All help and advice so very, very welcome!

depressedwithdebt

Hi there

I am after a bit of advice, having gotten myself into a mess with debt. This is the first time I have been able to pluck up the courage to deal with my debt problem, and am largely doing so as it is really starting to be the only thing I think about.
I have over £40k of debt, made up of the following:

Barclaycard - £6k (limit of £8k), fixed interest at 5.9%;

Natwest Visa - £3,500 (limit of £4,500), rate of 17.9%;

Egg credit card - £3,400 (limit of £5k), rate of 22.9%;

Virgin Credit Card - £8,200 (limit of £8,500), just ending the 0% rate, soon to be a massive 29%;

Santander 'loan' - £7,600 (this used to be a Cahoot flexi loan but is now a fixed loan with a high interest rate of 17.9%;

Citi Credit Card - £2,400 (limit of £3,500), fixed rate of 5.9%;
Natwest Charge Card - £2,000;

Natwest overdraft of £5,000;

Barclaycard overdraft of £2,300;

Northern Rock loan of approx £7,000 (nearly 4 years in of a 10 year loan);

AA loan of £3,500ish (few years into a 7 year loan).

So there it is. So much debt that I don't feel I can cope with any longer.

I am married with a 5 year old child. My wife works part time around my childs schooling, and whilst she knows we have some debt, she does not know the extent of it, and would be beside herself with worry if she did. I feel like a proper failure for landing us in this situation, but am determined to get out of it, even if it does take some time.

I have a good job earning £39k per annum, take home of £2,400 per month.

I have a house which only has about £15k of equity in it, and am on a tracker mortgage so pay very little interest, but am paying on a repayment basis at £615 per month. The lender is C&G and won't agree to interest only as we don't have 25% equity in the property.

I know about DMP's, but am worried of the impact this could have on my credit status (which admittedly is not good given the level of debt I have), and whether this would see every last penny tied up for a number of years, as I do want to think about the future, setting up a pension (I am only 31), maybe have another child if possible, whcih I may not be able to do if I have no spare money at all. I was thinking of leaving my two loans ticking over, and getting a 10 year (or maybe a little longer one) to clear the Virgin Card, Santander loan, Egg card and Natwest Visa, as I may be able to afford those payments. But then I am worried that I may not be eligible for such a loan.

I am not behind on any payments, and haven't missed any payments yet, but I am worried about keeping my head above water when the Virgin payments go up from the initial low £25 per month payments.

Any help at all would be so very much appreciated.

Thanks.


And here is the first draft of my SOA:

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 2

Monthly Income Details

Monthly income after tax................ 2399
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2399

Monthly Expense Details

Mortgage................................ 615
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0 - My wife pays this
Electricity............................. 0 - My wife pays this
Gas..................................... 0 - My wife pays this
Oil..................................... 0
Water rates............................. 0 - My wife pays this
Telephone (land line)................... 50 - this is for TV, phone and internet, with maximum customer discount from Virgin
Mobile phone............................ 40 - for 2 phones, sim only contract deals
TV Licence.............................. 0 - My wife pays this
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 280
Clothing................................ 0 - I don't put money aside for this (as haven't got enough!)
Petrol/diesel........................... 250 - I drive a long way to work and back, but am soon to be working closer to home, so expect this to come down to £150 per month as of October
Road tax................................ 0
Car Insurance........................... 38.33
Car maintenance (including MOT)......... 0
Car parking............................. 0 - this is free with work
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 5 - bond
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 15
Buildings insurance..................... 39 - buildings and contents insurance
Contents insurance...................... 0
Life assurance ......................... 53
Other insurance......................... 20 - pays out in the event of my death as I have no pension and wanted wife and child to get something should I die
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0 - my wife used to be a hairdresser!
Entertainment........................... 0 - I don't set money aside for this (but would like to be able to)
Holiday................................. 0 - as above
Emergency fund.......................... 0 - as above

Total monthly expenses.................. 1405.33
Assets
Cash.................................... 0
House value (Gross)..................... 165000
Shares and bonds........................ 0
Car(s).................................. 3500
Other assets............................ 0
Total Assets............................ 168500

Secured & HP Debts

Description....................Debt......Monthly...APR
Mortgage...................... 150000...(615)......1.59
Total secured & HP debts...... 150000....-.........-

