£20,000 debt

Stitchlover1

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!


Thank you - im going to start doing this too - its all simple things really but you don't think of them when you are in the situation. Its good to be here getting such good advice thank you

fd1972uk

Stitchlover1 wrote: »

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.

What is the term of your mortgage/loan though? (i.e. how many years).

To battle our credit card debts (a quarter of yours) one of the things I did was increase the term of our mortgage. We were down to around 15/16 years, but I pushed it up by 10 years and am now concentrating on a set amount per month to clear the credit cards (probably around 1.5 years to clear) then put most of that money towards our Mortgage again and reduce the term.

As already mentioned, put aside what you have to spend and keep the rest for bills. Basically we have a weekly budget (thankfully the wife is paid weekly) and we use that set amount to live off of.

I think you are both treating yourself big-time though and as is the case 'living outwith your means'.


FD

Running_Horse

Stitchlover1 wrote: »

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

Lunches and things. I know if I take money into work I can easily spend £3+ on food. Add that up over the year. Cheap ham sandwiches and fruit are boring, but saves me a fortune, and is good for the waist line.

Not really sure what advice to give someone else in their relationships, but it sounds like you are shouldering the burden and doing the worrying for two. If that doesn't change, you won't clear the debt, and the relationship will be on very rocky ground.

Well done for taking this first step.

jamesd

Here are the percentages of the outstanding borrowing that those monthly card payments represent:

Barclaycard	8112	186	2.29%
MBNA		5563	232	4.17%
MBNA		3063	75	2.45%
Natwest		2688	56	2.08%
Egg		1680	44	2.62%
Tesco		2075	44	2.12%

I don't know why one MBNA is so high, maybe it's the interest rate or the one you're deliberately paying most on? If it's not deliberate overpaying then trying to reduce that balance is the way that will reduce your monthly card repayment spending the most.

NatWest seems to have the lowest monthly payment percentage. If it's the normal rate, not just because it's a 0% deal, then you might give them a call and ask them if they are interested in increasing your credit limit or about balance transfer offers so you can shift some borrowing from a more expensive card. I'm assuming that the interest rate is reasonable, without having them provided I can't tell.

If you were able to shift the MBNA £5563 balance to a mixture of NatWest and Tesco that would reduce your monthly minimum payments total by £114 or more.

If you can give the credit limits, interest rates, minimum payment percentages in the card terms, current interest rates, long term rates after any deals end and which of you the card is issued to that may help to find more possibilities.

Learning2Budget

try doing an online food shop through https://www.mysupermarket.com it will help you see what you are spending on and help u meal plan too.
Agree with above posts, you need to have a serious chat with your OH. Good luck.x

jamesd

About £736 of the £832.20 mortgage payment is interest. A longer term would help but using repayment holiday interest only for a while would help more. Say for long enough to get rid of the debt on the most costly card.

The possible good news is that the mortgage interest rate might be a lot lower on a variable rate for a while. Need to find out and be sure what it is and that it won't be higher. Each 1% change in mortgage rate is an increase or decrease of about £106.70 a month in the payment.

thehappybutterfly

Hi StitchLover

You're not dissimilar to me but it's me who's the spender and my hubby's the careful one. Our debt is about as bad as yours but it's split over loans and credit cards - the loans are much easier to manage than the cc's (too easy to spend on them). 2 of our cc's aren't spent on at all but one of them is and that's the one I need to "step away from". Can I just ask, how did you run up so much debt on credit cards? I'm not going to judge 'cos I know how I did it......

Your mortgage payment does seen high - I pay £286 a month on a £90k - maybe at about 3.5% APR? I noticed yours is 6.9% - hopefully you can get a better deal when you renew. Would it be worth renewing earlier and paying the "get-out" fee to benefit from a more favourable APR?

This might not be good advice but I changed my mortgage to an interest only (without putting a plan in place to pay the capital) to reduce the monthly payments. Once we're on our feet, we'll take out an ISA or something to remedy this. I think otherwise my mortgage would be approx £500 p/m.

