£20,000 debt

Stitchlover1

I have posted in the credit cards forum, but have been told to come over here for help and advice. Here is my original post....

Me and my partner are currently in £20,000 debt over 6 credit cards. Only one of them is on interest free. We are currently paying around £700 in minimum payments. Ive looked at a loan over 5 years and we would pay about £400 a month which obviously would be a fantastic saving. Another thing we have to worry about is that we have a 120% mortgage and it is due for renewal in Sept 2012. Would we be frowned upon for getting a loan for 20k - should we wait until after we remortgage ? Im just really not sure what to do at the moment, and I have missed a couple of payments on one of the credit cards. Please help, any comments (constructive of course) are much appreciated.

If anyone can give some advice it would be much appreciated.

Tixy

Hi

Regardless of the mortgage issue you will probably struggle to get a loan of £20k. If you could get one I don't think it would be at a rate of 8% (which would equate to the £400/month).

With a consolidation loan any potential lender will view this as additional credit on top of the existing debts you have (as you might not use the money for consolidation, or might run the debts up again). Therefore they'd only consider lending to you if they thought you could manage the repayments on the new loan on top of all your existing debts/commitments. If you are struggling just to meet your current payments they are not going to think you will be able to pay off a new loan as well.
And as you have already missed a couple of payments on a card this will pretty much confirm it to them.:(

Really you need to be looking at other options to start reducing your cards down. If you can post up a statement of affairs of your current position people should be able to advise better as to where you can maybe save money/get things cheaper/cut back and be able to suggest what other options might be available to you -this is the link to the statement of affairs - http://www.makesenseofcards.com/soacalc.html
and then people should be able to offer you some advice

Stitchlover1

Here is my SOA.... makes for sad reading I think

Statement of Affairs and Personal Balance Sheet[/b]
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2


Monthly income after tax................ 1283
Partners monthly income after tax....... 1383
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2666

Mortgage................................ 832.2
Secured/HP loan repayments.............. 189
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 76
Electricity............................. 22
Gas..................................... 22
Oil..................................... 0
Water rates............................. 28
Telephone (land line)................... 18
Mobile phone............................ 60
TV Licence.............................. 12
Satellite/Cable TV...................... 80
Internet Services....................... 0
Groceries etc. ......................... 250
Clothing................................ 15
Petrol/diesel........................... 200
Road tax................................ 20
Car Insurance........................... 137
Car maintenance (including MOT)......... 12.5
Car parking............................. 10
Other travel............................ 160
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 1.8
Pet insurance/vet bills................. 26
Buildings insurance..................... 16
Contents insurance...................... 16
Life assurance ......................... 11
Other insurance......................... 27
Presents (birthday, christmas etc)...... 16
Haircuts................................ 16
Entertainment........................... 15
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2288.5

Assets
Cash.................................... 0
House value (Gross)..................... 108000
Shares and bonds........................ 0
Car(s).................................. 7500
Other assets............................ 0
Total Assets............................ 115500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 128000...(832.2)....6.9
Hire Purchase (HP) debt ...... 5500.....(189)......0
Total secured & HP debts...... 133500....-.........-
Description....................Debt......Monthly...APR
Barclaycard....................8112......186.......0
MBNA...........................5563......232.......0
MBNA...........................3063......75........0
Natwest........................2688......56........0
Egg............................1680......44........0
Tesco..........................2075......44........0
Total unsecured debts..........23181.....637.......-

Monthly Budget Summary
Total monthly income.................... 2,666
Expenses (including HP & secured debts). 2,288.5
Available for debt repayments........... 377.5
Monthly UNsecured debt repayments....... 637
Amount short for making debt repayments. -259.5
Personal Balance Sheet Summary
Total assets (things you own)........... 115,500
Total HP & Secured debt................. -133,500
Total Unsecured debt.................... -23,181
Net Assets.............................. -41,181
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.[/font]

ilovecheese

Hi Stichlover1

The two things that really stick out for me are:

TV. mobile phones. landline = 158 a month, can you downgrade your phones to Pay as go?

You have two cars that cost you £379.50 a month (assuming you own them outright and are not paying back finance on them) in addition to this you have £160 under other travelling costs. Do you need both cars? Can you get rid of one?

