Debts and redundancy - help

Pauper_Princess

Hello everyone

I have been follwong the posts on this site for a few days and the advice here is amazing! And it's comforting to know that other people manage to get themselves into a mess too... sometimes it feels like we're the only ones in the world with money worries!

Basically I wanted to know what others would do in my situation. I'm 32, married, no kids. Both me and hubby work full time, he has a manual job and earns around £15,000 a year. I earn £24,000.

On the face of things we should have money to spare each month, but we spend stupid money on absolute rubbish! During this year I have suffered quite bad depression and haven't kept as close an eye on finances as I should have.

We owe the following:

Egg credit card - APR 17.9% - balance owing £476. I pay off this when I can but I think this month I can only afford £50.

Sainsburys credit card - 0% (for purchases) until May 2007 - balance owing £880

Mesh Computers - bought a laptop on 0% finance - to be repaid April 2007. It was just shy of £1,000 and we've put aside £300 for this so far so we owe £700

Northern Rock car loan - APR 5.8% - has 18 months left at £187.09, so owe approx £3,300 on this (haven't phoned for a settlement figure yet)

So - total debts £5,356.

I've just found out that the small firm I work for is in negotiations with another firm, for a possible merger of sale of fees. If they sell the fees I won't have a job, and in a merger I might still lose my job. Accountancy jobs are really thin on the ground at the moment and I'm terrified that I'll end up with no money coming in.

Hubby brings home around £960 a month - the mortgage alone is £485. We couldn't even live on his wage, never mind pay off the debts.

Last year we cashed in an endowment that was losing money (another stupid decision) - we hadn't had it long (it was for our first mortgage) so we only got back £4,000. This is in a savings account at the moment. I wanted to leave this there in case I do lose my job, but should I use this money to pay off some of our debts?

The thing that bothers me most is that our biggest debt is the loan, which is fixed interest, so we wouldn't stand to gain very much by repaying some of this, and we'd have nothing to fall back on to boot.

Sorry this is such a long winded and ridiculous post. It's really starting to worry me now though - I suppose the threat of redundancy's bad enough, without fretting over debts!!!!

Can anyone offer any advice?? I know it doesn't sound like a lot of debt but like I said, if we lose my income, we can't afford the repayments on hubby's income. I've onle been with this firm 16 months so I don't even qualify for any redundancy pay

Thank you xx

Bestthingsinlifearefree

Hi PP,

welcome to MSE :beer:

You are doing the correct thing by looking at your options to strengthen your financial position in case any financial storms hit (e.g redundancy).

First thing. Don't panic, you and your OH are both in a job at the moment.

How about registering with Accountancy agencies to dip your toe in the water to see what jobs are out there.

How about posting a full SOA (statement of affairs, ie all incomings / outgoings)here ?

I would be inclined to keep your savings as a cushion (even if you are paying more interest on your debt than you are getting on your savingss, though others will disagree with me on this).

Have you got those savings in an ISA / (i.e tax free)

Could you get a zero % or low interest CC and transfer the Egg CC balance on to this ?

There are lots of positive steps you can take to strengthen your families financial position.

Keep posting and Keep positive.

Bestthingsinlifearefree

Hi (again) PP !!

I reckon after tax your take home pay of both of you in total should be £2000
or so, now minus the mortgage.

You should have a good £1500 or so to live on / bills and throw at debts.

If you could live on 1K a month and throw £500 at your debts in 10 MONTHS you will be debt free.:j

If you can post an SOA ppl can advise you in areas you maybe able to cut back on.

Also I suggest a spending diary for you and your OH.

Best,

Pauper_Princess

Thank you Bestthingsinlifearefree!!

Written down it looks madness to keep a savings account when you have debts - I'm so relieved that someone sees my point of view!! The money's in an ING account - not sure why I didn't put it into an ISA. At the time the ING account was really good interest, but I'm not sure how it compares now...

I haven't registered with any agencies yet, I think that would be a good idea, and just ask them to keep me on a "back burner" so to speak in case the worst does happen.

