Where to start?

Noctula

Hello all,

Pleased to meet you

Guess I'll just get on with it............We are where we are through a combination of bad luck, bad decisions and poor money management!

Starting at the beginning – we bought a house in 2007, just before everything flumped. We could have afforded 120,000 mortgage on our income at the time on an 100% mortgage but my husband’s parents offered to lend us 20,000 as a deposit (on the premise we’d remortgage after a few years and they’d get their money back plus interest). I wasn’t 100% convinced by the idea but went along with it and foolishly, rather than buying something for 120,000 (so having a mortgage of 100,000), we ended up buying a house for 140,000 with an 120,000 mortgage. Bad decision 1.

2008 I found out I was pregnant. We were running two cars because we were living in a rural area with my husband needing to commute 20miles and me needing to commute 60miles. My car was pretty ancient, gear box was going and I was struggling to get in and out with the bump so we bought an 04 Renault Scenic with interest free credit for 6500. Mistake 2. While I was on maternity leave my company went bust but luckily I managed to find a new job. Unfortunately it meant going back to work when my daughter was 4months old and paying around £700 a month in nursery fees.

My hours were ridiculous, as were my husbands, and with the added cost of childcare and the exhaustion caused by a non-sleeping baby we were near breaking point after a few months. Then a job came up that I could do back home where we were from. Both sets of grandparents were happy to help with looking after our daughter while we worked, it seemed like a solution. So we put the house on the market 12 months ago, (now valued at £125,000 it’s on the market for £120,000, our outstanding mortgage is £115,000). Except, just before we moved and just outside of warranty, the “big end” went on the Renault. Credit card paid the 3500 needed for a new engine.

We moved. Needless to say the house hasn’t sold, in fact, we haven’t had a single person look at it. It’s not over priced but it is in mid-Wales and the estate agent has said people won’t even look unless they think it’s a bargain. The job I moved down for didn’t work out, it actually resulted in me going on to anti-depressants but I tried sticking it out – unfortunately it was a local authority position, they were cutting costs, so at the end of my probationary period there was no longer a job. I’m now self employed but it’s been a struggle what with chasing invoices etc etc. We’re paying rent down here as well as a mortgage on the house. Every month our outgoings are greater than our income. We took out an £18,000 loan to try and consolidate accumulating debts but that was before I lost the local authority job. Now we have the repayments for that plus 5 and a half grand on credit cards. Somehow we’ve managed to avoid defaulting anything major but it can’t last.

To top it off the Renault has imploded again (possibly the turbo) – we’ve been running it as our only car for the past 6months and my husband has been cycling the 3miles to the train station to get the train for the 30miles to work. Except he works for Aldi and the store opening hours are changing and the new store times don’t correspond to when the trains run. So we were going to sell the Renault and replace it with two older, cheaper cars.

We’ve considered renting out the house and have permission from our mortgage lender except the rental income won’t cover the mortgage. Plus, we don’t have the funds to manage a property and deal with tenants from 150miles away. We can’t take a payment holiday on the mortgage because we don’t have enough equity in the property. We can’t sell the house below our mortgage value and remortgage in negative equity because the mortgage lender needs 2 years of records from me being self-employed.

We’ve talked about handing the keys back but apparently we’d still be liable for any outstanding unpaid mortgage because of course the property would be sold at auction by the mortgage lender to recoup their costs and they won’t get the house’s full value.

Our bank loan repayment is £300 a month, our mortgage plus associated costs (council tax, rates, buildings insurance) is around £600 a month, we go over our overdraft limits (we have a joint account and an individual account each) every month incurring up to £150 in charges per account each month (which sends us over drawn the following month, vicious cycle – overdraft limit is £500 on each account), the credit cards have around £5300 on them but we’re only paying minimum repayments which means the interest plus about £3. (We tried to transfer to interest free cards but we missed payments so they went back to normal interest rates).

Of course we’ve got all our normal living costs here (rent, bills, food, cars, internet which I need for work etc. We don’t have a television) and if we didn’t have the mortgage, debt repayments etc we’d be ok but as it is, every month it’s just getting worse.

