A Little Help from DFW's Please!

xxisabellexx

Hi all,
At the moment I'm trying to sort out my boyfriends finances. The problem lies in that he started a new job in December that paid a lower wage than his old one and it has had a much larger financial impact than he anticipated.

I found out he was in debt about 2-3 months ago and started helping him look into ways to save money. He applied for a 0% Virgin card in December and got refused. We looked at his credit report through Experian and everything looks fine except that he wasnt on the electoral roll which he now is. At the moment he is struggling to meet the minimum repayments on his debts and he has missed payments on his contract phone which I also think has had a negative impact.
Last week I decided to take a more proactive approach to the debt and looked into his statements to find out exact amounts, APRs etc and when I found out the Moneyshop APR I knew something serious had to be done! As he has a current account with HSBC I suggested he apply for their 0% card but he was also declined for that.

These are the debts, balances and APR:

Halifax Credit Card - £2400 - 23.95% APR - paying minumum of about £75pm
HFC (Beneficial Finance) Loan - £1500 (approx) - 34.9% APR - paying £203.15pm
Overdraft - £500 - 18.9% APR - Not currently paying anything but the bank are taking this away in November so needs to be paid off by then.
Money Shop :mad: - £750 - 527% APR (no thats not a typo!!) - paying about £130pm
He also owes me £450 but obviously thats a low priority (I'm 0% life of relationship )

With regard to Money Shop, apparently the way it works is that he borrowed 7 lots of £100 and one £50 in the form of cheques and he pays them to 'extend' the cheques. Basically he is just giving them money every couple of weeks and the balance never goes down because its just interest hes paying. As a matter of interest for myself and to show him the seriousness of this situation, I totalled up the amount from bank statements hes paid via debit card to them in the last year and a half and it was over £1700 - more than double the actual debt. This doesnt even include cash payments hes made.

At this point Im just not sure what the next step should be. Im not sure whether applying for any more credit is a good idea after already being declined twice. He is at the limit for his overdraft and is over the limit on his credit card and has no other credit cards we could shuffle to. But I'm sure you can appreciate that it is of absolute necessity that he pay off Money Shop ASAP.

I currently have 2 credit cards, Halifax (limit £750) and Egg (limit £500) which are clear and have been dormant for about a year each. He is not happy about me suggesting we utilise these cards but I cant see any other option. I think I might be able to get the limits increased and try and get them to offer some sort of special balance transfer offer. The other problem there is that I'm guessing paying off Money Shop would be classed as a purchase not a balance transfer.

So... any ideas?
TIA

xx

Horace

Hi and welcome.

Is it possible to post his SOA so that we can see what he has coming in and what is going out. Don't apply for any more cards either because if you ask for them in succession and you get a knock back then you are more likely to be refused no matter how good your credit rating is. https://www.makesenseofcards.com/soacalc.html - if you copy and paste it here we can see what's what.

I think that he needs to seek advice from one of the credit charities such as CCCS or National Debtline. I must admit that I have never heard of moneyshop but for them to charge over 500% is taking the piddle - I take it that these are some sort of loan shark people? I would get in touch with trading standards and the financial ombudsman people because that amount of interest is positively criminal.

In the meantime, he should cut up his cards and stop buying unnecessary stuff. If he can, then he should get his money paid into a different bank as that way his salary won't disappear in charges but he needs to clear the overdraft at the bank.

I am sure that others will be along with some advice.

urg123

Hi

Good on you for wanting to help. I agree - it really helps to have an SOA to show what's coming and what's going out and where you BF can shave a bit here and there to go on debt.

Can I ask - has he had a light bulb moment or is he being helped through this by you as his wonderful GF? He needs to take responsibility and positive action for to get out of this position.

My next thing is to look at ways in which he can make/save money

• selling stuff
• using quidco etc
• taking lunch etc into work
• taking on a part-time job

He hasn't got a huge amount of debt and it can be dealt with but those APRs are hard.

The snowball calculator is also great.

Hope this helps

urg x x

xxisabellexx

Thanks for the replies!

This is an approx SOA, some of the numbers are my best guess. This doesnt really reflect the situation over the last few months as he has only just agreed to split everything 3 ways with his 2 housemates rather than 2 ways (they are a couple).