Unsecured Debts

Description....................Debt......Monthly...APR
Barclaycard....................6000......135.......6.9
Citicard.......................2400......56........5.9
Natwest Visa...................3400......76........17.9
Mother loan....................2300......50........0
Barclays Overdraft.............2350......36........0
Natwest Overdraft..............5000......50........0
Natwest Charge Card............2500......50........0
Northern Rock loan.............7000......118.......9.9
AA loan........................3500......78........7.9
Santander Cahoot loan..........7600......190.......17.9
egg Credit Card................3500......100.......22.9
Virgin.........................8200......31........3 - the payments will rocket next month when promotional rate ends - probably to £250 a month, if not higher
Total unsecured debts..........53750.....970.......-

(note - I also pay my mum £50 a month for a loan I have with her of £2300)

Monthly Budget Summary
Total monthly income.................... 2,399
Expenses (including HP & secured debts). 1,405.33
Available for debt repayments........... 993.67
Monthly UNsecured debt repayments....... 970
Amount left after debt repayments....... 23.67
Personal Balance Sheet Summary
Total assets (things you own)........... 168,500
Total HP & Secured debt................. -150,000
Total Unsecured debt.................... -53,750
Net Assets.............................. -35,250


So there we have it. Seeing it down like that is so very, very depressing. I would love to be able to put some money aside for a pension, holidays (we go camping in UK!), entertainment, emergenices, etc, without putting it all on credit but I just don't know what to do for the best.

Thanks again for your help everyone.

winner12

Hi there if you read other posts you will see this has been your first step on a long journey be open and honest it takes courage also seek free debt advice CAB,CCCS,National Debt Line who will all be able to help you sort things out and put things into perspective
Good Luck

Sunnylooloo

Hi DWD

Don't worry lots of us have been where you are. A year ago due to my horrible messy long divorce I finally sat down and realised acutally how much I was in debt. My monthly salary was just about covering all my debt repayments and other bills so survive I had to use CC or OD just ends up in a vicious circle.

I spoke with both CAB and National Debtline and after a lot of tears and worrying I was advised to consider going BR. I really didn't want to do this (although this still might have to be an option) so I spoke with Pay Plan and bout a DMP and what the would allow me just wasn't feesible. So witht he help of National Debtline I took the ball by the horns so to speak and stoped paying all my credit cards (nothing can prepare you for the amount of calls or letters you get after doing this!! but you do get a thick skin)

I then worked out my Income and Expenditure Sheet and contacted all my creditors (letter templates on the National Debtline site) and i got all my payments reduced. Obv you can't use you credit cards or O/D and your credit history does get shot to bits, but lo and behold I could manage! I got a basic bank account with the Co-op and finally I actually have some money left each month (also with some fab money saving ideas from here!)

However, it is now getting to the point that most of them will only fix you in this arrangment for say 6 or 12months then they will want to review your situation.

This is only my personal experience and I am in the process of trying to sell my house (due to the divorce) and then I am hoping to make full and final offers where I can and finally get out of this hole.

It's not easy!

One thing I do think is you need to be completely honest with your wife otherwise you will drive yourself insane, I know it's hard but I have been amazed the support I have had from partner, family and friends and of course here...... wouldn't have known which way to turn without some of the good advice and support I have had from the lovely people in this forum!

Oops sorry this has gone on a bit long!

Good luck with what you decide to do.

LL

tbourner

Could you fill in a statement of affairs?
http://www.makesenseofcards.com/soacalc.html

It will help us to understand where you could save or move things around, and it'll help you get 'deeper' into your finances so you have a better understanding of things. Some bits you might need to do are a spending diary so you can track accurately what you spend on everything, and then maybe start some saving ideas like a meal planner etc. But that will all come with suggestions once people have seen your first attempt at a SOA.

I feel like I'm in a similar situation BTW, it's annoying when you're a high earner because everyone around assumes you can throw money around, and you can't tell them you're in s**tloads of debt!!

happycamel_2

Hi, any chance of getting an SOA up (see stickies at top) so we can give you some advice on where you could make savings?

That's your best bet for over paying without harming your rating. You could try for a loan to roll up some of the higher interest debts but:
1) only if you cut the cards up once they're paid off, don't even think about spending on them again
2) only apply once if you get rejected your credit rating probably isn't good enough and a bunch of rejections won't help
3)focus on the higher interest debt first for overpaying the minimum
4)with your debt to income ratio this is going to hurt and take a while so stay patient and keep posting and we'll do as much as we can to help

Good luck

tbourner

I used to be a lover of consolidation loans, it seems like a fix but it really hasn't been for me or most people on here I would bet. We went through several after buying cars, it always feels like you've paid off the finance once it's consolidated so you go out and finance another car!!! It sounds stupid now but after a good few months having consolidated you kind of 'forget' that you don't actually owe any less and shouldn't borrow more!!!

