Big Debts Help!

Mansun

Hi All,

Here's my story...My wife and I had our first child 3 years ago at which time she gave up her full time job and went part time so that she could raise our child herself. Last year we had our second child and my wife took SMP for 26 weeks before returning to her part time job.

About 6 months ago, the opportunity to work abroad came about so we decided as a family to seize the opportunity and take it. In August, we went to find a place to live and feeling sure that we were moving in September, my wife gave up her job so that we could focus on the move.

Unfortunately, for all sorts of reasons, the move abroad did not happen and since then, my wife has had to find another job but it is only for a small number of hours a week and on very low pay.

In all of the above time, our monthly income was reduced and our outgoings had (obviously) increased with 2 kids to raise so we relied more and more on credit cards to make many purchases. Also during this time, the Student Loans people caught up with me and started taking just under £300 a month from my salary.

Over the last year or so I have been transferring balances all over the place to try and take advantage of zero percents or very low percents whilst making only the minimum payments and to cut a long story short, we have ended up in a bit of a mess and don't really know what to do about it.

This is made worse by several things. Firstly I have a fairly stressful, well paid job (which I do actually enjoy). I always have a calm exterior and NEVER let on to anyone if I have problems specifically related to money. If truth be told, its very depressing for me to work very hard and not be free from money worries. I also find it worrying that I will not be able to raise my children in a way that I really want to as I have become 'financially limited'.

Anyway, I hope my ramblings haven't snt you to sleep and below is my SOA. Any advice would be most welcome.

Note that I have an appointment at my bank next week to discuss the possibility of taking out a loan to consolidate all of my debts, reduce my monthly outgoings and to provide some structure and an end date to my repayments.

Thanks in advance from a MSE newbie...

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 2450
Partners monthly income after tax....... 200
Benefits................................ 173
Other income............................ 0
Total monthly income.................... 2823
Monthly Expense Details
Mortgage................................ 800
Secured/HP loan repayments.............. 140
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 90
Electricity............................. 70
Gas..................................... 50
Oil..................................... 0
Water rates............................. 47
Telephone (land line)................... 19
Mobile phone............................ 20
TV Licence.............................. 12
Satellite/Cable TV...................... 35
Internet Services....................... 5
Groceries etc. ......................... 500
Clothing................................ 50
Petrol/diesel........................... 200
Road tax................................ 18
Car Insurance........................... 31
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 10
Buildings insurance..................... 9
Contents insurance...................... 4
Life assurance ......................... 50
Other insurance......................... 100
Presents (birthday, christmas etc)...... 20
Haircuts................................ 0
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Child Trust Fund........................ 50
Total monthly expenses.................. 2400

Assets
Cash.................................... 700
House value (Gross)..................... 160000
Shares and bonds........................ 0
Car(s).................................. 5000
Other assets............................ 0
Total Assets............................ 165700

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 124000...(800)......5.5
Secured Debt.................. 21500....(140)......5.5
Total secured & HP debts...... 145500....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
N Rock.........................1400......256.......11.9
Tesco CC.......................470.......11........NaN
Next...........................520.......30........NaN
Black Horse....................2000......75........NaN
Barclaycard 2..................3465......80........18.9
Santander CC...................5840......135.......0
Virgin CC......................1340......30........NaN
M&S CC.........................1380......35........3.9
Barclaycard 1..................390.......10........0
Total unsecured debts..........16805.....662.......-

Monthly Budget Summary
Total monthly income.................... 2,823
Expenses (including HP & secured debts). 2,400
Available for debt repayments........... 423
Monthly UNsecured debt repayments....... 662
Amount short for making debt repayments. -239
Personal Balance Sheet Summary
Total assets (things you own)........... 165,700
Total HP & Secured debt................. -145,500
Total Unsecured debt.................... -16,805
Net Assets.............................. 3,395
Created using the SOA calculator.
Reproduced on Moneysavingexpert with permission, using IE browser.

Tixy

Hi and welcome to MSE. Well done for posting your SOA and its good to give us some background as well.

Looking at your costs

Your elec looks really high- does it include arrears? are you with the cheapest supplier and have you tried reducing your usage.

Groceries could definatley be reduced - especially if your OH is not working many hours - some people on here manage to feed a family of 5 with pets for £250 but if you could at least drop to £400 to start and then try reducing slightly each month that would help with your shortfall. Try cooking more from scratch, the drop a brand challenge, shopping online (so you are not tempted to buy things you don't need and look at the oldstyle board for loads of hints and tips.

