Huge debts - house sale to help out??

bananah

hi,
To begin with, let me simply explain our situation. We are a married couple with one 2 year old daughter and another child due next year. My wife is on redundancy alert, and expects to be offered this before Christmas. We own our house, and have debts of £60k.
We're at our wits end, and recently came up with a plan to sell our house to pay off a lot of this, move into rented accommodation and save for a year or two. However, this is obviously a terrible time to sell, and our house has dropped significantly.
We're out of ideas - we've cut back on as much as we can, including food, bills, phones, shopping and childcare - we just cant do any more.
The following SOA seems to suggest we have a surplus every month, but the reality is we're going backwards. So it may be that some of our expenses our higher than I've calculated here.
Any suggestions really welcome.

Thanks.

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2500
Partners monthly income after tax....... 1800
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4300

Monthly Expense Details
Mortgage................................ 931
Secured loan repayments................. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 122
Electricity............................. 40
Gas..................................... 30
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 20
Mobile phone............................ 30
TV Licence.............................. 12
Satellite/Cable TV...................... 20
Internet Services....................... 0
Groceries etc. ......................... 250
Clothing................................ 50
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 30
Car maintenance (including MOT)......... 0
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 750
Other child related expenses............ 30
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 0
Buildings insurance..................... 10
Contents insurance...................... 20
Life assurance ......................... 22
Other insurance......................... 10
Presents (birthday, christmas etc)...... 30
Haircuts................................ 10
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 30
bank charges............................ 30
Total monthly expenses.................. 2592

Assets
Cash.................................... 0
House value (Gross)..................... 200000
Shares and bonds........................ 4000
Car(s).................................. 1
Other assets............................ 1000
Total Assets............................ 205001

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 173000...(931)......7
Total secured debts........... 173000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
egg card.......................6000......167.......0
citi card......................5430......122.......0
katy bacrd.....................2900......57........0
paul...........................1300......0.........0
next...........................667.......62........0
bcard sh.......................5517......110.......0
egg c sh.......................1261......53........19.9
all loan.......................21000.....483.......9.9
egg loan.......................9000......308.......6.73
MS card .....................2934......59........0
MS OTHER........................4100......93........0
Total unsecured debts..........60109.....1514......-

Monthly Budget Summary
Total monthly income.................... 4,300
Expenses (including secured debts)....... 2,592
Available for debt repayments........... 1,708
Monthly UNsecured debt repayments....... 1,514
Surplus(deficit if negative)............ 194

Personal Balance Sheet Summary
Total assets (things you own)........... 205,001
Total Secured debt...................... -173,000
Total Unsecured debt.................... -60,109
Net Assets.............................. -28,108

Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission.

fatbelly

This doesn't look like a disaster to me.

You need to find out what you're actually spending, and use all the info on this site to prune it.

If your wife loses her job, you will almost certainly need a dmp but you may find some tax credits kick in

Actually, from the figures you've given, I would expect that with your salary alone and 2 kids you would get (in the baby's first year, and once tax credits settle down)

Child benefit £31.35 pw = 135.85 pcm
Child tax credit £20.93 pw = 90.70 pcm

Childcare costs could also be removed! 750 pcm gone.

Also mortgages are heading down.

I am a bit concerned about your lack of car costs (no fuel, no road tax, no maintenance) but I think with a bit of planning you can weather the storm here

tyllwyd

I don't think you should rush to sell your house. You've estimated your equity at £30K and your debts are £60K. So assuming your valuation isn't optimistic, you'd have legal fees, estate agent fees, moving costs etc to pay, so even in the best case you'd still be left with debts of in the region of £35K - and then you'd have to pay rent anyway, so there is a danger that you'd give up your home and find that you were still struggling to pay the bills.

Is your mortgage interest only? If not, is it possible to change?

I agree with fb, I think you need to really tighten up on your spending, track where every penny is going and struggle on for a few more months. When you know the situation with your wife's job, you'll be in a better situation to go to one of the debt advice charities and find out what your options are. £60K debt is still crippling though, so it does look as if you are headed for a DMP.

RAS

Agreed with both our friends above. At least one other poster here decided it was going to be more effective to stop work cut out the childcare costs and review her work. She has worked, but when she can fit it round the children and cleared phenomenal amounts of debt in the mean time.

