Any advice for this option please.

coworcoo

Thanks southernscouser
I'll look at that thread and get all the details listed. I only found out yesterday our true position so I haven't done that yet but it is a priority. Let me assure you that there will be no credit cards in this family as long as I am part of it.

lush walrus and HLK
That sounds interesting I hadn't considered the idea of over payments but I like the idea of throwing the extra cash at the mortgage to get it back to near where it was.

The mortgage needs sorting as it is since we are on an endowment. Getting it on to a straight repayment with an overpayments feature sounds promising.

If I took the "budget review - snowball calculator" approach and applied it to paying back the debt through the mortgage rather than a straight fight with the credit card companies I wonder if that would have a more limiting effect on the interest we are being charged.

I can't help but feel that killing the credit card companies off now would be better to avoid the very high interest rate they charge while we fight the debt that has been transferred to the mortgage.

Thanks for all your thoughts so far. You are good folk in here.

Bestthingsinlifearefree

Hi Coworoco,

You are definitely taking the first steps to a debt free life by posting here.

I have made a rough calculation that a 108K capital and interest mortgage over 20 years at a 5% interest rate will cost you about £722 per month.

First I would post a detailed break down here of your statement of affairs ie exact post tax income and all out goings, including the individual debts, APRs, term of the debt.

With that information here people can then advise you different courses of action / options.

Yes you do have a get out of jail card via the equity in your house but this "pain free" option is SECURED on your house.

I think the pain of trying to take on the credit card debt maybe beneficial in reforming spending patterns.

The danger is as soon as its on the mortgage ie you have consolidated your debt MOST people then just run up fresh debt and next time round it wont be your credit cards you will be giving up but your familes home.

I would certainly get a spending diary for you and your wife.

I can see the logic and temptation of consolidating your debt into the mortggae and it MAY be the best strategy BUT why not post all the info here first and then we can all give suggestions so you can look at ALL options.

Robert_Sterling_3

Coworcoo

You sound very determined.
If you would put up details of each credit card
i.e. Amount Owing and monthly or yearly interest rate then I would do the sums to give you a good idea of how much you would save by replacing your cards by a mortgage.

coworcoo

Thanks kazzaj
Your statement about never borrowing through cards or loans ever again is one that I think we will be following.

Thank you Almost Redundant
A half and half approach is another option I have not considered. There should be scope for a 0% cards option since I don't have any credit cards in my name. " Never say it was the wrong time to have kids" I do agree with you about this, even with all the worry at the moment I am very very glad we have them.

Thank you both Bestthingsinlifearefree and Robert_Sterling
That's very helpful of you both with your calculations. I will sit down with my wife and get all our details together and post them. Its a bit late tonight so hopefully we will make a start on this tomorrow evening.

Thank you very much everyone.

Regards
coworcoo

coworcoo

I had forgotten that it is parents night tonight at the primary school. By the time we come back from that and eventually say goodbye to my in-laws who will be baby sitting I doubt we will have time to look at our figures.

My wife is off work on Wednesday so she will gather up all the info then and we can sit down in the evening and sort out our details. I'll make a post with the facts once I have them.

Thanks everyone for your offers of help. Please keep helping everyone here at the forum if you can. If most folk are like me when they post your words of encouragement are very helpful at a very dark time.

Regards
coworcoo

Bestthingsinlifearefree

coworcoo wrote:

I had forgotten that it is parents night tonight at the primary school. By the time we come back from that and eventually say goodbye to my in-laws who will be baby sitting I doubt we will have time to look at our figures.

My wife is off work on Wednesday so she will gather up all the info then and we can sit down in the evening and sort out our details. I'll make a post with the facts once I have them.

Thanks everyone for your offers of help. Please keep helping everyone here at the forum if you can. If most folk are like me when they post your words of encouragement are very helpful at a very dark time.

Regards
coworcoo

Hi Coworcoo,

Thats a nice post.

One thing you can do if you want to thank people is "click" on the thanks symbol / sign at the bottom of their posts. It only takes a second and is a nice gesture.

I know its a hassle getting all the paper work details together but it is definitely worth doing.

If you can include:

The amount of each individual debt.
who it is with / e.g Visa or Abbey national loan
the term e.g 36months
and the APR / interest rate.

include ALL your outgoings and incomings e.g child benefits, family tax credits).

By doing this process with your wife it will help you face up to the real situation. Once eveything is down in black and white other members I am sure will then make positive solutions about the best way forward.

By tackling this together as one team, you and your wife will certainly come out the other side financially stronger and also emotionally stronger / closer etc and once the plan of action is decided / implemented you will feel a lot better knowing you are dealing with the issue rather than ignoring it.

There is a lot of people on this site who have been in a lot deeper debt than you and come through the other side and their are a lot of very sharp minds here who can give you solid financial advice.


..........and best of all its free !!!

Well done for taking the first steps from what you have said so far about your financial situation I think with a bit of sustained determination / discipline you will be able to turn your situation around.

well speech over.

I look forward to you posting all the details so people can help.

black-saturn

I think you need to give us a break down of what your monthly expenditure actually goes on. With what you are both earning you should be able to live off it without going over your budget so there must be something going wrong somewhere.

coworcoo

Thanks everyone for your helpful posts.

