Options

beancounter1978

My husband and I are assessing our financial situation at the moment and trying to decide the best way forward. I'd be interested to get some opinions on how we are currently handling our budget and what others think of the options (bearing in mind that I know everyone's situation is different and we will ultimately choose the best route for us).

We have £27,500 of unsecured debt (not including student loans, which currently neither of us have passed the earning threshold for). This includes £3,000 owed to a member of the family, which we are paying back at £150 a month. We do not have enough income to cover our basic expenditure (we are about £270 short each month) and find ourselves robbing Peter to pay Paul at the end of every month (in other words using what little remaining credit there is on our cards to cover the food shopping). This keeps the credit cards permanently maxed, but we are managing to meet minimum repayments - just. Having completed a CCCS plan the suggested option is a DMP.

Our monthly outgoings (not inclusive of credit repayments) are £1,525. This obviously includes rent, utilities, car insurance and petrol, but also the following items which might be considered contentious if we submitted the DMP are:
- food/housekeeping budget of £350 per month. This includes essential costs for a 1 yr old child (nappies, milk, clothes etc) and 2 cats (food, litter). It also incorporates any emergency expenses, e.g. medical or dental costs. We have looked at ways to keep this down but the best option for us is currently using mysupermarket.com to find the cheapest basket/special offers etc and shopping online. We both work full time and divide the childcare between us, so there isn't really the time to go to different shops for different things.
- sports budget of £27.50 per month. My husband goes to a martial arts class once a week, which has helped considerably in easing the depression he suffers from. I personally consider this to be an essential, but am not sure creditors would see it this way...
- DVD/videogame rental service of £29.98 per month. We do not pay a TV licence fee (don't receive TV programmes) or satellite subscription; this is our alternative. We are currently looking at lower priced options on this, so could be reducing it to about £20 in the next few months.
- Internet bandwidth hosting of £14.99 per month, plus magazine and group subscriptions of about £75 per annum. This is to support my husband's main "hobby", which he is gradually building into a potential freelance writing career. We have always justified this with the argument that he doesn't smoke, drink or gamble, but again, not sure how this would go over with creditors.

We have a personal loan with a monthly payment of about £190 per month which is due to finish in about 1 year's time, so our key dilemma is this; do we enter into the DMP now, easing our regular end-of-month "how to pay for the food shopping" panic, but extending the lifetime of our main loan, or continue to struggle for the next 12-15 months, at which point our outgoings will reduce by a sizable chunk and enable us to reassess our budgeting plan?

Any suggestions welcome.

mackers8923

beancounter1978 wrote: »

My husband and I are assessing our financial situation at the moment and trying to decide the best way forward. I'd be interested to get some opinions on how we are currently handling our budget and what others think of the options (bearing in mind that I know everyone's situation is different and we will ultimately choose the best route for us).

We have £27,500 of unsecured debt (not including student loans, which currently neither of us have passed the earning threshold for). This includes £3,000 owed to a member of the family, which we are paying back at £150 a month. We do not have enough income to cover our basic expenditure (we are about £270 short each month) and find ourselves robbing Peter to pay Paul at the end of every month (in other words using what little remaining credit there is on our cards to cover the food shopping). This keeps the credit cards permanently maxed, but we are managing to meet minimum repayments - just. Having completed a CCCS plan the suggested option is a DMP.

