Which way to go?

Jacob77

Hi all,

I have a lot of debt that has been accumulated over many years, my lesson has been well and truly learnt!

Each month I have enough money to pay all my debts, and to cover my outgoings (food, phone, Kids, insurance etc) but that's about it.

We could just carry on like this, but it does make life very dull, don't get me wrong we do have some days out with the kids and we do have money to have a treat now and again, but we don't have any money available for emergency's (such as car repairs, etc).

I reckon we will be in the same financial situation for another 6-7 years (approximately) which is quite depressing!

Here is a snapshot of the debt I have:

• Bank Overdraft: 10K (only ever pay intrest charge, 75pm)(APR 10%)
• Lloyds Loan: 13K (350pm) (was 25K) (APR 8.5%)
• Visa: 5K (150pm) (APR 15%)
• Cahoot: 9.5K (240pm) (was 10K) (APR 19%)

Do I have any options that wont ruin my credit score,

Thanks,

Jacob

dancingfairy

I would start by doing a SOA(statement of affairs ) from makesense of cards.com then you can assess the full picture - the main options are:
1) increase income/decrease expenses
2) default on payments and enter some sort of payment plan like a dmp (debt management plan)
3) an IVA/Bankruptcy

Good luck
df
Edit: SOA calculator here:
http://www.makesenseofcards.com/soacalc.html
Once you have done that I would contact one of the debt charities Martin recommends and have a chat through things with them to see the best way forward - try CCCS, National Debtline or your local CAB.

Jacob77

I have completed a SOA and it tells me what I know already, basically I break-even each month and yes there are a few areas that I could save some money but not many.

1) increase income/decrease expenses - This isnt possible at the moment, unless I got a weekend or evening job but the tax that I would pay would make me working not worthwhile

2) default on payments and enter some sort of payment plan like a dmp (debt management plan) - If I did this wouldn't the Dept Management company just say you have the money so pay it?

3) an IVA/Bankruptcy - again is this an option if I do have the money each month to pay my debt

I don't want to be in debt for the next 6-7 years, but I don't seem to fall into a category that means that I can get any easier way out of this mess.:(

NorthernLas

OP - If you don't want to be in debt for the next 6-7 years, the honest answer is that you have to be prepared to do something.

If you want something that will not affect your credit rating then only option 1 suggested by DF is an option. And if you can't increase your income, then go for decreasing your expenses. Even small things have an effect e.g. £2 coffee a day equates to £10 a week or £500 a year. If you buy on the internet use cashback sites and put the spends in an emergency account. Keep a spending diary to find out where the extra money disappears to.

Use the snowball calculator http://www.makesenseofcards.com/snowcalc.html and work out what to pay off first.

WRINKLES

Jacob77 wrote: »

Hi all,

I have a lot of debt that has been accumulated over many years, my lesson has been well and truly learnt!

Each month I have enough money to pay all my debts, and to cover my outgoings (food, phone, Kids, insurance etc) but that's about it.

We could just carry on like this, but it does make life very dull, don't get me wrong we do have some days out with the kids and we do have money to have a treat now and again, but we don't have any money available for emergency's (such as car repairs, etc).

I reckon we will be in the same financial situation for another 6-7 years (approximately) which is quite depressing!

Here is a snapshot of the debt I have:

• Bank Overdraft: 10K (only ever pay intrest charge, 75pm)(APR 10%)
• Lloyds Loan: 13K (350pm) (was 25K) (APR 8.5%)
• Visa: 5K (150pm) (APR 15%)
• Cahoot: 9.5K (240pm) (was 10K) (APR 19%)

Do I have any options that wont ruin my credit score,

Thanks,

Jacob

Why are you worried about your credt score surely you dont want to borrow more money , give us some more information to go on , so that we can offer some worthwhile advice , how old are your debts , to start with .

slickric1234

find some way of consolidating the debt...
remortgage if you own a house
cahoot and visa interests are very high

chevalier

Ok so it seems that the focus for you is paying off debt quicker. Fair enough. But you can't increase your income through conventional means.

To me this suggests that you need to do what I call a financial health check. To make sure that every penny is working as hard for you as possible.

So here are few suggestions.

1) Are you a robot shopper? Going round the supermarket every week putting the same things in your trolley without really thinking about it? This was me (and others on here:eek:). So first off I actually looked in my cupboards and freezer and made a list of everything. Unless you have a very small freezer I bet, with a bit of fresh veg, you have enough food in there and the cupboards to feed you for a weeks of main meals...! Many people on here have halved their food shopping bills, by making an inventory, planning meals for the week, and then only buying the stuff needed to make those meals. It can also help if you buy fresh veg and fruit from a market, as it is generally cheaper than the supermarkets.

2) Have a look at the moneysaving old style board on this site. There are loads of cheap healthy meal options to stretch to food budget, plus alternatives for cleaners etc that will also save you money. Ie vinegar down the loo gets rid of lime scale. Star drops clean just about everything just as examples.

