Hi I'm new! (Please help!)

the_beast_3

H and I are trying to think of a way around our current money situation (i.e. being skint all the time).

Basically H, through a series of unfortunate circumstances, has credit card debts totally around £10,000, which mean crippling repayments of £400ish a month. Crippling on his current salary anyway, and that doesn't look likely to improve massively anytime soon. He doesn't use the cards anymore, btw.

He is struggling and has been borrowing more and more money from me, (which he hates doing btw) to keep his head above water. This comes in the form of me paying for the weekly shop and him not getting a chance to give me his half. I earn £5000 less than H, so this is also causing me stress as I am having to eat up my (small) savings stash even month to keep out of the red.

Basically we are both getting very stressed with the situation and it's affecting our otherwise sound relationship.

We think we may have come up with a solution, but I'd like your opinions please.

We have a mortgage on our house. The mortgage is £30,000 but the house value is probably around £80,000. We also have an extra £9,000 secured on the house with the mortgage provider at the same rate as the mortgage (paid for desperately needed home improvements). I thought that we could take out an extra £10,000 on the house loan thingy to pay off H's credit cards. This would mean repayments of approximately £100 per month instead of £400 for H, meaning that he could pay back the money he owes me fairly quickly (£200 a month). He would then have £100 a month spare to put in a savings account in case anything else goes wrong (fingers crossed it doesn't).

The only downside I can see with this plan is that if the house prices crash then we could be left owing more on the house than it would be worth. However, if they crashed back to what they were before they went silly, it would only mean an extra £19,000. We would still be able to afford to move as the houses we want to move to used to cost around £60,000, making £79,000 of borrowing which with no credit card debt we could afford the repayments on. As an aside, we can't afford to move anyway at the moment, so the extra money isn't going to make any difference to aspirations in that direction unless the prices fall significantly.

Am I being naive thinking that this is a good solution? Can anyone see any problems we haven't thought of?

Thanks for reading this. Sorry it was so long, but I wanted to make sure I had explained myself properly.

RoCas

Hi,

I'm not very good on debt advice I'm afraid but there will be lots of others along very soon who know exactly what to advise. I just wanted to say welcome to MSE.

yung

first of all welcome to the forum, if you post an S.O.A we may be able to give more help and support

CLAPTON

post a statement of affairs ..it's not possible to give good advice without full financial details
read
http://forums.moneysavingexpert.com/showthread.html?t=107280

the_beast_3

Sorry but what's an S.O.A?

southernscouser

Welcome aboard beast! :beer:

Do you consider these debts to be his or both of yours? In other words are you prepared to help him pay them off?

The problem with your idea is you are turning unsecured debt in secured debt which carries not only the risk of losing your home should you not be able to afford the repayments but it will also cost you a hell of a lot more in the long run. I was gonna say it's a quick fix but it's not even really a fix.

Although your husband (is that right?) isn't using the cards he is still 'borrowing' only from you instead. This means his outgoings exceed his incomings and no matter what way you add it up this means he will get further into debt. He needs to at least break even and the only way he can do that is by proper budgeting.

Can you list a SOA (details here) and we can see if we can help you make some cutbacks. Now obviously if you are in it together the do a SOA for the both of you. If not together do one for him but maybe also do one for you. We might be able to help you cut back some more if you want to hlep him!

inkie

Statement of Affairs - a list of all your incomings and outgoings and the APRs of any loans/CCs/HP agreements

yung

the_beast wrote:

Sorry but what's an S.O.A?

Statement of affair, detail of income and expenditure

the_beast_3

Our S.O.A.

Monthly Incomings:

My salary - £700 approx (varies)
Partners salary - £1000

Total - £1700

Monthly Outgoings:

Mortgage/Rent - £295
Council Tax - £86
Gas - £22
Electric - £25
Water - £18.50
TV License - £10.99
Phone, TV and Internet - £52 (varies slightly)
Food - £350 roughly
Car Insurance - £44.42
Petrol - £60
Savings to pay car tax/MOT costs annually - £25
Mortgage Insurance - £25
House Insurance - £35
My Credit card minimum repayments - £124
H's Credit card minimum repayments - £447
Mobile phone top ups - £20


Total: £1639.91

Which leaves about £60 per month for cigarettes (which I'm trying to quit), the odd magazine and a takeaway.

southernscouser

OK. Now are you paying the debts off together?

If not who pays for what or contributes what to bills?

You could honestly cut your food bill to £100 a month saving £250 straight away! :eek:

the_beast_3

We are each paying our own debts at the moment as H accrued most of what he owes before he met me.

We would normally split the bills 50/50, but H is currently paying 3/4 as I supported him while he was doing a course a couple of years back. He will be paying 3/4 until December, although we have thought of extending this so he can start repaying me what he owes me. I am also slightly worried about where the extra is going to come from come January if we don't as my wage is fairly tiny!

I know the food bill is bad, that's the obvious thing to cut. We keep saying we will try but have never got round to it. It starts with the next Asda trip though! We've both been shocked into action by the amounts of grumping we are doing with each other:o I'm not sure we could survive on £100 though - we spend £28 a month on cat food!!