help on deciding plan of action pls

lou777

Hi,

I used to be mortgage-free but now my partner and I have a joint mortgage of 51k on property due to change in our circumstances (mainly my ill-health). I had to give up work and now owe 29k on credit cards used in hospital fees and living expenses since I got too ill to work. I am now working part-time and have started my own business, but due to debts, need to earn at least 900 a month to pay min on credit cards, and for bills etc. We have gone down to interest only on mortgage for time being, so I can concentrate on paying off 1 credit card to start doing credit card shuffles. However, I am just not well enough to do any more than I am doing, and cannot guarantee earning that much each month - probably only some months when business is good.
Our property is worth 250k so we could technically downsize to a house worth 150k-160k mortgage-free, or with a very tiny mortgage, but my partner doesn't want to. He can afford to stay in the house and pay his share of everything but not help me at all. My share of the house is slowly getting eroded to the tune of 400/mo due to interest charges on credit cards, as I can only ever pay the minimum off my credit cards and then have to spend the difference on food to keep afloat.
We have discussed renting a room out, renting the house out or downsizing. We have dogs so if we rented it out, we would have problems renting elsewhere and couldn't stay with relatives because of this. We are having trouble securing as lodger due to this as well, and we don't really want one to be honest. We are torn between downsizing and trying to save what we have without putting our relationship under too much pressure.
We accept we will probably never own a house like this again if we go, but we don't know whether we can stay here and pull it off, let alone what lengths we would have to go to, in order to achieve it.
Any ideas??

Thanks

Lou

hazelize_uk

i think you need to breakdown everything into smaller targets so you can see where you are a bit. I think i would start with looking at the credit cards and getting rid of the interest you must be suffering on those. Are you able to transfer any of them to interest free cards? There are a few links on the credit card section of MSE which do not have transfer fees at the moment. If that is not an option for whatever reason, how long is your current mortgage over?? Maybe it may be better in the long term to re-mortgage to clear the 29k on cards, while you get back on your feet, and then concentrate on paying extra off to get the mortgage back down when you can.

It sounds like you and your partner keep everything separate which is not something i am used to, so you will probably have to be in agreement to increase your mortgage.

About downsizing - this would probably make the most financial sense however, i dont think i would like to leave my home due to financial reasons and understand that would be a terrible choice for you to have to make. I would therefore hope that you get lots of advice from MSE members to avoid having to do this.

im afraid without having more details i dont have any bright ideas, but i wish you luck and hope you get lots of much more useful advice!

Amanda

lou777

Hi,

I am not able to get another credit card because I have virtually no income, and for the same reason we were refused further remortgage. I have just sold my car in order to pay off 1 credit card, but am still 1k short for this so am just swapping balances around at the moment, which helps a little. We extended the term of the mortgage and then went interest only in the last month so I can concentrate on paying off the credit cards. However, for every 650 a month I pay off, 400 interest is going back on so I am unable to get anywhere.
Someone I know suggested borrowing the amount on my credit cards from someone like Ocean Finance, as the interest would be less. I have resisted this route so far. With a struggle, I may be able to pay off 1 credit card by June, but it would be my smallest one and therefore swapping balances wouldn't work efficiently. I may be able to get there in the end but am not sure if I am doing the right thing by keeping the debt on my credit cards.
The thing is, our finances are separate, so even if we did get an increase on the mortgage, the largest share of repayment would be mine and I would still struggle. My partner has his own debts through bad money management when I was ill and also when we split up over the stress of it all, so he cannot help at all but is technically in a much better position than me as he has a regular wage, even though every penny is accounted for monthly.

Lou

tyllwyd

Hi Lou

Reading this, I wondered if you are on the right board - do you think that your situation might be more applicable to the Debt Free Wannabe board?

I'm a bit confused by what you have written - are you saying that you were mortgage free a while ago, but since then you have run up debts of a 51K mortgage plus 29K on credit cards? And you have started up a new business? Obviously with that amount of debt you are going to have to earn a lot of money just to repay the credit cards let alone start on the mortgage. I was sorry to hear that you have been so ill - are you going to have to plan that possibly your health might break down again in the future?

I think you need to sit down and really face up to your situation. You say that if you leave the house you will never be able to afford a similar house again in the future - but from what you have told us, realistically you can't afford it now. Do you want to hang on with these debts worrying you, or do you want to draw a line under it, and live in a much less desirable place but with less stress. Have you got the energy and the potential in your business to expand it to the point where you can sort out your finances?

lou777

Yes, I probably need to go on the debt-free board. I just didn't know whether to start on selling my house and going mortgage-free, or whether anyone could help with ways of reducing the interest on my debt.
I was mortgage-free and earning a good wage when I moved into the house. I was already ill but didn't know what was wrong, or just how bad it would get until I have to give up work and pay for private treatment. My debts account for 30k on the mortgage and 29k on the credit cards. 5k of that debt is money someone owes me, but that is another story :-)
I do have the energy and potential for the business, but I will never pay these debts off if I need to earn 1k/mo to pay bills, mortgage and food, but only ever pay the minimum on the credit cards. I probably need to earn 1.5k/mo to get anywhere, and that is just not possible now. Basically, I need to find a way of getting the interest down on my cards.
BTW, I am still ill but can manage a business fine as long as I work from home. I have a very expensive illness which needs ongoing funds chucked at it, hence the massive debts. However, the worst is passed and now it is a matter of paying it all back without putting my health at risk.
I think I should take a different tack and visit the debt-free board. The obvious solution is to downsize and pay everything off. The sad thing is that the debt is probably OK over the course of a lifetime if I could roll it into a mortgage, it's the interest on the credit cards that isn't, but I can't get any more finance or remortgage as I have virtually no income.

