SOA - got the hard hat on - straight talking required!

rising_from_the_ashes

rising_from_the_ashes wrote: »

Consolidation isn't usually the best route to go down (been there, done it!) as it doesn't address the reasons for the debt ... if you're overspending and need credit to survive/fund items etc, then you'll run the risk of doing it again.....

JimmyTheWig wrote: »

I think you need to consider this before you go down the consolidation route. Not only do you need to work out how to pay off your debts, you need to work out how not to get further into debt!

RAS wrote: »

Do not consolidate, please. Over 85% of people who do end up with the consolidation loan and more debt.

Please listen to what's being said ..... it's true and unless you address the reason for the debt - and are prepared to not overspend by a single penny for the entire duration of any consolidation loan period, you will end up with more debts

You don't know what's going to happen during this period - what if you have your hours cut too?

rising_from_the_ashes

I'm not trying to be hard (you did say "straight talking required" in your title:)) but having been there and done it - and being able to say it was the worst thing that I've (and many, many more people have) done don't do it.

JimmyTheWig

EKAndrew wrote: »

lesson learned..........but we need to get out the mess we are in just now.

Sounds promising. But do you believe it is true? Really?

Do you know how much debt you were in a month ago?
Do you know how much debt you were in the month before that?

What I'm interested in is whether your debt is going up or coming down. If the debt is going up then you haven't learned the lesson. Which suggests that a consolidation loan will, for you, be the same as it is for many - an opening to more debt.

Or look at it a different way? It's just over 2 months until Christmas. On your SOA you have £80 a month for presents. Do you spend this each month or do you put some of it aside each month for Christmas? Have you already got lots of your Christmas presents? Where is the money for Christmas dinner coming from?
I'm going to assume that you are like a lot of people and haven't actually budgetted totally for Christmas. As things stand, you are going to have to have a pretty frugal Christmas. That's a shame, but these things happen sometimes. It's still time well spent with family and friends, which to me is more important than the money spent on it.
But what if you managed to get a consolidation loan. Do you honestly think, honestly honestly, that you wouldn't use any of your credit cards (or maybe some of the loan) to treat yourselves / the kids at Christmas? Something a bit special for Christmas dinner, maybe, or a couple of extra presents for the kids?

I'm not saying this to have a go at you. I'm not here to be mean, no-one is. I'm not saying this because I think that you are a particularly weak-willed individual.
I'm saying it because I'm guessing that you're a pretty normal family. You certainly sound it. You sound just like the rest of us.
And I think that most families would overspend at Christmas time, even if it meant going in to more debt. The difference is that you can't afford it.

We're not saying that a consolodation loan won't work for you. We're saying that they don't work for most people, and so probably won't work for you.


What that leaves the answer as, I don't really know.
But the first thing to do is to make sure you don't make things worse.

amorge

Hi, I noticed there was '0' in water rates? Is that because you're in a flat?

rising_from_the_ashes

Missed that!

Are you in Scotland?

opinions4u

EKAndrew wrote: »

Monthly Income Details
Monthly income after tax................ 1796
Partners monthly income after tax....... 450
Benefits................................ 122
Other income............................ 0
Total monthly income.................... 2368
Monthly Expense Details
Mortgage................................ 511
Secured/HP loan repayments.............. 177
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 95
Electricity............................. 50 shop around. use www.topcashback.co.uk
Gas..................................... 50
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 13
Mobile phone............................ 15 how about a £10pm sim only deal? Or go PAYG and only do incoming calls.
TV Licence.............................. 13
Satellite/Cable TV...................... 40 luxury. kill it.
Internet Services....................... 8
Groceries etc. ......................... 300
Clothing................................ 0
Petrol/diesel........................... 160 car shares? walking? look at it.
Road tax................................ 15
Car Insurance........................... 30
Car maintenance (including MOT)......... 0 something will go wrong with a car.
Car parking............................. 0
Other travel............................ 10
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 15 use comparison sites. Do shop around.
Contents insurance...................... 7 sounds like a bargain!
Life assurance ......................... 0 perhaps you should have some?
Other insurance......................... 0
Presents (birthday, christmas etc)...... 80 time to cut this massively. You have other priorities.
Haircuts................................ 0
Entertainment........................... 100 time to cut this massively. You have other priorities
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1689

Assets
Cash.................................... 0
House value (Gross)..................... 75000
Shares and bonds........................ 0
Car(s).................................. 7500
Other assets............................ 0
Total Assets............................ 82500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 69361....(511)......5.98
Hire Purchase (HP) debt ...... 8935.72..(177)......13.32
Total secured & HP debts...... 78296.72..-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
credit card....................5096.98...120.......20.9
credit card....................4274......64........23.9
credit card....................3824.94...100.......21.94
loan...........................2400......200.......0
credit card....................6098.86...170.......24.9
Total unsecured debts..........21694.78..654.......-

Monthly Budget Summary
Total monthly income.................... 2,368
Expenses (including HP & secured debts). 1,689
Available for debt repayments........... 679
Monthly UNsecured debt repayments....... 654
Amount left after debt repayments....... 25
Personal Balance Sheet Summary
Total assets (things you own)........... 82,500
Total HP & Secured debt................. -78,296.72
Total Unsecured debt.................... -21,694.78
Net Assets.............................. -17,491.5
Created using the SOA calculator at .............Reproduced on Moneysavingexpert with permission, using IE browser.

