Massive debts

gargrave50

Hi all, I'm sure the last thing you all want is yet another diary! However, I lack focus to be brutally honest and I was fortunate enough to have my/our LBM around 2 weeks ago. In the meantime I have self-admin my own DMP, and written to all of our creditors offering reduced payments. I'm ashamed and embarrassed to have gotten ourselves into this mess, but here it is the brutal truth. The SOA I've compiled is with the reduced payments and not necessarily the minimum payments. My letter has asked them to freeze interest and charges however I haven't received confirmation from any of them. I intend to persevere as we can't really afford much more, and I'm trying all the time to stash a little to make F&F when we can manage to do so.

My OH is extremely hard working, and owns his own van which he uses to do "homers" with his trade for extra money. I am just about to qualify as a midwife (waiting on my registration due mid October in order to practice). Sadly there are no jobs in Glasgow / Scotland. All the work is in London and surrounding areas which gives us additional costs if I need to work away from home. We are in a quandry. I work part-time but given the economic climate there is no option of going full-time / overtime in the meantime.

We realise we have stupidly gotten into ALOT of debt over the years, and want to be rid of it finally. The wage used for my husband is the minimum he would receive any week. Any additional income is planned for debt repayments.

I do surveys etc for shopping vouchers to manage Christmas and birthdays, and have budgeted for this also as my lovely son has friends and family parties to go to. The surplus goes towards Christmas.

We try really hard. I am expecting my LAST bursary payment this month (31st), and haven't included this in the SOA because after this payment I get zilch! We are trying to work out whether I can afford to take work in London (I have an interview scheduled for 31st July), with the additional living costs, childcare costs for my OH to manage DS and travel to see my family when I can. What kind of existence would it be?

Sorry to rattle on, I've posted my SOA. We have tried cutting back our living costs. I've already bought my DS school uniform for next year in M&S using survey vouchers . In my entertainment budget I've included £15 for DS tae kwon do. Its his only hobby and paying by d/d means we get one class free per month:cool:. Our Council tax includes 25% student discount which we won't be entitled to after September 2009, and includes £25 arrears payment. Our mortgage has been changed to interest only last year at 1% above base rate variable to give us some breathing space until I secure a midwives salary. The plan is to return to repayment once secured employment.

My plans are:

Use OS board to get ideas for reducing grocery budget
Continue to Ebay / Amazon anything not pinned down (or that we don't need:rotfl:)
Cahoot loan due to finish Jan 2010 therefore reattribute this money to debt payments
Continue with survey sites for vouchers
Make further enquiries re: employment as a midwife, send speculative letters to maternity hospitals in Scotland.
Pee/shower in the early evening to save turning lights on :rotfl:
Aim for 10 NSD's for rest of July and join the challenge for next month
Start a spending diary to track down this missing money:j

I'm sure we have missed out some expenditure because we definately do not have literally anything to spare at the end of the month. We have a hardship claim in for bank charges (we had council tax arrears at the time but have now entered into a repayment plan - not holding out hope for this to be honoured). Other bank charge claims are on hold. Credit card charges have been claimed around 2 years ago and used to get rid of old CC's - MBNA and Morgan Stanley.

Any help is appreciated, and your support is much wanted as I have NO WILLPOWER! Hopefully keeping a diary will keep my motivation high and let me see I am getting somewhere! I am missing some APRs will get a hold of these over the next few days and update. Thanks to you all in advance.

Should mention that we have recently opened another bank account with a bank which we have no financial relationship, so that we can control what we pay our creditors.

Number of adults in household........... 2
Number of children in household.........1
Number of cars owned.................... 1 (also own a van - paid off)

Monthly Income Details
Monthly income after tax................ 666.00 (spooky I know)
Partner’s monthly income after tax....... 1733.33
Other income............................ 122.08 (child benefit + tax credit)
Total monthly income.................... 2521.41

Monthly Expense Details
Mortgage................................ 99 (interest only until we are out of this mess)
Secured/HP loan repayments.............. 446.97
Council tax............................. 125.87
Electricity............................. 40
Gas..................................... 60
Water rates............................. inc in Council Tax in Scotland
Telephone (land line)................... 12.00
Mobile phone............................ 35 (2 mobiles - contract due to finish Nov will cancel for PAYG)
TV Licence.............................. 12.00
Satellite/Cable TV...................... 21.00
Entertainment..............................100.00
Internet Services....................... 7.34
Groceries etc. ......................... 220
Clothing................................ 20 (uniform is already bought for this coming year)
Petrol/diesel........................... 80 (for both)
Road tax................................ 15.00
Car Insurance........................... 38.76 (for van and car)
Car maintenance (including MOT)......... 10.00
Pet insurance/vet bills................. 0.00 (no pets)
Buildings/ Contents insurance..................... 17.90
Life assurance ......................... 9.29
Other insurance......................... 0.00
Childcare................................72.00 (2 days after school club each wk)
Presents (birthday, christmas etc)...... 40 (I do survey sites for vouchers to cover the rest)
Haircuts................................ 10
Critical Illness Insurance.............. 0.00
Dental Insurance........................ 27.00 (for both adults)
Mortgage Payment Plan................... 0.00
Total monthly expenses.................. 1472.13

