Urgent help needed please

Lydia.42

Hi guys
Really hope you can help here. My Mum came to me for help today, and below is her SOA. Thought I might be able to help, but I’m afraid that when I did our budget our debt was mostly credit cards, and after cutting back we had spare cash. Unfortunately as you can see this isn’t the case for my Mum.

The only good thing at the moment is that she has not defaulted to date, but has lost £600 per month as of yesterday – hence the urgency. She has calmed down a little now – having someone to tell has helped I think, but I haven’t been able to relieve her worries. Any help would be very greatly appreciated:

Mortgage & loan – £1353.16 (approx. £780 repayment mortgage/£580 secured loan – Northern Rock)
Buildings/contents – £30.73
Council tax – £120
Water – £18.80
Gas/lecci – £64
Mobile – £15
Life insurance – £9.92
Food – £200
Petrol – £80
Car insurance – £25
Tax – £12.50
Pension – £134.25
TV licence – £11.03
Sky – £18
Denplan – £14.00
Total: £2106.39 (previously £2706)

Credit cards:
Barclays (15.9%) balance: 1050 min £20
AA (20.9%) balance: 3030, min £60
Loan (13k remaining, 5.9%, 2.5 years to go) – £393.50
Total: £473.5

Incomings: £2021.06
Outgoings: 2579.89
Total: - £558.83


She also has other various credit cards, all with zero balance. I don’t have this list to hand at the moment (she has it with her to call the companies and ask about balance transfer rates). She probably has about another 20k credit available on cards that currently have zero balances.

We have managed to get MBNA to give her 0% until Nov this year to move the above credit card balances for the moment, and give her some breathing space there. But other than that, I’m stumped. She has no PPI on the loans, and has only recently taken out the secured Northern Rock loan over 5 years.

She reckons she has approx. 100k mortgage, and the house is worth approx. 190k. Should she try and re-mortgage? Her problem is that she is 55 and is not sure they would give her much more of a mortgage due to her age. She already works long hours so can’t take on a second job.

Can anyone offer any advice? I’m actually more stressed over her debts than our own, as I know there is light at the end of our all be it very long tunnel, but don’t know how to help her.

Thanks to anyone who has stuck with my waffling this far!!!!

fivemice

Hiya

How many people is the food for?
Has she shopped around for buildings/contents insurance?
Petrol seems quite high.
What's Denplan? Is it a real essential?

Also, with the mortgage, I have no idea whether it's a good idea or not, but my Dad was 48 last year when he took out his £118K mortgage and had no problems getting it, as a sole owner as well.

In_Search_Of_Me

Food, gas/elec & buildings seem a bit high...Looking at it it would seem that using equity would be an option but much better to see if there is any way she can earn more or reduce payments...By being lethal I've saved over 400 this month & have made an additional 150 on ebay so it can be done (though I'll have an empty flat soon lol!) Not a huge help me but just wanted to say how lovely that your mum can ask you for help like this! Big hug for you both.

Lydia.42

Thanks for the suggestions so far. Will get her to look at them tomorrow.
With regard to earning more, i'm not sure this is an option at the mo. Jobs around here are quite poorly paid, and i don't think she could find another job quick enough to help at the mo, or one that would pay anymore than she earns at the mo.
Thanks for the hugs!!!

Rachel85

Hi

This is the first time I've responded to a SOA but thought I would as there have only been a couple of responses (maybe as its nearly midnight!)

Anyway, I would suggest looking into the following:

Food: If its £200 just for her she'll be able to get this right down. Check out the Old Style board for ideas regarding meals on a budget and cheaper cleaning products etc! When I shopped just for myself I used to spend £20 per week (this was last year). I also tended to buy loads of rubbish rather than planning meals so I think you could do it for far less than this.

Denplan: I agree that dental insurance is a very good thing to have - however I'd say that this is a non essential for your mum right now and that if she can cancel it she should

Sky: Again, a non essential so if she is able to cancel it, do. Perhaps you could buy her a Freeview box for Christmas?!

Mobile: Could she switch to a PAYG with a fiver of credit each month perhaps? Ie. just make sure she uses it for emergencies only.

Buildings&Contents, Car and Life Insurance: Sounds obvious but check she is getting the very best possible deal. It may be a lot of effort to ring round and check but could be worth it.

Utilities: Again, sounds obvious but check she is on the best deal. It could save a little money each month.

Council tax: Ensure she's getting her single person's living discount (if she does live alone that is). So many people forget to apply.

Also, you mention that she has lost £600 per month but you don't say why. Is it a permenant or temporary thing? If its not going to be forever, could she switch to an interest only mortgage until she has a bit more money coming in?

As for the CC, as you have already said, see if she can transfer them to a lower interest rate or 0% for a while. Then if she has any spare cash try snowballing (I'm sure you know the score)...

I think the general principle is that every little helps. Even if you only shave a few quid off insurance, cancel sky, save on food etc the savings could mount up.

And at the end of the day she's made a massive step towards solving the problem just by talking about it - and she's very lucky to have a daughter she can rely on!

All the best.

Lydia.42

Thanks for your post Rachel:

Food: If its £200 just for her she'll be able to get this right down. Check out the Old Style board for ideas regarding meals on a budget and cheaper cleaning products etc! When I shopped just for myself I used to spend £20 per week (this was last year). I also tended to buy loads of rubbish rather than planning meals so I think you could do it for far less than this.

