Help! I'm new and trying to reorganise my debts

dangerousdodo

Hi all,

I have a number of debts that I am trying to clear and any advice would be much appreciated.

I have a total of £33500 debts built up on credit cards Virgin (MBNA) £19500 , First Direct £8000, Tesco £5000 M&S £1000. The debts amount to £900/month our income is £3200/month. They have mostly been built up as home improvements, holidays and new cars. We dont miss repayments but we often overspend each month and dip into the cards again. The interest rates are killing me particularly on Virgin which is 26%.

I have been in denial about it for some time , the debts have continued to mount up and I keep planning to sort them out and have been making excuses but last week I sat down to prepare a budget and started contact credit card companies and banks to work out what I could do.


So far I have:

• Done a realistic budget and cut back on some uneccessary expenses.
• Contacted my credit card companies to try and arrange for alternative repayments but they wouldnt assisst.
• Tried to get alternative credit cards and try the 0% balance transfer, but I have been rejected on cards because of a low credit rating.
• I have contacted Experian and my records seem to be in order so I dont believe an error has caused this.

Then I contacted my bank , First Direct, I currently have an Offest mortgage of £120000 which is maxed out. They will only agree to a remortgage , but subject to valuation and only to clear the £8000 debt on their visa card.

I tried to get a loan through Virgin but I was rejected, however I got a call from Freedom Finance who must have got my details from Virgin and they put me on to Black Horse.

Black Horse will agree to a loan in principle of £12500 over 5years at £297/month but at a rate of 16.5%, when I queried the high rate they said that it was higher than there customers rate of 11.5% because Freedom Finance take a cut.

The fact that I have got an agreement available from Black Horse gives me some optimism but the rate still seems high, I wondered if I could try other lenders but my fear is that I will get more rejections knocking my credit rating back.

I am also rather dissapointed that First Direct arent able to offer more until now have provided a fairly good service but I dont really want to switch the mortgage at the moment trying to make the most of the low rate which is 1% Bof E tracker.

My plan at the moment is to pay back £12500 on the Virgin card and then with the savings made (I am also going to hold back my pension monthly payments) overpay the remainder of the credit card. I would aim to have this cleared by the end of next year.

I wondered if when I have demonstrated repayments and reduction in debts over 6 months or so that I would improve my credit rating enough to get better loan deals on the remaining credit cards or a balance transfer. Is this possible or is it fantasy??

Now I have started I am determined to sort this out and I want to keep the momentum going.

Any thoughts and advice would be much appreciated.

Many thanks
DD

mo1_2

hiya,welcome to mse.i think you need to post a soa first then people can help,and my humble opinion is that you need to change your lifestyle not borrow more,and thats not a judgement on you,because not long ago i was in same boat as you,and once i realised i was living above my means things got better and i took control back

hypno06

Hi, I think that if you have got to the stage where you are contacting creditors and asking for assistance, and have been rejected for loans and 0% balance transfer cards, the time has come to say to yourself that this is the situation, and you have to find another way out of it without relying on anyone else to give you any more credit.

Banks and other institutions are not giving credit in the way they were two or three years ago, so even in six months time, you are unlikely to get good offers even if you can keep on top of things now.

So, the first thing to do is to decide whether with a bit of effort, cutting back, and ebaying etc, you can afford to make your monthly payments now. If the answer is YES, then this is going to be the best way to go, as it will not ruin your credit rating further, and over time will improve it. The minimum payments will not reduce your outstanding debt, however, so you need to find a few extra £££ to throw at the debts to get the capital repaid.

If that is the case - visit the snowball calculator on www.whatsthecost.com and put your figures in there.

If paying the contractual amount plus a bit more, really is not doable, then you may want to consider a debt management plan. Read the "problem debts" tab on this board and contact CCCS on their website and do the debt remedy thing online to see how much you should be offering creditors each month. The National Debtline website also have template letters for you to send to your creditors as well which generally get better results than calling creditors to try and reach an agreement.

You CAN get yourself out of this somehow - but there are various ways of doing it, of which borrowing more money is not one!

Hope that helps.

Horace

Hi and welcome

If you post your Statement of Affairs (SOA) then the good folks on here will be able to advise you where to cut back and how your money could be used to pay off your credit cards. Constantly borrowing is not a good idea.

https://www.makesenseofcards.com/soacalc.html - follow the instructions on there to copy and paste it to MSE (here).

dangerousdodo

Hi all,

Thanks for your earlier responses a bit slow getting back to you but I have completed my SOA, I used the budget planner on this site. It was a bit of an eye opener.

I dont think I can place attachments so I have had to copy it all. All transactions are monthly.