Assets
House value (Gross)..................... 110,000
Savings (Endowments) ………… 0.00
Car(s).................................. 6000
Other assets............................ 1500 (van)
Total Assets............................ 117,500

Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 74000.... (99).....1.51% (int only at present)
Secured Debt................ 49,898.... (446)......7.4% (used prev. to consolidate:mad:
Total secured & HP debts...... 123,898

Unsecured Debts
Description......................... Debt.............Monthly...... APR
AA VISA................... ...... 1920.58........40.00.......... 24.9%
BOS VISA..........................4914.63...... 60.00.......... 22.53%
Cahoot................................886.07...... ...131.72.........12.7%
Alliance & Leicester............3898.09........164.31........ .12.9%
Barclaycard.........................1820.89....... .50.00...........25.97%
BOS Overdraft.....................699.97........30.00. ..........7.9%
Next.....................................1210..... ......30.00...........29.9%
Shop Direct Littlewoods........2128.32......40.00...........? TBC
Shop Direct Choice...............3260.24......50.00........... ?TBC

Total unsecured debts......20738.79......... 596.03

Monthly Budget Summary
Total monthly income...................2521.41
Expenses (including HP & secured debts) 1472.13
Available for debt repayments........... 1049.28
Monthly UNsecured debt repayments....... 596.03
Total............................................. ............2068.16
Amount left after debt repayments....... 453.25 (this is a fallacy I must have missed something!)

To be fair by offering reduced payments to our creditors I have saved around £450 per month. This is the first month where we have made reduced payments so will need to see if I can increase some of these if this "surplus cash" turns out to be real.
Apologies for the lengthy thread - look forward to your feedback :rolleyes:

Personal Balance Sheet Summary
Total assets (things you own)........... 117,500
Total HP & Secured debt................. -123,898 :eek:
Total Unsecured debt.................... -20738.79
Net Assets.............................. -27136.79

Tixy

Hi Gargrave.

Good to read your whole story and sounds like you are making good progress with cutting things back. Congrats on nearly qualifying and fingers crossed a job appears somewhere near to home.

With regard to the reduced payments can I ask how you worked out what to pay to each of your unsecured creditors? Usually in a DMP you fix a total amount for unsecured debt repayments, say £600 per month and then allocate this pro-rata based on the outstanding balance. This is usually the best way to get each creditor to agree to the DMP and is what CCCS/ Payplan etc do.
On yours you are obviously paying most pro-rata to cahoot, and the other creditors may consider that you are unfairly favouring cahoot. (Apologies if I am saying something you already know here).

You may find some creditors will never formally write to accept your DMP & reduced payments. If they keep charging interest send them a please reconsider letter (there is a template on national debtline).

Other advice would be to join in some of the challenges, perhaps the grocery challenge and the monthly NSD challenge (if you haven't already- I see you have mentioned NSDs above).

Spending diary is a big priority, hopefully that surplus is all from cutbacks and you can up some of your repayments.

Good luck.

gargrave50

Thanks Tixy, I've had some great advice from you before and thought it was time to share my horrific story with the world! Give me the jolt I need to knuckle down and address this!

The only reason I haven't included Cahoot in our DMP is because its due to be paid in January 2010 and it seems so close that I would prefer to get rid of that so that it frees up some cash. If I offer reduced payments it will mean I'm left with this debt for longer. Does that make any sense? The rest of the money is allocated on a pro-rata basis based on the total amount which CCCS suggested for DMP payments.

Some creditors have asked for a list of creditors and amounts due which I have supplied, but none have asked me to detail how much is being paid to each creditor. I'm not giving them the chance to "accept" my proposal. Instead I'm just going ahead and paying what we can!!!! Will wait and see which ones continue to charge interest and send that letter you recommend.

Do you think its worth signing up for PAD - my worry with that is that creditors will see adhoc payments come in and ask that I increase my regular payment as a result? Am I better saving this to make F&F's?

The grocery and NSD challenges are a must - first on my list for tomorrow morning.

gfplux

Hello gargrave50.

I think the spending diary is a BIG priority. perhaps you should try and go back over today's spend so you already have one days spending diary under your belt by the time you go to bed.
You have obviously been spending more than your incomes for a very long time. (ref your consolidation loan) You have to get this under control NOW.
If we can help with your will power we will.
However remember you are getting closer to the time when this may get out of your control.
Good Luck and take each day as it comes and enter in to that spending diary.

gargrave50

Thanks Gfplux. I've got 2 small notebooks - one for OH and one for me. Starting fresh tomorrow - HAVE to change our spending habits now.