Good luck!!

Tixy

Hi

Well it looks like you have a shortfall of £260 a month, so you are going to need to look at every item to see what can be reduced to be able to get on top of your budget

I've put some comments below of things you could work on reducing or check if you can get cheaper.

Stitchlover1 wrote: »

Here is my SOA.... makes for sad reading I think

Statement of Affairs and Personal Balance Sheet[/b]
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2Monthly income after tax................ 1283
Partners monthly income after tax....... 1383
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2666

Mortgage................................ 832.2
Secured/HP loan repayments.............. 189
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 76
Electricity............................. 22
Gas..................................... 22
Oil..................................... 0
Water rates............................. 28
Telephone (land line)................... 18
Mobile phone............................ 60
TV Licence.............................. 12
Satellite/Cable TV...................... 80 can you ditch this altogether? or switch to the basic package which is around £20 a month?
Internet Services....................... 0
Groceries etc. ......................... 250 this is quite high for 2 people, even with pets, maybe try to reduce to £200 this month and then see if you can get it down further the following month. Try things like meal planning for the week before you shop and the drop a brand challenge. You will also find loads of tips on reducing this on the oldstyle board and the grocery challenge.
Clothing................................ 15
Petrol/diesel........................... 200 is this all essential driving? do you drive efficently, fill up at the cheapest places etc?
Road tax................................ 20
Car Insurance........................... 137
Car maintenance (including MOT)......... 12.5
Car parking............................. 10
Other travel............................ 160 what is this? ifs its communting for 1 of you could you get rid of one of the cars?
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 1.8
Pet insurance/vet bills................. 26
Buildings insurance..................... 16
Contents insurance...................... 16 shop around for B&C at renewal time, hopefully can get a bit cheaper given your house value
Life assurance ......................... 11
Other insurance......................... 27 what is this? is it required? is it a good price?
Presents (birthday, christmas etc)...... 16
Haircuts................................ 16
Entertainment........................... 15
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2288.5

Assets
Cash.................................... 0
House value (Gross)..................... 108000
Shares and bonds........................ 0
Car(s).................................. 7500 could you sell one
Other assets............................ 0
Total Assets............................ 115500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 128000...(832.2)....6.9
Hire Purchase (HP) debt ...... 5500.....(189)......0
Total secured & HP debts...... 133500....-.........-
Description....................Debt......Monthly...APR
Barclaycard....................8112......186.......0
MBNA...........................5563......232.......0
MBNA...........................3063......75........0
Natwest........................2688......56........0
Egg............................1680......44........0
Tesco..........................2075......44........0
Total unsecured debts..........23181.....637.......-

Monthly Budget Summary
Total monthly income.................... 2,666
Expenses (including HP & secured debts). 2,288.5
Available for debt repayments........... 377.5
Monthly UNsecured debt repayments....... 637
Amount short for making debt repayments. -259.5
Personal Balance Sheet Summary
Total assets (things you own)........... 115,500
Total HP & Secured debt................. -133,500
Total Unsecured debt.................... -23,181
Net Assets.............................. -41,181
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.[/font]

There are definitely some areas you could make savings, probably mostly in groceries and sky but I'm not sure you'll make up your fill shortfall from this.
Can either of you increase your income? second jobs or overtime?
Is your house big enough that you could have a lodger to help?
Aside from this or selling a car you might want to have a think about contacting one of the debt charities and perhaps considering if a DMP or even an IVA might be an option for you.

Stitchlover1

ilovecheese wrote: »

Hi Stichlover1

The two things that really stick out for me are:

TV. mobile phones. landline = 158 a month, can you downgrade your phones to Pay as go?

You have two cars that cost you £379.50 a month (assuming you own them outright and are not paying back finance on them) in addition to this you have £160 under other travelling costs. Do you need both cars? Can you get rid of one?

Good luck!!

Yes ideally I need to cut down the TV package, and this is something I am trying to "persuade" my boyfriend into - he likes the sports of course. Ive read in other threads that it would probably just be cheaper to give him fiver to go to the pub with !
With regards to the cars, one of them is on HP which is the 189 a month, the other one we own, but my boyfriends job means sometimes he has to get the train to work and other times he has to drive around to different places so we definately need the second car.

