40k in debt and counting...

Lucie_2

rozzy62 wrote:

one of my main questions i would have for, say, CAB is:
i am paying £900 mortgage part repayment/ part endowment thru Halifax, so why am i also paying about £400 for endowments as well, thru AXa Sun Life, Norwich Union etc?

OK, you need to dig out some basic financial information about your mortgage:
1) How much is it for in total? (ie how much did you borrow?)
2) how much of it is interest only & how much is repayment?

The endowments are to cover the cost of the capital on the interest only bit (think of it as a long term savings plan). The total expected pay outs of your endowment policies should equal or exceed the interest only bit of your mortgage.
Unless only a very small % of your mortgage is repayment, I'd say £400 on endowment policies seems like quite a lot. Are they on schedule to perform as expected or are they predicted to fall short?

rozzy62

My bank has juts cut my o/draft limit to 7K from 10k, so cash flow has been cut this month - just lost 3k. They have offered me a loan. I have said no thanks for the time being because i dont want any more loans.
Car Loan @ 320
Sains bank @ 220
M/C interest running @ 100+
plus minimum payment of 300
O/draft running @ 100+

It's getting tight and the only way i can see out of this are:
Pers Loan to consolidate debts = 30k @ Bank int rate over 5 yrs
or
sell house and pay off all debts in one fell swoop

bluezone

rozzy62 wrote:

My SOA:

Monthly Incomings:

My salary (self employed)- £5,000
Partners salary - £200

Total - £5200

Monthly Outgoings:

Mortgage - £900
Council Tax - £160
Gas - £30
Electric - £30
NTL (phone/tv/bband) - £100This is too high - can you cut the package down?
Food - £300For how many people is this for? - If this is for just 2 people then you coud easily half this amount
Petrol - £50

Other DDs:
Car Finance - £320
Sainsbury's Bank - £220
Life Insurances/endowments - £400This also seems a bit high - can you cuut this down at all?
3 valleys water £70.00
vodafone limited £50.00
world vision £15.00This has to go till you are out of debt

Cards
Egg o/standing - £2000
Mastercard o/s - £10,000
JohnLewis o/s - £5000

Overdraft - £10,000

Inland Revenue o/s - £18,000

any advice would be gratefully rcvd.
to me it looks like i have to sell my house and downgrade.
It is on the market.
I am hoping to get £300k for it and then buy a smaller house in a less salubrious location for, say, £250k.

I dont know if I have helped but it seems to me that you are living beyond your means and you have not had your lightbulb moment yet. I'm sorry if I sound a bit harsh - I dont mean to

xela_17

bluezone wrote:

I dont know if I have helped but it seems to me that you are living beyond your means and you have not had your lightbulb moment yet. I'm sorry if I sound a bit harsh - I dont mean to

It appears that way to me too. Obviously selling the house will get rid of the debts and if that's the way you have decided to go that's fine. However, the fact that the SOA is not by any means complete and you haven't even tried to cut your spending, says that you have not had a LBM and after selling the house will continue to live beyond your means and eventually have the same problem.

It would be better for you to take a close look at where your money goes - keep a spending diary for a month. Also, get to know your finances - e.g. you don't know if the £70 you spend on water is monthly or quaterly; you don't know the APRs on your ccs (the John Lewis one is likely to be around 25-30%).

When you're more in tune with what's going on, you'll be better equipped to sort yourself out. Don't just have a kneejerk reaction, sell the house and think that's the problem sorted because it won't be.

armarda

The original poster wrote:

yes, the £5k is gross. so that should be a lot less income available, say £4k.

I am afraid you are really overestimating the amount of take home pay you can allow yourself. i-resign gives the figures below which you may or may not be able to read but basically after tax and NI yuo're talking £3378. Self employed NI contributions may be a bit different but this is a small part of the tax charge. If you don't put your tax money aside you will have exactly the same issue next year with tax and will never get out of the cycle of always owing HMRC a load of cash you've already spent.

Annually Monthly Weekly
Gross Income £60,000.00 £5,000.00 £1,153.85
Tax-Free Allowance £4,745.00 £395.42 £91.25
Taxable Amount £55,255.00 £4,604.58 £1,062.60
Tax £16,207.60 £1,350.63 £311.68
National Insurance £3,251.48 £270.96 £62.53
Net Take-Home £40,540.92 £3,378.41 £779.63

justruth

Time for a reality check I'm affraid, you need to know whats happening with your money! You really don't have a clue! Once you actually understand the impact of interest your financial life will change. Get together all the information you can on your finances, break it down, what you total actual debt is, what the APR's are, what the min monthly payments are, how much your take home income actually is. Once you have done that have a look at the snowballing link that is dotted across this forum and see how much the debt is costing you.

Do you really want to sell your home? You're struggling for a reason, there is no quick fix, just a delay.

nrsql

Have a look at your various agreements.
From the tone of your posts I wouldn't be surprised if you have payment protection on some of these things - and it's probably of little value to you.

Check that you aren't paying for multiple policies e.g. insurance.
Have a look at your direct debits and make sure that you can match them to things you expect. Might still be paying for things you aren't receiving due to change of address etc.

My guess is that moving house will only delay the inevitable unless you get a hold of your finances - and there is probably a lot you can do with just a little bit of attention.

Have you thought about work expenses too?

rozzy62

looks like i have a busy weekend ahead of me ... thanks for the input, advice and guidance ... but once i have put all that down into a nice spread sheet and analysed it ... i am still going to be in debt by 40k ... and still with a cashflow problem. But i guess it has got to be done. Meanwhile my bank manager is worried on my behalf of my cashflow situation for next few weeks etc and wants me to take out a consolidation loan. "better to pay £350 per month for a 25k consol loan than more for all the interest payments and charges etc". Cashflow wise ... she has a point.

dang

"but once i have put all that down into a nice spread sheet and analysed it ... i am still going to be in debt by 40k ... and still with a cashflow problem."

You will still have your debt,and cashflow may still be a problem,but if you just get a consolidation loan you are imo just storing up an even bigger problem futher down the line.

Best thing to do is follow the advise,and get a full and realistic SOA posted.

EagerLearner

Hi Rozzy - I hope this spreadsheet will help you out - designed to work in addition to Martin's excellent budget planner:

http://forums.moneysavingexpert.com/showthread.html?t=238575

Money Pots will become easier, as will 'frills' spending - easier to keep track of when you have a spreadsheet to log everything in...

Good luck!