24K debt, 25 years old, work in a bank = problem!!

gpage2000

Hi to all. I'm in a sticky situation. My fiancee and I have built up 24.5K of debt on 2 loans and 4 credit cards over the last few years... i guess due to not sitting down and looking at what we could actually afford, and being tempted in on most of the credit.

We currently have 1100 in a month (whilst i am in 'training' and 1500 out (fiancee is not working due to 2 babies!) so we're falling short 400 per month, and i am stumped as to where to get that money from! We can not get a secured loan due to not being able to afford it based on our current low ish income.

I can not deal with CCCS due to my work, as I work in a bank - apparently it's in my contract, and I DO remember seeing something about how out finances must be in 'acceptable order' not involving any form of debt management.

So we're thinking of a 'debtbuster loan' style mega loans to clear the lot, and we should get a good interest rate as our credit rating is both excellent (as checked on equifax website) - i've been quoted around 8.5%, and bearing in mind one of the loans is 13.9% and most of the credit cards are over 15% now (we have exhausted the limits, and can not transfer anymore due to affordability checks when applying to a new card company)

So in effect it would seem to save money, but will add 20 years! HOWEVER... I recently (6months ago) changed jobs and am on a 2 year fast track to management course, so I aim to be making serious overpayments, say £200 per month, which would clear the loan in around 9 to 10 years - so my area of help is....

(1) Does a 'debtbuster loan' count as a debt management scheme, or is it just a bug secured loan? (i.e. will it affect my credit rating for the worse?)

(2) Any ideas on if there would be any fines on the secured loan if i were to clear it early? Or does it work like on a secured loan? It'd be on a variable rate, so not tied in as such...

(3) Would i be best to struggle through the next few years and assume i'll get a pay rise? I could then re-mortgage and knock it all on the head. But having said that, where could i get the 400 per month from to help?!

Any advice would be excellent.
Thanks for reading

Gav.

itsarichmansworld

:hello:

Gav secured loans are usually mega expensive and can feel more like a weight around your neck.

If you do a full SOA see southern scousers sticky we can see what you can cut back on.

£400 can be saved quite easily.

I understand wanting to re-mortgage I myself are doing this however I am improving my home too (new kitchen) etc

Do the soa first before getting loans etc

bobbie78

Hi

First off you need to have a read through SS's first timers thread and post an SOA showing what your income and outgoings are going to be. Have a look at Entitledto.co.uk to see what kind of benefits you might be able to claim for fiancée.

OK once you have your SOA sorted out with your APR's you can have a play with the snowball calculator to work out which debts to pay off faster to reduce the amount of interest you are paying over all.

If you post your SOA on here people will come will a million ways to reduce your spending on all the boring things like utility's and insurance.

If you are really worried take all your paperwork for all the debts down to your local CAB office and explain the situation and they will help you negotiate with the creditors but this is when it starts messing up your credit rating. You can also look on the national debt website / give them a ring for advice too which is a lot easier once you get the paper work together they will have worked with other people who work in banks so will help steer you in the right direction. Either way the SOA is the best place to start to see just where you are at.

After you've done all that you need to get a little note book and write down in it in great detail what every penny is spent on, every tenner from the cash machine, every mars bar. So then at the end of the month you can see if it tallys with what you think you are spending on things, and puts it in black and white you have a 100 quid starbucks habit (ok that's me but it is amazing what you find).

Good luck and look forward to seeing your soa soon.

ZTD

gpage2000 wrote:

(3) Would i be best to struggle through the next few years and assume i'll get a pay rise? I could then re-mortgage and knock it all on the head.

Your loans are debt. Your credit cards are debt. A mortgage is debt. You can not pay off debt with debt. Debt can only be paid off with money. You put £20,000 on your mortgage, you have not knocked anything on the head. You still have to earn £20,000 PLUS INTEREST more than you spend, in order to pay it off.

If you believe that by putting £20,000 on a mortgage is knocking something on the head, you will run up more debt on your credit cards and will end up with £20,000 unsecured debt again. Which will undoubtedly be fatal for your finances and your job.

gpage2000 wrote:

But having said that, where could i get the 400 per month from to help?!

First step, is posting an SOA.

gpage2000

without tooting my own horn, over the last 6 months i've got everything down to as cheap as possible, bar the debt!

