Advice please - too much debt!

Adorian

Hello all, I've been loitering around the forums for a while and today am biting the bullet and starting to try and reduce my debt.
A brief history: due to my partner losing her job a while ago, we started to slide into quite a bit of debt (previously we'd just been ticking over) and we're now £15K (plus just over £68k of mortgage) in debt. I've copied and pasted my SOA below. I think it's fairly accurate except maybe groceries.
In order to get work my other half is now living some distance away and therefore, although she's got rent free accommodation for now, has to pay out for food (no cooking or fridge facilities) which isn't particularly cheap as we don't eat fast food and she's not big on 3 sandwiches from the supermarket a day. Still, she's bringing more in than she's spending on food so that's a plus. Her first payday just came so I've paid off our £800 overdraft and am aiming to keep it paid off. Also travelling to see each other costs me about £70 in petrol plus £20 parking or between £67 and £127 in train fare, which I haven't included below. That takes a bite out of the budget. I know it's fairly big travel costs but I don't think it's good to not be seeing each other at all. We try and see each other every 3 weeks or so.
I'm making a lot of effort to cook cheaply from scratch, plan meals in advance etc and we've always been really careful about not leaving lights on or chargers plugged in for no reason, so we don't really have a lot of wiggle room on reducing outgoings. We are both on mobile contracts; she needs hers for work and does get some reimbursement which isn't included as we're not yet sure how much, I need mine so that I get free calls to her and unlimited texts - pretty important when you aren't actually seeing anything of each other.
We're on SVR with our mortgage at the moment (cheaper than the fixed rate we were previously on) but are worried that interest rates will go up.
I just got turned down for a 0% BT card as they weren't 'comfortable with the level of debt' I have (me neither!!) so am stuck with the cards I have with their mostly awful interest rates (Barclaycard is closed as they tried to up the rate by 5% for no reason) and, as our flat's apparently now only worth £3k more than we owe (after putting down a 10% deposit when we bought the place :eek:), I'm not sure we'd be able to remortgage.
Also I have a car service costing £200 and possible car repairs costing who knows how much this month which is not helping reduce our debt.
We don't have lots of Ebayable things, just our books and some CDs and DVDs which aren't really worth anything. Any ideas on how to reduce this debt as quickly as possible?



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.................... 1

Monthly Income Details
Monthly income after tax................ 1450
Partners monthly income after tax....... 1700
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3150

Monthly Expense Details
Mortgage................................ 479
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 85.7
Council tax............................. 102
Electricity............................. 17
Gas..................................... 21
Oil..................................... 0
Water rates............................. 32.89
Telephone (land line)................... 18
Mobile phone............................ 55
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 17.99
Groceries etc. ......................... 400
Clothing................................ 10
Petrol/diesel........................... 150
Road tax................................ 13
Car Insurance........................... 70
Car maintenance (including MOT)......... 20
Car parking............................. 5
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 22.5
Entertainment........................... 40
Holiday................................. 0
Emergency fund.......................... 0
Spousal visits.......................... 100
Total monthly expenses.................. 1699.08


Assets
Cash.................................... 0
House value (Gross)..................... 71000
Shares and bonds........................ 0
Car(s).................................. 1800
Other assets............................ 0
Total Assets............................ 72800


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 68383....(479)......4.94
Total secured & HP debts...... 68383.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................2055.92...46.25.....14.9
Tesco..........................1784.69...34........18.94
LTSB...........................3560.93...71........18
Nationwide.....................2066.62...62........19.9
Post Office....................429.46....11........16.95
Halifax........................4558.86...50.59.....15.9

Thanks for reading if you got this far. Any advice gratefully received.

HAYLEY8005

hi adorian

Well firstly you do need to include all commuting costs in the SOA as otherwise it is a pointless one, on the groceries is that including your partners grocerys she has to buy also if not that is huge i feed my family of 4 on £200. Also you have nothing down for building or contents insurance yet have a mortgage so i assume you are missing something in there, also life insurance the same. check comparision sites for car insurance as that seems high for 1 car when you next renew. the rest seems ok and you have plenty of surplus so i suggest you try the snowball calculator on the sticky at top put in all the debts and it will show you what to pay 1st and the fastest way out of debt with that surplus the debt is very manageable to overpay.

hayley

HAYLEY8005

opps edited in wrong part you can clear the post office in one months pay and then move onto the next highest interest which is nationwide and so on if you work hard this really wont take you long to be debt free.