Our monthly outgoings (not inclusive of credit repayments) are £1,525. This obviously includes rent, utilities, car insurance and petrol, but also the following items which might be considered contentious if we submitted the DMP are:
- food/housekeeping budget of £350 per month. This includes essential costs for a 1 yr old child (nappies, milk, clothes etc) and 2 cats (food, litter). It also incorporates any emergency expenses, e.g. medical or dental costs. We have looked at ways to keep this down but the best option for us is currently using mysupermarket.com to find the cheapest basket/special offers etc and shopping online. We both work full time and divide the childcare between us, so there isn't really the time to go to different shops for different things.
- sports budget of £27.50 per month. My husband goes to a martial arts class once a week, which has helped considerably in easing the depression he suffers from. I personally consider this to be an essential, but am not sure creditors would see it this way...
- DVD/videogame rental service of £29.98 per month. We do not pay a TV licence fee (don't receive TV programmes) or satellite subscription; this is our alternative. We are currently looking at lower priced options on this, so could be reducing it to about £20 in the next few months.
- Internet bandwidth hosting of £14.99 per month, plus magazine and group subscriptions of about £75 per annum. This is to support my husband's main "hobby", which he is gradually building into a potential freelance writing career. We have always justified this with the argument that he doesn't smoke, drink or gamble, but again, not sure how this would go over with creditors.

We have a personal loan with a monthly payment of about £190 per month which is due to finish in about 1 year's time, so our key dilemma is this; do we enter into the DMP now, easing our regular end-of-month "how to pay for the food shopping" panic, but extending the lifetime of our main loan, or continue to struggle for the next 12-15 months, at which point our outgoings will reduce by a sizable chunk and enable us to reassess our budgeting plan?

Any suggestions welcome.

It's very hard to judge another persons situation but for what it's worth some of these might help you.

- I fully agree with your sports budget and whilst some may judge it as a luxury only you and your husband can judge on how well it helps him. The question here is does the £27.50 a month bring you much better value than say what the medical bills would come to if he didn't go! I'd suspect it would possibly work out cheaper sticking as it is.

- Your DVD / Game rental would without a doubt in my view be considered a luxury but perhaps you should consider a TV licence, your paying £360 a year for what you have, a TV Licence is £142.50 add to this a freeview box for £30 and there you have saved yourself an instant £187.50 the channels may not bring you the same entertainment levels but it is helping you along the way.

I don't want to go into every little detail but I can assure you that you will find the answers to most of your questions on these forums. I was in serious trouble last year with serious arrears on the mortgage a lot of outstanding payments to various creditors and within the 12-14 months we are clear of everything. Yes of course things suffered but we are now a hell of a lot better off knowing that there will be money at the end of the month to buy the baby food etc been there before too.

Given that your both working full time are you claiming everything that you are entitled to? Do a check here and find out - http://www.entitledto.com/

Good Luck with everything....

beancounter1978

Mackers,

Thank you so much for your response. I agree about the rental service but the games are quite a crucial part of it (major factor in the "main hobby" I mentioned) and wouldn't be included with TV! However, as I said, we are working on a cheaper solution.

I think the main thing I'm concerned with is whether committing to a DMP for the sake of not having to tread water for another year is actually going to put us at a disadvantage further down the line (credit records, nasty letters, risk that creditors won't agree to it etc).

porkpie11

I don’t think any of the expenditure you have mentioned is excessive at all but I think you are correct I’m not sure that it would necessarily be taken that way.

Jesthar

beancounter1978 wrote: »

Thank you so much for your response. I agree about the rental service but the games are quite a crucial part of it (major factor in the "main hobby" I mentioned) and wouldn't be included with TV! However, as I said, we are working on a cheaper solution.

I think the main thing I'm concerned with is whether committing to a DMP for the sake of not having to tread water for another year is actually going to put us at a disadvantage further down the line (credit records, nasty letters, risk that creditors won't agree to it etc).

That really depends on your full financial situation. If you can just about meet minimum payments at the moment, then providing you are willing to be strict with yourselves, you may not need to do a DMP. It's difficult to say without having the full picture, though.

For that reason, could you counsider posting us up a Statement of Affairs - a sort of comprehensive summary of your financial position? You will find our favourite tool for doing these here:

http://www.makesenseofcards.com/soacalc.html

Put absolutely everything into it, and if you use the 'MSE' button in the 'Format Post' section, you can copy and paste it straight in to this thread as a new post.