I suspect that your APR on those debts is not always 0%

And you both need to keep a spending diary, so you can see where the money ids going. What do you spend on the way to worK. at lunch-time etc. Cutting that out could save you a £1000 this year alone.

You may need to tlk to one of the debt charities once you know the full situation. http://www.moneysavingexpert.com/loans/debt-help-plan#help

saintly_2

bananah wrote: »

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2500
Partners monthly income after tax....... 1800
Benefits................................ 0 (do you not get any child benefit?)
Other income............................ 0
Total monthly income.................... 4300

Monthly Expense Details
Mortgage................................ 931
Secured loan repayments................. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 122
Electricity............................. 40
Gas..................................... 30
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 20
Mobile phone............................ 30 (is this PAYG)
TV Licence.............................. 12
Satellite/Cable TV...................... 20 (could go without, try freeview)
Internet Services....................... 0
Groceries etc. ......................... 250 (go to the oldstyle board, this could be reduced quite a lot)
Clothing................................ 50 (Obviously your partner is pregnant and will need new clothes, but could this be reduced a little bit)
Petrol/diesel........................... 0 will need something here!!
Road tax................................ 0 will need something here!!
Car Insurance........................... 30
Car maintenance (including MOT)......... 0
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 750
Other child related expenses............ 30
Medical (prescriptions, dentist etc).... 30 (have a look at prepaid certificate)
Pet insurance/vet bills................. 0
Buildings insurance..................... 10
Contents insurance...................... 20
Life assurance ......................... 22
Other insurance......................... 10
Presents (birthday, christmas etc)...... 30
Haircuts................................ 10
Entertainment........................... 50 (can this be cut back)
Holiday................................. 0
Emergency fund.......................... 30
bank charges............................ 30
Total monthly expenses.................. 2592

Assets
Cash.................................... 0
House value (Gross)..................... 200000
Shares and bonds........................ 4000
Car(s).................................. 1
Other assets............................ 1000
Total Assets............................ 205001

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 173000...(931)......7
Total secured debts........... 173000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
egg card.......................6000......167.......0
citi card......................5430......122.......0
katy bacrd.....................2900......57........0
paul...........................1300......0.........0
next...........................667.......62........0
bcard sh.......................5517......110.......0
egg c sh.......................1261......53........19.9
all loan.......................21000.....483.......9.9
egg loan.......................9000......308.......6.73
MS card .....................2934......59........0
MS OTHER........................4100......93........0
Total unsecured debts..........60109.....1514......-

Monthly Budget Summary
Total monthly income.................... 4,300
Expenses (including secured debts)....... 2,592
Available for debt repayments........... 1,708
Monthly UNsecured debt repayments....... 1,514
Surplus(deficit if negative)............ 194

Personal Balance Sheet Summary
Total assets (things you own)........... 205,001
Total Secured debt...................... -173,000
Total Unsecured debt.................... -60,109
Net Assets.............................. -28,108

Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission.

i have put a few ideas there, people will come along and give you more advice! have you claimed back any charges off your credit cards??

try the snowball to see which is the best way to pay the cards off

http://www.whatsthecost.com/snowball.aspx

RAS

bananah wrote: »

Thanks.

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2500
Partners monthly income after tax....... 1800
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4300

Monthly Expense Details
Mortgage................................ 931 interest or repayment?
Secured loan repayments................. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 122
Electricity............................. 40
Gas..................................... 30
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 20 - learn to make free calls only
Mobile phone............................ 30 - cut this out - go PAYG
TV Licence.............................. 12
Satellite/Cable TV...................... 20 - go freeview only for while
Internet Services....................... 0
Groceries etc. ......................... 250 - you can halve this
Clothing................................ 50 - you simply cannot afford it so it is knickers and shoes only for a while

Petrol/diesel........................... 0 how much here?
Road tax................................ 0 how much here?
Car Insurance........................... 30
Car maintenance (including MOT)......... 0 how much here?
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 750 - you can lose this
Other child related expenses............ 30 - which are?
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 0
Buildings insurance..................... 10
Contents insurance...................... 20
Life assurance ......................... 22
Other insurance......................... 10 - Which is?
Presents (birthday, christmas etc)...... 30 - again this may have to go, the little one does not need money spending on him/her
Haircuts................................ 10
Entertainment........................... 50 - this may have to go
Holiday................................. 0
Emergency fund.......................... 30
bank charges............................ 30 - have you started reclaiming or are you on an account that charges
Total monthly expenses.................. 2592