Stitchlover1

Thanks Tixy, ok so here is the replies...
Satellite/Cable TV...................... 80 can you ditch this altogether? or switch to the basic package which is around £20 a month?
Im looking into this as per my previous post, its difficult sometimes tho as we often stay in and this is our only "luxury" as such
Groceries etc. ......................... 250 this is quite high for 2 people, even with pets, maybe try to reduce to £200 this month and then see if you can get it down further the following month. Try things like meal planning for the week before you shop and the drop a brand challenge. You will also find loads of tips on reducing this on the oldstyle board and the grocery challenge.
Definately going to give this a try - thank you for the tip ! Im not very good with cooking but am going to try :-)
Petrol/diesel........................... 200 is this all essential driving? do you drive efficently, fill up at the cheapest places etc?
This is for the month and I travel around 50 miles per day, I generally always fill up at Tesco to try and get the points but understand that this isnt always the cheapest. I always run on red too so maybe this isnt very economical ?
Other travel............................ 160 what is this? ifs its communting for 1 of you could you get rid of one of the cars?
This is for when my boyfriend has to get the train, he works in retail and has to travel to different stores. In his usual store he gets the train at £160 a month, but then sometimes he has to drive across the North West
Contents insurance...................... 16 shop around for B&C at renewal time, hopefully can get a bit cheaper given your house value
I think my current contents is set at about 75,000 which I dont really need, so Im currently on MS.com looking for cheaper
Car(s).................................. 7500 could you sell one
Unfortunately no, there was talk a while back about my bf getting a company car but this never came to fruition, he just really needs to claim his expenses too.

A lot of the problem is, is that my bf buries his head in the sand, and he is the one trying to push into a loan now which I don't want to do. Plus whatever spare money we have he seems to squander on lunches and things, and is always right up to his overdraft by the end of the month.

Its come to the point now where we are paying around £700 a month in payments to CC and I feel in a deep dark tunnel just waiting for the light to appear.

Im trying to get a part time job as a singing teacher and going for an interview next week which would be an extra £150 or so per month

fd1972uk

Wow, that is one huge mortgage for a house of that value.

What is the term of the Mortgage? Could you maybe increase it and the cost will drop and let you maybe hit some of the other debt?

As said your sky/phones are very expensive.

One thing I also noticed, do you have your own money to play around with? Or is there nothing left apart from that? Have you took that into account also?

As said, the food bill is huge IMO, we're a family of 3 and are not far off £100.00 cheaper per month than yourself.

Your energy bills are really good too, is it a small house?


FD

looktothefuture

Stitchlover1 wrote: »

Here is my SOA.... makes for sad reading I think

Statement of Affairs and Personal Balance Sheet[/b]
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2


Monthly income after tax................ 1283
Partners monthly income after tax....... 1383
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2666

Mortgage................................ 832.2
Secured/HP loan repayments.............. 189
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 76
Electricity............................. 22
Gas..................................... 22
Oil..................................... 0
Water rates............................. 28
Telephone (land line)................... 18
Mobile phone............................ 60 (Can you reduce this/change the contract/Move to PAYG?)
TV Licence.............................. 12
Satellite/Cable TV...................... 80 (Can you reduce this/change the contract/Move to Freeview?)
Internet Services....................... 0
Groceries etc. ......................... 250 (You can reduce this - visit MoneySavingOldStyle board for cheap meal ideas. My bill for food a month is £175 for 2 adults and 1 child - also have 2 cats)
Clothing................................ 15
Petrol/diesel........................... 200 (Do you need 2 cars if you have additional travel expenses below? Temporarily Sorn the car to save on petrol for a few months!)
Road tax................................ 20 (Not every month? Is this amount realistic?)
Car Insurance........................... 137
Car maintenance (including MOT)......... 12.5 (Not every month? Is this amount realistic?)
Car parking............................. 10 (Is this realistic? Especially if you have 2 cars?)
Other travel............................ 160 (What is this for? Can you reduce this - Oyster card?)
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 1.8
Pet insurance/vet bills................. 26
Buildings insurance..................... 16
Contents insurance...................... 16
Life assurance ......................... 11
Other insurance......................... 27 (What's this for? Can you find the same insurance cover cheaper?)
Presents (birthday, christmas etc)...... 16
Haircuts................................ 16
Entertainment........................... 15
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2288.5

