Advice please.

robdav99

Hi all, thought I would create a post here as it is about time I tried to fix the mess I got myself into when I was younger.

Sorry for the essay but I am just trying to get things striaght in my head aswell as painting a full picture for you.

I'm 24 and have quite a bit of debt.
It is mainly from being stupid as an 18-20year old wanting a couple of nice cars so I have a large loan with natwest it was a £15,000 over 10years, the balance around £11000 now.
I also have a Mortgage which is 5years and 8months old and the balance is £83582 but for reasons unknown to me it is split up into a £71205 mortgage and a £12377 unsecured loan both with NorthernRock.
I have a Natwest CC that is currently at £1390 and I pay about £60pm on that, more if I have spare money.
I also have a loan with GE Money which I am sure I was pressured into by a very aggressive double glazing sales man, the amount borrowed was approx £4500 iirc but it is £84pm for 120months = £10080 if I let it run its course, balance is currently £3496.
I also have 0% loans for Laser eye surgery for the wife and a new sofa, £1773 and £1000 respectively.

Everything get paid on time and I have never missed a payment.

I am 'happy' with most of the debt but the CC and the GE Money ones really annoy me due to the high interest rates.

The problem I am having is that I have applied for lower interst credit (0% balance transfers or high street un-sec loans) to pay off the high interest credit but it seems no-one will touch me with a long pole, due the amount of debt I am in already.

After the latest loan rejection, I got a call from a company called Debtfreehelpline and the woman on the phone told me she could make me debt free in less than 5 years and it wasnt an IVA, wouldnt affect my credit rating at all but I would have to close my Natwest current account.

I am just so confused as to how to proceed so any advice would be [FONT=&quot]appreciated[/FONT] and thanks if you have managed to read all that whinging.

Rob.

As per the advice from the main site I have done a SoA as follows:

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.................... 2

Monthly Income Details
Monthly income after tax................ 1390
Partners monthly income after tax....... 1050
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2440

Monthly Expense Details
Mortgage................................ 495
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 75
Electricity............................. 20
Gas..................................... 48
Oil..................................... 0
Water rates............................. 39.5
Telephone (land line)................... 13
Mobile phone............................ 35
TV Licence.............................. 12.37
Satellite/Cable TV...................... 0
Internet Services....................... 15
Groceries etc. ......................... 140
Clothing................................ 10
Petrol/diesel........................... 240
Road tax................................ 30
Car Insurance........................... 80
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 10
Contents insurance...................... 9
Life assurance ......................... 19
Other insurance......................... 35
Presents (birthday, christmas etc)...... 10
Haircuts................................ 5
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1400.87


Assets
Cash.................................... 0
House value (Gross)..................... 95000
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 0
Total Assets............................ 98000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 71205....(495)......4.79
Total secured & HP debts...... 71205.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Natwest Loan...................10947.....190.6.....8
Natwest CC.....................1389.19...33........17.9
GE Money Loan..................3496......83.83.....22.5
Sofa...........................1000......83.33.....0
Laser Eye......................1773......110.......0
Mortgage Unsecd Loan...........12377.....55........4.79
Total unsecured debts..........30982.19..555.76....-


Monthly Budget Summary
Total monthly income.................... 2,440
Expenses (including HP & secured debts). 1,400.87
Available for debt repayments........... 1,039.13
Monthly UNsecured debt repayments....... 555.76
Amount left after debt repayments....... 483.37

Personal Balance Sheet Summary
Total assets (things you own)........... 98,000
Total HP & Secured debt................. -71,205
Total Unsecured debt.................... -30,982.19
Net Assets.............................. -4,187.19

CH27

Do you actually have the £483 left at the end of the month?

Keep a detailed spending diary & you will soon see where you are frittering cash away.

You need to throw as much money as possibke at the Nat West credit card to get that cleared.