So, personally, I wouldn't get a loan to pay them all off, unless you are VERY strict with yourself. But if you do then talk to the bank about getting a loan to a similar monthly figure as you have now, that way you won't think you have more money to spend! Whatever percentage they offer you go in with a list of rates you're paying and work out the cummulative sum of each high rate until you meet the rate offered with the loan (if that makes sense) don't borrow more than you need to pay off the high rate loans. the interest being lower but the monthly figure being the same means you'll pay them off quicker.
If by any chance you can get a loan that you can overpay any amount each month then even better, cos that's another big problem with consolidating is that you can't overpay like you can on cards.

depressedwithdebt

Firstly, thanks so much to everyone for taking the time to reply to my appeal for help! This is my first time of airing my deepest worries as I am so ashamed of the financial position I have ended up in.

I will work on a SOA as suggested in the hope this gives a little more info of my financial position, and the best way to get out of it!

tbourner, can I ask how you have managed to get your debt clearing on the right track? It's nice to see how you so clearly understand the difficulties and embarrassments of being a high earner who is in so much debt!

dancingfairy

Firstly and perhaps most obviously you need to make sure you have enough money to cover the priority bills - ie mortgage, coucnil tax, water, electric /gas, food etc. Make sure you are getting good deals on each of them so you are not paying over the odds for things. These things are easy ways to make savings and other people will not notice the difference (but you'll notice the difference in your money!).
Then you've got to see how much money you have for everything else - set aside an amount for holidays., car repairs etc and what's left is what you have to pay debts with.
Maybe try a spending diary.
Try upping your income - car boots/ebay - maybe a bit of overtime where possible, anything really (that's legal).
df

tbourner

depressedwithdebt wrote: »

tbourner, can I ask how you have managed to get your debt clearing on the right track? It's nice to see how you so clearly understand the difficulties and embarrassments of being a high earner who is in so much debt!

Almost exactly a year ago I did what you did! Came on here, posted a SOA, got ripped to pieces for not realising the state I was really in! and eventually took on board the advice given.

I'm kind of lucky in that the wife and I accept the debt as completely joint, so all our money goes into a big digital pot on my spreadsheets, then I work out how much needs to go where, and we're left with a figure that we both agree to stick to as spending money. That actually worked for about 2 weeks and we ended up overspending again - so then came the additional bank accounts (see this post on another thread) which helped no end with managing it.
Obviously it's up to you when you come clean to the other half, and it depends on the levels she knows about and how much it affects your spending etc. But you probably will have to before you get a full clear picture of the future. I have to say it's great once you get a finish date in mind though even if it's 10 months away or 10 years!

depressedwithdebt

happycamel wrote: »

Hi, any chance of getting an SOA up (see stickies at top) so we can give you some advice on where you could make savings?

That's your best bet for over paying without harming your rating. You could try for a loan to roll up some of the higher interest debts but:
1) only if you cut the cards up once they're paid off, don't even think about spending on them again
2) only apply once if you get rejected your credit rating probably isn't good enough and a bunch of rejections won't help
3)focus on the higher interest debt first for overpaying the minimum
4)with your debt to income ratio this is going to hurt and take a while so stay patient and keep posting and we'll do as much as we can to help

Good luck

Thanks for your suggestion.

Do you know of any decent companies out there who offer consolidation loans to people in my situation? I do plan on being very strict with any cards I clear as I honestly can't face being in this position again in a few years time if I am able to sort something out now.

I have just heard of so many horror stories of some companies offering consolidation loans that I wouldn't know who to turn to first.

I am thinking that if a consolidation loan is a no go, a DMP may be my only option, but the thought of it just seems so frightening.

Marisco

Hi dep, a DWP is not frightening really, before I met my oh I had nothing like that to sort out, but he had loads (ex wifes) that I sorted out into some sort of order!! It's time consuming and you need to be reasonably "tidy" with paperwork. It helps if you have a seperate file for each debt. Or you can arrange for one of the free ones (don't pay anyone!!!) to do it for you. It will ruin your credit rating though, but at least you'll not be struggling to pay everything. Only offer what you can afford to pay from the start, it's no use setting a figure that you cannot keep to, so be realistic about things. If, after paying all bills, you only have say, £300 left, then that is what you have left to distribute between then all. And to be honest, it will be far better if you tell your oh, as you'll need to work together to get the debts down. Good luck