Assets
Cash.................................... 0
House value (Gross)..................... 108000
Shares and bonds........................ 0
Car(s).................................. 7500
Other assets............................ 0
Total Assets............................ 115500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 128000...(832.2)....6.9
Hire Purchase (HP) debt ...... 5500.....(189)......0
Total secured & HP debts...... 133500....-.........-
Description....................Debt......Monthly...APR
Barclaycard....................8112......186.......0
MBNA...........................5563......232.......0
MBNA...........................3063......75........0
Natwest........................2688......56........0
Egg............................1680......44........0
Tesco..........................2075......44........0
Total unsecured debts..........23181.....637.......-

Monthly Budget Summary
Total monthly income.................... 2,666
Expenses (including HP & secured debts). 2,288.5
Available for debt repayments........... 377.5
Monthly UNsecured debt repayments....... 637
Amount short for making debt repayments. -259.5
Personal Balance Sheet Summary
Total assets (things you own)........... 115,500
Total HP & Secured debt................. -133,500
Total Unsecured debt.................... -23,181
Net Assets.............................. -41,181
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.[/font]

There are a few things I've highlighted because I think they could be reduced or need to be looked at more closely as they seem unrealistic to maintain.

In my opinion, I think you may have missed things you hadn't realised you spend on (magazines, odd sweet/drink, newspapers etc) so keep a spending diary each and you'll be amazed on what you spend your money and how quickly it goes!

When I first started down my DFW route, I always drew out money at the beginning of the month which was my spending money and once it ran out, that was it and I couldn't "loan" myself any more money! it works - try it!

good luck!

ALIBOBSY

Stitchlover1 wrote: »

Yes ideally I need to cut down the TV package, and this is something I am trying to "persuade" my boyfriend into - he likes the sports of course. Ive read in other threads that it would probably just be cheaper to give him fiver to go to the pub with !
With regards to the cars, one of them is on HP which is the 189 a month, the other one we own, but my boyfriends job means sometimes he has to get the train to work and other times he has to drive around to different places so we definately need the second car.

You need to sit down with your partner and make him realize how bad your situation is, you are virtually bankrupt, anything that you are not tied into via a contract or is food/shelter/working costs has to go now today. With that sort of debt you should BOTH be in everynight,no pubs, no sports channels. He is not a child he needs to understand you both have been living beyond your means and now you have to cut right back until you clear the debt.
At one point when we first had a baby we were short of cash and to pay for the bills my OH sold his prized golf set his computer and an air rifle-all hobbies he had enjoyed before we met,but he put people before "things". I gave up my season ticket and sold any stuff I could.

If he needs to drive to places for work he should be claiming some kind of travelling costs for this surely.

The mobile costs, sky and car costs need looking at urgently.
He can ask at work what would happen if he no longer has access to a car, or perhaps sell and get cheaper cars-pay off the loan? Could you share one car and on the odd day he needs it you go by public transport.

Cut up those cards straight away stop spending now isthe time to pay back.

Most of us on these boards have had the lightbulb moment and gone through hard periods cutting right back, it is hard, but so satisfying when you come out the other side.

good luck

ali x

Stitchlover1

fd1972uk wrote: »

Wow, that is one huge mortgage for a house of that value.

What is the term of the Mortgage? Could you maybe increase it and the cost will drop and let you maybe hit some of the other debt?

As said your sky/phones are very expensive.

One thing I also noticed, do you have your own money to play around with? Or is there nothing left apart from that? Have you took that into account also?

As said, the food bill is huge IMO, we're a family of 3 and are not far off £100.00 cheaper per month than yourself.

Your energy bills are really good too, is it a small house?


Our house is only worth 108,000 but we got a 120% mortgage. 100% mortgage and 20% unsecured loan which was the best way for us to get on the property ladder at the time.
With regards to foodbill im going to Asda tonight to pick up the essentials and am going to use the "drawing money out" and "brand drop" trick - first time so will give it a go