Struggling with bills, is there light at the end of the tunnel?

thesealeyboy

Hey, i've had a quick scan over a number of threads in this part of the forum, although not all. I have found myself in quite a tricky situation, I lived with my gf for 18 months, a large part of which she was unemployed. As a result pretty much most things like rent bills etc came from my salary.

I now find myself single and living alone (which is great don't get me wrong!) but struggling each month, knowing that I will get paid, my bills and rent will go out and then im left with just enough to go food shopping. I have a part time job at a hotel usually just working a Saturday night, which is good as it provides me with money for petrol for my car, and the bonus is that it's weekly paid.

I bought a new car back in June on HP - biggest mistake of my life, and i'm paying an extortionate amount of money each month for it. I have been crying out for a way out of it ever since. My prayers were answered, well kind of, in December when a bad accident wrote my car off, but due to the fact I had ignored the need for GAP Insurance when I bought the car, I am now left with approx £1900 outstanding with the finance company which continues to be paid off at the normal monthly payment. The good news is that I will be shot of it by Christmas, at least that's what I keep telling myself to keep me from going insane. So, due to being car-less, I purchased another car, somewhat cheaper this time, ie £100 and that is no joke, granted its costing me about another £100-150 to get it through the MOT next week, but this is still way less than one monthly payment for my old car. The way I see things now is that a) it starts b) it gets me to work c) it gets me home. 'Job's a good'un'

I also have two credit cards, both maxed out at £1k each, which I am now paying for £50 a month onto each, and then I vowe to never use one again. I fell seriously behind on payments to both of these cards, and one was threatening CCJ action etc and has now been closed, however the other appears to be a bit more lenient (spelling?) after speaking to them on the phone and agreeing to make these regular monthly payments. So with all of the above, and my bills, things look like this:

Take Home Pay: £1074

Rent: £425 (water rates included in this)
Car: £294
Credit Card #1: £50
Credit Card #2: £50
Sky: £19.50
Mobile Phone: £30-40 (roughly)
BT Landline: £30 (roughly)
Broadband: £23.44
Council Tax: £87
Electric: £20
TV License: £30 (currently, soon to be £10)

Those of you good at maths will see that my limit is soon reached, take into account about another £80-100 a month from working at the Hotel on Saturday night and that's me done!

How is it that I know of people who earn less than me, can go out to the pub or round town EVERY Friday and Saturday night and yet seem to always have money?

I admit, i've never been any good with cash, and granted yeah I could knock sky down to a smaller package, but that is realisticly onyl going to save me about £10-12 a month.

I have set myself some targets, as this was the only way I could see myself staying sane:

1) Pay £50 off each of my two credit cards until the balance is ZERO
2) Pay off outstanding finance for car
3) Buy a house!

I really would like to buy my own place, as I can clearly see that renting is costing me and I get nothing back from it, but everywhere I seem to look I am worried about either not having enough or any cash for some sort of deposit, or being turned down due to my credit rating situation. Can anyone offer any advice or knowledge for a first time buyer who isn't in a very good financial situation?

I can see that once my car finance is clear, which hopefully will be by december, then things will start to improve. The contract for my house is up for renewal in June, and I am quite reluctant to commit myself to another 12 months worth of £425 when it could be going towards a mortgage.

Am I doing something seriously wrong here, or are things not quite as bad as I am imagining them to be?

Apologies for the length of my ramble, it's late and i've had a bad day, although even on good days, this is never to far away from my every thought.

J

cath-w

Hi there,

Just wanted to post and offer a bit of help to hopefully cheer you up a bit. You say

' I could knock sky down to a smaller package, but that is realisticly onyl going to save me about £10-12 a month.'

However, if you combine this with other small savings it will soon add up. If you got rid of Sky, and the mobile phone and got rid of the broadband then you would save approx. £78.00 a month. This would mean that you could more than double the payments on one of the credit cards and pay it off much quicker. You could also have a small amount of money to go out to the pub now and again too. Check to see if your local library offers free internet access. OK, so not as good as having broadband at home, but it will help you save money.

Keep the long term goal in mind of buying a house to help you get through. It will be possible to do. You are used to paying for the car loan and so once paid off this can translate into savings for a house purchase.

We used to have an overdraft and two credit cards many years ago. We sorted things out and since then have been able to live abroad for several years, I gave up work and went back to Uni and got a degree, we have had some nice holidays and we are now buying a house. Like you I also worked in pubs and nightclubs to bolster our income. They only reason we have been able to do a lot of things is that we still scrimp and save even on two incomes. We do not go out every weekend and I buy most of our clothes second hand. We did not go on holiday last year and this year it will probably be a week in a cheap caravan somewhere for a bit of a break. The next holiday may be in 2007 after that even though we could afford a big holiday now. However, we plan to pay our house off in about 7-10 years by over-paying the mortgage and once we make a significant dint in the mortgage we are going to go on a fantastic holiday somewhere too.

