I can't quite believe it's got this bad

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  • Talheedin
    Talheedin Posts: 21 Forumite
    Hi Everyone,

    Good news and bad news yesterday.

    I’ve cancelled my New Scientist subscription, found out that sky can be reduced to £15 a month for the lowest package (doing that this evening) and decided to cancel broadband at home until either the Sky broadband comes out or we go back to NTL. That should save us around £64 a month although we would be back with BT for calls (I’ll look into the 1866/1899 that Mad Maverick suggested though). My wife has reluctantly taken my cards and put them away, probably not totally necessary but it does take the temptation to spend on credit away and is a psychological step. I’ve taken out an allowance for the month in cash this morning so that I know what I’ve got and can see how it is dwindling. Finally, I’ve started a spending diary; £7.34 yesterday of which £3.34 was lunch at work which I calculated is costing me around £750 a year! Wow, that was a bit of a shock and it’ll have to go.

    The bad new was that the Water company sent me a bill yesterday (the first one for around three years, I checked through my records for this) and, guess what, I owe them loads. They want to increase my payments to £91 a month for 11 months to cover it. Is there anything I can do about this? Can I phone them and say “I’ll pay you what the monthly payment should be and then pay off £10 a month extra”? Otherwise this wipes out the savings I’m making above.

    My Wife and I had a long talk last night about our options and she thinks that we should try to put the debts on the mortgage first. Now, a couple of days ago I would have agreed with this but now I’m not so sure and I think we should probably go with the CCCS plan however, as I’m uncertain about a few things, I’m not really in a position to convince her. The questions she had about CCCS were very similar to mine and I’d really appreciate it if someone could give me some answers (or at least let me know their experiences):
    -Will my Wife’s income (and child benefit and CSA money) be taken into account by the creditors seeing as there is no financial link between us other than that we are married?
    - Will they be able to force me to sell the house or file for bankruptcy or something similar?
    - How long is a DMP likely to last?
    - Is there a standard amount for living expenses that we can refer to so that we can see how much we’ll be left with each month?

    Thanks

    Talheedin
  • lynzpower
    lynzpower Posts: 25,311 Forumite
    Combo Breaker First Post
    Securing a debt onto the mortgage, with respect, is one of the worst things you can do.

    1. It adds interest on top of the interest youve already accrued elsewhere, and strings is out for 18 years.

    2. It doesnt change your spending habits. As calley pointed out you havent been budgeting well, and lets face it not one of us has been anexpert budgeter or else we woudnt have ended up in debt. Another example is you hadnt noticed you havnet been paying your water rates for a while. Again, this is poor budgeting. Not having a go,Ive been pretty poor at it myself. but securing your debt onto your mortgage is not going to give you these skills. iF YOU accrue any more debt after this and find yourself in a pickle, its literally a house of cards that will tumble. If you miss payments on your mortgage or on the secured part, yes, they can file for bankrupcy.

    Additionally, plenty of people come on here with secured debts that they cant get out of. if the lucky things happen and you have a win on the lottery or you get left money from a distant relative the penalties of closing secured loans down make it night on impossible to get out of them.

    I believe that you are financilly linked bacuase you are married although others will be able to tell you more about this.

    Securing debt on your home will more as likely put you in negative equity.

    If you want to move and the sale price of your house is less than the mortgage plus the secured loan you are still liable for the extra debt once you have sold the property.

    Aso bear in mind interest rates are set to rise, and although you are on a fixed rate now, newer fixed rates later in the year as predicted will mean that your mortgage goes up, and thus the secured loan goes up too. Have you factored this in.

    The DMP I believe is the better route. It doenst involve securing the debts. SOme people have a DMP that lasts 18 years, but the fact is that you might get a promotion, or get some money from elsewhere and this can bring the term of the DMP down. In a DMP the creditors stop the interest, so tht you wont be chasing your tail, what you pay off will be coming off the balances.

