Advice on our situation....

misterbarlow

In my early 20's I lost two very close friends in seperate car accidents and it shook me up a lot, I suddenly started living a care-free life thinking I could go at any time too, and started racking up debts all over think I might as well enjoy my life to the full and enjoy it, and worry about it later if I live that long... (Which I am now having to do..)

I bought a house and was getting loans for nice cars, and putting fancy household goods, holidays and clothes etc on multiple credit cards..

I would be on Martin Lewis hate list big time for the way I lived for many years...

By the time I met my now wife I was up to about 18k owing...
My wife had a car loan and a few cards also, and so we pooled our debts once we got married, and I took out an unsecured loan about a year ago for £24k over the maximum I could get which was 7yrs...

We have both always had an A1 credit rating and I have taken out and paid off about ten loans with my bank, and so they said yes to me for £24k unsecured over 7years on the spot..
Although the monthly payment was £440pm, that was over £200pm LESS than the current seperate loan and credit cards combined we were paying, so we were miles better off...

We could mangage fine at the time, but now my wife has recently left work as she recently had our baby and now her income has dropped from £1200pm net to £460ish on SMP, but in June her SMP ends and we will be struggling then as we cant afford for her to go back to work right away due to childcare costs...

As we only moved house 18months ago on an 88% mortgage and with the recent drop in house prices, we are probably in or near negative equity now, so A) its going to be hard to reduce our mortage by getting a new better deal, and a secured/homeowner loan is probably not an option for us as we have no equity...

I just about earn enough to pay ALL our debts (mortgage, that loan, and all the other bills) with my income (£1800pm net), so we can keep a roof over our heads and keep warm etc, but once my wifes income drops to zilch we will have no money over watsoever for things like FOOD, petrol, clothes for the kids, going out, or things like birthdays, christmas, etc...

We are really starting to worry about how we will manage come June when we revert to my income only......
So really I need to try and find a new unsecured loan over longer than 7yrs for £22k....
But I cant find anywhere that does loans for the amount we need over more than 7yrs..

Can anyone suggest anything??

mooomin

The first thing I would suggest is that you go through your figures and post a SOA (Statement of Affairs) a link to which can be found at the top of the Debt-Free Wannabe pages.

If your wife can't go back to work right away, what are your options for her working from home? There's a board here on upping your income, she could do surveys, mystery shopping etc while still looking after the baby. Could she work a couple of nights a week when you're home and you could look after the baby? Could she Ebay/Amazon items in your home you don't need/want? Every little helps in these situations.

Just a few thoughts from me so far, but if you post a SOA we will be in a much better position to help you.

misterbarlow

Sorry, I jumped straight in and posted and then started reading things properly.. hehe

I have had a go at a SOA as we stand..

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1700
(my income is variable, my basic net is about £1350 but I get regular but varying overtime, as I am on callout rota,
so my income varies monthly from approx 1600-1800 net)
Partners monthly income after tax....... 460 (SMP, will drop to zero in June)
Benefits................................ 150 (child tax credit and child benefit)
Other income............................ 0
Total monthly income.................... 2310
Monthly Expense Details
Mortgage................................ 770
Secured loan repayments................. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 90
Electricity............................. 100 (as still paying off debt from previous property)
Gas..................................... 40
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 12
Mobile phone............................ 40 (2x£20, one mobile each)
TV Licence.............................. 12
Satellite/Cable TV...................... 32
Internet Services....................... 17
Groceries etc. ......................... 300 (varies 250-300)
Clothing................................ 100 (again varies)
Petrol/diesel........................... 50
Road tax................................ 20
Car Insurance........................... 35
Car maintenance (including MOT)......... 25
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 7
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 15
Life assurance ......................... 70 (for both, 2 policies x£35 each)
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1820

Assets
Cash.................................... 0
House value (Gross)..................... 130000 (est)
Shares and bonds........................ 0
Car(s).................................. 4000 (est)
Other assets............................ 0
Total Assets............................ 134000

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 126000...(770)......6.25
Total secured debts........... 126000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
bank loan......................22000.....440.......9.9
credit card....................4000......35........0
next...........................500.......40........0
Total unsecured debts..........26500.....515.......-

Monthly Budget Summary
Total monthly income.................... 2,310
Expenses (including secured debts)...... 1,820
Available for debt repayments........... 490
Monthly UNsecured debt repayments....... 515
Amount short for making debt repayments. -25
Personal Balance Sheet Summary
Total assets (things you own)........... 134,000
Total Secured debt...................... -126,000
Total Unsecured debt.................... -26,500
Net Assets.............................. -18,500

I know there are cuts that can be made if it came to the crunch, like i would lose the landline, lower my broadband speed package, etc etc, before we got into serious difficulty...

Gemmzie

If your wife works 16 hours, will you not get Child Tax Credits to cover the childcare? You may earn too much but it might be worth checking.

Your life assurance is very high, might be worth checking that.

Is the £7 medical for a prescription? If so, you would be better off with a pre-payment certificate.

whatatwit

Before you get to June, you should both start keeping spending diaries to see exactly where the money goes to each month, as we all spend more than we think.
Get your wife to have a look at the Old Style board, this should help to reduce the grocery costs as there are loads of recipes and ideas for batch cooking and making food go further.