Many people who got out and seem to have endless money in reality do not. Many people I know go out twice a week to the pub, buy sandwiches for lunch and many new clothes. They then say they cannot afford to buy a house, but if they spent less on such items then they could soon save for a deposit. Boring I know, but a very good long term goal to have.

Just keep going and keep smiling. The short term pain will be worth it in the end.

C.

lady_noluck

You should be able to get a council tax discount if you're living on your own. I think it's about 45%.

As for your mobile, could you either change to payg or if you're on contract a lower priced tariff. I'm with O2 and pay £30 monthly including 200 mins of free calls. This leaves me with just line rental to pay BT ( roughly £30 a quarter). If you do need to use your landline for calls check uswitch.com for cheapest call provider. And check websites like confused.com to make sure you're paying the cheapest car insurance. (Sorry, I don't know how to put the links in.)

Also start a money diary, writing down every penny you spend. Spending a few of pounds here and there on things you don't need really adds up at the end of the month. Make food at home instead of buying out, read newspapers on internet ( free internet of course!) etc etc. There's loads of ways to cut back on this site, and you'll be surprised how much you save.
How about selling some stuff you could live without on ebay or do a car boot sale?

And i'm sure everyone will tell you this but always use the extra money you save to pay off the debt with the highest interest first.


I was one of those people who had a morgage and went out every weekend, spending loads of money. That how I ended up £13000 in debt!
Don't let these people get you down, you never know how much debt they're in. It's depressing to see people going out having fun all the time and knowing you can't afford to do it too, but a few years down the line they could still have serious finiancial difficulties whilst you're debt free and enjoying life.

National Debtline and CCC both told me 8 months ago to plead bankrupcy as I had a deficit of £700 each month but by cutting down to real basics I'm just about managing. So if I can do it, I'm positive you can!
Good luck!

Conor_3

OK...

You've only got a few things that you can juggle with.

1) Mobile phone.

Go onto 3. It really isn't that bad and is the cheapest around. Carphonewarehouse.com are doing a special offer of a LG U8138 with 500 minutes X network and 100 texts a month for £9.99 a month for the first 6 months. It then goes up to £30 a month.

2) Sky TV.

You really don't need it. Cancel your subscription. The card can still be used to view Free to View channels. If you want films to watch, take a look at the Blockbuster online DVD rental package..£13.99 a month for all the DVDs you can watch.

3) Broadband.

Unless you are doing alot of downloading, speed isn't an issue. There are now plenty of ISPs doing packages for under £20 a month...some as low as £15. See https://www.adslguide.org.uk for more info.

paint

lady_noluck wrote:

You should be able to get a council tax discount if you're living on your own. I think it's about 45%.

Yep, you definitely get a discount - it's 25% if you live alone.

Malestrom

I would agree with the above posts. You need to cut back some of your outgoings. Your car finance ends at Christmas so you could use this as your milestone. Cut back on everything you can until then. Use the money saved to pay off the two credit cards as at your current payment amount it will take at least 20 months to clear them.

CopperPlate_2

J

You've probably heard a lot of what's been said before - although it's probably easier to ask for advice here, anonymously (sort of), than talking to friends or relatives!

The main thing is to prioritise what you MUST spend on the various outgoings ie. rent, mandatory bills like electric or gas, council tax, car running costs (I'm assuming that you absolutely need the car?), etc. and then look at the 'non essentials' like, (sorry!) Sky, Broadband, Mobile phone.

Lose the Sky - I know it's nice to watch the latest films and the choice of telly on Sky is huge compared to the Beeb or ITV, but at the end of the day, if you're working, getting home and chillin out, hiring a DVD or video every now and again is a far more controllable way of spending as opposed to the Direct Debit method where the money just comes out of the account and lethargy prevents you from cancelling it. It's the old 'gym membership syndrome'!

Convert your mobile from contract (if you're outwith your contract period, otherwise you'll have to stay put until it's finished I think or they'll charge you up to the end of it) to PAYG. You can see on this site that there are often heaps of free giveaway SIMS for O2 and even Orange has started doing it too. With Orange there is no minimum top up every month either, and you can top up with a fiver if you want to.

Shop around for car insurance - go to some of the supermarket sites, Tesco, Sainsburys, as well as the usual suspects like the AA, and the insurance companies. If your car is old, then I don't know if fully comp would be the best option, probably just 3rd party which will keep the cost down too.

You should get a discount of 25% off your council tax (and I don't know where you live, but our local council only takes 10 payments a year and doesn't take anything for February or March - if that's the same for you, put that money aside towards paying off your credit card bills/car loan, or repairs to the car if you really need it, but probably better to clear the most expensive debt first IMHO).

If you really need your car - then try and put, even 20 quid a month away into another account - that's £240 a year which would go towards your MOT and road tax which can be fairly big outgoings.

Lose Broadband (again only if you are outwith your contract period or you'll probably get charged for the remainder) - go back to dial-up Anytime, or shop around for the cheapest Broadband deal if you really can't live without it.