    I believe that you have significant scope for reducing your outgoings, theres 200 pcm off your food bill there for a start, plus as you pointed out a 750 a year lunch habit that can go without too muhc toruble. please dont be hasty in securing when there are clearly much better options out there. A few other things- ewhat have you got to sell? Sell anything you have got you dont need on ebay/bootsales/amazon. You say your wife cant work, what about part time work? Weekend job in a shop or something? Right now its all hands to the decks to get things sorted IMHO.

    All the best :)
    :beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
    Theres no dollar sign on piece of mind
    This Ive come to know...
    So if you agree have a drink with me, raise your glasses for a toast :beer:
  • grade15
    grade15 Posts: 543 Forumite
    I think KatrinaC be sitting next Martin Lewis!! :dance:
    not sure if this is mentioned but could you reduce your council tax..as you are claiming child benefits ..not too sure..just know that if you are claiming benefits, then it can reduce your CT..
    smile everyday...cos its free :)
    Live everyday to the Full..cos there is no tomorrow:dance:
  • caleo
    caleo Posts: 345 Forumite
    grade15 wrote:
    I think KatrinaC be sitting next Martin Lewis!! :dance:
    not sure if this is mentioned but could you reduce your council tax..as you are claiming child benefits ..not too sure..just know that if you are claiming benefits, then it can reduce your CT..

    They have too much income to be able to get any help towards the counciltax etc.


    -Will my Wife’s income (and child benefit and CSA money) be taken into account by the creditors seeing as there is no financial link between us other than that we are married?
    - Will they be able to force me to sell the house or file for bankruptcy or something similar?
    - How long is a DMP likely to last?
    - Is there a standard amount for living expenses that we can refer to so that we can see how much we’ll be left with each month?



    Your wifes income, CB and CSA would not be included into your income if the debts are all in your name. Your outgoings would be reduced though, as they would expect your wife to pay towards the mortgage, food, utilities etc

    The CCCS will advise as to how long the DMP will go on for- depends on what disposable income you will have left after you have paid all essentials.

    They will send you a pack which will have a budget sheet in it. Complete this, and you will have an idea of what your outgoings are without the debts, and see what is left over to share between the creditors. When you have the interview with the CCCS, they will run through your outgoings, and they have minimum amounts that you need for food etc.

    There are a few people on here who work for the CCCS, and I am sure they will be around soon and will be able to give you guidelines as to what you can expect to budget.

    They won't leave you destitute, they will ensure that you have sufficient to live on. They do not want you to be struggling and then not paying your DMP.

    Yes, it is going to affect your credit. If you are concerned about remortgaging in 2 years time, there are some lenders who will let you remortgage. I have just done mine, and got a better rate than with a high street lender.

    Caleo
  • Talheedin
    Talheedin Posts: 21 Forumite
    Ah, I didn’t know that a DMP could last that long or that it would freeze the interest. Is there anywhere that I can find out more about what a DMP actually is, I’ve only got a few fuzzy pieces of information on them?

    My wife does work (her wages are included in the SOA above) and we have actually been looking for things to sell on ebay and have amassed a small pile to start with unfortunately having five kids doesn’t leave many things in mint condition. (I’ll just explain the family dynamics because I think someone asked about it earlier. I have two teenagers who officially live with their mother but spend three nights a week with us. She earns more than I do and gets the child benefit, I don’t have to pay maintenance per se but I do have to pay for them for the three days a week and share a proportion of costs; clothing, birthdays, entertainment, etc. My Wife has a teenager from her previous marriage who lives with us and we have two toddlers of our own. All of them are boys and for anyone who has seen Malcolm in the Middle you will have some idea of what our house is like, except we also have a dog.

    My Wife’s spending habits are saintly (along with many of her other virtues). In the five years we’ve been together she has only been overdrawn once and that was because of a mix up with her wages. She refuses to get a credit card. Hence the reason why I’m trying to talk her into being in control of the finances and me just having a monthly allowance. She has reluctantly agreed.

