£100k debt in 7 years

Button21

Hi guys,

I am posting here for a friend....

Here are some background details...

DarkConvict

its good your trying to help, Re-mortgaging is a bad thing, you are turned unsecured debts into secured debts.

They need to scrap the idea of home improvements and work on paying off all their debts. If they have remortgaged before several times it is honestly just saying, you are living beyond your means.

They really need to pop on and see the advice given first hand as everyones experience differs, the key thing here i believe is posting up an SOA as i feel they are just spending way to much every month, and by securing it every time feel confident to carry on spending, this is because it initially reduces the monthly repayments (which is bad as you pay more in the long run) but then they get more credit so monthly repayments start increasing as does the level of debt! Post up in MSE format - http://www.makesenseofcards.com/soacalc.html

Happytogetdebtfree

i agree with dark convict, maybe they can cut there spending a little ? if you poisted an soa or something good luck x

welshmoneylover

Button21 wrote: »

Hi guys,


...a couple of unexpected bills has just tipped them over and they have no emergency fund.

They desparately need some home improvements (bathrooms) Thanks guys!

If they're that financially strapped for money, surely having a new bathroom is the least of their worries.

Happytogetdebtfree

why is the bathroom not usable ?? they need to re assess and maybe think of waiting on the bathroom front x

Button21

mistake.....tried to post SOA unsuccessfully!

Button21

Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 0
Monthly Income Details
Monthly income after tax................ 300
Partners monthly income after tax....... 1750
Benefits................................ 270
Other income............................ 0
Total monthly income.................... 2320
Monthly Expense Details
Mortgage................................ 450
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 160
Electricity............................. 60
Gas..................................... 50
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 45
Mobile phone............................ 10
TV Licence.............................. 12
Satellite/Cable TV...................... 40
Internet Services....................... 0
Groceries etc. ......................... 280
Clothing................................ 50
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 12
Buildings insurance..................... 11
Contents insurance...................... 11
Life assurance ......................... 25
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 30
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1276

Assets
Cash.................................... 0
House value (Gross)..................... 175000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 175000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 75000....(450)......2.7
Total secured & HP debts...... 75000.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................8000......200.......0
Loan...........................15000.....300.......0
Overdraft......................2000......100.......0
Total unsecured debts..........25000.....600.......-

Monthly Budget Summary
Total monthly income.................... 2,320
Expenses (including HP & secured debts). 1,276
Available for debt repayments........... 1,044
Monthly UNsecured debt repayments....... 600
Amount left after debt repayments....... 444
Personal Balance Sheet Summary
Total assets (things you own)........... 175,000
Total HP & Secured debt................. -75,000
Total Unsecured debt.................... -25,000
Net Assets.............................. 75,000

welshmoneylover

They've been very foolish haven't they?

Most people would give their right arm to have a house given to them so they're mortgage free.

Borrowing so much money is just plain crazy.

Button21

yes....you are correct! they have been very very foolish! I honestly don't know that they have spent the money on! This will be the 3rd time they are remortgaging!

They are looking to borrow £115k.

Blunt replies welcome folks.....there has to be an LBM moment for them at somepoint!

It's all too easy to remortgage but they see that as the only way forward....I have tried telling her that the easy option isn't the best one!

DarkConvict

Button21 wrote: »

Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 0
Monthly Income Details
Monthly income after tax................ 300
Partners monthly income after tax....... 1750
Benefits................................ 270
Other income............................ 0
Total monthly income.................... 2320
Monthly Expense Details
Mortgage................................ 450
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 160 (get it paid over 12 months instead of normal 10)
Electricity............................. 60
Gas..................................... 50
Oil..................................... 0
Water rates............................. 0 (no water)?
Telephone (land line)................... 45
Mobile phone............................ 10
TV Licence.............................. 12
Satellite/Cable TV...................... 40 (get rid of it, its a luxury)
Internet Services....................... 0
Groceries etc. ......................... 280 (that's good for 5 people, maybe could be lowered further)
Clothing................................ 50 (drop to 0, bare essentials only)
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 12
Buildings insurance..................... 11
Contents insurance...................... 11
Life assurance ......................... 25
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30 (drop it except for close family and keep it to 5-10 per person)
Haircuts................................ 30 (get it done at a local collage for alot less, let hair grow long and cut it short)
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1276

Assets
Cash.................................... 0
House value (Gross)..................... 175000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 175000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 75000....(450)......2.7
Total secured & HP debts...... 75000.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................8000......200.......0
Loan...........................15000.....300.......0
Overdraft......................2000......100.......0
Total unsecured debts..........25000.....600.......-

Monthly Budget Summary
Total monthly income.................... 2,320
Expenses (including HP & secured debts). 1,276
Available for debt repayments........... 1,044
Monthly UNsecured debt repayments....... 600
Amount left after debt repayments....... 444 (This 400+ needs to be going to pay the debt with the highest APR)

Personal Balance Sheet Summary
Total assets (things you own)........... 175,000
Total HP & Secured debt................. -75,000
Total Unsecured debt.................... -25,000
Net Assets.............................. 75,000

That's all i can see (comments in red).

£25k of unsecured debt is bad, but people on here are alot worse, but since they have secured £75,000 of it, i do consider them to be in £100,000 of debt and that puts them up with the top end debt free wannabes here.

They need to cut spending alot, they lived to much luxury for their lifestyle for 7 years, they now need to cur back extensively to rope it back in. The interest on the debt is going to chew into them so they need to make the highest repayments possible.
Pay min payments to everything, and put the remainder into straight onto the debt with the highest APR (just be careful on loans for early repayment fees)

Button21

miss_missy....good advice! That's what I thought...their SOA doesn't seem too bad....but I think they have really pulled their belts in recently. I have no idea where the surplus goes....easy come easy go I think and I have told her that.

It's all too easy to remortgage - that is the easy option.