Deep breath here goes:

Total income £3497

OUTGOINGS
Home
Offset Mortgage £690
House incurance £37.36
Bank acc fee £9.95
Council Tax £112
Water £76.07
Gas £40
Electric £65
Home Phone £20.56
TV Licence £12.12
Mobile £33
Home subtotal £1096.06

Insurance
Pet £24.15
Gas Boiler £17.04
Subtotal £41.19

Eats/ Drinks & Smokes
Food/ groceries/toileteries £680
Eating out £87
Coffee/ sandwiches £30
Drinking out £20
Smokes £330
Meals at work £10
Subtotal £ 1167

Motoring
AA £18.92
Car Maintenance £183.33
Car Insurance £65
Car Tax £31.25
Petrol/ Diesel £200
Subtotal £498.50

Cards & Loan
HP £47.50 (1 month left on repayment)
Credit Cards £856.40
Subtotal £903.90

Savings
Company share option £60
Company Pension £329
Subtotal £389

Fun
DVD rental £15
IT £5
Pet costs £10
Books/music £20
Lottery £24
Newspapers £15.16
Subtotal £89.16

Health & Beauty
Gym £34
Dentist £6.67
Subtotal £40.67

Clothes £40

Big one offs
Christmas £83.33
Holiday £66.67
Birthdays £33.33
Kitchen/ homewares £16.67
Subtotal £200


TOTAL: £4455.47


A couple of points to add:

• Mortgage is £690 and interest is currently £152/ month. As it is an offset I have been dipping into it on months where there is a deficit. There is currently only £500 available in the offset.
• Pension is currently £329/ month I have been paying the premium for which my company matches for some while as it is a company scheme. However the company is moving to a new scheme next month and I am considering delaying joining the scheme.

I know you will pick up on the smoking, we have tried, whilst we want to give up we have both have had alot of stress lately and its very hard at the moment

Any further comments and advice would be appreciated.

Thanks
DD

hypno06

The first thing that jumps out is the grocery bill - how many are in your household?

Bennifred

Hi!

Your water bill seems very high - are you metered? We pay £35 per month for a family of 5 (metered). We were surprised how much lower the cost was when we switched to metered water......

Good luck!

dangerousdodo

hypno06 wrote: »

The first thing that jumps out is the grocery bill - how many are in your household?

Thanks.

I know it does seem really high it is just the two of us and two dogs. I couldnt trace all my receipts , I had to go to the bank statements and averaged them out over the last couple of months. It does include for all food, home cleaning , beauty products and may include some clothes or homewares may have been piurchased with groceries. Also we have been getting a vegbox at £50/ month which I have stopped (and is included) as we were throwing away alot each month.

However I was shocked when I saw this and will investigate and start taking action.

dangerousdodo

Bennifred wrote: »

Hi!

Your water bill seems very high - are you metered? We pay £35 per month for a family of 5 (metered). We were surprised how much lower the cost was when we switched to metered water......

Good luck!

We live in the south west which I think is the highest paying in the country. I have always been wary about having a meter because I thought it may count against us if and when we move. But I take your point it needs investigation.

Thanks

Little_Miss_Winner

dangerousdodo wrote: »

Total income £3497

OUTGOINGS
Home
Offset Mortgage £690
House incurance £37.36
Bank acc fee £9.95:eek: whats this for???
Council Tax £112
Water £76.07
Gas £40
Electric £65
Home Phone £20.56
TV Licence £12.12
Mobile £33
Home subtotal £1096.06

Insurance
Pet £24.15
Gas Boiler £17.04
Subtotal £41.19

Eats/ Drinks & Smokes
Food/ groceries/toileteries £680:eek::eek::eek: ( i spend £70 a week for 5 of us)
Eating out £87 - get rid
Coffee/ sandwiches £30 - get rid bring your own
Drinking out £20 - get rid
Smokes £330 - can you try and half ?????
Meals at work £10 - get rid bring your own
Subtotal £ 1167

Motoring
AA £18.92
Car Maintenance £183.33
Car Insurance £65
Car Tax £31.25
Petrol/ Diesel £200
Subtotal £498.50

Cards & Loan
HP £47.50 (1 month left on repayment)
Credit Cards £856.40
Subtotal £903.90

Savings
Company share option £60
Company Pension £329
Subtotal £389

Fun
DVD rental £15
IT £5
Pet costs £10
Books/music £20
Lottery £24
Newspapers £15.16
Subtotal £89.16 - All these can go, except maybe pet costs??

Health & Beauty
Gym £34 - walk, run instead?
Dentist £6.67
Subtotal £40.67

Clothes £40

Big one offs
Christmas £83.33 - is that divide by 12 months, you spend nearly £1k at Christmas???
Holiday £66.67 - holidays???????????????:eek:;)
Birthdays £33.33 - Can this be reduced ?
Kitchen/ homewares £16.67 Bye bye
Subtotal £200


TOTAL: £4455.47



Thanks
DD

Hiya,

Was just passing and read your post Well done for coming to mse, there are a lot of good people on theses boards, who know their stuff and will help you.

I have added some pink boldy comments to your soa;). Sometimes it helps seeing comments from someone else. Sometimes is doesn't:cool:

You are on a fab income, but are throwing money away, on entertainment, presents, luxuries etc.....you really cant afford too, and can use this money to pay off some of your debt.

Hope you stick around, and keep posting.

Hugs

Little_Miss_Winner

I have just worked out that you could save £805 a month, by cutting out all entertainment. halving your fag costs to £165, and I allowed you £400 for food (kind i know)
I also took your Big One offs down to £100.:p

£805 a month!! Thats nearly 10k in a year!!:eek::eek::eek:

food for thought:D