We’ve got an application for a basic bank account with the co-op to complete so we can transfer our income and essential outgoings into that but we’re still stuck with debts and a mortgage we can’t pay.
How we’ve managed to avoid defaulting on anything major yet I’ve no idea!!

I just wish we could magic it all away. I want to do things properly, I’d rather pay everything back but I can’t see how we can, even if we write letters offering minimal payments, asking them to freeze interest etc.

Wondering if bankruptcy is the answer – would it really be a fresh start or would it haunt us forever more?

Advice and experiences would be very welcome right now.

January20

I've just read your post and 2 things come to mind.

1) Can you do an soa so that everything is clearer so others posters can help you with suggestions.
Link here: http://www.makesenseofcards.com/soacalc.html

2) You are paying a mortgage and rent on the property you actually live in. Is there no way you can go back and live in your house? Can your husband move his job to another Aldi? Can you move your work since you are self-employed?

Other people with more experience will come along with suggestions.

traycee

Hi Noctula

And welcome.

Wow you have had a tough few years haven't you.

So first a big hug... I can imagine how much stress you must have been under with all of this. No magic wand I'm afraid but lots of advice and support available here I am sure and hopefully that will make a huge difference for you.

Do as January 20 suggests and post us a full SOA (statement of affairs) and let's see what suggestions we can make.

You need to get busy now... Start by getting that basic account opened and then you can treat your existing current account and overdraft like another debt. You certainly don't need to be paying £150 per month in bank charges:eek: It may be that you could be redirecting that to you outstanding debts which will reduce them soo much quicker but I can comment further when I have seen your full SOA.

Traycee

traycee

Been thinking about your situation whilst I did a few jobs this morning so I am back with some further thoughts...

Noctula wrote: »

Hello all,

Pleased to meet you

Guess I'll just get on with it............We are where we are through a combination of bad luck, bad decisions and poor money management!

Starting at the beginning – we bought a house in 2007, just before everything flumped. We could have afforded 120,000 mortgage on our income at the time on an 100% mortgage but my husband’s parents offered to lend us 20,000 as a deposit (on the premise we’d remortgage after a few years and they’d get their money back plus interest). I wasn’t 100% convinced by the idea but went along with it and foolishly, rather than buying something for 120,000 (so having a mortgage of 100,000), we ended up buying a house for 140,000 with an 120,000 mortgage. Bad decision 1.

Great that you recognise your mistakes but don't beat yourself up about them now. Most of us found our way here through our mistakes. It's now about drawing that line and looking for the best way to move forward.

2008 I found out I was pregnant. We were running two cars because we were living in a rural area with my husband needing to commute 20miles and me needing to commute 60miles. My car was pretty ancient, gear box was going and I was struggling to get in and out with the bump so we bought an 04 Renault Scenic with interest free credit for 6500. Mistake 2. While I was on maternity leave my company went bust but luckily I managed to find a new job. Unfortunately it meant going back to work when my daughter was 4months old and paying around £700 a month in nursery fees.

My hours were ridiculous, as were my husbands, and with the added cost of childcare and the exhaustion caused by a non-sleeping baby we were near breaking point after a few months. Then a job came up that I could do back home where we were from. Both sets of grandparents were happy to help with looking after our daughter while we worked, it seemed like a solution. So we put the house on the market 12 months ago, (now valued at £125,000 it’s on the market for £120,000, our outstanding mortgage is £115,000).

I feel that the house in Wales a massive issue for you guys that needs addressing. Could you/ would you consider moving back in? Perhaps you have more family support where you are?

Except, just before we moved and just outside of warranty, the “big end” went on the Renault. Credit card paid the 3500 needed for a new engine.

We moved. Needless to say the house hasn’t sold, in fact, we haven’t had a single person look at it. It’s not over priced but it is in mid-Wales and the estate agent has said people won’t even look unless they think it’s a bargain.