For me, there's an easy £150 a month that you could throw at the most expensive credit card. If you really want to get ahead of the problem, it's time to do away with some of the fun.

EKAndrew

Morning All, thanks for the replies...........and I don't mind people being harsh / straight to the point. I'm big enough and ugly enough to accept that. That's why I'm here.

Here are the replies for the questions asked (sorry I dont know how to multi quote!)

Consolidate - maybe my terminology is incorrect after doing some reading last night, by this, I mean consolidate the debts with a personal loan over a 5yr period. Rough calculations show that to be approx 400-450 pm. (the reading I did last night showed "consolidation loans" to be over a longer period)
What if my hours are cut - that is very unlikely. I could leave where I am just now to earn more money but I'm in a position that the company I work for is very sound financially and is very very very unlikely to be going anywhere. My last company wasn't so lucky so I know not to chase the ££, being secure is more important. However, I do accept stranger things have happened
Jimmy - yes I know how much debt I was in, I have a spreadsheet that monitors all my payments in and out, and what I spend on "rubbish". The debt has fluctuated, if we look over the last year - it went up for the first 6 months, then has come down over the last 6 months - but not enough! It hit home when we looked at what we were paying every month (to debt) compared to what the balances were showing. eg Pay Barclaycard £120 pm, but then £80 interest, so you are only paying £40 off the balance. (have i explained that well enough???)
As for Xmas, the £80 we "spend" is paid to one of OH pals who pays it into a voucher scheme (its protected!!) - so its all planned for! As for Xmas dinner, we take turns every year of going to the parents house - they offer to cook as they know the kids are hyper and we dont have the time! We only take a couple of bottles of wine.
Water / Flat - yes, in a flat in Scotland, so its included in the council tax
Opinions4u - mobile phone and Sky - i'm on a contract so cant get out of it just now, but will defo look at it. Car - I walk to work or get the bus. The car is used to take kids ot school/grandparents house, so we can go to work. Can't be cut or we'd be looking at child care costs too. Presents / Entertainment - its alot, will see what OH says when I bring it up. Its £2k over the year!

Thanks to everyone for the replies - I appreciate your honesty and advice

On another note, I called Barclaycard last night to complain about advice I was given a few months back. I told them to close the account as I wasn't accepting their interst hike,and I would continue to pay it off. They offered me a £50 token apology to be credited to my account and advised that no interest would be applied to the account for 3 months. So I work that out as a real bonus! (approx £80pm interest * 3, and £50) Complaining works!!!

EKAndrew

RAS wrote: »

Can you answer the question about the limits on those cards, please.

Hi RAS -
Limits are :
credit card......5096.98...was 6k, but now closed
credit card......4274......5.5k
credit card......3824.94...this was Cahoot, who dont exist, so now closed
credit card......6098.86...6.5k

So moving debt around isnt really an option

merlot123

EKAndrew wrote: »

Consolidate - maybe my terminology is incorrect after doing some reading last night, by this, I mean consolidate the debts with a personal loan over a 5yr period. Rough calculations show that to be approx 400-450 pm. (the reading I did last night showed "consolidation loans" to be over a longer period)

Consolidation, whatever terminology you use is rarely recommended, it will end up costing you more in the end.

You need to reduce spending, increase income, get low APR balance transfer cards if you can so you repay the actual debt rather than the interest each month.

Repaying debt is a long and sometimes a difficult road, moving the debt elsewhere isn't solving your current situation.

Btw, well done for acknowledging your situation now, before it got worse, never an easy thing to do, especially seeing an SOA in black and white.

Straight talking required....I gave it to you:D

JimmyTheWig

Great news that the debts haven't been increasing over the last 6 months. This suggests that you are now living within your means, something you probably haven't for a few years before this.

Good that you've got Christmas sorted, but you've sort of missed my point. I was using Christmas as an example where you might just "need" that extra bit of cash. If it's not Christmas for you then it may well be something else.
The point is that if you had available credit, would you use it? If you got a consolidation loan then you would have more available credit (on your credit cards). Would you use it?
Is the reality of the situation that your debts haven't increased in the last 6 months because you haven't had any credit available?

Can you understand, at least, why most people find themselves owing more not long after going down the consolidation route? Have you got the willpower to do better than most?