£80,000

thejames

DVardysShadow wrote: »

A loan [if you could get one] would be pointless to pay off another loan ... And if you use it to pay off credit cards, you will put yourself onto a much more demanding treadmill of repayments. Essentially, at this point, you are unable to do much more than service the interest, never mind repay any capital.

Overall, I think you need to set a decision day about 3 months on from now as to whether to go bankrupt. But in the meantime try your damndest to get yourself on some path of recovery. If at 3 months you can see you are going nowhere or back into debt, then you should consider bankruptcy or a similar arrangement. But if you can see a way through, then you should hold off.

Willow asks important questions here and answers really are needed



I'm getting the impression that you only understand your finances in terms of what goes in and out each month - but you don't really understand your debt. Willow's questions are vitally important at this time. It may be that you can cut spending and get back on some sort of an even keel where at least you are not increasing your debt. For goodness sake, don't add another loan into the mess, you are really on the edge here and another loan will push you over. What you have to do is at least keep that even keel until one of your loans is paid off. Once you do that, it will free up money each month to put towards paying off your credit cards.

Now, Willow's questions will indicate how long it will be before you free up money to start paying down the debt. You need to understand how long you will be treading water before you can get anywhere. And make your decision as to whether to go bankrupt or fight your way out.

Just answered these... I want to fight I don't want to give up.

debtfreewannabe321

thejames wrote: »

After thinking i really need to look at my shopping bill! But I still don't know how you have a shopping bills at £200 is that on meat, fish, toiletries etc... This I'm finding it hard to get my head around.
?

I have recently started shopping online, i used rosspa this month and stocked up on lots of stuff for a whole month. Spent around £90, this included fresh fruit as well. Then I shop in Ald* once a week and spend around £20-25 on topping up. I also used approved foods for the first time and got mysel enough toiletries for a year at least. So we're stocked up on shampoo, conditioner, toothpaste, shower gel, - i use the shops own brand bubble bath (think tesco is around 19p)

Try dropping brands such as heinz, to tesco's/asda beans. if you get on ok with them, the next week try dropping from tesco/asda to the value range.

sueh6

thejames wrote: »

After thinking i really need to look at my shopping bill! But I still don't know how you have a shopping bills at £200 is that on meat, fish, toiletries etc... This I'm finding it hard to get my head around.

It's very simple - plan your meals - yes, for each and everyday. Once you've done that you can do an online shop for those meals and include the staple things too like butter, bread, milk, toiletries (use supermarket own brands - much cheaper or even discount brands where possible). I've just done my monthly 'shop' for a family of five adults and it equates to £200 including delivery. I will also spend around another £75 over the next 3 weeks on my fresh items such as fruit and veg etc (the £200 includes this weeks fresh items).

It can be done but it takes time and effort and this is where your commitment comes in - you need to be 100% committed in order to put the effort in otherwise you will not be able to stick to it. With the amount of debt you have there are no easy answers and you will feel some pain be it time spent saving money or not being able to do the things that got you in this position in the first place.

PinotGrigio41

thejames wrote: »

Just answered these... I want to fight I don't want to give up.

If you are prepared to fight and put in the work and effort thats a great start.

Great words of wisdom above from DFW and Sue. I'm am currently heading this month , for a Grocery spend of £300 for four adults incl fresh fruit, veg and pet food. I am hoping to be able to reduce this further by following tips from others on this board. I am only just starting out as you are, although have been free of using credit cards for two years nearly and using only the cash in our pockets or accounts. Once you have a plan of action you will be able to make some progress in turning things around.

You are getting some really sound advice here.:)

Willow_K

thejames wrote: »

Hello again,

Ok after a 24 hour period of mulling over options, this maybe a possible one.

I pass my business over to my mother, shes happy to do this. So she in affect owns the business for the time being.

I go back to work on a full time basis, my husband and I are in the police, so work shifts, (hence reason for not wanting to go bankrupt) this would put on another £800-£1000 on our incoming, this is obviously something I didn't want to do with my past experience. But I have to man up at this point.

We look at our food bill.

Look into all of my service bills to get better deals.

...?......

Our sofas finish in may this year thank goodness one is dropping.
Boiler is 9 years started this September
Loan also got for franchise 15 years
Husbands loan is 10 years took out 3 1/2 years ago.

Bit daunting but I feel we may have options to get 'ourselves' out of this.

OK - so one of the £18000 loans is for the franchise? You said the franchise cost £12000 - is there any of the remaining £6000 left or has it all gone?

I think you need to think of the franchise loan as a seperate debt to the others. It should certainly be sitting on the balance sheet of the franchise. You say your mom is taking on the business - presumably this means she will keep any profit? I think that you need to talk to her about paying the loan installments each month and also make sure that she is paying the mobile phone bill for the franchise. This will free up another £300 + to go towards your other debts. That plus the £37 sofa payments and the other £250+ I think you can find in your SOA AFTER you've made up the deficit will mean you are throwing an additional £600 at your debts each month on top of the minimum payments - and that is before you earn more through work.

If you can earn an extra £800 per month, you could potentially be throwing an extra £1400 at the debt each month and be debt free (excluding the franchise loan) in around 4 years!