Regarding the games, I suspect that the cost you have at the moment is for unlimited use, as in as many games as you like for as long as you like? I'd tentatively suggest that as you don't have a TV licence, you MAY find if you had to go the DMP route that creditors will be ameanable to allowing you to keep this as an alternate to a TV license, so if you can find a package for about £12 - £13 a month, that would be good. That may not be as flexible as the plan you currently have, but it's better than nothing!

Internet is usually considered an 'essential' these days, but probably not the forum subscriptions. At £75 per annum, though, that's not a huge amount, though, and he could easily 'earn' that amount by doing daily clicks on cashback websites (I only do two sites, and I'm over £100 this year so far )

~Jes

Katie-Kat-Kins

I reckon that if you are managing to meet the minimum payments each month without getting in any deeper and have nearly paid one loan off then you probably don't need a formal DMP.

Once the loan is paid off you can target all that money you aren't paying off at the next most expensive debt thereby snowballing your debts. There is a tool for calculating snowballing I'm sure someone will post a link if you can't find it.

In the meantime if you aren't in a formal DMP why not work out a budget and try to undercut it each month so you can make an extra payment against one of the credit cards. If it is informal then it is a bit more flexible, so you could try to reduce that grocery spend by £50 a month by going on the old style board and you could collect what you save in a jar to pay off your priority debt.

You could also try to make some extra via ebay, OH's hobby/job, daily clicks, etc, there are lots of suggestions on the upping your income board. Also reclaim any bank charges and pay any payments against your debts. Remember to go through Martins articles and do all the pain free savings too, switching and saving on your utilities and insurance, downshifting on supermarket brands etc will all help make a dent.

If you could reduce some outgoings and up your income then you could make some payments a bit over minimum so you wouldn't just be treading water.

If you post a full SoA we could suggest ways to make savings.

You could also consider whether you could have a payment holiday or go interest only on your mortgage to give you a little more disposable income to target on those debts.

Sounds like you would appreciate the flexibility of staying outside the formal DMP if possible so go for it.

Good Luck and well done for tackling it before it gets out of control.

BeautyandtheBeast_3

Hi, you need to do a detailed SOA to fully understand where savings can be made! xx

beancounter1978

Thank you for the replies above; they really are appreciated.

Jes, thanks for the cashback clicking tip; I already do a couple of questionnaire sites which earns me a couple of quid a month, so if we can build that up a bit it might cover a good portion of that.

Kat, we rent rather than own, so the mortgage payment holiday isn't an option; however the family member who we owe the £150 to has already offered to let us suspend payment for a while if we need to. I've been resisting so far because of pride, I suppose It might sound stupid but I prefer owing money to the bank and paying interest on it than not paying back someone I love who has bailed me out time and again, especially since not getting that payment would affect them financially - not massively, but enough.

Ebay is already on our favourites list; we've been using it (and Amazon Marketplace) for years to prevent the debt escalating by "recycling" DVDs, books, toys etc. At the moment the weeun has just reached the 1 year mark so we're offloading a lot of her baby paraphernalia, which in turn means we can buy her bigger clothes without denting the budget even more.

I think in all honesty I do want to avoid the DMP if at all possible, I just thought if we had something more formal in place it might make for a bit less conflict when I have to keep telling the OH that "we can't afford that, honey". I'll work on an SoA; thanks for the link, Jes.

Katie-Kat-Kins

beancounter1978 wrote: »

Kat, we rent rather than own, so the mortgage payment holiday isn't an option; however the family member who we owe the £150 to has already offered to let us suspend payment for a while if we need to. I've been resisting so far because of pride, I suppose It might sound stupid but I prefer owing money to the bank and paying interest on it than not paying back someone I love who has bailed me out time and again, especially since not getting that payment would affect them financially - not massively, but enough.

Sorry should have checked back!

You could ask the family member if they could accept slightly lower repayments........ depends how desparate you are.