Life assurance is very high - almost certainly be able to save a considerable amount by shopping around (unless one of you have serious health condition)- plus make sure it covers what you think it does.

What are other insurances? If ASU type policies this is really high.

Seek other advice than just the bank before you take on a debt consolidation - the bank is only there talking to you for their own sake not yours - remember they do not have your best interests at heart. Make sure you fully understand all the terms and the costs involved and how much extra you might pay in insurance. Don't sign up to anything there and then - take time and look for alternatives.

You can probably make cutbacks to make your months balance on paper but obviously could seriously improve things if and when your OH finds better paid work.

Mansun

Thanks. Am planning to stop payments to the CTF next month.

The Life and Other Insurances stuff is all with my bank to cover mine and wife's life as well as critical illness. If I stop paying for some of these, I will obviously lose all benefits and means that I will have been paying for these things in vein. Will speak to the bank next week.

Regarding groceries...I know...but need someone to have a word with the wife. Because of my job and its time demands, she is responsible for all of the grocery shopping and most times, she doesn't hold back... How much should we be spending on the family (including nappies, etc...) per month? Or should I say, what is the least we can spend to cope in other peoples opinions?

Tixy

If any of those policies were bought with your mortgage they are likely to be far from competative - have a look here http://www.moneysavingexpert.com/insurance/ and look at the loans, life & medical tab. I agree some cover is essential (when you have kids) but you need to shop around just as you would for car insurance.

Regarding groceries - least you could spend (and feed your family heathily) probably £200, but its certainly easier on £300. Maybe your wife would like to look on the oldstyle board, plus encourage her to drop to supermarket brands on things that really don't matter -such as cleaning products, bleach, toilet rolls etc. Also shopping at several supermarkets, including the discount ones such as aldi and lidl and at butchers, farm shops or fruit & veg markets can save you loads.

jm28cardiff

Mansun wrote: »

Thanks. Am planning to stop payments to the CTF next month.

The Life and Other Insurances stuff is all with my bank to cover mine and wife's life as well as critical illness. If I stop paying for some of these, I will obviously lose all benefits and means that I will have been paying for these things in vein.

They are not investments, so you havent been paying in vein, even if you never, ever get to claim...in fact its better never to have to claim on these policies!!

Mansun

Thanks both for your advice so far. Will take it all on board and make myself a bit of an action list. A daily diary might be in order too.

My other major concern is the fact that Christmas is only just around the corner. One of the other reasons for getting a bank loan was to take advantage of a 3-month payment break to make sure we had extra cash for kids presents, etc. Plus we are always the hosts and end up spending a lot of money on Christmas Dinner and other such stuff.

Not being able to provide for my wife and kids really bothers me...especially at Christmas time (and I really love Christmas).

Mansun

Regarding insurances, I just find it all very confusing and feel it is risky to cancel any of the policies.

I have checked my accounts and I make payments of £37.01, £11.52, £20.64, £10.83, £31.14 and £52.44 to HSBC Life every month.

I also pay for MPPI at £50 a month although this was increased by £25 earlier this year without me knowing and I am trying to get some money back from them.

Tixy

You may find that you are doubling up or trebling up on the same cover over and over, you really need to find out exactly what is paying for what.

If the children are both still young (and I hope its not teenagers using nappies!) then they really won't understand the cost of christmas presents - I'm sure they'll be just as happy with quite cheap big colourful toys as with really costly gifts -you've plenty of time for them wanting all the latest gadgets when they get older:rolleyes:.

You can still enjoy christmas without spending more than you can afford - its about planning and organising to get the best deals - and also if you remember back to the best bits from your childhood christmases was it all about the presents or about having family around and fun & games? And if you always host -any chance you can suggest that whoever usually comes to you hosts this year?;)

Mansun

No, not teenagers but just as moody! I'll find out about insurances next week during my meeting with the bank.

Just spoke to the wife now she's home from work and she seems to think it's impossible to reduce grocery spend. This will be a real challenge...

Tixy

Sounds like she needs old stylers help - http://forums.moneysavingexpert.com/forumdisplay.html?f=33

and don't let her think that its all beans on toast, value coffee and smart price sausages to manage on that budget, its doable whilst still feeding healthy, filling and nutritious food - honest!

Deep_In_Debt

Just to second what others have said, getting a consolidation loan is not really a good idea. It's not really clearing your debt and you often pay more over a longer period. Been there, done that....

For household products, I buy supermarket own brands. Tesco loo roll is cheap - do you really need posh stuff?

If you have a Lidl near you, worth a visit. I don't have young children but from what I have heard their nappies are very good.