I would appreciate a kick up the backside when required! Thanks for reading my war and peace. :beer:

LeeSouthEast

What immediately jumped out at me was the £100 a month for entertainment. Are you able to break down what exactly that entails? It seems a huge amount, given what you're trying to accomplish. Good luck! We'll be with you.

Nargleblast

Good luck Gargrave, sounds like you have an action plan worked out. It will be tough but you will get there with determination. Keep applying for jobs, there is supposed to be a shortage of midwives, and although I fully expect a jobs freeze in the NHS in a couple of years' time (due to reduced funding) there should still be plenty of jobs about at the moment. Any preceptorship posts around? I.e. a temporary contract for newly qualified staff with a designated mentor to get competancies signed off etc? What about advice from your place of learning?

Tixy

gargrave50 wrote: »

The only reason I haven't included Cahoot in our DMP is because its due to be paid in January 2010 and it seems so close that I would prefer to get rid of that so that it frees up some cash. If I offer reduced payments it will mean I'm left with this debt for longer. Does that make any sense? The rest of the money is allocated on a pro-rata basis based on the total amount which CCCS suggested for DMP payments. Yes, agree with that, once you have paid that debt off spread that amount over the remaining creditors. It should work quite well cos people usually review a DMP after 6months.

Some creditors have asked for a list of creditors and amounts due which I have supplied, but none have asked me to detail how much is being paid to each creditor. I'm not giving them the chance to "accept" my proposal. Instead I'm just going ahead and paying what we can!!!! Will wait and see which ones continue to charge interest and send that letter you recommend. Good idea and good that they don't see the breakdown.

Do you think its worth signing up for PAD - my worry with that is that creditors will see adhoc payments come in and ask that I increase my regular payment as a result? Am I better saving this to make F&F's? In your case I think probably not. Whilst its a very successful challenge I'm not sure it would work well with a DMP, particularly a self-admin one, it will confuse the creditors. I agree to save up any extras somewhere in a seperate account ready for some F&Fs in 6months or so.

You'll get there! Now you have started you'll find money saving addictive. I've subscribed to the thread so do keep us all up to date.

gargrave50

LeeSouthEast wrote: »

What immediately jumped out at me was the £100 a month for entertainment. Are you able to break down what exactly that entails? It seems a huge amount, given what you're trying to accomplish. Good luck! We'll be with you.

Hi thanks for reading. Just wanted to break down the £100 entertainment. My husband works 7 days a week and 4 nights late (he's an Electrician and is lucky to be getting a run of overtime at the moment!). Usually on a Friday or Saturday if DS is staying at Grandparents I will get a (half price) bottle of wine and a couple of bottles of beer for OH and we sit out in the garden or with our neighbours. We generally don't go out. Also I've put £100 because its the Summer holidays and its to ensure that the extra spending is accounted for. So far we are in wk 3 and I've spent £3. £1 a day every day this week for a little club DS loves and the rest of the clubs have been FREE!!!! As a rule I use my clubcard points for cinema vouchers and leisure days out. Should mention we also have a wedding to go to each month for the next 3. I've done surveys to save enough vouchers for wedding presents , so thought we could budget some "entertainment" money for a couple of drinks. I will try to cut this down and I've probably budgeted more than necessary to cover the weddings and school holidays! Oh the joys! Thanks for your support, its always useful to have a fresh eye on your spending!

gargrave50

Tixy wrote: »

You'll get there! Now you have started you'll find money saving addictive. I've subscribed to the thread so do keep us all up to date.

Thanks Tixy, need to keep my motivation up! I'd like to think I've thought very carefully about how best to manage (and get rid of) this debt, and its great to get the opinion of some more experienced MSE'ers!!!:beer:

gargrave50

Nargleblast wrote: »

Good luck Gargrave, sounds like you have an action plan worked out. It will be tough but you will get there with determination. Keep applying for jobs, there is supposed to be a shortage of midwives, and although I fully expect a jobs freeze in the NHS in a couple of years' time (due to reduced funding) there should still be plenty of jobs about at the moment. Any preceptorship posts around? I.e. a temporary contract for newly qualified staff with a designated mentor to get competancies signed off etc? What about advice from your place of learning?

Hi, just to clarify. Glasgow are changing from 3 maternity units to 2 at the end of the year (the joy of centralisation). As a result the staff are being split between the 2 remaining units and they have announced no posts will be released for 18 months until they see how the staffing pans out :eek:. I've applied for a preceptorship post in London which I have an interview for on 31st July. I'm ecstatic to have an interview as if I got this post I could complete my preceptorship and have a better chance of securing a post in Glasgow once things settle down. Trying hard to work out how it would work both financially and with childcare as OH works long and hard hours and DS at 6 is just a little too young to look after himself!!!!:rotfl::rotfl::rotfl:

Thanks for your support, I'll keep you all updated. Was trying for NSD today but had to pay £1 for DS Summer School club. I was absolutely gutted and then I found £1 change in the car and replaced it!!!! Yay - so far so good.