mindset adjusted ..

enthusiasticsaver · 24 September 2019 at 9:57AM

Leeoss wrote: »

Thanks for the advice offers up so far, yes a real long hard look in the mirror required.

I cautious of DMP, and I agree with the snowballing suggestion, so I have now produced a spread sheet to embark on this.

I’ll have to keep the car for now and will plan to hand it back at the end of the term.

I’m hoping within 2yrs my loan finished the car has gone, and maintenance reduces I can use the additional cash to blitz the rest..

Thank you for hearing me,

Mindset adjusted ..

Good luck with getting rid of the debt. Why not start a DFW diary for support along the way?

If you do not intend to go down the DMP route can I suggest a spending diary (lots of free phone based app ones) to moniter your spending, saving for an emergency fund and when the car PCP deal is finished look at other ways at sourcing a car. A brand new car is a heavily depreciating asset and not great for someone in debt. Look at something a few years old and if you have to borrow then do a low rate personal loan or if you are debt free by then a 0% money transfer. Don't get hooked into this status symbol of a new car every 3 or 4 years.

Trying to make sense and find a way out of debt..

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