Jenna

Hey there,

Welcome to DFW & well done on posting up your SOA. I'm sure all the experts will be along soon but there were a few things that jumped out at me:

1) Clothes - is this a guesstimate or do you really spend this much? If so this needs to come down. Keeping a Spending Diary for a little while could help you to identify what you're really paying out on this.

2) Car - would you still need this after your wife stops work? Any public transport available to get to your work?

3) Food - this can easily be reduced and this is something your wife could help with even when she's stopped work by getting good deals etc. Check out the Old Style board for lots of ideas & tips.

Keep us updated on how it goes!

Horace

Chop up the Next card for a start off so neither of you will be tempted to use it to buy clothes. Kids clothes can be had for free from freecycle or for very little money in charity shops. Same goes for adult clothes - there is no way that you should be spending £100 a month on clothes.

Ditch the satelite TV and use freeview instead, ditch the mobiles too or at least switch to PAYG.

Sell stuff that you no longer wear, read or play with on ebay or at a carboot that should bring in some extra cash.

Keep a spending diary as others have suggested also when you go shopping look in your cupboards, fridge and freezer to see what you have already got and only buy what you need. Change the places that you shop - use Lidl instead or even Tesco or Asda value ranges. This will also give a huge cutback in grocery spends.

mooomin

misterbarlow wrote: »

Sorry, I jumped straight in and posted and then started reading things properly.. hehe

I have had a go at a SOA as we stand..

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1700
(my income is variable, my basic net is about £1350 but I get regular but varying overtime, as I am on callout rota,
so my income varies monthly from approx 1600-1800 net)
Partners monthly income after tax....... 460 (SMP, will drop to zero in June)
Benefits................................ 150 (child tax credit and child benefit)
Other income............................ 0
Total monthly income.................... 2310
Monthly Expense Details
Mortgage................................ 770
Council tax............................. 90
Electricity............................. 100 (as still paying off debt from previous property)
Gas..................................... 40
Water rates............................. 35
Telephone (land line)................... 12
Mobile phone............................ 40 (2x£20, one mobile each) Could these be changed to PAYG? Some PAYG deals will offer lots of texts/free weekend calls.
TV Licence.............................. 12
Satellite/Cable TV...................... 32 Could you change this to a freeview box instead? It would save you about £400 a year for a small initial outlay.
Internet Services....................... 17
Groceries etc. ......................... 300 (varies 250-300)This could be reduced. Look over the receipts and see what you're buying that you don't really need. Start batch cooking - making loads and freezing portions.
Clothing................................ 100 (again varies)Even with 2 kids that seems a lot to me. Can you start buying clothes through Ebay/charity shops?
Petrol/diesel........................... 50
Road tax................................ 20
Car Insurance........................... 35
Car maintenance (including MOT)......... 25
Medical (prescriptions, dentist etc).... 7
Buildings insurance..................... 20
Contents insurance...................... 15 Buildings and contents seems quite high, could this be reduced?
Life assurance ......................... 70 (for both, 2 policies x£35 each)Seems quite steep, visit an IFA and shop around
Presents (birthday, christmas etc)...... 30
Total monthly expenses.................. 1820

Assets
Cash.................................... 0
House value (Gross)..................... 130000 (est)
Shares and bonds........................ 0
Car(s).................................. 4000 (est)
Other assets............................ 0
Total Assets............................ 134000

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 126000...(770)......6.25
Total secured debts........... 126000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
bank loan......................22000.....440.......9.9
credit card....................4000......35........0
next...........................500.......40........0
Total unsecured debts..........26500.....515.......-

Monthly Budget Summary
Total monthly income.................... 2,310
Expenses (including secured debts)...... 1,820
Available for debt repayments........... 490
Monthly UNsecured debt repayments....... 515
Amount short for making debt repayments. -25
Personal Balance Sheet Summary
Total assets (things you own)........... 134,000
Total Secured debt...................... -126,000
Total Unsecured debt.................... -26,500
Net Assets.............................. -18,500

I know there are cuts that can be made if it came to the crunch, like i would lose the landline, lower my broadband speed package, etc etc, before we got into serious difficulty...

Hello again!

My initial thoughts -

• No money set aside for haircuts or entertainment, even a small budget is better than nothing as then an unexpected outing won't knacker your budget.
• Your clothing budget seems high to me. Don't feel that buying from Ebay is a bad thing, I personally love it and prefer it to shopping in charity shops as people want to get good feedback so the items tend to be in good condition. People I know who are parents say they get good bargains for their kids as well.
• Your insurances seem quite high as well. Join a cashback website like Quidco and start shopping around.

As I said before, look at decluttering by selling on Ebay/Amazon. It's the kind of thing that could be done by your wife when the kids were asleep as it doesn't take too long to do, especially if you download an Ebay client like Turbolister. Aim to clear your Next debt ASAP and then close the account, you can then throw the extra £40 per month at the next highest APR debt.

Good luck!