With the Egg card - I've considered taking out a balance-transfer card, but I've only just (September) taken out the Sainsburys cc and the interest-free on the laptop. I'm worried that I'll be turned down for a BT card as they might think I've applied for too much recently? I did wonder about getting a card in hubby's name, as these are all in my name, but would we still run the risk of being seen to have too much credit in too short a space of time - ie would they see my cc's if he applied in his own name?

Thanks for your post. Trying not to panic but it's not easy!!!

Bestthingsinlifearefree

Hi PP,

This is a good starting point.

http://forums.moneysavingexpert.com/showthread.html?t=107280

I would keep the 4K in ING or an ISA (maybe try Britannia, the rate is about the same as ING but you don't lose the tax like you do with ING and you still have instant accesss for your money).

My logic for keeping the cushion is that if you lose your job it will pay the mortgage for 10 months or so (where if you use it to pay your debts, you have no safety net).

As I say once you start budgetting, you should be able to SAVE 5K in 10 months (based on the info you have given so far).

I will PM (private message) you with a couple of job hunting sites in case the worst happens.

Look forward to seeing the SOA Then we can advise more.

Pauper_Princess

Hi again BTILAF!!

My SOA - does that just mean the monthly incoming and outgoing I've seen in other peoples' posts? I'm ashamed to post it actually! I KNOW there are loads of ways to cut back

Income:
Me (after tax) 1,540.00
Hubby (after tax) 1,000.00

Total income 2,540.00

Outgoings:
Mortgage 485.18
Council tax 99.00
Life insurance 52.89
ASU insurance 19.50
Pension 159.85
Northern Rock loan 187.09
Gas 43.00
Electricity 36.00
Water 46.20
BT (landline) 19.00
Mobile phone top ups (hubbys... grr) 30.00
Gym - joint membership 86.00
Denplan (dentist fee) 9.50
Sky (!!!!) 43.50
Specsavers 8.00
BT internet (hubby again....grrr) 27.98
Hubbys online game subs 8.99
Put aside for laptop 113.00

Total of all direct debit payments each month: 1,474.68

We have 2 cars - hubby's a postie and needs to be at work - 7 miles from home - by 5am, and I need a car to work out at clients' quite often. I've tried getting up at 4.30am to take him to work but by 10am I'm nearly asleep

My car costs:
Road tax 110.00 p.a. 10.00
MOT/repairs say 200.00 p.a. 20.00
Insurance 174.00 p.a. 14.50
Petrol 50.00
AA 131.00 p.a 11.00

Total costs of my car 94.50

Hubbys car:
Road tax 180.00 p.a. 15.00
MOT/reps say 200.00 p.a. 20.00
Insurance 189.00 p.a. 15.75
Petrol 70.00

Total costs of hubbys car 120.75

Annual expenses:
TV licence 131.50 p.a. 11.00
Buildings and contents insurance 258.25 p.a. 22.00
Burglar alarm maintenance 82.25 p.a. 7.00
ICAEW subs 252.00 p.a. 21.00

Total annual expenses each month 61.00

Food etc
Supermarket, say at 60.00 p/w 260.00
Hubbys football 35.00

Overall total outgoings each month 2,045.00

This should leave us nearly £500 a month to pay off cc's etc. This never works though - we spend an absolute fortune on utter, utter rubbish (we spend a shocking amount on nice food each week).

I just want to point out a couple of things in our expenses:

Denplan dentists fee £9.50 per month - this covers checkups, fillings, hygienist etc. It also forces me to go!

Gym membership - can't cancel until 12 months is up next May (!!!!)

Sky - hubby flatly refuses to get rid of Sky Sports

Internet - been on at hubby for past 3 months to switch provider, still waiting for him

ICAEW subs £252 a year - have to pay this to remain a member of the Institute. Work will not pay it for me.

Could go on for ever but this is getting me more and more wound up!

Basically all our money problems come down to an immature husband and my being too pathetic to stand up to him and say No. I'm so pathetic.

