Large Debts £42k - I wasn't worried but I am now!

nickmack

Help!!!! Any advice would be gratefully received, even if it's insults lol.

I knew that we owed quite alot of money, but it didn't really concern me too much until a few months ago.
I used to think, it's ok, everyone owes money, it's the culture nowadays. I can repay it in years to come. Only now things are catching up.
We owe in total about £42,000. Before I worked it out, my guess was about £30,000, so I'm feeling slightly more uncomfortable. It's very close to the point where we're struggling to make the repayments and pay all bills etc.

The debt came about because of my university borrowing and getting married and buying a house. My parents have never been rich and so they haven't been able to help with anything.

I've already done some trimming down by shifting CC balances, moving energy supplier, changing BB supplier, getting Sky discounted and restricting food budget but it doesn't seem to be enough. We have no savings of any kind.

As I look after most of the money, I had to explain the situation fully to my wife. I think she's more worried than me, but I'm pretty concerned.

We don't live an extravagent lifestyle at all. We've not been on holiday for years, we only go out once every two weeks to the pub. Neither of us smoke. The only real luxury we have is Sky Digital, which is useful to stop us going insane as we spend alot of time in!

I thought about getting a debt consolidation loan for £25,000 repayable over 10 years to bring the monthly repayments down, but will anyone lend me that amount as I owe quite alot?

The debt consists of (all rounded up to nearest £):

DEBT APR OUTSTANDING
Student Loan 2.6% £4830
Cahoot Loan 5.9% £5219
Egg Loan 6.7% £4931
Cahoot CC 10% £1951
Egg CC 14.9% £5663
Mint CC 14.9% £4892
Morgan Stanley CC 15.9% £2850 (BT- 3.9% 6mnths)
Halifax CC 15.94% £6328 (BT - 0% 6mnths)
HSBC CC 18.4% £5000 (BT - 5.9% 9mnths)

Monthly Income
My Wages £1500
Wife's Wages £825

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TOTAL IN £2325

Monthly Outgoings
Student Loan £120
Cahoot Loan £222
Egg Loan £129
Min CC Repayments £625
Mortgage £768
Council Tax £100
Car Ins £48
Electricity £60
TV Licence £11
SH Pension £50
Life Ins £55
Phone Bills (2xMobile, 1xLandline) £85
Broadband £15
Sky TV £32
Petrol £160
Food £200

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TOTAL OUT £2680

**purpleprincess**

Have a look around the site, there are lots of ideas. Also, above the threads there are links for CCCS and payplan, these will be able to give you free advice.

Good luck!

woohoo_postingid

Sky TV £32 - Consider going for a cheaper package or a freeview box
Life Ins £55 - May be worth shopping around

I'm assuming you have no kids, in which case you should easily be able to reduce your shopping bill.

You say you go to the pub once every 2 weeks but have not said how much you spend when you are there.

Do you have more than one car? Are they juicy?

2 Mobiles and a landline = £85. Why do you need 2 mobiles?

woohoo_postingid

Sorry, I should add that I'm sure there are lots of suggestions with regard to your loans and credit cards, it's just that I don't think I'm the best person to advise you on that and I don't want to give you the wrong advice.
I'm sure someone will be along soon who is more knowledgeable soon!

CLAPTON

you are over spending by about £355
possible saving
phone : reduce to BT at £10 plus 2x payasyougo and use call1899 for calls should save £60
life insurance seems very high for young people maybe save £30
can you reduce petrol / car costs?
what is SH pension?

How much equity is there in the house? What is the mortgage? Is there scope to remortgage to a lower rate and so reduce the monthly payments ?

As I can't realistically see you can squeeze out £350 (unless you can get a cheaper mortgage, Your choices are really :

Increase income ..better jobs or evening / bar work?

a. remortgage (if possible ) and cut up all your credit cards and never ever get another loan
b. talk to CCCS / payplan about IVA
c. bankrupty
d. or if there is sufficient equity in the house sell and rent for a while.

nickmack

Thanks for your help, your questions answered below.

woohoo_postingid wrote:

Sky TV £32 - Consider going for a cheaper package or a freeview box

It was £42.50, I negociated a deal with Sky today to save 25%. Maybe I should cancel altogether!

Life Ins £55 - May be worth shopping around

I did do a comparison recently, I thought £55 was alot but with Critical Illness cover, the price is not bad at all. Cheapest I found was a few pounds less. Have considered taking a risk and cancelling it altogether but I couldn't face my wife having to sort out all this debt with no cover if anything happened to me.

I'm assuming you have no kids, in which case you should easily be able to reduce your shopping bill.