Seriously your house has been on with an estate agent for 12 months and you haven't even had 1 viewing! When did you last speak to them? Do they know how much you need to sell? What else have they sold in your area and for how much? What suggestions do they have? Have you spoken to other estate agents in the area? If not do it. What do they say. Price what price do they think people would consider a bargin? Could yopu auction it with a reserve? Consider closed bids. Consider taking it off the market for a month and ensure in that time that it is looking the part for sale. House doctor it if required? Get estate agents / friends opions on how it is looking. Once ready relaunch property as new to market, just come on our books, newly available. Hold an open day? I am not an estate agent if there are any reading this do you have any advice?

The job I moved down for didn’t work out, it actually resulted in me going on to anti-depressants but I tried sticking it out – unfortunately it was a local authority position, they were cutting costs, so at the end of my probationary period there was no longer a job. I’m now self employed but it’s been a struggle what with chasing invoices etc etc.

Can I ask what line of work you are in? Perhaps we can suggest ways of increasing your income as well.

What are you doing about childcare for LO now?

How old is you LO now? (Just wondering when LO could get free nursery place!)

We’re paying rent down here as well as a mortgage on the house. Every month our outgoings are greater than our income. We took out an £18,000 loan to try and consolidate accumulating debts but that was before I lost the local authority job. Now we have the repayments for that plus 5 and a half grand on credit cards. Somehow we’ve managed to avoid defaulting anything major but it can’t last.

To top it off the Renault has imploded again (possibly the turbo) – we’ve been running it as our only car for the past 6months and my husband has been cycling the 3miles to the train station to get the train for the 30miles to work. Except he works for Aldi and the store opening hours are changing and the new store times don’t correspond to when the trains run. So we were going to sell the Renault and replace it with two older, cheaper cars.

Before you get 2 further cars what are the alternatives?
Is there a bus he could catch?
If you are in rented could you move closer to his place of work or to an alternative location where he could use public transport perhaps a bus if train times aren't compatable?
Where do other colleages live could he car share with anyone?

We’ve considered renting out the house and have permission from our mortgage lender except the rental income won’t cover the mortgage. Plus, we don’t have the funds to manage a property and deal with tenants from 150miles away. We can’t take a payment holiday on the mortgage because we don’t have enough equity in the property. We can’t sell the house below our mortgage value and remortgage in negative equity because the mortgage lender needs 2 years of records from me being self-employed.

Long term rentals are by no means plain sailing and if the rental won't even cover your mortgage (with rates as low as they are now) then I can't see this working long term. Plus you would need to declare the income and potential pay tax on this.

We’ve talked about handing the keys back but apparently we’d still be liable for any outstanding unpaid mortgage because of course the property would be sold at auction by the mortgage lender to recoup their costs and they won’t get the house’s full value.

Definetly don't hand back the keys, this is far from the end of your problems. My now hubby handed back the leys to his 1st property purchased with his 1st wife after they split. The buliding society sold the house worth about 35k with 30k mortgage outstanding for 10K at auction and then came after him for the 20K

Our bank loan repayment is £300 a month, our mortgage plus associated costs (council tax, rates, buildings insurance) is around £600 a month, we go over our overdraft limits (we have a joint account and an individual account each) every month incurring up to £150 in charges per account each month

Need to address this now.

Don't even do this again next month you need this £150 working for you not making the banks a profit.

(which sends us over drawn the following month, vicious cycle – overdraft limit is £500 on each account), the credit cards have around £5300 on them but we’re only paying minimum repayments which means the interest plus about £3. (We tried to transfer to interest free cards but we missed payments so they went back to normal interest rates).

Of course we’ve got all our normal living costs here (rent, bills, food, cars, internet which I need for work etc. We don’t have a television) and if we didn’t have the mortgage, debt repayments etc we’d be ok but as it is, every month it’s just getting worse.

We’ve got an application for a basic bank account with the co-op to complete so we can transfer our income and essential outgoings into that but we’re still stuck with debts and a mortgage we can’t pay.
How we’ve managed to avoid defaulting on anything major yet I’ve no idea!!

