Really don't know what to do next

Julie67

I first posted on here a couple of weeks ago and have been trying hard to reduce our debt but things seem to have come to a head. Our overheads and debts are so big that any slight dip in earnings throws us into real problems. I bring home £2000 a month which I know is a good wage and my OH usually ears around £3000, he has his own business. However things are really quiet for him at the moment and although he is trying everything he can think of his income has probably halved over the last month. I know this still seems good but relative to what we owe it means we just can't manage.
We put the house on the market when we realised it as probably the only realistic way to pay off the debts quickly and have a fresh start but no viewings as yet (it has only been a few days). We owe my parents £6000 and I thought we would have a while to pay this but my mum rang last night and asked for a £1000. We are currently over our £2000 overdraft limit and I know there is a cheque waiting to come out for the HIP pack which we have to have to sell the house. (£350)
I recently took on another credit card with the intention of transferring some of the balance as it is 0% interest on balance transfers for the first 14 months. I have had to draw out the cash for my mum on the credit card which I know is a bad move but we have no choice.
No one else other than you guys no about our situation and I just can't tell anyone:o what do we do now?
What if it takes 6 months to sell the house and business doesn't improve. I feel like I need to start talking to the companies involved but I don't know where to start
Sorry about the length of this but neither of us are sleeping through worry and I hate my job but I know I have got to keep it at least in the short term. The last thing we need is to be off work through stress.
Does anybody have any advice. I just don't know where to turn.

milliemonster

Hi Julie

Did you do a full SOA last time you were here? I only ask as we have a similar level of debt to you and our income is less and we are able to overpay massively on ours each month?, our joint income is around £4k per month.

This is only because we have managed to strip our essential outgoings down to free up the money to overpay, we have sorted out our budgeting properly to stop going overdrawn etc, can you post up your SOA again?

Julie67

I did yes, but really had to guestimate OH income because it is so up and down and I think we were probably overly optimistic. I will look at it again later and repost (can't at the moment as it is on my laptop at home)
At the moment it feels like everything has come to a head.

milliemonster

I've just found your old SOA from before and noticed that your mortgage is £1227 a month, this is obviously a huge chunk out of your income esp if your oh has a bad month, as you are selling up, is there any chance you can speak to your lender to go interest only for a while?, it may take some time to sell in the current market.

A couple of years ago wour mortgage was £1300 a month and was crippling us so we sold up, bought a cheaper a house which is actually really lovely and I much prefer it to where we were before and our mortgage is now £487 a month, a big difference! and it means I can sleep at night now. It took us about 8 months to find a buyer though and we only had 2 viewings in all that time.

Try not to panic too much at the moment, you are quite lucky in that most of your debt is interest free (ours isn't! and we can't move it as we can't get anymore credit due to the amount we already owe) I think it is just a case of getting your SOA done accurately with the minimum your oh earns each month (anything else then is a bonus) so we can see the bare bones of everything, then help you look at how to manage your budget and what the next steps are

don't worry hun! it will get better xx

Julie67

Yes it is a huge mortgage and we pay £500 a month to someone who lent us part of the deposit. God only knows why I thought it was so important to own this big house and fancy car. It now just feels like a millstone. I would happily rent for a while. We have just been so stupid:o Keeping up with the Jones's and all that.
How do I find my previous SOA that I posted?

Julie67

I have found my SOA. I am going to work through it again and be more realistic with the income. Thanks for you help. At least I feel like I am trying to do something.

milliemonster

If you click on your name on your first post it will bring up an option to click previous posts and it's in one of those.

Oh I know where you are coming from with the big posh house and fancy car, we did exactly the same thing, all I wanted was a nice new detached house with a big garage and yes it was lovely for the first year, after that I hated the place, hated having no money and it all going on the house every month, it made me wake up and realise what is really important in life. My sister has a very small 3 bed semi that she and her hubby bought just before they got married 20 years ago, they have never moved from it even though they considered it when the kids were little, now because they had such a small mortgage they can afford to do whatever they want (even though they don't have huge incomes), they are currently in Australia and Singapore, the car they have is an S reg escort that they have had for 12 years!!! and just keeps going, they have no debt, but have the disposable income to do more or less what they want because they have never gone in for a big house and new cars every couple of years.

