I'm New!

polegirl23

Hi all!

I've not posted in DFW before but have been directed over here following a thread I posted on the 'Mortgage' board.

After extensive talks with my husband we have realised that we need to sort our money situation out. We were hoping to start trying for a baby next month but have realised that unless we get our debts paid back, it's just not going to be possible.

So husband is working all the overtime he can get, most evenings and weekends at the moment, I've taken on a second job and we need to reduce our outgoings! We've managed to reduce our gas and electric bills by changing supplier, have cancelled Sky and our grocery bills are already low (about £15-20 per week for 2 adults and 3 dogs)

My question on the 'Mortgage' board was about changing deals to get a lower interest rate to reduce payments (we currently pay £878 a month on our mortgage) however from the response it looks like this won't be a good idea. Council tax credits and working tax credits have been mentioned to me so I am going to contact the council to see if we are entitled to anything.

Our (joint) debts are as follows:

Mortgage - £142,000
Loan - £4000
Loan 2 - £500 (approx, due to be paid off by Dec 2010)
Car Loan - £1000 (approx, due to be paid off Dec 2010)
Credit Card 1 - £4000
Credt Card 2 - £1000
Credit Card 3 - £500
Credit Card 4 - £450
Credit Card 5 - £100
Store Card 1 - £600
Store Card 2 - £600

Correct me if I am wrong but I think our first concerns should be the credit cards and store cards, the loans have been being paid steadily for ages although they do take up a chunk of our monthly income. The store cards were originally for about £750 and we have been paying £25 a month for about 3 years and the balance has hardly gone down, same with the credit cards so I think we should focus on getting rid of these, by paying the smallest ones first. Would you say this is our best course of action?

Any advice would be appreciated!!

KingElvis

Keep paying all the minimum monthly payments to avoid damge to your credit rating, then start paying off the higher interest ones first.

If you go for it, buckle down and stay focused, you'll be suprised how fast you can shift these. Then DON'T start using them again and end up in the same mess. And for the love of God, don't take on more debt to pay these debts.

All the best

Elvis

Hannah_10

^^ What Elvis said...

Pay the minimums on everything, then use any suprlus against the highest interest rate first. So lets say the highest interest rate one needs a £100 minimum payment and you have £200 a month spare. Well then you give it £300 a month till it's clear. Then you look at your next highest interest level, lets say that one has a £59 min payment, you give it £359 till it's clear and so on. It's called snowballing.

If you would like us to cast a ruthless eye over your income and outgoings to see where any further savings can be made then you could post your SOA, there is a stickypost at the top of this board which explains how.

podperson

Hi Polegirl, welcome to the board!


Firstly yes look into any benefits you might be entitled to. If you are over 25 and work more then 30hrs a week (which it definately sounds like you do!) then you can apply for working tax credits. This is through hmrc not the council, if you go on their website they have a helpline or might even by able to apply online now.
Not heard of council tax credits so assume they mean council tax benefit? This is also worth applying for although you need to be on a relatively low income to get this so if you and hubby are working then might not qualify.

Regarding reducing your outgoings, sounds like you are on top of it already but if you wanted to post a statment of affairs (there is a thread with a link on the stickies at the top of the forum) then sometimes people can pick up things you might not have thought of.

Are you still using the credit cards and store cards at the moment? If not might be worth writing to them and saying that you are having financial problems at the moment and could they freeze the interest on the cards. Some are more helpful then other but you don't ask you don't get Would definately agree to paying these off first, some people would say always go for the one with highest interest but paying the smaller ones off gives a nice sense of accomplishment! Make sure you cancel the accounts when they are paid off so you don't feel tempted to use again. If you are struggling with making the payments could also try someone like cccs or payplan to set up a dmp.
Good luck with it x

scottswald

Hannah_10 wrote: »

Pay the minimums on everything, then use any suprlus against the highest interest rate first. So lets say the highest interest rate one needs a £100 minimum payment and you have £200 a month spare. Well then you give it £300 a month till it's clear. Then you look at your next highest interest level, lets say that one has a £59 min payment, you give it £359 till it's clear and so on. It's called snowballing.

i agree, the snowballing method would definately be the way forward for you.

good luck with your debt busting!!! :beer:

Hannah_10

On a less serious note... If you're trying for a baby then you wont need much budget in your SOA for entertainment... Or for electric (who needs the telly)! :rotfl:

InDeepDebt

How much are your monthly payments to the two loans due to finish in a few months?

The reason I ask is that we have massive debts - over £60k in unsecured. We initially went through one charity for a DMP but they rejected us as the payment time was too long (33 years) so we self administered.