What is OH's hobby/job? Maybe you could make some more money from that? I'm on at mine to try some tutoring to up his income.

Admire you for tackling it on your own, I'm sure if you show OH the snowball thingy and the demotivator you can get him inside a bit more.

Fire_Fox

beancounter1978 wrote: »

We have £27,500 of unsecured debt (not including student loans, which currently neither of us have passed the earning threshold for). This includes £3,000 owed to a member of the family, which we are paying back at £150 a month. We do not have enough income to cover our basic expenditure (we are about £270 short each month) and find ourselves robbing Peter to pay Paul at the end of every month (in other words using what little remaining credit there is on our cards to cover the food shopping). This keeps the credit cards permanently maxed, but we are managing to meet minimum repayments - just. Having completed a CCCS plan the suggested option is a DMP.

Our monthly outgoings (not inclusive of credit repayments) are £1,525. This obviously includes rent, utilities, car insurance and petrol, but also the following items which might be considered contentious if we submitted the DMP are:
- food/housekeeping budget of £350 per month. This includes essential costs for a 1 yr old child (nappies, milk, clothes etc) and 2 cats (food, litter). It also incorporates any emergency expenses, e.g. medical or dental costs. We have looked at ways to keep this down but the best option for us is currently using mysupermarket.com to find the cheapest basket/special offers etc and shopping online. We both work full time and divide the childcare between us, so there isn't really the time to go to different shops for different things.


- sports budget of £27.50 per month. My husband goes to a martial arts class once a week, which has helped considerably in easing the depression he suffers from. I personally consider this to be an essential, but am not sure creditors would see it this way...
- DVD/videogame rental service of £29.98 per month. We do not pay a TV licence fee (don't receive TV programmes) or satellite subscription; this is our alternative. We are currently looking at lower priced options on this, so could be reducing it to about £20 in the next few months.
- Internet bandwidth hosting of £14.99 per month, plus magazine and group subscriptions of about £75 per annum. This is to support my husband's main "hobby", which he is gradually building into a potential freelance writing career. We have always justified this with the argument that he doesn't smoke, drink or gamble, but again, not sure how this would go over with creditors.

I'm struggling to understand how you can continue with this level of shortfall for the next few months without a DMP or other intervention. I would suggest you get a letter from your GP stating that the physical activity is a necessary part of your husband's treatment programme.

It's quite straightforward to reduce your housekeeping budget without going to several shops each week. I only shop every fortnight, mainly at Asda as it's cheaper overall but periodically at Tesco when I have some decent vouchers (Clubcard/ Sun newspaper £5 off sat Morrisons, Tesco accept those ). This way I catch the offers at both without spending all my time in the supermarket! if you never go in person you miss all the yellow stickered stuff so that's good to do every now and then.

Without meaning to be rude if you have time for gaming you have time to batch cook - perhaps you could do an hour each once a week? With a slow cooker you need cheaper cuts of meat and there is no messing about - just throw meat, liquid and a load of veggies in raw and leave for four to six hours. Nothing burns and nothing needs stirring or browning!! :T

Could your husband perhaps cut back on the spend on his hobbies for a few months, just until that personal loan is paid off? At the moment it is costing you a lot more than the headline figure as you are paying interest on your cards/ overdraft than you borrow to fund it.

Jesthar

beancounter1978 wrote: »

Ebay is already on our favourites list; we've been using it (and Amazon Marketplace) for years to prevent the debt escalating by "recycling" DVDs, books, toys etc. At the moment the weeun has just reached the 1 year mark so we're offloading a lot of her baby paraphernalia, which in turn means we can buy her bigger clothes without denting the budget even more.

If you have a local 'Freecycle' scheme, a lot of people on here say you can get second hand young 'un clothes on there a lot of the time, as they grow so fast! Not tried it myself (no OH, let alone offspring!), but I've seen it suggested a lot.

~Jes