Weighed Down by Debt

coyocacan

This is tough one. But well done for posting. As others have said, this situation is going to require all out war to achieve victory.

What is most important is learning and installing the essential disciplines for success. This to me means:

- Turning your back completely on any aspirations to keep up with the Joneses
- Relishing the daily opportunities to challenge every single pound that you spend
- Dedicating time every day and week to reviewing your financial position and financial decisions
- Building a relationship with your spouse which includes the financial aspects and responsibilities of marriage
- Seeing life as more than just a sojourn with money. Enjoy this wonderful planet for free!
- Not to dwell on any mistakes from the past. Learn from them but do not despair of them

Keep us posted on progress. Very best of luck.

mabbya

pleasedelete wrote: »

Your credit card repayments don't seem to make sense. Are you paying some or all more than minimum?

Are you focusing extra payemnts to those with high interest/larger repayments.

Virgin is only interest plus 1 per cent. If yours are interest free then 1 per cent but you seem to paying more? That's illogical if it's on zero per cent.

My virgin credit card is not interest free. Current monthly interest rate is 2.0084%, minimum payment is £62, so as this card has the highest interest and smallest balance, paying as much as I can into this card to clear. This is also the card I tend to use on a regualr basis. So thinking of phoning up and cancelling the card so that I after paying balance won't rack up more debt! I have managed for the last two months not too spend on it though, so getting there!

mabbya

danielanthony wrote: »

what about going interest only on the mortgage until the other debits are paid off?

I did think of doing that . In fact contacted my mortgage lenders last Summer, but the form sent to me required an indication as to how I intend to invest to pay off the capital while on interest only and as I had no intention to do that I ditched that idea.

mabbya

merlot123 wrote: »

I can find your shortfall easily, reduce groceries £100, pack lunches for the children £80, donation £40, reduce haircuts £50, reduce Sky package £25 (thats giving you the basic package of approx £22 per month, I'm being generous).

You and your OH need to get on board, you have a very good joint income but yet you have over £50K of debt, you must ask yourself how has this happened? and you need to start tackling it today, it going to take years to repay this debt, and please don't take this the wrong way, but I do not think the reality of your situation has sunk in yet, otherwise the SKY, mobile phone contract would have been reduced and you would be talking about packed lunches etc.

With an income of over £3k per month, I assume you are in the higher tax band? If so, you will lose your child benefit from April 2013, you need to factor this in as well, child tax credits are to go from April 2012 (if you get the basic), that is another £188 per month you will need to find.

Having said all the above, well done for posting your SOA, never an easy thing to do, and the peeps on here are not being harsh, just honest, and your situation needs honesty.
merlot123

The children are on packed lunch 3 days a week, the £40 is for school dinners for 2 children twice a week. I don't qualify for any form of tax credit so only get child benefit (£188 / month). My mobile phone is up for renewal shortly so will review then. I have cancelled the £40 donation, reduced hairdressers to £65 per month for the family. The only one I haven't tackled yet is the sky package, although last month I I moved telephone and internet to sky so getting a better deal compared to previous expenditure. Also reduced pocket money to £50 / month.

mabbya

Updated SOA

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 3085
Partners monthly income after tax....... 1250
Benefits................................ 188
Other income............................ 0
Total monthly income.................... 4523
Monthly Expense Details
Mortgage................................ 968
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 121
Electricity............................. 51
Gas..................................... 91
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 12
Mobile phone............................ 50
TV Licence.............................. 12.5
Satellite/Cable TV...................... 47
Internet Services....................... 12
Groceries etc. ......................... 450
Clothing................................ 50
Petrol/diesel........................... 60
Road tax................................ 25
Car Insurance........................... 45
Car maintenance (including MOT)......... 40
Car parking............................. 0
Other travel............................ 93
Childcare/nursery....................... 25
Other child related expenses............ 300
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 44.5
Contents insurance...................... 0
Life assurance ......................... 15
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 65
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
association............................. 10
professional subscriptions.............. 20
child trust fund........................ 57.5
swimming lessons........................ 35
homecare 400............................ 43
homecare assist......................... 3
donation................................ 0
family.................................. 45
lebara.................................. 20
Total monthly expenses.................. 2910.5

