what's the worst that could happen?

dib-dab

My husband and I have recently faced up to our debts and we now have everything consolidated into 2 unsecured bank loans.
We can afford the repayments so I am not worried in that sense but for the past year my husband's company have been making redundancies and I constantly worry myself sick about what would happen if he was next. I know this is silly to worry about something that might never happen but I always have this weight on my mind.
We moved abroad and I am looking for work here so his is the only income.
I don't know much about what happens if you can't meet repayments so I am wondering what would happen if we couldn't? We don't have anything saved up so we would be instantly up the creek without a paddle if he was made redundant.
If I know what the worst would be then maybe it will stop me worrying about how bad things could get! Or maybe it will make me worry more.
We have a mortgage but according to our mortgage company we do not have equity in the house due to the fall in house prices so selling the house if we needed to would not help.
I just wish I could stop worrying as it is really driving me mad and I can't face the thought of feeling like this until we are debt free.
Now that we are repaying these loans we can start putting away a bit of cash each month ready to pay the loans off early (overpayments not allowed) so when we have a bit of cash in the bank maybe I will feel better. Although our outgoings each month are very large due to high living costs where we live now and debt repayments (even when cut back to minimum) so it will be a long while before I can feel happy that we have a reasonable emergency fund.

talana

Why not approach this worst-case scenario in the normal way by doing an SOA for it? Hopefully you'll never have to put that SOA into action, but have it on paper now and you'll know exactly what you have to do.

Nargleblast

First of all, destroy any credit cards or charge cards if you have them. Then do the Statement of Affairs thingy - you will find it at the top of the threads list, a sticky for First time posters/SOA calculator. Once you have completed that, post it on here and we will see where you can perhaps tighten things up and free up extra cash for emergencies or extra loan repayments.

Nargleblast

Sorry, just noticed you said overpayments not allowed. In that case, extra cash freed up will cushion living expenses and provide an emergency fund.

talana

And don't forget to factor in any possible redundancy payout he would get in this worst-case scenario.

speedycat

Have you thought about getting a Mortgage protection plan, not with your mortgage provider but with an independent company where the costs would be much less.

That way if he lost his job, your mortgage would be paid for you until he got another job.

If you couldn't pay your loans or any other bills then you would go and get advice from a debt charity who would give you a letter to send to all your creditors offering small token payment until you were back on your feet.

In our case they all accepted our offer but it didn't stop a few of them marking our file with a couple of defaults.

I'm not as worried now about a bad credit history as I once was. Sometimes there's just nothing you can do about it and there are always places you can turn to if you need credit.

You never know - he might end up getting promoted instead

dib-dab

Thanks for the replies so far everyone - below is our SOA. I had not posted it before as we do not live in the UK so although our expenses may look ridiculously expensive they are as cheap as it comes here unfortunately.

If my husband was made redundant he would not get a redundancy payout. He would be given one month's pay in lieu of notice (although the company have been asking others who have been made redundant to work their notice!!) and he also gets a 'gratuity payment' as per labour law here which would be approximately one month's basic pay (around £3500 - the rest of his salary is made up of other benefits which are received every month). He was told last week that as far as they could say his job was safe but then 2 days later there were a load more redundancies hence why I am worrying so much again!

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household.........
Number of cars owned....................

Monthly Income Details
Monthly income after tax................ 0 Hopefully this will change soon but this is the current position. I will feel much happier when I am earning.
Partners monthly income after tax....... 4700
Benefits................................ 0
Other income............................ 575.25 Rental income on our house in the UK
Total monthly income.................... 5275.25