She’s a good cook, so reckon she should be able to get this down to £80-100
Saving - £80-100

Denplan: I agree that dental insurance is a very good thing to have - however I'd say that this is a non essential for your mum right now and that if she can cancel it she should

Cancel – saving £14

Sky: Again, a non essential so if she is able to cancel it, do. Perhaps you could buy her a Freeview box for Christmas?!

No freeview where we live, so will have to install aerial for any TV. Think we may be able to do it ourselves.
Saving - £18

Mobile: Could she switch to a PAYG with a fiver of credit each month perhaps? Ie. just make sure she uses it for emergencies only.

She is cancelling BT (so haven’t included it on her budget), phone is a work one, so she only needs to pay for calls. So should be able to get this down to £5.
Saving - £10

Buildings&Contents, Car and Life Insurance: Sounds obvious but check she is getting the very best possible deal. It may be a lot of effort to ring round and check but could be worth it.

Will ask her to look into these today. She has also asked to see the person who sold her the mortgage – will get her to ask if she has any life cover included in this, maybe she could cancel others then.

Saving - £18-20

Utilities: Again, sounds obvious but check she is on the best deal. It could save a little money each month.

She only moved gas & lecci about 2 months ago, so think she is on best deal at the mo – but will double check today. Water is about correct – she is on a meter.

Council tax: Ensure she's getting her single person's living discount (if she does live alone that is). So many people forget to apply.

Have asked her to check this today, as she could not find exact amount (but she thinks she is paying for single person)

Also, you mention that she has lost £600 per month but you don't say why. Is it a permenant or temporary thing? If its not going to be forever, could she switch to an interest only mortgage until she has a bit more money coming in?

This is permanent I’m afraid, and no obvious pay rises on the horizon.

As for the CC, as you have already said, see if she can transfer them to a lower interest rate or 0% for a while. Then if she has any spare cash try snowballing (I'm sure you know the score)...

She is going to move the balances as soon as her new card arrives (needs the 3 numbers off the back to do the transfer). But the minimum will still be approx. £80 per month for now.


So as you can see, still a big shortfall. I don't know anything about DMP's and IVA's. Are these something that could help her? Or should she just remortgage? The thing is that she is due to retire in about 10 years (age 65), don't think her health will allow her to work much more beyond this. So if she remotgages, she's still going to have to earn what she does now, and there is no way she can clear everything in 9-10 years. So what does she do then?

Looking back at my first post, i think the pension payment may actually be an endowment (will check with her today). Not sure if this is worth anything, but that could save her £135 per month and be used to clear cc's if there is any money in the plan. Should she cash an endowment in? Can't see the point in paying it if she may lose her house....

Really worried. Didn't sleep to well last night. Any more ideas. My brain hurts this morning.

Thanks guys

kar

Has she looked into mis selling of endowments if this was the pot that was supposed to pay off her mortgage it is unlikely that it will.

At her age though if its a pension payment I would try hard to keep it (a break for a couple of months if they allow maybe).

My only thought is a possible downgrade to a smaller property. I appreciate that she probably doesn't want to do this but i just can't see a way of making ends meet unless the mortgage/loan repayments are reduced. Even if there were no CC's I don't think it would all add up. Sorry.

nadnad

i'm not on top form this morning - so can't get the numbers to work for me!!
however I would say that your mum has options - she has equity in her property and shes on a good wage so she can sort herself out. so try to think positive.

on what you've mentioned about that she can save that comes to £162 which leaves a £396 shortfall.

a couple of options spring to mind and I'm sure others will come along to either agree or disagree as to whether they are the right options:-

1) switch her mortgage to interest only for a while - but make sure its only a while - say a year or so shes still probably going to be left with a shortfall but it would give a bit of breathing room.

2) she could remortgage. I calculate her debts to be in the region of £15K PLUS the secured loan (how much is that for? APR? months remaining?).

Post how much the secured loan is etc - because that is crippling her.

Also could she get a lodger? does she need her car?

she needs those balance transfers done asap. plus you could get her to phone the loan company (for the £393 explain she doesn't want to default, that shes sorting her finances out right and that shes going to send them a token payment for this month) because I assume she has no savings and so this month she may default on some debts?

nadnad

of course the other option is to sell the property and clear the debts and start anew. she could rent a while or depending on what she had left put a deposit down on a smaller property.

Lydia.42

Thanks guys.
Just been round to see her before work.
The £135 odd is actually an endowment that has been running for approx. 11 years and still has 14 to run (due to mature when she reaches 70), and will probably only pay out approx. 40k with the predictions at the moment.
My first thought was to cash this in and try and clear as much of the 13k left on the 2nd loan. This coupled with the fact she wouldn't be paying the endowment each month would save her £527.75 each month.

This all depends on the value of the endowment of course. She is gonna ring them today from work to see what they say. But doesn't think it will be over 10k, so still a short fall. The short fall could go on a cc but that would then increase the minimum payments each month.

Downgrading her car could free up a bit. It's worth about £4500-5000. Depending again on what extra she needed to find on top of the endowment.

She has thought about selling getting a new place, after clearing secured loan (this has just under 5 years to go, and was for 30K, apr approx 5% i think). And the possibilty of renting and clearing all was mentioned too. But if she rents, i don't think she will ever get back on the property ladder. Would this matter when she retired? I guess so long as her pension paid the rent, it wouldn't.

She has about 1000 in her Natwest Reserve account, so can use that this month/next month to cover the £600 shortfall. Then things will go pear-shaped. So i guess this week is really all about seeing what options are available.

Thanks again, any more suggestions greatly appreciated.
L

lynzpower

Could she move her CC payments onto 0% or low LOB cards?

IS there no chance of bringng money in from anywhere else? Getting another job for example