Move your bank account to an online provider like Cahoot (or see the best buys on this site) - look at opening a high interest savings account to put ANY savings you might have into it (Cash ISA's etc - again see the best buys on this site for more info)

You've obviously made a start by sitting down and writing out your outgoings, and income - I know it's not always a very nice process when you suddenly think, "hang on a minute, I'm spending more than I'm taking in" and you re-check the sums thinking it's a miscalculation!

The main thing I'd say is that it's all about control. If you get control over what you are spending, then you will stop the outflow being quite so fast.

And another thing - when you look at other people and see them going out, spending money like it's going out of fashion, ignore it. I had friends who bought everything on Buy Now Pay Later terms: a new car, PC, video camera, leather suite, holiday, clothes. One of them worked part time and the other full time and neither were stellar earners. They didn't grudge themselves anything - and me and my wife (on modest earnings, but still earning more than them both) sat and felt inadequate because neither of us wanted to put ourselves into huge debt just to feel that we were keeping up. Needless to say their house of cards came down about them after a couple of years and we're no longer friends which is a shame. And we got blamed - they wanted a nice lifestyle where they were happy and didn't have apparent pressure and thought that spending their way out of it was the answer.

I've gone off an a bit of a tangent here!!

Cut up the credit cards - take out a weekly cash allowance (a reasonable one, don't go overboard on cutting back or you'll find it's too hard after about a fortnight and go mad, splurge on your account and end up miserable so you'll go and buy yourself something to cheer yourself up...) Give yourself a reasonable amount to live on each week - spend cash, don't use debit purchases because you'll lose track of what you spend. It's harder to hand over a £20 note for the takeaway from M&S than the debit card for the same amount.

If you can, open a budget account and transfer all your direct debits into it, then work out how much each month you need to pay in to cover all the debits. What's left in your main account, work out how much you need each week for food, etc and variable things. Open a couple of savings accounts so you can even put a tenner a month away for Christmas presents (if you buy) or things you know that you will have to fork out for.

At the end of the month, see what you have left in your main account and, if you can REALLY afford it, save a proportion of it, and, if you want to treat yourself to a CD or something relatively small then go ahead. Remember you have to live a life as well!

Don't go mad on the cutbacks - a little at a time to start is better than going mad!

Hope the above ramble helps you - just remember that "none of it constitutes financial advice" and it's only my own personal opinion and what I've tried myself to keep on the financial straight and narrow!

CP

thesealeyboy

Hi Guys

Thanks to everyone that's had their 2 pence worth above, much appreciated.

Since my post another debt has reared it's ugly head, council tax, due for this financial year, and my local county council have apparently sent me numerous letters and court summons, basically now, they want the full amount of £670 by the end of march - not going to happen!.

I have been in touch with Baines and Ernst about a Debt Management Programme, I spent a good 30 minutes yesterday afternoon on the phone to one of the guys there, with a confirmation call coming tonight to set the ball rolling.

Has anyone got any good knowledge of these Debt Management Programmes? They are basically proposing to 'act on my behalf' with regards to my outstanding car finance, my two credit cards, my council tax and my overdraft on my current account.

All in all my debts add up to roughly £5000, and to be fair I think my credit score is shot to pieces as I have even been turned down for a 'been refused credit elsewhere?' loan. So what they have suggested, after taking into account all my libing expenses such as rent, electric food, clothes etc that I will pay them £120 a month. If i get any letters, correspondance or calls from CC companies or car finance peeps I am to inform them that B+E are 'acting on my behalf' and pass the details on. It seems good in a way, because, although I appreciate it will take longer for me to clear these debts it is going to relieve the majority of stress from my life, and ill know that 'technically' once I have completed this I will be back to square one in effect.

Has anyone got any experience of this kind of arrangment? Is it too good to be true? Are there pot holes I need to watch out for? Is this the right option for me (as best you can tell anyway) and will it have any effect on me applying for a mortgage in say 6-12 months time?

J

SomeOne_2

If you take the Baines and Ernst route, you'll probably make things worse for yourself. they take a cut for themselves.
You're better off going somewhere free e.g. Citizens Advice Bureau.

Malestrom

No, No, No!

Baines and Ernst and is a commercial debt management company, they want your first months payment to line their pockets and then they'll charge you 17.625% of every payment you make. Go to either National Debtline or Consumer Credit Counselling Service who will do EXACTLY the same job but for FREE!

Justin_Credit

thesealeyboy,

STOP & LISTEN to what has been said here, especially to what Malestrom has posted.

Please read these forums more thoroughly and you will find that what has been said on this thread is echoed all over with regards to debt problems.

I shan't offer any further in the way of ideas but whatever you do DONT go down the B & E route it will only cost you money that you haven't got.

Sorry if this sounds a little blunt in it's approach but am only trying to stop you making a big mistake.

Regards

JC