Lou

Gingham_Ribbon

Lou, you will get a lot of help on the debt free board. I'll move your thread over there so you'll get more replies.

Good luck.

lou777

Thanks - I thought I was going to have to start the story all over again :-)

lynzpower

nope here we are Lou!

Ok what you need to do is post your SOA, incomings, outgoings ( and we mean everything here!) and the interest rates on what youve got. Theres a budget planner at the top of the page fill out that, and post the results here, and watch us go!
Lynz
x

lou777

I am not sure how to go about this, as I can't tell you my incomings. They vary so much from 0 to 500/mo at the moment but my original business is seasonal and my job is on and off depending on the month so expected income this year is going to be 200-1000/mo at a guess. My outgoings are about £1,100 (650/mo credit cards, 131 mortgage and 300 other bills and food, though food goes back on the credit cards once min payment has been taken and interest added). I have survived through family help, cutbacks and selling things I own so far, whilst I set up my business. I have now started 3 other ventures that will help but cannot forecast incomings yet, which is why I am focusing on the interest. I am doing as much as I can to raise money, but am fighting a losing battle unless I find a way of getting the interest down. If I got them interest-free, it would mean that I would be paying off 650/mo instead of 250/mo after interest. This would help enormously.
Debts:
Mortgage - £30,355 with Abbey (partner owes £21,094) monthly repayment £213 interest only
Egg - 2950 ish (3000 limit) rate 1.24%/mo. min repay £59/mo (interest free for 2 months as I managed to zero this last month before shuffling)
Halifax -9750 (9750 limit) rate 19.95% APR. min repay £194/mo (interest £145/mo)
Cahoot - 5000 (5000 limit) rate 13.8% APR min repay not applicable, as I pay off £100/week for food shopping bill of approx £100/mo (interest 55/mo)
Sainsburys - 3750 (5800 limit) rate 14.94% APR. min repay £170/mo (interest £67/mo)
Capital One - 4050 (4050 limit) rate 1.42%/mo. min repay £121/mo (interest £66/mo)

I have just started transferring balances and will aim to get some off Halifax in the end, after swapping about a few times as some will not allow transfers as they are owned by same co. I have 2k to play with at the moment, which you can see is not enough to get any one card free. I did have 3k spare but had to pay off a business supplier early, and will put that back from business earnings from the paid for stock over next month.
However, as my outgoings still exceed my incomings by far, I have to be careful not to spend some of that 3k before swapping balances. To get 2 interest rates free, I need 4k.
What does anyone think about a loan to cover 1 credit card, that would allow me to shuffle interest-free? Basically, I need to get rid of as much interest as I can, and focus on building up my business(es) whilst earning some from temp job. I can only get on top of it if I get rid of the interest on my credit cards.
I have managed to pay off 650/mo on my credit cards and 306/mo on mortgage for 2 years now, but recently have come to the end of the road so reduced the mortgage to interest only over 19 year, reducing it to 131/mo so I can focus on credit cards. However, out of the 650/mo I have been paying for 2 years, about 10k has been paid in interest over that period so I could have reduced my debt over 2 years by that much if only I could get interest-free.
Sorry for the ramble :-)

lou_lou_skinty_poos

would you not consider talking to cccs or payplan both are charity organisations and could help you set up a debt managment plan that would write to ure creditors and ask for interest and charges to be stopped whilst you pay them a set ammount u can afford you wouldnt be able to use the credit cards anymore tho. why not contact them and see if they can help you?

https://www.payplan.com

lynzpower

hello again Lou,

Usually here on the DFW we dont like consolidation loans! As they are an extra level of interest, over what youve already got, plus it doesnt get people out of bad spending habits! I would also say that the likes of ocean finance charge extortionate amounts of interest, and you will more as likely only be able to get loans with v high interest as you are a high risk with no job. Sorry, if this sounds harsh, by the way, it really doenst mean to.

You havent mentioned how much you spend on
contents insurance
buildings insurance
sky? cable tv?
phone lines? Mobiles?
Food, what DO you spend when you go shopping? £20 £50?
bus fares, car costs anything like that?
internet?
electric, gas, water rates, council tax?
optical bills, prescriptions?


You dont say what the businesses are? Are they homeselling ie Avon, ann summers that sort of thing? If they are maybe there will be others along soon who do this sort of thing and can offer some top tips on how to increase your income?

When you say you work part time, whats your hourly rate? If say, you worked 10 hours at 10 pounds an hour , you should be able to predict what you are going to get each month? Do you work overtime? Or are based with commission? If you are only running fluctuating businesses, is there no job, even if its part time that you could get? At least to have a stable income coming in. Is there any chance of being able to get this set up in a contract?

All the best lou, you are definatley in the right place, everyone here is lovely and we are all doing really well in getting out of debt and getting our costs down!! Stick with us!