£40k Debt, any advice please?

Magical30

He knows the financial situation we are in as i forced him to come to citizens advice with me last week. He seems to think it'll all be ok, that we can do a dmp, but i've told him we have no money left. He says i should fiddle the figures to make it look like we've got income left for a dmp. He doesn't understand that this won't help. Thanks for all the advice.

tiddly_widdly

Hi. Why do you use jar baby food. It must eat into a lot of your food budget. Cooking a little extra of your meals will not cost extra moneywise as your baby is small yet will save you a fortune each week. Just remove babys portion before you season with salt, then put through a blender.

Jesthar

Magical30 wrote: »

He knows the financial situation we are in as i forced him to come to citizens advice with me last week. He seems to think it'll all be ok, that we can do a dmp, but i've told him we have no money left. He says i should fiddle the figures to make it look like we've got income left for a dmp. He doesn't understand that this won't help. Thanks for all the advice.

Ouch - head definitely buried, then.

Has he seen it all laid down in black and white like on the SOA? He has to understand that there is no way that these kind of figures can be 'fiddled', even with cutbacks, and the longer he ignores it, the worse it will get. And besides, 'fiddling' the figures is dangerous!

Would it be possible to call PayPlan or CCCS together and talk everything through with them? If he has the experts telling him he doesn't have the cash for a DMP, perhaps that might help?

I don't really know what else to say, except you look like you need this: *hugs*

~Jes

robnoblewarren

Hi,
Well done, lots of courage required to take that step. You both need to make /recover another £500 per month, You can't keep the house unless you work together. May I suggest as a start that your partner takes responsibility for all expenses that relate - even partially - to his business. So the mobile phone and car(?) become something he takes care of and pays from his business account. Getting those costs down then becomes his job.
1) I agree the food bill is £150 over what it can be. I know it's tough with kids, but it is possible. You just have to give up things you think they are entitled to and work together.
2) Get the last tax computations for both of you and use the TaxAid charity to check them out for missed claims. Expect to find something - maybe only £200: maybe £1000 p.a.
3) Not sure about the loans - looks to me as though you have driven the APR down well, except the mortgage. What rate are you paying now, looks like 5.5% is that right? Bank rate down today means jump in and change the mortgage to fixed interest for as long as you can get. Use mortgage broker, don't let them charge you a fee as well as commission.Don't expect quick results.
4) The rest is about getting more income. Somehow us Brits don't seem to believe they have a chance to earn more. Well this needs to change. What are your talents/skills? What do you see as money making possibilities around you? What does your local employment agent say about which jobs are in demand? [Credit control for one :} ] I know, it means working a second job, both of you - that's what it takes. Study, get grants, get trained (part time book keeper?). Keep turning up new ideas for creating income, support each other, work as a family (involve the kids), and know that the recession could last a decade, so you're learning now what lots of us will have to learn later. Stay positive though, it can be done, it is being done.

Happytogetdebtfree

Hi welcome to the boards :-) is there anything you can sell on ebay ?? to make a few extra i agree that you can cut the food bill,its hard if your used to lots of luxuries but needs must.... try and batch cook aswell so that you can get more for your cash xxx good luck x

Conor_3

Looking at your income and your mortgage, it looks as if you've bought beyond your means in the first place and then compounded it with more borrowing - probably trying to keep up with the outgoings.

In order to be eligible for a DMP, you've got to have some money spare to be able to pay it. With the amount of debt you have and the amount of money you have spare, even if you take out all the frivolities such as mobile phone, based on figures they use that you need to live on, it's going to be borderline as to whether you have enough.

As mentioned, bankruptcy is a real option and if you've not got a lot of equity in the property could be a good one. You could arrange for a family member to buy out the OR's interest in the property if they're able to. Only downside is that even if you bank, things are still pretty tight as they are without including the unsecured debt repayments.

What about renting? Would that be an option?

Just a final word of warning. Baines & Ernst are advertising on the TV again. AVOID AT ALL COSTS.

Magical30

My partner seems to want to hang on to the house at all costs. I

Magical30

I think he'd feel a failure if we had to sell it and rent somewhere. He's been ignoring the problem for a long time, and will not really discuss it with me. My dad sold us the house cheap, so there is equity even though house prices have dropped. He just keep saying he'll be earning more, more jobs about to start. Bur i can only base it on the last twelve months income, he just won't listen!

hula-hoops

Thank you for posting. It takes courage but once it's done you will start to feel better.

Agree with the others that the food bill is far too high. Ours is £100 a month for 2 adults. A 7-month-old and a 4-year-old can't eat that much.

£90 a month on mobile phones when you have a land line is also too high.

Can you take in a lodger? Can you take in ironing for people and earn some money that way? You can do it in the evenings when the children are in bed. Look at all the baby things you have that you don't need and sell them on ebay. Good quality things sell very well there.

Your buildings insurance can come down too. I pay less than £20 a month for buildings and contents for a house with a higher purchase price than yours.

What is the emergency fund?

Jenny2008

Magical30 wrote: »

I think he'd feel a failure if we had to sell it and rent somewhere. He's been ignoring the problem for a long time, and will not really discuss it with me. My dad sold us the house cheap, so there is equity even though house prices have dropped. He just keep saying he'll be earning more, more jobs about to start. Bur i can only base it on the last twelve months income, he just won't listen!

I can understand that. People place an awful lot of social status on owning their own property. It's a matter of pride - a way of showing the world you've 'made it' in a way. But really, who cares whether you own a property or not? I'd guess that no one else apart from you and your partner would give a stuff! And really, what sort of social status is there in being up to your eyeballs in debt?

I imagine you feel like you'e banging your head against a brick wall with him sometimes - I really feel for you. It's so difficult when you're the one who is realistic about your financial situation and your partner isn't.

He says he'll be earning more soon - does he have any projections on how much more? Why don't you put whatever he predicts he's going to earn into a snowball calculator and show him in black and white that it will still take you x amount of years to clear your debts. Looking at your SOA, he'd need to double what he earns now just to meet your minimum repayments.

Remind him too, that while you're spending however many years paying off the debts, in the meantime you will have no spare money for holidays, school trips for your children, or savings. And it's not just saving for a rainy day you need; you will probably want funds put away for emergencies, a replacement car when your current one packs in, holidays, and the biggie - retirement.

It is very dangerous planning your finances around a best case scenario as your partner is doing. The country is in economic crisis: how can he possibly say with any confidence he will definitely be earning more in the future? What if it goes the other way? In any type of financial planning, the ONLY thing you should do is plan for worse case scenarios. Anything else is a bonus.

You are in a position at the moment where your mortgage is £150,000 and your property is worth £195,000. If you could actually get that amount by selling it, you would clear your debts in one go. That's a powerful position to be in. You need to persuade your partner to swallow his pride, rent for a bit, and save up properly - debt free - for another house.