My wife and I have been looking at our options for the past week and going over our figures. Here is our monthly breakdown:

Income:

Pay01 1567
Pay02 882
Tax credit 44
Family allowance 165

---

Total 2658

---

Current Outgoings:

Mortgage 374
Endowment 127
Insurance misc 12
House Insurance 44
Council Tax 170
Electricity 46
Gas 69
Phone 35
Internet 35
TV licence 11
Small Pension 38

Food Shopping 400
Kids Clothes 50

Car Costs:

Fuel 260
Road Tax 10
Insurance 45
Breakdown cover 10
Maintenance 25
Train fares 40

---

Total 1801

---

Credit Cards
Various amounts spread over 6 cards

---

Total 1100

---

Bar finding a cupboard full of Gucci handbags and shoes I understand now that a drop in joint income when my wife moved to part time working when we started our family and periods of maternity leave along with initial car loans that we were paying off when we moved into our house are the main reasons for the credit card use.

I think we have always struggled to make ends meet since we moved in about eight years ago. Our salaries were also a good bit lower then. I dread to think what percentage of the total 40,000 we own in credit card bills is interest that has accumulated over the years.

I don't know if I would have found another solution to our shortfall each month rather than using credit cards if I had been fully aware of our financial situation, but using credit cards would have been a very last resort in my book. I won't say what my opinion is of these companies but not withstanding our current situation you can probably guess it would not be fit to publish.

In summary our current situation is this:
(Income) 2658 - (Total Outgoings) 2901 = -243

We also have a couple of loans that were previous attempts at consolidating some debt. One is for 370 per month and this will be paid up by May and the other is for 169 which will be paid up by October.

I don't see any way we could tackle the debt through the snowball route so we are looking to put this debt against our mortgage. I see this as a one time only option. I am determined that we won't be in this position ever again.

Here is a breakdown with the new figures:
New mortgage 108,000 over 20 years, straight repayment. We can get 4.99% fixed for 5 years with the Yorkshire Building Society, our current provider. We might be able to get 4.69% with them fixed for 5 years, this might be a new offer since we first looked but lets assume the 4.99% option. This would be 711 per month.

I did look about at mortgage offers and I did see the Yorkshire Building Society listed on one of the websites as being good at the moment. I think we also avoid re mortgage fees if we stay with them.

We'll keep our endowments going as a savings plan and our other costs the same minus the credit cards.

In summary our new situation should be:
(Income) 2658 - (Total Outgoings) 2138 = 520

We will be breaking even for a few months until the smaller loans have cleared but I have some modest savings that should see us through. There are also a couple of months there that are council tax free. The estimates on our costs are also fairly aggressive so if we are careful we should be ok.

The main point is though that we should be aiming to save 500 per month. Anything else we decide to do like home improvements etc. will be saved for.

We'll get our endowments misselling claim going and I have a reasonable final salary scheme that I have been in since I was 26 so hopefully these are points in our favour.

I have worked out that our percentage of income going towards the mortgage will be 26.75%. One of the mortgage guides recommends that you should not go above 40% so I am hopeful that we have a bit of safety margin there.

Our priority with any interest rises in the future would be to maintain the mortgage payments. If required we could divert our surplus savings money towards the mortgage but I am speculating what might happen in 5 years time. I don't have any feel for the range that interest rates can vary though but I am aware that we should take account that after 5 years the rate could be a bit higher.

Over payments are a feature with our proposed re-mortgage. I think we'll always look for this in the future. After the five years is up we'll shop about for the best mortgage deal with this feature. Going forward from here we will be saving hard and looking to make savings where we can with the help of this site and your good selves.

Once we have built up a fair amount we intend to make perhaps an end of year lump sum overpayment towards the mortgage. Hopefully doing this where possible will offset the action of re mortgaging now to some degree.

We will never take any loans out to pay for anything but rather save for our house improvements etc. The one exception to this would perhaps be 0% interest free offers but only if we have the cash in the bank to cover for the full amount.

One savings tip I picked up from a post by another forum member was to use the on-line facilities with the bank. At a suitable date in the month once all the direct debits are off and I have taken out cash for our weekly costs, shopping, fuel etc. I'll move the surplus money out of the "working" account into the savings account perhaps leaving 150 "float" in the working account. This means that we should always be moving our savings surplus into an appropriate savings account with a higher interest and we can do this for odd amounts of money that remain.

In hindsight we probably should not have bought this house. It was suggested that we should have really have had a property in between the small flat we had initially and this house. When I'm worrying a little bit less and trying to be a bit more positive I wonder if we are actually doing ok. In essence we are effectively buying our house now for 108,000 when the market value for it is hopefully a good bit higher. Perhaps in five years time with my wife working more hours, our income a bit higher and a reasonable bit in the bank as savings we will come to think of this moment as the fresh start that secured our families future.

I'm sorry for such a long post but I thought I would get all the details down in the hope some of this might be helpful to others. All your suggestions have been very helpful and welcome and you have helped me a great deal to formulate our "plan of attack" to put us back onto a positive track.

Thank you all very much.

regards
coworcoo

Magentasue

£50 on kids' clothes is too much! They probably have enough already - first area to cutback.

£400 on food, I spend £75 a week (£300+ a month, includes pet food, cleaning, shampoo etc.) for six of us (five of us with adult appetites) when I'm being my most frugal - I'msure you could easily cut a £100 off this.

£35 internet - a luxury - could you use the library?

That's over £150 a month saved!

Could you save a few quid on phone, gas and elec by cutting down and shopping around?

Others will be along with more ideas!

skintchick

Utilities look very high too - you could get cheaper gas and leccy I'm sure - check out the utilities board.

You need to change your mindset so you understand you have to mkae changes in your lifestyle. At the moment you are a little bit 'oh, it's not our fault, it's the circumstances' but we all have control over how we respond to circumstances.

Now, you have the chance to tighten your belt and sort things out. If I were you, I'd take it.