Adorian

Thanks for the advice Hayley, much appreciated.
The groceries does indeed include my partner's having to eat out; it's probably not quite that bad but if I'm visiting as well it means we're both eating out. I get by mostly on about £10 - 15 a week, depending on what I've run out of. This week, for example, I'm mostly eating soup made from 60p worth of beef bones (that's actually a lot!) made into stock, various bits of cheap veg from the market, some dried beans and barley, plus toasted cheese sandwiches with bargain 'buy one get TWO free' Cathedral City cheddar.
I live in a flat so the building insurance is included in the £85.70 management charge. We don't have contents or life insurance. Well, I have some life insurance through work but not a huge amount.
My car insurance is really high as: we live in a dodgy area for car theft, I only have 2 years no claims (to be eco friendly we didn't have a car for ages but public transport to where I work is so bad and then I started having to travel to different offices that I had to get a car. With no no claims.), I use the car for business as well as commuting, and I have points on my licence. I did check through various comparison sites and this was the cheapest that didn't get really bad reviews - and if you have an accident you want decent customer service.

I've already done the snowball so I can see a rather depressing "It will take you 33 months", but I've resolved to, whilst paying off everything else in the right order, get rid of the Post Office one separately through Quidco, clicks, Ebaying or whatever else by the end of January, just so it's gone but without affecting my paying off the highest interest rates first. We'll see how successful that is.

Travel between our 2 places probably averages about £100 a month. I'll see if I can edit the original post to reflect that.

Mikazaru

Are the trains any cheaper if you book well in advance? Are you eligble for any of the railcards to get a thrid off? How about the coach or is it too far, I used to travel quite large distances by coach and depending on what time I travelled and booking in advance I could tickets from as little as a pound. Remember to book all your train tickets through Quidco
If your partner isn't living with you for a while would you be eligible for the single person discount on your council tax?
Would your partner be able to apply for a 0% card in their name?
Is it possible for OH to get a mini fridge and a toaster or anything where they are living to cut down on the food costs?

Nessie23

Hi Adorian,

Firstly well done it trying to deal with the debts, it might be hard at the beginning, but as you will see the situation getting better month by month. At the end once you are debt free you will feel as if you had a huge weight lifted off your shoulders!
Here are a few items where you might be able to reduce your monthly expenses.

Telephone (land line)................... 18
(Unless you are in contract you should be able to move this one down to 12ish per month) check MSE's guide http://www.moneysavingexpert.com/phones/home-phone-calls?dd

Mobile phone............................ 55
(Are you in contract? Can you move down or go onto a sim-only monthly contract with cheaper rates for the same amount of minutes? You can get lots of minutes for £15-20 per month)

Internet Services....................... 17.99
(You should be able to get this down to 9 per month) http://www.moneysavingexpert.com/phones/cheap-broadband?dd

Groceries etc. ......................... 400
(Definitely worth looking at this, can you downshift supermarket. Are there any other options available to eat healthy nice food just a bit more cheaply available? )

Haircuts................................ 22.5
(Can you reduce this a bit?)

Entertainment........................... 40
(can you reduce this for a few months?)

Is there anything you can do to reduce your credit card payments. One of the problems is that you are paying a very high interest rate on the debts. Is there any way you can move the debts to a credit card with a lower % rate. Are any of your providers prepared to give you a lower rate for a balance transfers?

Are you able to do any overtime at work? Could you consider an additional job in the run up to Christmas?

Have you tried visiting the citizens advice bureau (or any other reputable charity) who might be able to give you advice on debt?

From your SOA, the critical items appear to be the huge interest on the debts and the food bill. Any reduction on what you spend on both these items will have a big impact on your debt reduction.

I appreciate not all of them items suggested above might be doable, but hopefully you can implement some of them and reduce your bills with a minimum amount of financial pain.

Good luck
Nessie

isy1011

Well done for posting.

Have you actually got that much left each month after debt repayments. Or...in reality not. In which case you need to start a spending diary to see where the money is going. Because...Im sure if you had then maybe the credit card debt would not be as high.