Otherwise, yes - downgrade your SKY package. I pay £55 p/m for TV, line rental and calls and broadband. I know your boyf likes Sports but I think there's enough sport on the telly and if there's something special he really wants to see, can he go to the pub (with a fiver!) or maybe to a mate's house?

and PAYG mobiles definitely - Tesco Mobile are great. Top up £10 and get £20 free credit. You can also opt in to a text bundle of £5 for 5000 texts if that's your bag (it is my DD!).

Your boyf needs a wee kick up the rear end to get his receipts in and claim those expenses!! Can he back-date?

I think you've made the right move coming on here - you'll get tons of good advice and a shoulder to cry on! Hmmm, and let me know how you get on reducing your food bill - that's my biggest problem.

Lots of luck and don't despair xxx

Teekaylon

Stitchlover1 wrote: »

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.

Im in a very similar situation to yours 20k debt on credit cards

...have you not tried calling your creditors and telling them that you basically cannot afford your repayments at the rate they want?

i did just that and too my surprise both my creditors now allow me to make £50.00 monthly repayment on a 12 month arrangement and have zeroed interest and charges on both debts ... not bad considering prior to calling them my minimummonthly payments should have been totalling in excess of £500.00...!!! call them im glad i did was the best days work i ever did in fairness.. im amazed at how polite they actually were too.. good luck!

patman99

You need to sit your b/f down and explain to him that Sky needs to go BEFORE you end-up bankrupt. As a couple, you BOTH need to tackle this debt head-on.

He needs to understand that it is time to pull his head out of the sand and take a good look at the situation.
To help cut-down the food bills, hunt around the net for money-off coupons.

With a debt this big, you might have to think about a 2nd job. A bit of cash-in-hand work cutting your neighbours grass or do a spot of ironing. In fact, you both should sit-down and create a list of all your skills, then look at what you could offer as a 'service' to others, even if it is for 6 months or so.

Above all, just remember, there IS an end to your debts, it's just up to you when the end point arrives.

jamesd

It looks as though it's probably just about possible to get things to the point where you're not borrowing more every month and having things get worse each month, but it's close. I agree about the satellite, just not affordable right now. Also needs work on the rest.

If you can't get those things done or if the mortgage interest rate goes up you'll both need to do one of these things, in most to least desirable order. I'm assuming you're in England or Wales:

1. Teekaylon is right, you can get your creditors to accept that you can't afford to pay and come to agreements for a while. Cutting out the cable TV will be a mandatory part of any such arrangement. Same for mobile phone unless the penalties for leaving are greater than the cost of continuing. I used to have a co-worker who'd lost their job and got suspended interest for more than £40,000 of debt while he paid it off. He was still working on it, but making good progress.

2. Debt management plan with CCCS or one of the other voluntary debt management charities.

3. Debt Relief Order (DRO). The least painful form of insolvency, comes before IVA and bankruptcy in preference order. Best to work with CCCS to do this if required.

4. If not eligible for DRO for some reason, IVA.

5. Bankruptcy seems avoidable here, no reason to go here.

The core problem you have is that your outgoings exceed your income. If you can reduce the costs enough by shifting to cheaper debt or getting some mortgage arrangement or interest rate reduction you can get back into a stable or improving situation where you're able to reduce the debts. Over time that'll gradually take you from balancing on the edge to stable.

I can't tell without knowing the new mortgage rate and without knowing if more card options might be available but my best guess at the moment is that you'll be best off by doing all you can immediately then waiting until the new mortgage is in place and contacting CCCS to set up a debt management plan for each of you as soon as that is done.

It looks just barely possible to avoid that, depending on what the new mortgage interest rate is and what spending reductions you can make. But a DMP can include things like suspending interest that can make it much easier to get rid of the debts, so it would much more quickly get you both to a sound long term situations.

There are lots of people here who've done the DRO, IVA and even BR route and who can tell you that it's not as bad as you might think it is once the situation is bad enough to make it necessary.