Assets
Cash.................................... 0
House value (Gross)..................... 250000
Shares and bonds........................ 100
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 251100

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 188000...(968)......2.89
Total secured & HP debts...... 188000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
halifax loan...................5379.43...145.......12.04
sainsbury loan.................5549......149.......6.9
m & s loan.....................2472......224.......6.6
argos card.....................34........34........0
virgin credit card.............2100......160.......24
barclaycard mc 1...............4726......108.......7
barclaycard visa...............11475.....263.......7
halifax cc.....................7716......85........6.9
personal.......................2380......100.......0
halifax overdraft..............2000......31........0
barclays overdraft.............2550......33........0
sainsbury cc...................1700......50........6.9
g e capital....................3500......95........19.56
barclaycard mc 2...............2600......105.......13.9
Total unsecured debts..........54181.43..1582......-

Monthly Budget Summary
Total monthly income.................... 4,523
Expenses (including HP & secured debts). 2,910.5
Available for debt repayments........... 1,612.5
Monthly UNsecured debt repayments....... 1,582
Amount left after debt repayments....... 30.5
Personal Balance Sheet Summary
Total assets (things you own)........... 251,100
Total HP & Secured debt................. -188,000
Total Unsecured debt.................... -54,181.43
Net Assets.............................. 8,918.57
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

Cat2011

On renewal see if you can get your buildings insurance down. A broker might help. Check out Quidco/Topcashback
Is there any overlap between your Homecare 400 and your buildings insurance? Do you absolutely need the Homecare?
You shouldn't be saving whilst in debt. I don't think you can afford the child trust fund payment. Perhaps you can pay more in once you're debt free.
Work on your gas and elec, your costs are double mine (I live in a 4bed). Can you get a free elec monitor from your supplier? Change supplier? Have your boiler on for as little as possible.
Check your T&Cs to see if you can overpay your loans. I could overpay mine, I think you're allowed to on all loans? Then if you get any lump sums in, use that on the loans as they are highest interest.
Use the snowball calculator to work out which payments to overpay first, and find out your debt-free date http://www.makesenseofcards.com/snowcalc.html
If you can't lower your outgoings more, you need to increase your income. Can you and partner take on a 2nd job one night a week? Sell everything not absolutely essential. Try eBay or Amazon. I've listed all my books and DVDs on Amazon, I can choose the price and once up they just stay there, then I get an email saying something has been sold and I post it off. It's great
Spending diary is excellent idea. I used to be able to spend £200 in a week, and I had no idea where it went...

Well done for realising your situation . It's going to be a hard slog - but so very much worth it. Good luck.

sharronej

Congratulations Mabbaya just 24 hours and you've turned your negative to a positive! I see you've also joined the grocery challenge - fantastic, there's so much help and support on there!

I agree with Cat2011 - there's no point in saving for your children's future at the risk of losing your home, perhaps a more useful thought would be that by putting the £50 on hold you are securing their immediate future and by changing your financial habits you are teaching them how to have a secure future for themselves. Any savings you have should be put towards paying off your debt - the interest rates are so poor at the moment and even if all your cards were on interest free it's still better to pay them off just in case anything unmentionable should happen.

One last thought do your children ENJOY their after school activities or have they been asking not to go? So many parents feel that their children should go to these things that sometimes they don't appreciate how tired their child is at the end of the day or that they don't enjoy it. A really lovely alternative is to sit round the table as a family and play some board/card games - your children will remember this forever and it will bring you all so much closer together.

Fantastic progress so far - keep going :T

eyeopener2

Thats a good start, and it is just that a start. If you stick to this your debts will not be increasing and as long as you have a lot of 0% interest your heading in the right direction. More to be done so keep shaving those expenses downwards.

Have you cut up the cards? I'm not sure if that has been mentioned yet or not. All temptation is then gone.

And stop the CTF, with your income once the debt is paid back you can top them up as much as you want.

Sky should go as well but I know you may have a battle to win with that one.

CTF plus Sky is around the £100, that makes a serious dent in your debts over a year.

Nice work in such a short space of time, keep it up cos its worth it as you start seeing that very dim light at the end of the tunnel.

E2