I have reduced this to £50/week. It was about £75 until a couple of months ago. We make a point of buying bulk on genuine special offers for non-perishable items. We shop at Tesco and Asda alternate weeks to get both lots of offers. Do you think £3.50 per person per day is excessive for food and toiletries?

You say you go to the pub once every 2 weeks but have not said how much you spend when you are there.

Maximum of £20 for the night. Every two weeks might be a bit much, it's at least that, maybe once every 3-4 weeks.

Do you have more than one car? Are they juicy?

Just one car, about average consumption. Need for my work and taking wife to work.

2 Mobiles and a landline = £85. Why do you need 2 mobiles

One mobile for me, one for my wife. I use mine for work quite a bit. I do claim a little back for it. My bill is about £45, my wife's £30. I considered changing to PAYG, for me it wouldn't make any savings, maybe for my wife though. Have to wait until the contract lock in period is over anyhow.

jobbingmusician

I would advise contacting PayPlan or CCCS tomorrow. Why the urgency? Because you will feel much better once you have done this (see other threads on this board!)

Although you say you are 'coming to the point' where repayments are a problem, you are already there - your outgoings exceed your incomings, and nothing you have posted in your expenditure seems ridiculously high (although there are some good ideas here for cutting back).

No-one has yet suggested DVD tarting as an alternative to Sky, so let me be the first (on this thread )

Do have a look at some other threads (try a search on Moozie, hope I've got the name right) and see how other people have benefitted from contacted with one of these agencies. If you get a consolidation loan it will simply mean that a) your current debts get stretched out over a very long period, and b) you have no incentive to change. I wish you the very best, but I'm not sure you've quite had your 'lightbulb moment' of realising that things HAVE to change, yet - although it sounds as if your wife has!

With all the very best - JM :beer:

dudleyboy

SKY TV - definitely ditch and get Freeview if you can. There's only so many repeats of Only Fools and Horses you can watch, am I right?

Mobiles - change both to PAYG (assuming it's one each) - check out Virgin mobile... clear, straightforward and cost effective tarrifs: http://www.virginmobile.com/mobile/services/tariff/tariff.html

Landline with BT? If so check out OneTel and their competitive prices: http://www.onetel.co.uk/index.php?node=landline-sukt
or read Martin's article on utilities for cheaper (tho fiddly) alternatives

To be honest, i'm not sure how you racked up so much debt if you do as little as you say but you can still live well and spend less as many here have found. Best of luck!

shazzer22

Hi, I was in a similar situation when i left uni, lots of spending on cc whilst studying and nothing to show for it!

I definately would not advise getting a consolidation loan, i did and just ended up spending on the cards that i used it to pay off! now i'm in the situation that a friend is going to be helping me out with a nearly interest free loan so that i do not have to pay the HUGE amounts of interest charged on my - so called - graduate loan. ( I borrowed 16k and would of end up repaying 27k!!)

keep checking on here for more tips though, its addictive! good luck

lynzpower

hi there

IM with dudley boy on this, i wonder how you got into the debt while spending fairly leanly? Maybe a spending diary would be a good idea- I started mine a few days ago and I wondered where the cash was bleeding to- I can see where now!! Definately helped a lot. Along with the Old stlye cutting back, using markets etc, pound shops!

DavidHM

First of all, as said above, lose the Sky and try and squeeze out those last few quid of life insurance. (You're not getting any benefit from the extra premium).

What car do you own? How much is it worth? (Alternatively, make, model, age, mileage, colour and condition). If it's worth over £2,500, get something worth £1,000 or less and put the rest into debt repayment. For £1k you can get something quite nice. How many miles per year do you drive? Could it be cut down or switched to public transport?

Given your financial situation, I'm sure you can get shopping down to £150 per month by planning. I don't think you're extravagant but there are still a few pence quid to be saved.

It seems to be cheaper to switch to quarterly, rather than monthly Direct Debit for TV licence. (Not sure of the exact figures though).

Your electricity bill seems quite high, although there is no gas bill at all listed that I can see. Obviously consider switching utilities with the links on this site.

Most of your debt is on credit cards. Although consolidation is not a good idea if it increases the length of time taken to repay your debt, it may be a good idea to borrow via a personal loan to repay the cards over the same length of time (or less) but at a lower interest rate. That is of course entirely dependent on your psychology - if you can motivate yourself never to use the cards again, it will work; but run the debt up again and you're really shafted.

If you do consider further borrowing, only do it on the condition that you're unequivocally better off in terms of length of time taken to get debt free and total interest paid - and then stick to it.