Assets
Cash.................................... 0
House value (Gross)..................... 200000
Shares and bonds........................ 4000
Car(s).................................. 1
Other assets............................ 1000
Total Assets............................ 205001

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 173000...(931)......7
Total secured debts........... 173000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
egg card.......................6000......167.......0 ??
citi card......................5430......122.......0 ???
katy bacrd.....................2900......57........0 ????
paul...........................1300......0.........0 ????
next...........................667.......62........0 ???
bcard sh.......................5517......110.......0 ???
egg c sh.......................1261......53........19.9
all loan.......................21000.....483.......9.9
egg loan.......................9000......308.......6.73
MS card .....................2934......59........0 ???
MS OTHER........................4100......93........0 ???
Total unsecured debts..........60109.....1514......-

You need to know the APRS so you know what to pay off first

Monthly Budget Summary
Total monthly income.................... 4,300
Expenses (including secured debts)....... 2,592
Available for debt repayments........... 1,708
Monthly UNsecured debt repayments....... 1,514
Surplus(deficit if negative)............ 194

Personal Balance Sheet Summary
Total assets (things you own)........... 205,001
Total Secured debt...................... -173,000
Total Unsecured debt.................... -60,109
Net Assets.............................. -28,108

Do you have PPI on any of the cards or loans? Check if they will payout if the missus is made redundant. If not, then reclaim immediately.

And join www.freecycle.org - like e-bay but free. Clothes for the missus, toys for the child and kit for the baby. Plus household good etc.

Jesthar

Hi, bananah (love the name! ), and welcome!

I agree with the others - this is very do-able! Your priority is to start a spending diary to work out where all the pennies are slipping away - I'm not in debt, but still have a custom spreadsheet (yup, certified geek here!) into which I enter EVERYTHING I spend so I can see if any areas are getting out of control.

Now, let's have a look:

bananah wrote: »

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2500
Partners monthly income after tax....... 1800
Benefits................................ 0 - no child benefit?
Other income............................ 0
Total monthly income.................... 4300

Monthly Expense Details
Mortgage................................ 931
Secured loan repayments................. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 122
Electricity............................. 40 - seems reasonable, but have you compared prices recently?
Gas..................................... 30 - seems reasonable, but have you compared prices recently?
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 20
Mobile phone............................ 30
TV Licence.............................. 12
Satellite/Cable TV...................... 20 - is this a combined tv/phone/internet package? If not, you could save a few pounds by dropping this if you can
Internet Services....................... 0
Groceries etc. ......................... 250 - nappies aside, this can come down quite a bit with just a little work - check the Old Style Moneysaving section of this board for help here. Some people on there comfortably feed a family of 5/6 on £250 a month
Clothing................................ 50 - could be reduced to essentials only for a while to help you get started
Petrol/diesel........................... 0 - nothing here?
Road tax................................ 0 - nothing here?
Car Insurance........................... 30
Car maintenance (including MOT)......... 0
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 750 - ouch! No vouchers or anythign to help with this?
Other child related expenses............ 30
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 0
Buildings insurance..................... 10 - is this the cheapest deal you can get?
Contents insurance...................... 20 - is this the cheapest deal you can get?
Life assurance ......................... 22
Other insurance......................... 10 - not sure what this is?
Presents (birthday, christmas etc)...... 30
Haircuts................................ 10
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 30 - might be better spend on your debts for a little while.
bank charges............................ 30 - look into reclaiming these!
Total monthly expenses.................. 2592

Assets
Cash.................................... 0
House value (Gross)..................... 200000
Shares and bonds........................ 4000
Car(s).................................. 1
Other assets............................ 1000
Total Assets............................ 205001

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 173000...(931)......7
Total secured debts........... 173000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
egg card.......................6000......167.......0
citi card......................5430......122.......0
katy bacrd.....................2900......57........0
paul...........................1300......0.........0
next...........................667.......62........0 - prime target!
bcard sh.......................5517......110.......0
egg c sh.......................1261......53........19.9
all loan.......................21000.....483.......9.9
egg loan.......................9000......308.......6.73
MS card .....................2934......59........0
MS OTHER........................4100......93........0
Total unsecured debts..........60109.....1514......- - can you find out the APRs on all these, as you chould start overpaying on the highest APR ASAP. I should think this will be Next, looking at the monthly payment, which is good news as that deby is small and could be paid off pretty quickly, freeing up extra money to help pay off the next one.