Adorian

Hi Mikazaru, thanks for your input.
The cheapest train fare (which isn't always available but I will try and split journeys up to see if I can get them cheaper if not) is about £67 for an off-peak return. If I can't get that (sometimes it's not offered for some reason), with some journey splitting I can get the trip for less than £90 sometimes. Advance, when available, which seems a bit random, is only about £3 cheaper so for the flexibility it's normally worth the extra £3 just in case something goes wrong! I can really only travel Fri p.m. to Sunday p.m. and my partner finds it difficult to take much time away and, if she can, it tends to be short notice, hence the expensive ticket. The train takes between 3 and a half and 4 hours. Coach times aren't very good for either of us and take nearly twice as long. Prices can be OK but then it involves sitting around for ages at various stops, wasting what little time we could have together so we've ruled that out as an option.
I don't think we'd be eligible for the council tax discount as she's on the electoral roll here not there and we're not intending on changing that - we're having to work & live in separate places, we're not intending to have completely separate lives (plus if she comes off the electoral roll or starts changing addresses for banks etc it will probably mess up her credit rating).
My partner's only become a UK citizen recently and has no credit rating to speak of - she had to pay a big deposit just to get a mobile phone contract in her own name recently - so getting cards in her name isn't really an option at present (although hopefully in the future - although I'd hope we wouldn't need them).
As far as cooking facilities is concerned, she shouldn't really be staying where she is anyway and the last thing she needs is anything that could be flagged up as a fire hazard or make it noticeable that somebody is living there (her employer's OK with it but it has to be discreet). I think a toaster might be a problem. I am going to speak with her about the cost of food/drink but to be fair, she's living in rubbish circumstances away from home; there's only so much suffering I can expect her to endure. Maybe we can agree a budget for it so she's more aware of what the cost is. I suppose that would be one positive step!

Adorian

Hi isy1011,
I'm pretty sure we must be leaking a lot more cash than is in the SOA but I can't really see where. I'm trying to get my partner to do a diary for a couple of months and I will too, but spend seems a bit random, we aren't regularly buying new clothes (although occasionally get stuff from charity shops if we've had a browse) or buying expensive coffee from coffee houses etc. I guess it's just figuring out how to average other occasional mystery costs out on a monthly basis. But it has to be going somewhere, you're absolutely right. This is, by the way, the first month we've had 2 incomes for the best part of a year though. Previously we were on about £1450 a month, and our power bills were higher because she was home most of the day plus we'd go out a couple of times a month just to get away from every day miserable life. And I think there are some things she should be claiming back from work, but maybe she's getting cash and thinking that it's just cash in the pocket rather than money that's already been spent once. Something to raise!

Gothicfairy

I can't offer much help but your water seems high ? Are you on a meter and if not the get one as you are out most of the day it could well work out better. If you are on a meter are you paying arrears ?

Adorian

Nessie, thanks for the detailed breakdown and links! Much appreciated. :T
I've appended comments. Hopefully in green.

Nessie23 wrote: »

Hi Adorian,

Firstly well done it trying to deal with the debts, it might be hard at the beginning, but as you will see the situation getting better month by month. At the end once you are debt free you will feel as if you had a huge weight lifted off your shoulders!
Here are a few items where you might be able to reduce your monthly expenses.

Telephone (land line)................... 18
(Unless you are in contract you should be able to move this one down to 12ish per month) check MSE's guide I've been intending to look at this. Thanks for the prompt and the link. We don't use the landline that much normally but we pay extra for cheap international calls through BT as we have family & friends abroad & my OH is rubbish at things like remembering to dial extra digits to get cheap calls. I'll see what I can do. We used to have to have BT in order to get broadband (not with BT) but I'm not sure if that's still the case)

Mobile phone............................ 55
(Are you in contract? Can you move down or go onto a sim-only monthly contract with cheaper rates for the same amount of minutes? You can get lots of minutes for £15-20 per month) Just got 18 month contracts with O2 after some debate as OH needs to make a lot of work related calls. She's got a smart phone for work so she can pick up emails too and is paying £40 for 600 minutes, unlimited texts and 500mb data, but should be getting £20 - £30 back from work. I'm not allowing for that until it happens though. I'm paying £15 a month for 300 minutes, unlimited texts and also for free calls between me and her. I was previously averaging about £10 - £12 a month with Tesco PAYG and, as we knew we'd be having to call each other more, I got an O2 contract too. It's not really costing me any more, and, if she gets the £ back from work, which does seem quite likely, it's costing her maximum of £5 more a month than before she had the job but it is enabling her to actually do her job AND stay in touch with me for free.