I just wish we could magic it all away. I want to do things properly, I’d rather pay everything back but I can’t see how we can, even if we write letters offering minimal payments, asking them to freeze interest etc.

Wondering if bankruptcy is the answer – would it really be a fresh start or would it haunt us forever more?

Advice and experiences would be very welcome right now.

Sorry for long post but you have several issues and for each one you will need to find your own solution one that will work for you. So I am just trying to throw some suggestions in to the pot for you to consider.

Hope they help look forward to seeing your SOA

Traycee

Noctula

Thank you.

I'm currently working out an SOA and when you find direct debits you don't even remember having you know you're in trouble!

And Traycee - I will answer everything you've asked/suggested but it'll be later on this evening once I've worked out the SOA etc.

I'm starting to feel like Ireland!!! LOL

January20

Noctula wrote: »

Thank you.

I'm currently working out an SOA and when you find direct debits you don't even remember having you know you're in trouble!

And Traycee - I will answer everything you've asked/suggested but it'll be later on this evening once I've worked out the SOA etc.

I'm starting to feel like Ireland!!! LOL

Yes, but you are doing the hardest thing now. When your SOA is done fully, you will be able to take control of the situation and start implementing measures to change things.

traycee

Evening Noctula

Noctula wrote: »

Thank you.

I'm currently working out an SOA and when you find direct debits you don't even remember having you know you're in trouble!

Don't worry that's kinda the point of doing it!

And Traycee - I will answer everything you've asked/suggested but it'll be later on this evening once I've worked out the SOA etc.

Well done on giving your SOA your prompt attention and I hope I didn't overwhelm you with too many questions... just trying to help. Look forward to hearing from you when you are ready.

I'm starting to feel like Ireland!!! LOL

Traycee

Noctula

Still working out our SOA!! Oh God :S

I knew we were in the poo but it's even more poo than I'd thought - we've been doing the "head buried in sand" scenario and with individual accounts and joint accounts (with associated overdrafts) and different credit cards it was easy to spend without realising what we were doing, or at least going "tra la la, it will all be fine" (the alternative one is "I don't know why we're in such rouble, I know we've had bad luck but we don't spend that much", oh yes we do!!)

Over the past year or so we've tried to set a monthly budget on odd occasions but it's always been based around what we were going to spend the next month without taking into account what we had been spending previously.

Even if it turns out the best option for us is bankruptcy our spending habits need to be changed quite dramatically (or at least the way we manage our money!) in advance of doing anything because otherwise, 2 or 3 years down the line I can see us in the same place as we are now.

We've tried sorting things out in the past with loans etc but we've never really changed our spending habits, never worked out a proper budget and that's the bit we really need to change.

Am I waffling?!

Thanks for "listening" anyway. The more I go through all the accounts the bigger a fool I feel....and embarrassed.....and just really, really stupid.

*sigh*

For my SOA I'm going through the past 6 months then I'm going to average it out for a monthly spend. So far I've managed 2 months. That's how chaotic things are.

Urghh.

Noctula

Well, in the end, because it was taking so long, I based the SOA on the last three months, extrapolating spending where necessary into a 12month division. I'm actually completely horrified. :eek: Particularly with the grocery shop!! This includes all food, toiletries, household cleaning stuff, pet food, cat litter etc etc but even so - it's the daily bits an pieces, odd bottle of wine, snacks etc that add on. I honestly didn't know how much we spent, I thought it was around £300

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................ 894
Partners monthly income after tax....... 1800
Benefits................................ 81.2
Other income............................ 0
Total monthly income.................... 2775.2