You will possibly have been refused a loan as your income/debt ratio is high.

bottleofred

Hi Rob I've put some thoughts below. Regarding the IVA, I don't know too much about them, but I'd be AMAZED if it didn't affect your credit rating and think the company were spinning you a line to get you signed up. If you did want to do anything, I'd consider a debt management plan with the consumer credit counselling service or other non fee charging company and definitely would not pay any of these companies for the service. As you have over £400 left per month, I'd definitely suggest throwing the extra money at the debts and particularly the ones that cost the most (GE Money!). If this figure is not actually left though, I'd start spending diarys and record absolutely every penny you spend.

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.................... 2

Monthly Income Details
Monthly income after tax................ 1390
Partners monthly income after tax....... 1050
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2440

Monthly Expense Details
Mortgage................................ 495
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 75
Electricity............................. 20
Gas..................................... 48expensive, can you look into a combined electric and gas combination with any companies?
Oil..................................... 0
Water rates............................. 39.5
Telephone (land line)................... 13
Mobile phone............................ 35expensive. a pay as you go would cost around £10 per month
TV Licence.............................. 12.37
Satellite/Cable TV...................... 0
Internet Services....................... 15can you get this combined with the land line for the phone for a better deal
Groceries etc. ......................... 140
Clothing................................ 10
Petrol/diesel........................... 240
Road tax................................ 30
Car Insurance........................... 80very expensive. consider shopping around for a better deal
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 10
Contents insurance...................... 9
Life assurance ......................... 19
Other insurance......................... 35
Presents (birthday, christmas etc)...... 10
Haircuts................................ 5
Entertainment........................... 50consider halfing this. Nobody expects you not to go out, but you could try reducing it.
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1400.87


Assets
Cash.................................... 0
House value (Gross)..................... 95000
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 0
Total Assets............................ 98000


Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 71205....(495)......4.79
Total secured & HP debts...... 71205.....-.........-

Unsecured Debts
Description....................Debt......Monthly.. .APR
Natwest Loan...................10947.....190.6.....8
Natwest CC.....................1389.19...33........17.9
GE Money Loan..................3496......83.83.....22.5I would try to clear this asap due to the interest
Sofa...........................1000......83.33.... .0
Laser Eye......................1773......110.......0
Mortgage Unsecd Loan...........12377.....55........4.79
Total unsecured debts..........30982.19..555.76....-


Monthly Budget Summary
Total monthly income.................... 2,440
Expenses (including HP & secured debts). 1,400.87
Available for debt repayments........... 1,039.13
Monthly UNsecured debt repayments....... 555.76
Amount left after debt repayments....... 483.37

Personal Balance Sheet Summary
Total assets (things you own)........... 98,000
Total HP & Secured debt................. -71,205
Total Unsecured debt.................... -30,982.19
Net Assets.............................. -4,187.19

katsu

The debthelpline person was not being realistic. Dont take her advice at all.

robdav99

CH27 wrote: »

Do you actually have the £483 left at the end of the month?

Keep a detailed spending diary & you will soon see where you are frittering cash away.

You need to throw as much money as possibke at the Nat West credit card to get that cleared.

You will possibly have been refused a loan as your income/debt ratio is high.

I wish we did have that much left over at the end of the month, but I am not sure where it goes I do need to start being abit tighter with money.

Would getting a remortgage that included the whole amount help? That would effectively take away £12377 of unsecured debt on my credit record, I don't even know why it has been done like that.

thanks for all the advice bottleofred I will look into it.
Mobile, internet are contracts at the mo so stuck in those. Car insurance is all as cheap as I could get it, £40pm for each car is not bad for me and my wifes age, and both cars are needed unfortunatly.

I agree the CC and gemoney need sort first hence the balance transfers and lower intrest loans I have been trying to get but I'll just have to pay more into them when I can.

katsu

I'd focus on getting bank statements/keeping a spending diary and coming up with a realistic SOA to see how to manage your debts.

We generally recommend against putting your debt into your mortgage as it costs you a lot of money over 30/whatever years and probably 95% of people go out and get into more debt. If you clear your debts instead of adding to them you tend to be better off in the long run.

And seriously -that debt helpline were out to make money from you by telling you something that was as true as if I tell you that the tooth fairy exists.