Through various methods, we should get our DMP down to about 5 years. However, one of our creditors (Halifax) would not accept a self administered plan so we went through another charity. They insisted that we pay all our creditors pro rata - even one where the balance was £130. We know from experience that it takes a couple of months at least for the late charges to stop so that balance would go up to well over £150 - we just keep paying the £5 minimum and bung extra on when we can to get it out of the way. It should be fully paid off next month.

If I was you I'd try to get the two loans paid off just normally - then they're out of the way.

Jim

EDIT - the above is assuming that you went down the DMP route.

polegirl23

Hi all

Thank you so much for all your replies, it feels good to get it all off of my chest!!

I've completed a SOA, although I haven't been able to put interest in for the credit cards and loans as I'm at work and have estimated some of the balances to the best of my knowledge. The amounts for bills I have managed to pull off of my internet banking so they should be accurate. I haven't included any of my husbands overtime in the SOA or income from my second job which I am starting at the weekend.

At the moment we are paying £878 a month on mortgage as we missed a payment at the end of last year so have been making up the backlog. However, August will be the last month at the amount and then we will drop back down to £780 so this is what I have put in my SOA.

I haven't put anything in for presents or holidays as to be honest these are the things we can live without while we are getting ourselves sorted out. If this is not the right way to fill in the form then please let me know and I will correct it!

From the SOA it seems that we should have £269 left at the end of each month so with the overtime and other income I would hope that we could afford to pay about £600 back on debts each month, which sounds good!

An comments??

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 1430
Partners monthly income after tax....... 1248
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2678
Monthly Expense Details
Mortgage................................ 780
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 134
Electricity............................. 37
Gas..................................... 56
Oil..................................... 0
Water rates............................. 23
Telephone (land line)................... 26
Mobile phone............................ 50
TV Licence.............................. 9.23
Satellite/Cable TV...................... 60
Internet Services....................... 0
Groceries etc. ......................... 80
Clothing................................ 0
Petrol/diesel........................... 150
Road tax................................ 18.3
Car Insurance........................... 45
Car maintenance (including MOT)......... 25
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 21.61
Contents insurance...................... 0
Life assurance ......................... 28.35
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
British Gas Services (Homecare)......... 32.61
Total monthly expenses.................. 1616.1

Assets
Cash.................................... 0
House value (Gross)..................... 180000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 186000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 142000...(780)......5.54
Total secured & HP debts...... 142000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
NW Credit Card.................3800......75........0
HSBC Credit Card...............450.......10........0
Capital One Credit Ca..........1000......20........0
Welcome Loan...................1000......200.......0
Car Loan.......................1000......280.......0
HSBC Loan......................4000......140.......0
Argos..........................600.......26........0
Homebase.......................600.......26........0
Capital One Credit Ca..........100.......5.........0
Vanquis Credit Card............500.......10........0
Total unsecured debts..........13050.....792.......-

Monthly Budget Summary
Total monthly income.................... 2,678
Expenses (including HP & secured debts). 1,616.1
Available for debt repayments........... 1,061.9
Monthly UNsecured debt repayments....... 792
Amount left after debt repayments....... 269.9
Personal Balance Sheet Summary
Total assets (things you own)........... 186,000
Total HP & Secured debt................. -142,000
Total Unsecured debt.................... -13,050
Net Assets.............................. 30,950
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

barbarawright

How on earth do you feed 2 people and 3 dogs on £20 a week? Plus cleaning stuff, shampoo etc? Are you sure this is accurate (as an aside, i'm amazed at how quickly people work out what their minthly food expenditure is - i wouldn't have a clue but it's certainly more than £1.50 a day!)

NorthernLas

A spending diary is a really good way of picking up bits and pieces that you have forgotten. It is amazing how things add up, just write everything down for a few days (preferably a month)

polegirl23

Hi Barbara!

Our grocery shop genuinely does come to between £15 - £20 a week. I'm on a diet where my breakfast and lunch for 7 days costs less than £2 (box of cereal, 15g per meal!), my husband takes a box of pasta and sauce to work and that lasts him the day and a big bag of own brand pasta costs about £4 and lasts the month. In the evenings we live off things like scrambled egg on toast and jacket potato with beans. We sometimes buy 'value' mince to make spaghetti bolognaise and chilli's.

We buy value cleaning products (and to be completely honest, my husbands nan does tend to pick up a lot of these sort of things for us when she's shopping as she knows we are struggling, same for loo roll and kitchen roll).

The dogs have a big (15kg I think) bag of dry food that costs about £11 and lasts the month.

We haven't had take-aways or 'convienience food' for about 4 months as I've been dieting anyway!

The reason I know what we spend on groceries is because my husband gets paid weekly on a Friday and we got to Asda on Friday evenings and make sure we don't spend more than £20! The only extra I buy is a pint of milk on a Monday morning (58p) to take to work to last me the week for my cereal!