    Unfortunately Child Benefit is a universal benefit and doesn’t entitle you to reduced council tax.

    I am trying to get budgeting under my skin and hope I’m starting well but it’s only been a few days compared to years of just spending. I’ll just have to see what happens when the pinch starts to bite.


    I was just about to post the above when I saw Caleo’s message. Thanks very much for that Caleo it’s cleared a few things in my head.


    Thanks

    Talheedin
  • Cantdance_2
    Cantdance_2 Posts: 200 Forumite
    Please please please don't put the debts onto the mortgage...

    We did that - and then spent it all again - and then got a secured loan from one of those TV lenders - and then spent it all again!

    End result - The house we bought for £90,000 is now mortgaged for £117,000, plus another secured loan of £17,000 which would cost us around £32,000 to pay off if we tried to move.

    Hence we would now need to get around £160,000 if we wanted to move and the house is worth £145,000 max.

    No-one's posted the link to the Snowball calculator yet - this is superb. It shows you how long it would take to pay off all your debts if you carried on just paying the minimum payments on everything - and then how long it would take to pay them off if you just find a little bit more than the minimum each month.

    It also shows you how much more interest you would pay by putting the debts onto the mortgage (in my case about £20,000 more I think!)

    It gave me a debt free date about 3 years from now which I can now work towards as a goal and has motivated me into being much better with the money.

    http://www.whatsthecost.com/snowball.aspx

    When I first came to this board my wife and I had about £500 more a month going out than coming in. By getting advice from people here, cutting back on stuff and moving things around we managed to break even and now even have some spare cash every month which gets thrown straight at the debts, bringing that Debt Free date ever closer.

    I haven't done the sums so can't quite work out if you have enough money to keep meeting your minumum payments, but if after a bit of sacrificing and juggling things around you can just about make them, then my best advice would be to help yourselves. Don't remortgage, and don't go into an IVA / DMP if you can help it.

    Reduce (maybe even halve!) your shopping bill by going to Netto / Lidl / Aldi if you have one nearby - yes the stuff's in different packets but it's just as good and sometimes better. Switch all your suppliers through Uswitch and see if you can save on utilities. Cut your broadband down to a basic package if you don't want to get rid of it totally. Cut your sky back or cancel when possible.

    Then if you do everything like this you can think of and you still don't have enough to make your minimum payments, it's definitely time to approach the CCCS for advice. They're only going to tell you to do the same things anyway so best do it first and see if you can get by without them.

    Things will hopefully only get better as chances are your salary will be going up rather than down so you may find it's only going to be a few months where you have to be really stingy and after that things will get slightly better.

    But cut up every credit card / Store card you and your wife own - it's the only way to stop putting anything else on there!

    Hope this was helpful in some way.

    James
    Total Debt: Owe about £19,000 on credit cards plus £24,000 which is my half of joint loans.
  • Talheedin
    Talheedin Posts: 21 Forumite
    I think we're passed the time where we can save enough to pay the debts as we are. Especially when we make an effort and then Yorkshire Water take it back off us (I was paying the water bill by the way, they just didn't bother to send anyone round to check the meter and bill us properly. I know I should have checked it myself.)

    On top of that more gas and electricity rises! Don't switch now!

    As I've been reading your posts I've been thinking "Oh, yeah, well I am budgeting now and cutting back on things, we'll be sorted." But deep down I know there'll be the temptation to just get this or that. And temptation will lead to purchase!

    I must admit I feel really crap. I suppose this is all just part of facing up to the reality of the problem.

    Talheedin
  • Cantdance_2
    Cantdance_2 Posts: 200 Forumite
    Talheedin wrote:
    I think we're passed the time where we can save enough to pay the debts as we are. Especially when we make an effort and then Yorkshire Water take it back off us (I was paying the water bill by the way, they just didn't bother to send anyone round to check the meter and bill us properly. I know I should have checked it myself.)

