Newbie - your thoughts etc welcomed!

moestar

Hi there,

Haven't posted before but have read some of the threads on here and have found them encouraging, so thank you!

Am currently getting to grips with finances and wanted to post in order to be more open about where I'm at. I have a lot of judgement on myself for having a negative net worth, no house, no pension etc etc at the age of 34 (and I'm an accountant . . !) So trying to get a bit of perspective, partly.

Used to be one of those well-paid people who never had much left at the end of the month (certainly never put any away). :eek: Then after an illness, decided my job wasn't meaningful any more (or healthy, really - huge stress and huge hours). Despite many hours of weeping and terror at the idea of not having a salary, I resigned and went off to do something meaningful (armed with £10k personal loan - glad I didn't know the whole thing would ultimately cost a lot more than that!!)).

This journey was great, I have achieved some life dreams and get paid (a bit!) for things I'd do for free. Even managed to create some well-paid jobs when I needed them. But the last job again proved too much and I'm currently signed off sick (was a temp contract so am no longer employed). So in summary, very glad I've done what I've done, but having a bit of trouble with the financial aftereffects.

Still have £18k of debts, with payments of about £450/month and no assets (apart from my little car, worth about £3k now).

I hear an SOA is required - so here goes:

Monthly Incomings:

My salary - nil
Income from self-employment:
Teaching (riding) approx £200-400/month
Small business consulting approx £400/month atm (usually paid late!!)
- not able to work many hours atm, so doing what I can and trying to build up in future months - especially the consulting.

Benefits - just applied for benefits backdated to Sept when I got ill. Scary, never thought I'd need to do that. Don't know if/how much I may get.

Total - £600-800/month

Monthly Outgoings:

Rent - £300 for board and lodging with lovely friends, beautiful and economical (if unconventional) home. Includes all bills, food etc.
Council Tax - 0
Gas - 0
Electric - 0
TV License - 0
Sky - don't have
Phone (mobile) - has been £60/mo!! - just reduced to £35/mo with 50% chequeback.
Food - 0
Car Insurance - £189 with £50 cashback (Post Office) - fully paid for the year
Petrol - £100-£150 depending on travel to teach - I am starting to charge mileage from this month @30p/mile
Life Insurance £10
General cash expenses - snacks on the road, toiletries, parking, prescriptions seeing friends - £20/week , say £90/month
Personal Loan payment - £246.91
Egg card payment - £83 (min)
Morgan Stanley card payment - £110 (above min)
1st direct card payment - £10
One-off things - I know there shouldn't be but realistically there usually is - last month my professional subscription (£260), this month some technical books I need for my consulting (c£200) & attending training with my riding trainer (£30). . . on average £150-200/month?


Total: £1135 approx.

Shortfall: £500 per month


God it looks terrible! As you can see at current level of income I am in a bit of trouble. Up to now I have lived on savings from my last job, but that's gone now. So looking at using the capacity for work I have (maybe 2 days/week) as efficiently as possible. Will really help if I get some benefit money in, and I can get some more consulting this month, as it pays a lot per hour.

Debts wise I have:
Personal loan at 7.9%, remaining payments total £10k
Morgan Stanley CC £4100 (limit £9300)
Egg CC £4500 (limit £9000 I think)
- both cards have just expired from 0% deals and are now at 16.9% - have collected the numbers for each to ask if they can reduce the rates on the existing cards. Also have a Virgin MBNA card with credit limit of £15,000 (!!) - nothing on there at the moment.
1st direct gold card has crept up to £300 . . also about 15-16%.

So . . .Thoughts, encouragement etc would be very welcome.

Moestar

newmum1

I would say definately throw as much money at the cards as you are paying a high interest on those. Could you cancel the virgin card unless it makes more sense to balance transfer you existing cards to this, is it a lower apr??? how long before you know if you will get any money for being off sick?? if you ar spending a lot on prescriptions then you could look at the pre paid prescription certificate that may help.
And well done for posting.

moestar

Thanks v much newmum1 :-)

I was wondering whether to cancel one of the cards . . think I will wait until I have made the calls to see if I can get a 0% BT or lower rate on one of the existing cards. I doubt I'd get a new card as I don't have a salary.