HOWEVER

If going back to work is going to damage your mental or physical health think long and hard before committing to this. You can still clear your debts working part time as you do now, it will just take a little longer - 8 years or so.

Now in terms of what to tackle first, in your position, I would let the loans run their course for the time being. You have lumped all the credit and store cards together in your SOA. Use the snowball calculator link at the top of the page to work out which should be paid off first (usually the one with the highest APR). When that is paid, throw the extra, plus the minimum payment you would have been making on that card to the next card and so on.

When you have paid a card off, call up and close the account, or alternatively see if they can give you a balance transfer offer to make the remaining debt cheaper.

When the cards have gone, you can focus on overpaying the loans, either by physically overpaying if they will let you or pushing the money into a savings account until you have enough to settle the balance.

With regards to the shopping, I suggest you start a thread on the Old Style board - they will get you on the right path.

Good Luck x

thejames

Willow_K wrote: »

OK - so one of the £18000 loans is for the franchise? You said the franchise cost £12000 - is there any of the remaining £6000 left or has it all gone?

I think you need to think of the franchise loan as a seperate debt to the others. It should certainly be sitting on the balance sheet of the franchise. You say your mom is taking on the business - presumably this means she will keep any profit? I think that you need to talk to her about paying the loan installments each month and also make sure that she is paying the mobile phone bill for the franchise. This will free up another £300 + to go towards your other debts. That plus the £37 sofa payments and the other £250+ I think you can find in your SOA AFTER you've made up the deficit will mean you are throwing an additional £600 at your debts each month on top of the minimum payments - and that is before you earn more through work.

If you can earn an extra £800 per month, you could potentially be throwing an extra £1400 at the debt each month and be debt free (excluding the franchise loan) in around 4 years!

HOWEVER

If going back to work is going to damage your mental or physical health think long and hard before committing to this. You can still clear your debts working part time as you do now, it will just take a little longer - 8 years or so.

Now in terms of what to tackle first, in your position, I would let the loans run their course for the time being. You have lumped all the credit and store cards together in your SOA. Use the snowball calculator link at the top of the page to work out which should be paid off first (usually the one with the highest APR). When that is paid, throw the extra, plus the minimum payment you would have been making on that card to the next card and so on.

When you have paid a card off, call up and close the account, or alternatively see if they can give you a balance transfer offer to make the remaining debt cheaper.

When the cards have gone, you can focus on overpaying the loans, either by physically overpaying if they will let you or pushing the money into a savings account until you have enough to settle the balance.

With regards to the shopping, I suggest you start a thread on the Old Style board - they will get you on the right path.

Good Luck x

I've put the full amount in that, the total of what I owe to that bank, the loan without interest was 1200. I will keep the franchise business as mine but mum will take over the business in a managers position.

I don't want to go to full time work and it will be hard but other mums do it I'm not the only one and this is our future.

Willow_K

I've put the full amount in that, the total of what I owe to that bank, the loan without interest was 1200. I will keep the franchise business as mine but mum will take over the business in a managers position.

I don't want to go to full time work and it will be hard but other mums do it I'm not the only one and this is our future.

Fair enough, but that £12000 still needs to be treated separately. Obviously if the franchise is not making enough money to cover the repayments then you will have to find the minimum payment out of your own money, but if it is turning enough profit, the loan payment should come out of profit before any drawings or wages.

The capital part of the loan repayment needs to come out of the Business Net Profits, but the interest portion would be an overhead coming out of gross rather than net profit meaning you won't pay tax on it.

You may already know all of this, but if you don't and want me to explain further, let me know.

Willow_K

Also, if your mom is going to be in a managerial position, will you be paying her a wage? In a new business with no capital, this is going to put you in a vulnerable position unless you can guarantee the business will make enough money to cover the salary - don't forget you will have employers National Insurance contributions on that.

If you are just going to pay your mom cash in hand and treat it as your own drawings, be careful that with your full time job, you don't go over the higher rate tax rate.

Also remember to put around 25% of profit each month away into a separate bank account for Tax and NI at the end of the year - you don't want HMRC chasing you on top of the other debts.

The other option is getting your mom to work as a contractor and invoice the business each month. That way, it is a simple overhead for your business and your mom will have to sort her own tax and NI out. In fact, I would suggest that this is your best option.

It's really worth getting a good accountant with a self-employed business - they are worth their weight in gold if they know their stuff - this is not an area to skimp on!

Happytogetdebtfree

Well done for keeping up postings and well done for taking positive steps xx

mfmaybe

I just wanted to add my support to your thread. I'm fairly new to MSE (in terms of really embracing the philosphy) and it's amazing how quickly you become addicted to saving money. Within a couple of weeks, I've gone from shrugging my shoulders at my overdraft to thinking "how could I have been so stupid to let that happen, I must fix it NOW". I'm certain that in a very short space of time, you will feel the same way, you will treat every penny as a prisoner, and you will be as addicted as anyone on here! :T

You can do it! Oh, and I was once about £25k in debt on a low single salary. I did eventually pay it off, but I didn't have MSE with me at every turn. If I did, I think I'd have done it in about a quarter of the time. Don't underestimate the power you will get from these forums. Best of luck