I know it's late but...

Galeboy

I know it's late but we need help. Stupidity and the fact that large CC limits were thrown at us over the past 4 years mean we are facing a tough (impossible?) time.

I guess the lightbulb moment occurred about a year ago: hopefully you can see from the numbers below that we have since trimmed out all the excessive expenditure (SKY etc, big mobile bills) since then. However debt has risen to a max in July and now only slowly decreasing. We badly need some advice on being debt free asap.

Here is an SOA for me/OH/4 young children:

(all per month)

Income:

£2300 salary
£246 tax credits etc

Total income: £2546



Basic Outgoings:

Mortgage: £680 (13 years to run £78k balance with house value of about £165k)
Council tax: 90

Gas: 42
Electric: 40
Water: 26

BT (landline +broadband): 35
Mobile: 5

Home insurance: 12
Life insurance: 9

Commuting season ticket: 48
Petrol: 40
Car Insurance: 12

Total basic outgoings: £1039


Debts:

Marbles CC: Min. Paymt. £190 (£9600 on 9600 limit at 19.9%)
LTSB CC: Min Paymt. £150 (£7400 on 7500 limit at 14.9%)
HBOS CC: Min Paymt. £150 (£7400 on 7600 limit at 15.9%)

LTSB Loan: £233 (10500 balance at 11.9%)
HDB loan: £185 (10300 balance at 7.9%)


Total debts payments (minimums on CCs): £908



So total income minus total outgoing (at CC minimum payments): £599


which sounds ok (ish) but we're struggling (need to keep a cash diary to see where this 599 is going).

Anyways, the aim is to try and rise above paying minimums and get this horrible debt dealt with. It seems to me that we have trimmed down the expenditure as much as possible, so there is only a little slack there. The best way forward would be to work on getting better interest rates....but because of our debt to income ratio we are not going to get any 0% deals (in fact we are unlikely to get ANY new credit).

Any suggestions??
We do have a decent bit of equity in the house and so could extend our mortgage (loathe to do this though..). Maybe we are doing the wrong thing by trying to pay off mortgage in 13 years...I am 38, so maybe I should look to extend the term of the loan?


Anyway, it's late and I'm rambling but just wanted to know what people think is the best way forward.....

I'mcomingbackasaman

If there was no way to raise extra cash, (better paid job) wife working as well then I would remortgage and borrow enought to pay all CC.s and loans (one where you can pay more off when you want) I would pay off the loans and credit cards, and only have one credit card in future for extreme emergencies. The money you'll save by not paying on all the different CC's and loans can be paid off your mortgage when you like then.

I'm no expert and there's plenty of people on here with a lot more experience who I'm sure will help you, but that's what I would do.

CLAPTON

first things first , you need to know where that 599 is going...that is a huge amount.
start a spending diary for both of you of course.
so a few things , food, going out, haircuts, optical/dental/medical, magazines, newspapers, work related lunches/coffees, etc etcc.

also what about annual or one off spending e.g. clothes, shoes, children related activities, school things, car servicing, tax, MOT, RAC/AA,holidays, xmas spending, presents/birthday parties

do that first and then reconsider the situation.

Bluelad_2

Hi Galeboy,

Ignore me if I missed something on your SOA (as you say i is late).

You have not listed monthly food costs. I am guessing that for 6 of you, this will be 'eating a nice chunk' of that 599. This seems to be one of the favourite areas that the magical people on here can suggest cutbacks.

Galeboy

Hi CLAPTON

I agree that £599 is what needs looking at, but I suspect that there won't be any massive savings to be had (but I'm willing to be proved wrong!). I'll try and improve my SOA to include estimates of the "extras" that you have listed (and I have omitted).

Thanks,
G.

Galeboy

Bluelad wrote:

Hi Galeboy,

Ignore me if I missed something on your SOA (as you say i is late).

You have not listed monthly food costs. I am guessing that for 6 of you, this will be 'eating a nice chunk' of that 599. This seems to be one of the favourite areas that the magical people on here can suggest cutbacks.

Yes...you're right...I guess what I was doing was an alternative type of SOA that showed how much I had left over for food/everything else/money that might be available to add to the minimum payments on the CCs.

As a rough guess, I'd say £400 for food.

yung

welcome to the site, you have not put food down don't you eat? can you extend your mortgage if so. I will do that to clear off all CC and cut all of them except one

Galeboy

yung wrote:

welcome to the site, you have not put food down don't you eat? can you extend your mortgage if so. I will do that to clear off all CC and cut all of them except one

Hi Yung, see my reply to Bluelad....I deliberately did my SOA to show what my working budget was to feed family/clothe family/pay extra on getting debt free.
Thanks. G.

yung

yeah I seen that as I was saying if you can extend your mortgage to that amount might be cheaper in the long run to clear all you CC.

pania

Hi Galeboy,

No worries re the time of night. Debt related insomnia is the reason many of us post so late!!!

It seems madness to me that you are struggling by paying 6 lots of interest (mortgage plus creditors) when for a fraction of the price that you are paying now you can amalgamate all of that into one payment with only one interest fee. On the surplus you would have you could have a great life and a greaat time but just be cautious you don't drop into the same credit trap again. you're existing mortgage repayment sounds incredibly high to me. did you have credit problems that meant you had to go to an adverse lender or have you left the mortgage running a long time?

extend the term of the repayments to as long as you can (many mortgage companies operate above retirement age so long as you have a pension.) that of course means for the time being you'll have good low repayments. (approx £650-700)as soon as you've got yourself on your feet, with maybe some savings behind you,you can remortgage, reduce the term of the loan and get it paid off.
even if you've got credit problems there are companies nowadays that can help.

See if that is a viable option for you. if not come back to us all here on the boards and we'll try to work another way around it.

Best of luck to you buddy, you'll sort it.
Hugs
Pania
xx

rog2

Whilst I agree, in principle, with pania's advice, I must sound a word of caution. Whilst re-mortgaging can cut down your monthly payments, it often, by prolonging the debt, means that you will actually end up paying more.
However, there appears to be a good equity in your house, and, if you are thinking of selling in the next few years, then this could be a solution for you.