Should hear on the benefits within the next 2 weeks - fingers crossed, would really help.

Don't have a lot of prescriptions luckily, but I will have a look for the prepaid certificate.

Thinking I could write some ebooks on horse topics and business topics, having read something about ebooks on here recently.

Many thanks again.

Moestar

GettingThingsDone

Hi moestar! Welcome - we've all had that horrible feeling when you add up the numbers and they don't look pretty - It's definitely the best thing you can do though.

Hope we can help

CLAPTON

as an accountant i hope this makes sense

re-organise your SOA along these lines

a. work out everything on the basis on the monthly average (because it makes adding up the numbers easier)

b. income first
c. spending excluding debt repayments second
d. now work out income - spending gives the amount (called a surplus) you have to pay your debts
e. add up debts
f. add up debt monthly minimum payments
g. if surplus is greater than minimum monthly payments then look at things like 0% CC or low LOB , low cost loans etc
h. if however surplus is less than your minimum debt payments then you simply can't pay your debts and so your choices are
-increase income
-bankruptcy
-IVA
-DMP

clearly you need to sort out your income situation but if the current level continues then you simply can't pay the debts and you need to consider the alternatives above.

moestar

Thanks GTD and Clapton.

Know what you mean Clapton. Income is at an unusual low atm -but have had a day's consulting at £400 the last two months, so in theory a couple of days consulting a month and I am back in balance, on a monthly basis at least.

The worrying part is the cashflow this month/next month - have a feeling I may end up having to borrow some cash until income builds up. Not what I want but not sure there's a way round it?

The other short-term solution I guess is reducing outgoings - can probably negotiate down my rent this month as have done some work for the people I live with.

Anyone had success negotiating payment holidays on loans/cards? I just wonder if it impacts later credit decisions - my gut feel is not to let on that I am short of cash and get through it somehow . . not sure how logical that is!

Thanks for the help,

M

debt23

Hi,

Just out of interest, what does a 'small business consultant' do?

And if you say 'I consult with small business' Ill kick ya!;)

All the best

debt23

SunderlandBlackCat

moestar wrote:

Also have a Virgin MBNA card with credit limit of £15,000 (!!) - nothing on there at the moment.

Hi Moestar

I only cleared my Virgin card 3rd week in January & they phoned me today to offer me another 0% deal so I'd say its definitely worth phoning them & asking.

moestar

Great info BlackCat - that's very encouraging. Thanks! Impressed - only 160 days to go, well done.

debt 23 - I consult with . . no just kidding. :-) My career to date has been in Business Recovery (ie in crisis but not bust yet) with larger companies, which is a good education in what can go wrong with a business and how to prevent it. (And am qualified chartered accountant). Some friends have recently asked me to use this to help them sort out their smaller companies - because they're firefighting, up against the wall cash-wise, want to grow but don't know how to manage the risk etc.

This part-time but reasonably remunerative work fits well with my recovery from illness, so am looking to find some more people I can help. Friends reckon it will be easy but it's a little daunting!

Thanks for saying hello.

Moestar

SunderlandBlackCat

moestar wrote:

Great info BlackCat - that's very encouraging. Thanks! Impressed - only 160 days to go, well done.

Thanks - the 160 days is most likely going to change though to concentrate on paying off my mortgage as thats now my highest APR. Even if Idon't do that though I just used the Virgin 0% offer to pay a chunk of my mortgage off so that'll be about 9 months.

This part-time but reasonably remunerative work fits well with my recovery from illness, so am looking to find some more people I can help.

Have you contacted your local Business Link?

moestar

Yup, I'm on it with BL - networked to an existing adviser who has told me what I need to do to get on their suppliers matching service, and is willing to keep me on his radar. :-) No guarantees but it's another useful avenue!

Smart, using your 0% to help pay down the mortgage. You obviously pretty organised and paying plenty down each month.

Cheers,

M