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1170
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1170

Monthly Expense Details

Rent.................................... 200
Council tax............................. 30
Electricity............................. 15
Gas..................................... 15
Water rates............................. 8
Telephone (land line)................... 5
Mobile phone............................ 35
TV Licence.............................. 7
Satellite/Cable TV...................... 8
Internet Services....................... 2
Groceries etc. ......................... 100
Other travel............................ 30
Haircuts................................ 5
Entertainment........................... 100
Holiday................................. 20
Gym..................................... 37.5
Total monthly expenses.................. 617.5

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

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
HSBC Overdraft.................500.......0.........18.9
Money Shop.....................750.......130.......527
Halifax CC.....................2400......75........23.95
HFC Loan.......................1500......203.......34.9
Total unsecured debts..........5150......408.......-

Monthly Budget Summary
Total monthly income.................... 1,170
Expenses (including HP & secured debts). 617.5
Available for debt repayments........... 552.5
Monthly UNsecured debt repayments....... 408
Amount left after debt repayments....... 144.5
Personal Balance Sheet Summary

Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -5,150
Net Assets.............................. -5,150

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

He is locked into a contract for his mobile, sky and the gym.
To be honest I think £400 is a good amount to be putting into debts that size. I think it would be good if the money he was paying was going on the actual debt rather than just interest.

In answer to some of the other points -
LBM - To be honest I dont think it was really until yesterday when I physically showed him how much hes been paying to Moneyshop for nothing and that there were things he could do to fix the whole situation that he really sat up and took notice. That might be a bit harsh, I dont know.

I love the snowball calculator, such a fantastic tool! I have told him that compared to a lot of people, his debt isnt that big and its manageable. Even if he were to carry on the way he is, he'll be debt free in 18 months. I just know it can be sooner.

He's looking into going back to his old job which will mean he'll have at least £200pm more than he does now.

I just think the main priority is getting those APRs down.

Any other advice greatly appreciated, thanks

Horace

He can ask his mobile to reduce the contract surely? Sky he can get rid of, he just tells them that he doesnt want it either that or he switches to a cheaper package.

£100 a month on food is excessive - he can get this down by cooking for himself, making his own lunches and shopping carefully e.g. cheaper brands. I live on my own and my monthly shopping bill comes to about £30 and that comes from a mixture of supermarket shops mixed with trips to the butcher and greengrocer.

£100 a month on entertainment is also bad - I am not saying that he shouldnt go out but there are ways to go out for free - see freebies board for free cinema tickets and you can get money off vouchers for food. If he ditches this spend for a couple of months or more then he will free up £100 a month.

Also if he stopped paying into his holiday fund for a while that will save even more money to chuck at his debts.

theoretica

If that SOA actually matches reality (spending diary?) then he could pay off the Money Shop loan in under three months if he is really parsimonious - ie puts the £145 surplus towards it, makes £100 cover both food and entertainment and cuts out the saving for holiday. Then in July he will have an extra £130 (the interest he will not need to pay Money Shop) which will refill his holiday savings and then pay off the overdraft for November.

You could juggle around to get the debt onto your cards if you decide to go that route- if it comes across as a purchase it wouldn't be too bad, you just balance transfer from his CC to one of yours and then pay Money Shop with his card, the problem is if it would count as a cash advance when I think you would have to pay with one of your cards and then transfer to the other. Is your Egg card one where you can do what are called super balance transfers and put the money to a bank account?

RAS

Hi

he needs to kick the £100 per month entsw into touch for a while and reduce his mobile tariff.

The other people to contact are your local credit union

You might be able to get a loan to cover the pay-day loan from your local credit union.

This will explain them and you can find the nearest one to you.

http://www.abcul.org/page/index.cfm

A number of them offer freedom loans which are designed to get you out of the payday situation. The APR is usually nearer 25% in these situations than the 11% they charge for regular savers.

sorry but unless it hurts, he is less likely to learn. You can support him on the ents front by helping cook really cheap meals for friends and encouraging him to go for walks rather than pub sessions but he has to do it himself.

GeorgeUK

The credit union is a good idea, but other than this - do not let him apply for any more credit. You can have about 3 credit checks in a 6 month period before your credit score is affected so he should really not be tring to get any other cards for 6 months.

Credit Union seems his best option right now.