So moving for us was the best thing we ever did and reevaluating our lives and what is important, now we have a 3bed extended end terrace that is an old LA house, when we moved, my best friend (who is a real snob) initially drove straight by and refused to come in! as it looks nothing from the outside but as it has been extended inside it is massive, bigger than my previous house, massive bathroom, 25ft conservatory etc and even she was gobsmacked when she saw it inside, I would never own a new house again, the only thing I lost was an en suite (which was more like a cupboard anyway)

dottyanne

I know what you mean about trying to keep up - we have seen both sides, when we initially bought our house we were both on good incomes, then we both went self employed after OH was made redundant - BAD MISTAKE (for us anyhow) we were even using the child benefit to sustain teh shop, in the end we closed it down with masssive debts (mainly personal now) we got behind with the mortgage and everything - thankfully this is up to date now and all business debts (bar the Lloyds TSB Overdraft) have been paid but were still massivley in debt to the tune of around 51k, 10k of this to my dad so i know a bit where your coming from, we only have one car now and our incomes have dropped again as ours are based on a basic plus commission (not making any commission at the moment though!) so i sympathise with you a great deal.

Julie67

Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget SummaryAmount(£)Total monthly income4,125Monthly expenses (incl. HP & secured loans)3,214.95Available for debt repayments910.05UNsecured debt repayments1,085Amount short for making debt repayments-174.95

Personal Balance Sheet SummaryAmount(£)Total Assets (things you own)268,000Total Secured & HP Debt-225,000Total Unsecured Debt-40,580Net Assets17,420
Household Information

Number of adults in household3Number of children in household1Number of cars owned2
Income, Expense, Debt & Asset Details

IncomeAmount(£)Monthly income after tax2045Partners monthly income2000Benefits80Other income0Total monthly income4125

ExpensesAmount(£)Mortgage1127Secured/HP loan payments349Rent0Management charge (leasehold property)0Council tax150Electricity61.5Gas61.5Oil0Water Rates40Telephone (land line)30Mobile phone100TV Licence11.95Satellite/Cable TV35Internet services10Groceries etc.400Clothing50Petrol/diesel340Road tax28Car Insurance210Car maintenance (including MOT)0Car Parking5Other travel0Childcare/nursery0Other child related expenses50Medical (prescriptions, dentists, opticians etc.)10Pet Insurance/Vet bills0Buildings Insurance33Contents Insurance33Life Assurance0Other Insurance0Presents (birthday, christmas etc.)20Haircuts20Entertainment20Holiday0Emergency Fund20Total monthly expenses3214.95

Secured & HP Debt DescriptionDebt(£)Monthly(£)APR(%)Mortgage210000(1127) 6.4Hire Purchase (HP) Debt15000(349)11Secured & HP Debt totals225000- -

Unsecured Debt DescriptionDebt(£)Monthly(£)APR(%)HSBC Cred Card878023019HSBC Loan940021012Private Loan130005002Halifax Cred Card160013015HSBC Overdraft2000156Private Loan580000Unsecured Debt totals405801085-

Asset DescriptionValue (£)Cash0House Value (Gross)250000Shares and bonds0Car(s)18000Other assets (e.g. endowments, jewellery etc) 0Total Assets268000

I have redone the SOA more realistically and can now see why we are struggling to makes end meet each month. Although I don't know where I can increase our income or decrease our spending.
Thanks so much for your posts. It so helps to know we are not alone. Any advice on the above much appreciated. Julie

Julie67

Statement of Affairs & Personal Balance Sheet
Summary
Monthly Budget Summary

Amount(£)

Total monthly income

4,125

Monthly expenses (incl. HP & secured loans)

3,214.95

Available for debt repayments

910.05

UNsecured debt repayments

1,085

Amount short for making debt repayments

-174.95

Personal Balance Sheet Summary

Amount(£)

Total Assets (things you own)