Bestthingsinlifearefree

Hi PP,

You are not pathetic, you are doing a great job !!

That's a massive step forward posting the SOA.:T

Firstly the Sky. I think it is possible to cut down the package BUT keep sky sports.

Or tell hubby sky goes and comes back when the debts are gone.

Me and Mrs Bestthings cut the sports and movies and got sky down from £42 to £21 (there is plenty of football etc on BBC / ITV).

GYM needs to go.

Life insurance seems expensive, is this essential (e.g you have no dependents).

Maybe you are over insured ? Maybe you just need enough cover to cover the mortgage, if one of you dies.

what is ASU insurance ????

Is membership of the ICAEW essential ? What do you get from that ? (seems expensive)

There is nothing in your SOA for birthdays, christmas and holidays.

Did you spend nothing on birthdays, christmas and holidays in the last 12 months ?;)

Ok your hubby is not to motivated at the moment, you need to sit down with him and have a big, big financial heart to heart and explain how the families financial security is very import and you want to tackle this together as one team, one plan, one strategy.

There have been threads on here in the past re what to do about partners who are not helping reduce debt etc etc maybe look them up for advice or begin a new topic re this subject.

£30 on mobile calls seems alot. Pay as you go essential / emergency calls only
you should not spend more than £10 per month.

£500 seems to be disappearing each month.

where ?? chinese or magazines or beer ?? Both need a spending diary.

There are lots of tips in the money saving old style about cutting down on food spending. You can take control of the food budget, meal planning etc etc

Did you get my PM re job sites to look at (to collect your PM's look in the top right hand corner of the screen, where it says, Private messages and click on there.)

Keep up the good work and I reckon you can be debt free in 10 months.

Lots of small changes, consistently.

Fight for and watch every penny:T

Best,

tyllwyd

Looking at your SOA, it's pretty obvious that if you can't find another job, you are going to have to make some drastic cuts.

I think you need to start a spending diary, to make sure that from now on you don't 'lose' your spare £500. If you could manage to keep back at least £200, that would be a start towards your debts.

You are paying quite a lot into your pension. Would it be worth thinking about stopping that now, and re-starting when your job situation sorts itself out?

Pauper_Princess

Best,

Life insurance is expensive due to a medical condition which has raised the premium until 3 years all-clear given

Can't cancel gym until next May - let myself get talked into signing up for a 12 month contract. I've looked on other sites about this and it seems there really is no way to cancel (Note to sensible folk: don't join Bannatynes)

The ASU insurance is Accident Sickness Unemployment Insurance - why did I forget about this? It pays out a percentage of my wage if I lose my job - however I think it's only about £700-800 ish (gaah! Need to check) but doesn't kick in for first 3 months. So I'd still have 3 months of no income at all.

ICAEW I have to pay to retain my membership - without this I can't put my qualifications on my CV so I'd be well scuppered!!!

£30 on hubbys mobile - as well as texting all his friends with stupid things, he manages 2 football teams and spends a lot of time texting the team to rounf them up each week

tyllwyd - I've been thinking about my pension. Not sure how to go about reducing my payments...

Bestthingsinlifearefree

To be honest I would get rid of the ASU by the time it kicks in, you probably would have got another job any way.

Also I would get rid of the life assurance as well, you both have no dependents and can work therefore it is not priority.

(just my personal opinion, others may have another view, I can afford to have both but me and MrsBest have neither).

Can your hubby get over time e.g christmas coming up.

Limit presents to each other to £20 or something.

Did you get the PM ? (just checking you have the hang of the system).

Best,

tyllwyd

Hmm, your OH's hobbies are quite expensive when you add them all up ...

£43 half of the gym membership
£43.50 Sky
£35 football
£8.99 online gaming
£15 (say) on phone expenses for football team
£10 you are paying extra by not switching to cheaper internet service

I make that £156 per month. I guess that is OK as long as you have two incomes coming in, but it will be a lot if you do lose your job.