Help please with managing debt

zimlily

Hello everyone

A newbie here! I was wondering if I could ask for advice on our income and expenditure and repayment plan for our debts which is around £26k - what a mess! We got this way when dh was made redundant 3.5 years ago and we found ourselves relying on credit cards and loans to get by and then we tried to consolidate and ended in a mess. Niether are us are much good at being clever with money. We went to CAB a year ago which has brought us much relief as they were able to negotiate lower payments to our creditors and arrange for interest to be frozen. This is all very helpful. We try to live as frugally as we can and naturally want to get out of debt but just can't see any light at the end of the tunnel. Will we ever get there? Last year we had unexpected expensive car repairs so I ended up increasing my overdraft so need to try to reduce this also. However, we don't have extra cash to save for unexpected expenses or to save in the hope of accepting settlements on debts in the future. It seems we will be in debt for many years to come. I worked out it will take around 9 years paying the amounts we currently pay and with 2 young children we worry about our future - we rent so it seems we will never be in a position to buy, etc. This is such a huge weight on our shoulders and we could really use with some advice so we can manage this debt as best we can and make progress. Do you think our replayment plan is the best for us or could we try something else?

Here are our figures. We are a family of 4.

INCOME
Monthly
DH Net Pay 1161
My Net Pay 330 (self employed part-time)

Child Benefit 116.6
Tax credit 100

TOTAL INCOME 1707.6



EXPENDITURE
Monthly
Rent 450
Council Tax 96
Water 31.25
Gas 25.5
Electricity 45
Housekeeping 460 groceries/£20 leisure/dog maintenance costs/haircuts and other such expenses that arise
Car running costs 155 incl. ins/petrol/repair costs/road tax/rac
Clothing 60 around £25 or this to clear catalogue bill
TV Licence 10.5
Telephone/TV/Internet 70 telewest 3-in-1 package/2 payg mobiles
Child activites 30 for 2 young children
Dentist/Eye care 25 lens/glasses/dentist check-ups for 2 adults

TOTAL EXPENDITURE 1458.25


DISPOSABLE INCOME 249.35 Say 249 for creditors



2006 Agreed Payment per month
mbna 7406.6 88
cahoot 4896.97 50
barlays bank overdraft 1284 15
barclays bank loan 5845 35
tesco 4677.1 55
barclaycard 469 6
249


I still need to find extra money from what we have to start to reduce my overdraft of £1400 - all the creditors are in dh's name and my overdraft was never included. It used to be small but I increased over the last year for car repairs. Oh yes, just to add in the last year we have barely reduced the overall amount as the creditors added on so many penalty fees and interest during negotiations with CAB!

Thank you all so much for any input you can offer me.

Many thanks
Zimlily

Annie_Fanny

Zimlily - firstly well done for posting and well done for already having arranged a repayment plan.

Firstly you may need to start hacking into your budget...i.e. £460 for housekeeping seems very 'generous' and you will be able to cut back on this. Have you tried the 'Old Style' board - they will be able to help you cut back on groceries etc. Also your tv/internet package is very expensive - give Telewest a call and try and blag a reduction! I tried this with ntl and they knocked off about £9 a month - not much but it is better to be in my pocket then theirs!

Secondly you may be able to claim back the charges imposed by the banks...someone will be along soon I am sure to advise you on this, Amosworks/Lynzpower can you help? There is also plenty of information relating to this topic in the 'Budgeting & Current Accounts' forum on this site. Other then that have a look at this website, where you will be able to find lots of help: http://www.consumeractiongroup.co.uk/forum/

Thirdly are you or your OH able to get an additional job at all? I know it's hard but any additional income will ensure that the debt gets paid off quicker!

Good luck

ismangil

A very good start!

My specific suggestion for now:

Dump Telewest, and go TalkTalk + Freeview.

Hope this helps!

nic82

Your electricity seems very high, especially since you have gas too. With the summer evenings it should go down anyway, but even little things like switching off lights when you're not in the room, not leaving mobile phone chargers switched on and not leaving ANYTHING on standby will all help to cut costs.

Also, hop over to the OS board where will be able to pick up loads of tips on cooking healthy food for families on small budgets, as well as ways to clean your house without buying expensive cleaning products, etc.

lynzpower

Hi there
Right a few things

You need to do your SOA in detail I think. this 460 figure gives us little to work with ie? What are dog maintainence costs? Do you have a plan you pay up, or not?

When you say your self-employed part time? What is it? Is it avon/ ann summers? Or something else? Chances are if you let us know someone else will be running a business similarly. Also, are you paying up your NI & inland revenue? Or at least saving toward them? Chortle can offer more when they arrive.

You say the interest is frozen? Did you do a SOA for them before? Or did they just negotiate for you?

You also say that you had unexpected car repairs, this tells me its not sometihng you budgeted for and thus the overdraft extension. However, you do need to put a bit away for the inevitable ( boilers are another thing that "go" often causing much stress) without these figures being built in, it cant ever be a budget you guys can stick to.

The other thing that isnt that helpful I can see there is that the barlcaycard is a farily low amount, but £6 a month you will be paying even that little un forever.

Have you kept a spending diary to see what goes where? You might be surprised even if you think you are being frugal you might not be. Are you using money off coupons for your food shopping ( tesco take them whether youve bought the product or not for example)

Do claim back your bank charges. Ive had 157 from Co-op already and 1107 is in line to come back to me from LLoyds. I havent even started to look at overdue charges on my credit cards yet ( got 3, one about to be chopped) Regardless of whether the accounts are open now or not, you can still claim those charges back. At £35 a pop or whatever your bank charges, chances are you will be able to write off some debt with that money, which is what IM doing with mine

Also stick around here, is my biggest tip, every day someone will tell you another fab money saving plan, and it may reap dividends for you

And my question of the week..... *drum roll* are you doing a car boot sale? If not why not weathers better now and theres no time like the present!

All the best
Lynz
x

zimlily

Firstly, thank you all for taking the time to respond and for all the useful tips. It is so useful getting feedback as it enables me to rethink certain figures.
I have reduced housekeeping from £460 to £430 - for this I have included groceries for the 4 of us and pet food/annual vet visits/and a buffer for things like haircuts etc. Plus entertainment of £20 a month mostly for an occasional outing with the children or family birthday presents - cheap ones! Neither of us go out to the pubs, cinema or anything like that though dh smokes a couple of roll up tobacco cigarettes. We use the local library a lot for books and so on. Nowhere else do we have a buffer built in for unexpected extras, etc. We already only use natural household cleaners - lemon - vinegar, etc. I bake my own bread and am growing some veggies in the garden.

I will certainly look into reducing Telewest bill by calling them and finding out if we can knock some money off our monthly bill.

We cannot work any extra hours as we both work hard as it is with two very young children who need thier parents. My self-employed work is for a local company doing admin jobs for them.

Also, what is the norm for clothing allowance for a family of 4. Dh works in a office and is required to dress quite smartly so needs collared shirts, etc.

The point that interests me a lot at the moment is claiming back on bank charges and interest charges from banks and credit cards companies whilst our lower repayments were under negotiation with CAB. I have never heard of this before and would really appreciate more basic info on this. I will look into the links you all provided too.


Thanks very much for all your help so far.

Zimlily

beanielou

Just to say that Im amazed that your CAB let you enter into a repayment scheme that was going to run for 9 years.Did they not offer you other ideas/solutions? i think you need to look at this.