Internet Services....................... 17.99
(You should be able to get this down to 9 per month) We currently are on a 'no notice' contract with Virgin Media. I hate their customer service but the speed is OK and it means no hassle with trying to cancel a longer term contract. It is expensive though. I'm hoping to relocate to her area eventually if all goes well/I can get work there/we can rent the flat out so am reluctant to get into any longer term contract that is going to cost us to get out of. I suppose it's a case of working out how long it'd take for me to move and whether the difference in cost is worth taking the hit of a cancellation fee. Something to look at tonight - I'd love to be paying a lot less and we had been talking about getting O2 as we'd get a discount for having mobile contracts with them.

Groceries etc. ......................... 400
(Definitely worth looking at this, can you downshift supermarket. Are there any other options available to eat healthy nice food just a bit more cheaply available? )
High grocery costs are due to my OH not being able to cook so having to eat out (and she's a healthy eater, so no nasty fast food or pasties) in a tourist oriented area so it's not cheap. Her work is physically quite strenuous so she does need to try and eat well. Personally I'm living on easily less than £20 a week, even the weeks where I'm replenishing bulk buy items. So not really much room for manouevre. I shop at the butcher in the market for bones for stock and the Chinese warehouse and a big Indian supermarket for pretty much everything else except value tomato juice and the occasional tin of value spaghetti and whatever cheese offers Sainsburys or Tesco has. If I do buy meat or fish it's from the market or Lidl.

Haircuts................................ 22.5
(Can you reduce this a bit?)
No. This is something I won't compromise on. I have always had really awful hair (or so I thought), hated it as a child and until I was in my late twenties and it only behaves well if somebody that knows how to deal with mixed race hair cuts it. It's only since I found my last hairdresser and then when we moved countries, current hairdresser that I don't hate my hair or end up scraping it back into a very unflattering frizzy ponytail. £45 every 3 months is money well spent for the sake of my mental wellbeing!! My OH has short cheap to cut hair but it does need a regular trim and I dye my hair myself so not much leeway there unless I go back to the scraped back ponytail and crying when I get home from the hairdressers. Seriously. It probably doesn't come to quite that much, but better to err on the side of caution.

Entertainment........................... 40
(can you reduce this for a few months?) This really covers more of my OH's away from home expenditure as well as my up to £5 a fortnight bottle of wine so it's not that bad. Not sure there's much I can do about it. Knowing I have the bottle of wine there means I don't think "What a rubbish day." and end up going to Tesco and buying one and drinking half of it in one night.

Is there anything you can do to reduce your credit card payments. One of the problems is that you are paying a very high interest rate on the debts. Is there any way you can move the debts to a credit card with a lower % rate. Are any of your providers prepared to give you a lower rate for a balance transfers?
I think I said that I just got turned down for a 0% BT card so no, can't do that, sadly. I don't want to BT to a card that is already carrying debt unless I am completely sure that it'll be a positive hierarchy of payment and at the moment that isn't the case with any of my cards except, I think, Nationwide. But they don't have an offer on at the moment.

Are you able to do any overtime at work? Could you consider an additional job in the run up to Christmas? No opportunity for overtime. I was looking for part time work until my OH got her job but no success. Now as I want to be able to see her some weekends, I don't think I'd have much luck getting a Christmas job. We're hoping she'll get to be at home for Christmas but she has to be back at work soon after so I'll be going back with her for a few days. Otherwise yes, that would be a good idea. Until about 5 years ago I always had 2 jobs (probably why it's been hard to get used to one salary for 2 people instead of 3 salaries!!)

Have you tried visiting the citizens advice bureau (or any other reputable charity) who might be able to give you advice on debt?
Our CAB is conveniently only open whilst I am at work so no, I haven't. I think, if we both keep our jobs (and our heads) then there's no reason we can't get rid of this debt, I'd just rather do it much sooner rather than later as the interest rates are ridiculous. The sooner we can get this down to manageable levels, the sooner I can actually be able to move to be back with my OH full time even if it means taking a lower paid job (which I couldn't afford to do right now).

From your SOA, the critical items appear to be the huge interest on the debts and the food bill. Any reduction on what you spend on both these items will have a big impact on your debt reduction. I'll try ringing around the cards this evening, see what they have to say. Although I can't see them being keen to agree to take less money from me! Maybe I'll see what the average rate is on these cards and if mine are more ask them why. I guess it can't hurt to try!

I appreciate not all of them items suggested above might be doable, but hopefully you can implement some of them and reduce your bills with a minimum amount of financial pain. All suggestions gratefully received. (Except for the hairdresser ones of course!) It's certainly given me something to look at. Especially the broadband. Thanks very much for taking the time to help.

Good luck
Nessie