If you need debt help you get advice from CAB, Payplan, CCCS or Christians Against Poverty.

robdav99

katsu wrote: »

We generally recommend against putting your debt into your mortgage as it costs you a lot of money over 30/whatever years and probably 95% of people go out and get into more debt. If you clear your debts instead of adding to them you tend to be better off in the long run.

I'm not planning on putting anything extra into my mortgage..
for some reason my £93000 mortgage was split into a £74400 mortgage and a £18600 unsecured loan both for 25years I'm just wondering if merging them into 1 mortgage would make my credit report look abit better.

GeorgieFTB

robdav99 wrote: »

I'm not planning on putting anything extra into my mortgage..
for some reason my £93000 mortgage was split into a £74400 mortgage and a £18600 unsecured loan both for 25years I'm just wondering if merging them into 1 mortgage would make my credit report look abit better.

It sounds similar to a together mortgage, NR basically sold you a smaller than needed mortgage and a loan so that the mortgage looks more affordable. It was how some people managed to get 125% mortgages, a relative got one and is now so far into negative equity they can't see the wood let alone the trees!

You're best bet is to run a spending diary for at least a month, this will tell you where your SOA is optomistic, everyone does it, my weakness is the local shop... I pop down to get some milk and end up spending a fiver on 'stuff'!:eek:

Once you know your situation you can then take charge of it, use the snowball calculator (on the same site as the SOA) to work out where to throw the money and how long it will take you to pay off.

Gx

bottleofred

Hi Rob,

I really don't recommend you consolidating the debts, as debt consolidation only works for approximately 10% of people who try it and I wasn't one of them. The money is obviously going somewhere, so you should both keep spending diaries (small notebooks are available from the co-op for less than £1 each) and put absolutely every penny you spend into them (including items that cost less than 50p etc, EVERYTHING!). Once you have done this, you will become more aware of where the money goes and what is actually left each month.

Good luck

Red

broady70

Hello,

I had the same deal with Northern Rock. We took out a 100% mortgage and it was split the same way. I think it is done in case the value of houses fall and the mortgage is defaulted on. This would allow the house to be sold and the mortgage fulfilled leaving you with the unsecured loan still to be paid.

We moved from Northern Rock 2 years ago and the new mortgage company would only take on the mortgage not the 25 year loan. We ended up taking out a personal loan with the bank and that will be paid back over 7 years. Its bigger payments per month but will clear the mortgage a bit quicker.

A spend diary is brill but scary, I know even take a flask to work!! It worked out at about £250 per year.

Pollycat

robdav99 wrote: »

After the latest loan rejection, I got a call from a company called Debtfreehelpline and the woman on the phone told me she could make me debt free in less than 5 years and it wasnt an IVA, wouldnt affect my credit rating at all but I would have to close my Natwest current account.

Rob
you might find this thread about Debtfreehelpline interesting.
https://forums.moneysavingexpert.com/discussion/1046625

How did they get your number?

You seem to have quite a bit of money left over at the end of the month, you really need to find out where that surplus goes.

You and you wife need to keep a spending diary and write down EVERYTHING that goes out of your wallet/purse that isn't covered in your budget.

That means newspapers, glossy mags, takeaways, coffees from Starbucks etc, even an extra pint of milk or loaf of bread from the corner shop, birthday cards, collections at work, new lippy/eyeshadow from Avon - the list can be endless.

Then you can re-do your SOA to accurately reflect your income/spends and start changing your spending habits.

Although some people won't agree, I think £140 pm on groceries for 2 young people who both work might be a bit on the low side, unless you cook from scratch, bulk cook and buy reduced items.

Once you know your surplus, you can start overpaying on your credit card and loan (assuming there isn't a penalty for doing that - check it out).

Your 2 highest interest rate debts (Natwest credit card & GE Loan) total just under £5000 - with almost £500 a month spare you could clear them in less than a year.

When do you finish paying for your sofa?

£39.50 pm water rates seems high.
We pay £20.00 per month on a meter and there are 2 people at home most of the day (retired).

Just noticed:
the monthly payments for the GE loan and sofa are exactly the same amount - is this correct?