3) Next get a list of your direct debits. Are there some on there that you can't remember what they are for? Maybe you no longer use the product or service? Or maybe a subcription you once thought was indispensable (sp?) can now go.

4) Whenever you buy online, check if you can get it for the same price via a cashback site. Quidco.com, topcashback are just a couple, but it does pay off and it is free money.

5) Utilities - council tax you can ask for it over 12 months, if it would help you budget better. Gas and electric when was the last time you checked you are with the cheapest company. If you already are, are you massively in credit to either? If so then ask them to drop the DD they take each monthe. Likewise with broadband, telephone and mobile phone providers. For all of these you can go via a cash back site to get extra money. And make sure that appliances/heating is used as efficiently as possible. Eg if your heating thermostat is above 21 degrees celcius, you are probabaly better lowering it and discovering jumpers...:)

6) What insurances do you have. If you have been with the same company for more than a year, chances are that you are paying too much. If you have life insurance/critical illness cover, check that it would pay out for what you think is should. If you or your partner are self employed eg, some policies don't cover you.

7) Do any of your credit cards/ loans have PPI on them? Again check that you would be covered as Self Employment often isn't. If you have wrongly been sold this, then ask for the money back.

Hope these pointers are helpful
chev

urg123

Some great advce from Chevalier there.

Alot of your debt is on quite high interest. Do you have any unused credit cards which have offers? it might be worth transferring the highest APR debt to this card but then you have to be really disciplined.

If you are really serious about this:
1 set a budget - that also helps you towards
saving for an emergency, review your costs and see where you can make savings,
2 look at ways of making extra money - using cash back sites,special offers and sell some of your clutter - sorry I meant your treasures!
3 use this site as a fantastic resource - there are so many great ideas on these pages and the diaries are great. Take advantage of them!

Good luck!

Urg

Jacob77

Thanks for all your advice, there is definitely some thing there that I can use to tweak my outgoings.


Here is SOA:

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 3348
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3348
Monthly Expense Details
Mortgage................................ 921
Secured/HP loan repayments.............. 312
Rent.................................... 0
Management charge (leasehold property).. 20
Council tax............................. 154
Electricity............................. 60
Gas..................................... 60
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 20
Mobile phone............................ 35
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 10
Groceries etc. ......................... 400
Clothing................................ 50
Petrol/diesel........................... 0
Road tax................................ 20
Car Insurance........................... 35
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 32
Buildings insurance..................... 13
Contents insurance...................... 18
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 30
Entertainment........................... 200
Holiday................................. 60
Emergency fund.......................... 30
Total monthly expenses.................. 2602

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 4000
Other assets............................ 0
Total Assets............................ 4000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(921)......0
Secured Debt.................. 11945....(312)......0
Total secured & HP debts...... 11945.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
overdraft......................10000.....250.......0
cahoot.........................9000......245.......0
Next...........................500.......70........0
Visa M/C.......................5000......131.......0
Total unsecured debts..........24500.....696.......-

Monthly Budget Summary
Total monthly income.................... 3,348
Expenses (including HP & secured debts). 2,602
Available for debt repayments........... 746
Monthly UNsecured debt repayments....... 696
Amount left after debt repayments....... 50
Personal Balance Sheet Summary
Total assets (things you own)........... 4,000
Total HP & Secured debt................. -11,945
Total Unsecured debt.................... -24,500
Net Assets.............................. -32,445

Jacob77

I havejust redone this with my Partner and we think that this approach may help:

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 3348
Partners monthly income after tax....... 240
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3588
Monthly Expense Details
Mortgage................................ 921
Secured/HP loan repayments.............. 312
Rent.................................... 0
Management charge (leasehold property).. 20
Council tax............................. 154
Electricity............................. 60
Gas..................................... 60
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 20
Mobile phone............................ 35
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 10
Groceries etc. ......................... 400
Clothing................................ 0
Petrol/diesel........................... 0
Road tax................................ 20
Car Insurance........................... 35
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 32
Buildings insurance..................... 13
Contents insurance...................... 18
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 20
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2352

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 4000
Other assets............................ 0
Total Assets............................ 4000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(921)......0
Secured Debt.................. 11945....(312)......0
Total secured & HP debts...... 11945.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
overdraft......................10000.....250.......0
cahoot.........................9000......245.......0
Next...........................500.......70........0
Visa M/C.......................5000......131.......0
Total unsecured debts..........24500.....696.......-

Monthly Budget Summary
Total monthly income.................... 3,588
Expenses (including HP & secured debts). 2,352
Available for debt repayments........... 1,236
Monthly UNsecured debt repayments....... 696
Amount left after debt repayments....... 540
Personal Balance Sheet Summary
Total assets (things you own)........... 4,000
Total HP & Secured debt................. -11,945
Total Unsecured debt.................... -24,500
Net Assets.............................. -32,445

Pollycat

That's better, Jacob.

Is the £240 additional income for your wife guaranteed?
Or is it benefits that you missed from your first SOA?

Depending on how old your kids are, you should be able to reduce your £400 grocery bill too.
Check out the advice already given by Chevalier.