268,000

Total Secured & HP Debt

-225,000

Total Unsecured Debt

-40,580

Net Assets

17,420

Household Information
Number of adults in household

3

Number of children in household

1

Number of cars owned

2

Income, Expense, Debt & Asset Details
Income

Amount(£)

Monthly income after tax

2045

Partners monthly income

2000

Benefits

80

Other income

0

Total monthly income

4125

Expenses

Amount(£)

Mortgage

1127

Secured/HP loan payments

349

Rent

0

Management charge (leasehold property)

0

Council tax

150

Electricity

61.5

Gas

61.5

Oil

0

Water Rates

40

Telephone (land line)

30

Mobile phone

100

TV Licence

11.95

Satellite/Cable TV

35

Internet services

10

Groceries etc.

400

Clothing

50

Petrol/diesel

340

Road tax

28

Car Insurance

210

Car maintenance (including MOT)

0

Car Parking

5

Other travel

0

Childcare/nursery

0

Other child related expenses

50

Medical (prescriptions, dentists, opticians etc.)

10

Pet Insurance/Vet bills

0

Buildings Insurance

33

Contents Insurance

33

Life Assurance

0

Other Insurance

0

Presents (birthday, christmas etc.)

20

Haircuts

20

Entertainment

20

Holiday

0

Emergency Fund

20

Total monthly expenses

3214.95

Secured & HP Debt Description

Debt(£)

Monthly(£)

APR(%)

Mortgage

210000

(1127)

6.4

Hire Purchase (HP) Debt

15000

(349)

11

Secured & HP Debt totals

225000

-

-

Unsecured Debt Description

Debt(£)

Monthly(£)

APR(%)

HSBC Cred Card

8780

230

19

HSBC Loan

9400

210

12

Private Loan

13000

500

2

Halifax Cred Card

1600

130

15

HSBC Overdraft

2000

15

6

Private Loan

5800

0

0

Unsecured Debt totals

40580

1085

-

Asset Description

Value (£)

Cash

0

House Value (Gross)

250000

Shares and bonds

0

Car(s)

18000

Other assets (e.g. endowments, jewellery etc)

0

Total Assets

268000

Sorry I think that's easier to read!

Karmacat

Hi Julie... I just happened on your thread. Well done for coming back - that can be harder than getting here in the first place.

Looking over your SOA, there are a couple of things that stand out to me:
- gas and elec, £120-odd a month - is that the best tariff?
- you're spending £130 a month on telephone services! Plus £35 a month on satellite services! Since you don't have enough money to cover your debts, you *have* to rein that in somehow.
- your grocery bill of £400 for 4 isn't high as these things go, but a regular user on here will be able to cut it down further - by maybe £50. Check out the Old Style board on here.
- your buildings and contents insurance is a little bit high, if you go through quidco to find the best value quote, you can reduce that and get cashback too.
- what are you actually doing with that emergency fund money? Can you use it to pay off some debts? Check out Martin's article on the main site.
- you've got clothing expenses of £50 on there. Apart from a few things at Primark for the child in the family (who may be growing apace, after all! ) that could be knocked on the head for a few months. As could haircuts for one month.

Other issues:
- I'd advise you to keep a spending diary - every single penny, every bar of chocolate, every cup of coffee, everything. On Hypno's diary, we did a "virtual £20" spending diary, about a dozen of us, and apart from a couple of bottles of wine when I was in France, *all* my extra spends were chocolate - so I need to start making my own sweetie things at home. Thats the reason for the spending diary - to let you know what you *actually* spend on, and give you back more control over your money.

- have you cancelled all the nonessentials like magazine subscriptions?

- is everything on the cheapest interest rate you can find - credit cards etc?

- the third adult in your house? Is that a schoolage adult/uni student? If not, and they're working, they should be paying *something* towards their keep.

- check out the Up Your Income Board - there are lots of ways to make bits of money on the web without spending, and lots more ways to make money by spending and retrieving your own money (like the scratchcards you might have seen discussed). Those vouchers etc can be saved up and used for Christmas presents - freeing up more money to be used on debt repayment. And so it goes on ...........

Thats all I can think of for now. Hope this helps. Good luck!