Monthly Expense Details
Mortgage................................ 443
Secured/HP loan repayments.............. 0
Rent.................................... 550
Management charge (leasehold property).. 0
Council tax............................. 145 (for both properties)
Electricity............................. 68 (for both properties)
Gas..................................... 19
Oil..................................... 0
Water rates............................. 44.38 (for both properties)
Telephone (land line)................... 22.02
Mobile phone............................ 90 (mobile phone each, tied by contracts)
TV Licence.............................. 0 (We don't have TV)
Satellite/Cable TV...................... 0
Internet Services....................... 25 (Internet dongle, still 12 months remaining on contract)
Groceries etc. ......................... 546.7
Clothing................................ 115.47 (Can cut this easily, although recently I've had a splurge on ebay for my daughter, plus she needed new shoes)
Petrol/diesel........................... 243.26
Road tax................................ 20 (for two cars)
Car Insurance........................... 62.75 (for two cars)
Car maintenance (including MOT)......... 104.17 (for two cars)
Car parking............................. 0
Other travel............................ 104.2 (train fare, although this will be stopping)
Childcare/nursery....................... 187.25
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 52 (recently higher than typical due to recent vaccinations, spaying etc)
Buildings insurance..................... 16.04 (for mortgaged property)
Contents insurance...................... 8
Life assurance ......................... 14.95
Other insurance......................... 32.27
Presents (birthday, christmas etc)...... 20.09
Haircuts................................ 4
Entertainment........................... 152.58 (mostly eating out - can stop most of this)
Holiday................................. 60
Emergency fund.......................... 0
Unaccounted for (e.g. cash withdrawels). 104.17 (!!!!!!?!! Have no idea where this goes, need to sort this!!)
Miscellaneous bits...................... 73.51 (Again, needs reducing)
Work (e.g. memberships, equipment)...... 35.83
House maintenance/one offs.............. 124.99
Conservation Organisation Memberships... 9.42 (can cancel these)
Bank Account Fee........................ 12.85 (can change this)
Child Trust Fund/Child Savings Account.. 30
Total monthly expenses.................. 3540.9


Assets
Cash.................................... 0
House value (Gross)..................... 125000
Shares and bonds........................ 0
Car(s).................................. 2000
Other assets............................ 0
Total Assets............................ 127000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 115000...(443)......3.5
Total secured & HP debts...... 115000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Overdrafts.....................1500......0.........18
Tesco credit card..............280.......14........19
MBNA credit card...............4500......37........18
Student loan 2.................18500.....0.........1.5
Student loan 1.................5500......115.......1.5
Parental loan 2................36000.....0.........0
Parental loan 1................3000......0.........0
NatWest Credit Card............1250......30........18
HSBC Loan......................17000.....321.......8
Total unsecured debts..........87530.....517.......-


Monthly Budget Summary
Total monthly income.................... 2,775.2
Expenses (including HP & secured debts). 3,540.9
Available for debt repayments........... -765.7
Monthly UNsecured debt repayments....... 517
Amount short for making debt repayments. -1,282.7

Personal Balance Sheet Summary
Total assets (things you own)........... 127,000
Total HP & Secured debt................. -115,000
Total Unsecured debt.................... -87,530
Net Assets.............................. -75,530



I feel I can also answer your questions now Traycee:

1. I feel that the house in Wales a massive issue for you guys that needs addressing. Could you/ would you consider moving back in? Perhaps you have more family support where you are?
We moved to where we currently are because that's where our family is (both sets of parents) and with a baby I needed the support, especially as I'd had to go back to work. My husband can't get a transfer back to where we were living because it's dependent on their being a managers job available in one of the "local" stores (local in Aldi's view being anything up to 60miles/an hours drive although the nearest store to where we were living was 25miles). Additionally, I wouldn't be able to employ myself locally up there because I would have no contacts who would be able to provide clients (although my local authority job down here didn't work out it did allow me to make contacts with people in the field that I needed for my self-employment needs)