Monthly Budget Summary
Total monthly income.................... 4,300
Expenses (including secured debts)....... 2,592
Available for debt repayments........... 1,708
Monthly UNsecured debt repayments....... 1,514
Surplus(deficit if negative)............ 194 - this is a good start - on paper you have a surplus! Now all you need to do is find out what actually happens to this cash - spending diary time!

Personal Balance Sheet Summary
Total assets (things you own)........... 205,001
Total Secured debt...................... -173,000
Total Unsecured debt.................... -60,109
Net Assets.............................. -28,108

Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission.

I know it's not the most pleasant of thoughts, but if your wife does get redundancy, would that include a financial payout? If so, then part of that could be used to pay off some of your debts, particularly the highest interest ones. There would also be no further need for childcare, I think?

You mention bank charges - are these fees for a 'better' bank account or penalty charges? If the latter, you should be able to reclaim them in the near future, and the courts hve ruled them unfair. Same for credit card and store card charges, except you can reclaim those now! See the 'Reclaim 1000s' section of this site for all the info.

The good news is if you get yourself sorted now, then even if your wife is made redundant you will still be in a position to cope with paying off your debts.

~Jes

dancingfairy

entertainment could also be reduced a bit as well. Perhaps you might find a combination of working part time would work for you. You would then have reduced childcare but would hopefully be still be earning some money and it might not suit you to be a full time mum (it might you never know).
Are you getting childcare vouchers from work to help at all?
Best of Luck
df

bananah

Hi,
Thanks to everyone for their support and suggestions - I must admit I am somewhat confused as there seems to be different postings - not sure if someone posted it on another board for me. Anyway, just wanted to start by saying a big thanks to all, and to try and answer some questions etc.

On the car front, the car is a lease car through my company so I claim all petrol etc costs back, and the lease covers tax etc, so not so bad.

On the childcare, we have taken Jess out of nursery and she now goes to childminder, and we think we can cut back even further to £500 pcm in the new year.

Spending - I agree with all posts that we need to nail down exactly what we're spending and where, so I am going to keep a spread sheet of November's activity.

Still no news on the redundancy stuff, so fingers crossed. We also have some shares and a wedding dress we can sell, and hopefully some bonuses coming up which we will throw at the debt, so hopefully come new year / Feb we will have a much clearer idea.

On the APR front, I wasn't sure of the APRs on all of them so left them for now, but I will get this updated. We have looked at the snowball calc before, so will do this again with all of our debts.

One issue we have is having cards on 0% balance transfers until Feb - but am I the only one who then finds it nigh on impossible to get given NEW cards to shift it when this becomes 16-20%???

We are ebaying as much as we can and are also launching a website of our own, selling wedding stationery (I was going to mention the web address then, but I imagine that might be construed as advertising, and be wrist slapping for me!). Anyway, we will also look at the making money sections.

I have reclaimed my bank charges before, and I will also suggest my OH does this - can you also do it with loan charges and credit cards?


Thanks again - I will update our situation when I can!

GeorgeUK

Yes, you can reclaim loan charges and credit card charges - the same rules apply but these are not part of the test case. Lots if reclaiming info here - also worth checking if your house is in the correct council tax band.
http://www.moneysavingexpert.com/reclaim/

New cards can sometimes be difficult to get if you already have quite a few cards, but if you manage to clear a card don't close it. You may be offerred a 0% or low interest life of balance as an existing customer. Sometimes worth reading some of the junk the banks send you. If they don't offer something and you have a nil balance, phone up to see what the interest rate is and if they have any offers on.

RAS

bananah wrote: »

Hi,
I must admit I am somewhat confused as there seems to be different postings - not sure if someone posted it on another board for me.

This is your other thread http://forums.moneysavingexpert.com/showthread.html?t=1296781

if you pm fermi or Tine, they will stitch the two together for you.