Looking for advise

phil999_2

Hi All,

Firstly thanks for reading this and i appreicate any advise.

I have reached the point of acceptance that i have a massive debt problem and i need to get a proper handle on it i have always hidden between credit cards robbing peter to pay paul etc. But it has to stop so.. I am downloading the budget tracker from the site as my starting point.

Background

I own a house with my wife that has a mortage for about 60% of the value of the house. I do keep an eye of the mortage and keep it discounted. There is about 80k of equity left of which probably 15-20 is mine.

I have 2 credit cards both on 16%+ APR (11K on mbna and 3 on another one which is with my bank) i also have 1k over draft with bank.

In addition to this i have a 25k loan which is with my bank payments of £299 a month and it has till 2011 to go.


How should i proceed? I was going to take 15k from the mortage to pay off the cards? or is there a better way to manage things?

My mortage is repayment and has 23 years left.


Massive thanks for any advise.

Phil :rolleyes:

ryanjbow

It seems like you should take advantage of the equity build up in your home to get rid of high-interest debt. You can usually get low rates on a home-equity loan to pay off the credit cards. Any loan less than 16% will be worth it to get rid of those high interest cards.

If it was me, I would take out a home equity loan large enough to pay off all the other debt.

phil999_2

Thanks, The loan is at 8% i believe and only has till 2011 to go so i think i will just pay off the cc's. But filling out the budget i cant make ends meet so i am now reviewing other things.

johannamse

ryanjbow wrote:

It seems like you should take advantage of the equity build up in your home to get rid of high-interest debt. You can usually get low rates on a home-equity loan to pay off the credit cards. Any loan less than 16% will be worth it to get rid of those high interest cards.

If it was me, I would take out a home equity loan large enough to pay off all the other debt.

NO NO NO!

This is not the solution...you have clearly done this before, hence the MASSIVE 25k loan, and did you learn??? NO! It will make you feel good for a few weeks, and then this time next year you will be back on here, asking us all if you should go bankrupt.

You can also not compare, APR's on different products. Just because you are paying 7% on a mortgage, which SEEMS cheaper than a credit card at 25%, you will be paying back the money for a MUCH longer time. If you borrow 15k on a mortgage, you will end up paying back over 30k!

You need to learn the hard way. Post your income and outgoings on here and we will see how much you can free up to throw at those credit cards.

Please, please do not get another GREAT BIG LOAN.

phil999_2

The 25k loan was to pay off cards.

What is different this time - i know i am close to becoming bankrupt if it continues and i will make sure it wont hense asking for advise already doing budgets etc. I HAVE already destrored both credit cards.


I really appreicate the thoughts and comments.

mrcow

ryanjbow wrote:

If it was me, I would take out a home equity loan large enough to pay off all the other debt.

BIG MISTAKE!

Please don't make it for the second time around.

Securing previously unsecured debt at 8% is not a good idea.

There are many credit cards that have lower APRs than the 16% that you are currently paying. Have you looked into applying for any 0% on balance transfer cards to shuffle some of this debt onto lower interest?

Alternativey, you could look at an unsecured loan, which again would lower the interest, but would also give you a defined repayment program. Look for flexibilty (and don't be bullied into taking compulsory payment protection insurance).

Your basic plan should be:

Cut down on interest being paid on current debt
Reduce your monthly outgoings (on utilities/mortgage/insurances etc)
Work to a managable budget
Increase earnings (through employment/Ebay etc)

Posting your budget would be helpful if it's possible. I can guarantee that the members here will be able to save you money that you'll be able to throw at that debt.

BTW congratulations on realsing that something has to be done. So many people in your position bury their heads in the sand.

Take care

phil999_2

Budget below

Mortgage / Rent £489.00
Home Content Insurance £37.50
Council Tax £102.00
Gas Bill £20.00
Electricity Bill £20.00
Home Phone Bill £10.00
Internet Bill £52.00
Mobile Phone Bill(s) £25.00
Cleaning Products / Cleaner
Garden Maintainence £12.50
Other Home £25.00

Private Medical Insurance £10.95
Food Shopping £320.00
Eating Out £25.00
Coffee / Sandwiches Out £25.00

AA / RAC Membership £5.83
Rail / Bus / Coach / Taxi £41.67
Car Maintainence £83.33
Car Insurance £27.42
Car Tax £10.83
Parking £10
Petrol / Diesel / Gas £28.00
Other Transport £41.67

Personal Loan Repayments £299.21
Credit Card Repayments £300.00
Pet Costs £30.00
Shopping For Fun £16.67
NTL / Sky Subscription £36.00
TV Licence £10.00

Cost of Christmas £20.83
Cost of Birthdays £16.67
Cost of Sofa / Kitchen / TV £83.33

New Clothes £16.67
Newspapers / Magazines £10.00
Dentistry £16.67
Haircuts £15.00


INcome

Average Income From Employment / Self Employment £1,600.00
Other Income £300.00

arrowsmith

Internet costs of £52 a month ! (What connection have you got?)
Do you need to spend £25 a month on mobiles ?
Private Medical insurance
RAC/AA membership, read the guide on this site and cut it in half.
Car Maintainence seems high unless your including car cost.
Do you really need Sky TV at £36 a month ?
Sofa/ Kitchen /TV at £1000 a year ?

All this comes to £300 a month that you don't really need, if you haven't got the money then you will have to cut back.

phil999_2

arrowsmith wrote:

Internet costs of £52 a month ! (What connection have you got?)
Do you need to spend £25 a month on mobiles ?
Private Medical insurance
RAC/AA membership, read the guide on this site and cut it in half.
Car Maintainence seems high unless your including car cost.
Do you really need Sky TV at £36 a month ?
Sofa/ Kitchen /TV at £1000 a year ?

All this comes to £300 a month that you don't really need, if you haven't got the money then you will have to cut back.

Internet costs i am currently reviewing and maybe my company will pay this or at least 1/2 of it.

The medical insurance is my life cover for the mortage

RAC - I will investigate this - Thanks (although i think i am in a contact until sept)

The Car maintainence i based on £1000 every year as i drive about 400 miles a week. The money i was going to save so when something goes wrong i dont have to borrow to fix it.

Sky - I will review this and remove the sports package

The Sofa /etc - I know that in the next 12 months my tv will fail and also i want to budget for a new fridge (it will probably fail due to age) i wanted to budget again so i didnt borrow more when they fail.

johannamse

At first glance...get rid of gardener, clothes, hair, eating out, ntl, magazines...How many are you feeding on 320??

The fact that you are only going to reduce your ntl by getting rid of the sport, means it will be dangerous for you to get another loan.

Getting out of debt is hard and boring and you have to make some big sacrifices. Things that have seemed part of life up until now, you will have to realize are actually not neccesseties (sp?).

The good news is you have a good income and if you put your mind to it you can get out of this in tact.

Please heed all the good advice you are being given. I know we seem like pains in the !!!!!! now, we do really know what we are talking about.

have a think before you do anything.

Well done for doing the budget.

phil999_2

Firstly i want to thank everyone on here. The budget spreadsheet has helped lots and lots.

I am also now working on reducing bills.

Would it help if i wrote to my credit cards? or not really?