2.Seriously your house has been on with an estate agent for 12 months and you haven't even had 1 viewing! When did you last speak to them? Do they know how much you need to sell? What else have they sold in your area and for how much? What suggestions do they have? Have you spoken to other estate agents in the area? If not do it. What do they say. Price what price do they think people would consider a bargin? Could yopu auction it with a reserve? Consider closed bids. Consider taking it off the market for a month and ensure in that time that it is looking the part for sale. House doctor it if required? Get estate agents / friends opions on how it is looking. Once ready relaunch property as new to market, just come on our books, newly available. Hold an open day? I am not an estate agent if there are any reading this do you have any advice?
We had one person show interest when it first went on the market but they weren't able to offer anywhere near the asking price and due to the drop in the houses value since we'd bought it we couldn't afford to accept much less than we were asking. Obviously in hindsight we might have been better off if we had. Who knows? The house itself is a 3 bed semi, new build (3 years old so still within the guarantee). However, there are still unused plots on the estate plus two other completed houses that the builder has on the market (admittedly at a higher price than we're selling). We've been in regular contact with the estate agent. He's advised us to drop the price as we may get interest if we drop to 110,000. However, our outstanding mortgage is £115,000 and because I've not been self employed for the minimum of 2 years that are needed to provide records to our mortgage lender (Nationwide) we're unable to sell in negative equity. The same issue would apply if we tried to sell it at auction. We'd be lucky to get 100,000 for it.

3. Can I ask what line of work you are in? Perhaps we can suggest ways of increasing your income as well.

My income actually varies quite a bit month by month because I'm self employed. Over the summer I can bring in £2000 a month but over the winter it can be as low as £200 a month so I've averaged it. I've only been self employed for about 5 or 6 months and the type of work I do is relatively seasonal (I'm an ecological consultant carrying out protected species surveys - I do work for developers, architects, planning consultants etc looking for plants and animals that are protected by law and helping with mitigation issues. It's actually quite specialised and there's only 2 other people within the county who does the same kind of work).

4. What are you doing about childcare for LO now?
My daughter is in nursery for 2 afternoon's a week and I get two days of help from my mother and mother-in-law (they both work as well though). Obviously when I lost the local-authority job and went self-employed I cut right back on the nursery but still need those two afternoons.

5. How old is you LO now? (Just wondering when LO could get free nursery place!)
She's only just turned two I'm afraid

6. Before you get 2 further cars what are the alternatives?
Is there a bus he could catch?
If you are in rented could you move closer to his place of work or to an alternative location where he could use public transport perhaps a bus if train times aren't compatable?
Where do other colleages live could he car share with anyone?
Nope, nope, and nope Have looked into all of that. There are no buses that run at appropriate times. Currently his shifts are 7am-7pm which helpfully corresponded with the trains but the store times are changing so the train times won't correspond any more. There aren't any buses that run at the appropriate time and even if there were they take over an hour. He works 10-12 hour shifts so adding an hour of travel would mean he'd never see our daughter. Additionally, he also has to be available to cover in other stores so needs transport between them. We are moving to a different house that's more central to the three stores he's most likely to end up in but again public transport isn't available.

7. Need to address this now.

Don't even do this again next month you need this £150 working for you not making the banks a profit.

Agreed. Having looked at the accounts, we're averaging bank charges and interest of £234.41. In fact currently:

• Bank charges and interest = £234.41
• Costs associated with the mortgaged house = 600.64
• Debt repayment = 402.31

*sigh*

zcrat41

Hi Noctula,
I don't have much to add. Just a thought about your OH job & travel. I used to work as an Area Manager for a company very similar to Aldi. If I asked managers to go to other stores I had to provide transport - either pay for taxi, train or bus depending on the most cost effective (and how desparately I needed cover!!) The other thing is, if the management are changing store hours they should be consulting all the staff - it might be worth bringing up travel issues. I have moved shop managers in the past due to change in circumstances or helped them out. Might be worth a chat to the HR dept.
Good luck
ZC

Noctula

Hey ZC,

thanks for the suggestion The problem is, he's contracted to a base store within a 60minute drive of home (that's how it's put) and currently he's within 45minutes so it's highly unlike that they'd be willing to move him....unless there is a movement of staff in another store close to home. He is planning on speaking to his Area Manager but it's not hugely hopeful.