Monthly Expense Details
Mortgage................................ 802 Repayment mortgage - do not want to go to interest only as this will only seem like shifting the debt from one place to another.
Secured/HP loan repayments.............. 0
Rent.................................... 1333 This is huge I know but trust me this is as cheap as it gets where we live.
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 100 This is combined for electricity and water - higher in the summer due to heavy use of air con but this is the average cost. No possibility to shop around as only once company here provides this.
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 64 This is for phones here and UK phones - works out cheaper to pay a small line rental for UK phones which include calls and texts than to pay for calls when we visit the UK.
TV Licence.............................. 0
Satellite/Cable TV...................... 30 This is the minimum possible. Cable and satellite is the only option - we do not get terrestrial channels.
Internet Services....................... 70 Very high but this is the cheapest we can get here!
Groceries etc. ......................... 270 Again high but groceries cost more here than UK.
Clothing................................ 0
Petrol/diesel........................... 220 My husband has a 3 hour round trip to work so even with very low petrol prices this is the minimum. No car share option.
Road tax................................ 0
Car Insurance........................... 84 Cannot get this cheaper.
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 440 Car hire - avoids having to get a car loan. Expensive but minimum unfortunately. Also includes taxis for me which are cheaper than hiring a second car. I use buses and walk wherever possible but most of the year it is too hot to walk around andthe bus system does not go to most of the places I need to get to.
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 26 House in UK.
Contents insurance...................... 0
Life assurance ......................... 8 This is correct - my Dad deals with life insurance so we got a good deal with no commission.
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 20
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 3587


Assets
Cash.................................... 0
House value (Gross)..................... 165000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 165000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 155000...(802)......0
Total secured & HP debts...... 155000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Bank Loan 1....................28791.....1200......0 Includes interest. Last payment Feb 2012 but hoping to repay early.
Bank Loan 2....................3225......170.......0 Includes interest. Last payment August 2011.
Credit Card....................6840......300.......0 This is a credit card we have here - we have extra money over the next 3 months so this will be paid off by the end of March and will become savings.
Total unsecured debts..........38856.....1670......-


Monthly Budget Summary
Total monthly income.................... 5,275.25
Expenses (including HP & secured debts). 3,587
Available for debt repayments........... 1,688.25
Monthly UNsecured debt repayments....... 1,670
Amount available for making debt repayments. 18.25 This will be increased to £300 when last credit card is paid (see above).

Personal Balance Sheet Summary
Total assets (things you own)........... 165,000
Total HP & Secured debt................. -155,000
Total Unsecured debt.................... -38,856
Net Assets.............................. -28,856

Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using Firefox browser.

dib-dab

I forgot to add that we have cancelled all credit cards other than the one that we will pay off in the next couple of months and we have put ourselves on a total ban in terms of putting anything else on that card - if we don't have the money then we don't buy it!

Dr.Shoe_2

There doesn't seem to be much you can do to save money except cancel your satellite TV subscription, all the terrestrial channels fromthe UK, US and most other countries can be watched via the PC for free. OK, you won't get the subscription channels but you do have a whole world of TV there.

You could move to a more affordable area which would save a great deal of money. Downsizing is a neccesary option after redundancy and no one would blame you for it.

Living abroad may complicate matters as far as getting benefits is concerned unless you are in an EU country in which case you will only qualify for what the local rates are.

Perhaps a move back to the UK would be your first step?

dib-dab

Thanks so much for you suggestions Dr Shoe. But moving back to the UK can't be an option for us at the moment as we currently live in a tax free country so would have an enormous tax bill if we return before the end of the tax year. Also there is not a great deal of work in my husband's industry at the moment so I think he would struggle to find a job. The salary he earns is reflective of where we live so he would not be earning anywhere near that amount back in the UK.
There is no cheaper accommodation here than what we have unfortunately - the price we have to pay for the 'low' (!!) price of our rent is the 3 hour round trip to work that my husband has every day.
If I could be told for sure that my husband's job was absolutely safe then I would not really have a care in the world as know that we can meet our repayments and be debt free within 2 years but at the moment I just feel like our situation is such a fragile house of cards that could come down around us at any moment. Hopefully not and 2 years down the line I will be wondering why I spent so many hours worrying myself to death but I just can't stop thinking about it.
I hope I don't sound dismissive of your suggestions, I really am grateful for you taking the time to have a look at my SOA.

JamieT1977

Only places I can see cutting back on is entertainment (though to be fair even people in debt need to "live life".)

Can haircuts be reduced by doing yourself etc?
I would budget something for emergencies as well, you never know what pops up.

As already mentioned, use the internet for watching tv.

Apart from moving back, which you say is not an option, that's the best I can suggest.

But fingers crossed, he does it lose his job