    On top of that more gas and electricity rises! Don't switch now!

    As I've been reading your posts I've been thinking "Oh, yeah, well I am budgeting now and cutting back on things, we'll be sorted." But deep down I know there'll be the temptation to just get this or that. And temptation will lead to purchase!

    I must admit I feel really crap. I suppose this is all just part of facing up to the reality of the problem.

    Talheedin

    Well, if you're really at that point then I heartily suggest the CCCS or PayPlan who are similar and just as good but not as busy.

    But just looking at your yearly thing - you still have just about more money coming in than going out and at the end of the day that means you CAN get by without more borrowing.

    If you cancel your magazine, cancel your sky, change some suppliers, change your food shopping habits, you might find it's enough to scrape by for a while and not have to screw your credit rating over by going onto a DMP, or worse still, putting it all on your mortgage whereby you'll pay 10 times more in interest.

    Take a look at the snowball calculator- I did and it made me feel much better about 'going it alone'.

    James
    Total Debt: Owe about £19,000 on credit cards plus £24,000 which is my half of joint loans.
  • Cantdance_2
    Cantdance_2 Posts: 200 Forumite
    Talheedin wrote:

    As I've been reading your posts I've been thinking "Oh, yeah, well I am budgeting now and cutting back on things, we'll be sorted." But deep down I know there'll be the temptation to just get this or that. And temptation will lead to purchase!

    I must admit I feel really crap. I suppose this is all just part of facing up to the reality of the problem.

    Talheedin

    And if temptation is the problem (as it normally is for us DFWs!) then just remove all possibility of giving into it!

    Give your wife all your credit cards, as you have done, or better still, detroy them all once and for all!

    Work out how much spare money you have a month and withdraw it all in cash, divide it up week by week and put it in 4 sealed envelopes not to be opened until that week.

    Make it impossible for yourself to spend any more than you have!

    I know you feel crap and believe me I was there but facing it up to it and starting to sort it out is by far the best thing I ever did and worth 10 consolidation loans or remortgages.

    Previously I used to think about money non-stop, during the day, lying there at night, sweating and feeling like I was going to suffocate.

    I still think about money non-stop but because I took control of it, it feels good - I know that I've broken out of the 'must buy this' trap and that I'm doing something to sort myself out once and for all. Eventually it becomes fun - how much can I save this month?

    I don't reckon you're at the giving in stage just yet...

    James
    Total Debt: Owe about £19,000 on credit cards plus £24,000 which is my half of joint loans.
  • lynzpower
    lynzpower Posts: 25,311 Forumite
    Combo Breaker First Post
    Aww talheedin, heres a hug ((((talheedin))))

    It is part of the relaity of facing up to the problem. Weve all been there right at the start, and yes, its pretty crap. Dont be so hard on yourself. You really cant be expecting to budget now, when youve only been here a couple of days at most. Come on, your still learning some skills - dont run before you can walk and then beat yourself up over it. Now smile :) thats better :D

    But the bottom line is, yes you will be tempted- god not one of us here are :A halo wearing, we are all only human and we can all only do our best. ONly yesterday I got into the swing of looking for holidays on the internet, OH said to me, theres no way were undoing all your hard work by spending that, I agreed, and then sat down sulking for the rest of the day.

    Temptation doesnt have to lead to purchase, and what many DFWs will testify to, is that the less you spend, the less you want to spend. Its not a life sentence, many of us have our treats built into the budget, once things have levelled off a little bit. However, if you are worried about these temptations for gods sake please dont secure, as I said before.

    Speak to the water board and say, look, not being funny, Im looking at my finances, I cant pay it off in one go, can we start installments of a tenner a month on top?
    :beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
    Theres no dollar sign on piece of mind
    This Ive come to know...
    So if you agree have a drink with me, raise your glasses for a toast :beer:
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