OUT

Mortgage 465 (4.79% for 2 more years!)
Council Tax 86
GAS/ELECTRIC (recently changed) £40
WATER and sewerage 30
TV licence 11
NTL (phone broadband and TV) £30
lfe cover 12.50 (joint)
contents ins. £8! (up to 20k)
buildings 17

DEBT OUT:
HSBC LOAN 8900 = 177 pm ( 4 years remain 7.6 apr)
other loan 5500 = 137 pm (3 year, 13.9 apr)
ccard 1 HSBC = 2300 = 80pm min (9.9 apr fixed)
ccard 2 Virgin = 3700 = 75pm min (10.9% ish)
ccard 3 Tesco = 2850 = 85pm min (15.9%)
argos store card = 700 = 20 pm (19.9!)
overdarft = 500 quid = 4 pm (about 15.8)

(note that the cards have also been moved around to get the cheapest deals at the moment, the above rates are the standard rates)

And then income.... me = 950 ish min.
fiancee (tax credits etc to baby) = 250

we are going to try and find a sunday job for my fiancee which will get 100 to 150 per month after tax more, and i'm due a general pay rise in April, a rise for completing initial training and a rise for going up a 'grade' at my job

I also get a quarterly bonus.. approx £400 min up to whatever i can!

I'm more worried about the credit cards, as even with just the 400 a month extra, this will only cover the minimum payments really

hope this is enough info to get people's brains going!
Gav.

Thanks for the posts so far, good to know there is help out there!

ZTD

I can't seem to see "Food" anywhere...

Sea78

hi,

a few things - food, clothes (babies etc), milk? nappies, going out?

It's hard to include everything at first and well done for posting! This board should be a great help for you.

Sea xx

Timmne

Hi Gav, :hello:

Have you thought about getting a LOB credit card? I have just grabbed a M&S one that's 3.9% on balance transfers done in the first 6 months, for the life of the balance. that could take care of your credit cards and store card depending on the limit they give you.... The 3.9 is the best rate you'll find compared to loans, although it's not as good as getting a 0% card (but then you have to be a tart so may cause you more issues than you can cope with!).

Try getting a second job as a delivery driver for a local take away restaurant (I know it's a bit specific but I've had experience!). I used to earn around £90 per weekend after tax; this is a huge £360 extra every 4 weeks!

Also your fiancee could register as a mystery shopper (search for a thread on this in this forum) - my girlfriend has just done it and it's great as it's varied times and dates so doesn't have to work against her busy schedule! She's booked on £80 worth of visits this week alone (before tax) and could be a lot more!

Could your Fiancee work? Depending on her qualifications she may be able to get a job and leave the kiddies at a nursery if it's giving you any extra cash after childcare costs....

Hope this helps!

gpage2000

Yeah sorry... i forgot to mention that we are in fact spiders and eat flies, so there are no costs involved there! But seriously...

All food, nappies baby stuff is covered with the tax credits and monthly benefit which is about 50 a week, and then 110 a month - and we even manage to squeeze some bills out of that also... and going out, doesn't happen at the moment, due to 2 kids and no money, so that's no worry right now.

since we've 'hit the limit' on all borrowing, i'm confident we couldn't save any more money on bills (i regularly check the net and shops for the best deals), we did a detailed excel thing on the computer and we're basically 400 short consistantly, we have learned from our mistakes in terms of purchasing, it's really just that mass debt sitting there... and it doesn't ever seem to be going anywhere.

Any kind of borrowing that will badly affect my credit is not an option, due to working at the bank - i' get anual FSA and other checks and can not be in a 'bad money situation' - though it's okay to have the debt i have know, as it is all 'normal' debt, even though unmanageable for us!

Sorry if i miss anything else out, please let me know - as i'm sure you will!!

Gav.

gpage2000

Thanks Timmne.. it does make sense, we've not really thought about full time childcare, as we would rather bring up the kids ourselves i guess... but it's better than ending up in more debt with no security,

My fiancee could easliy earn 1000 after tax, and so would be great, but we'd then be looking at a heft care cost of probably £200 per week, and a loss of a massive chunk of the tax credits... but i think with us both in work we can apply for up to 80% back on the cost of childcare.

She is planning to go back to full time work, but when the kids were in full time school, which is 1 year left for our son, but 3 years for our recently born daughter!

We will add it up and see what happens, but perhaps a part time job for her... evening even, as if she is working less than 16 hours, it'll not affect the current benefit too much.

I had thought about a weekend job, but again i've got the dilema of not spending time with the family vs clearing debt.

If i could somehow freeze everything for 3 years i'd be fine, as then i'd be in management, taking home say 2k, and fiancee say 500 min... then we'd be fine, as we would be able to clear the debt at a rate of £1200 per month!

Perhaps i have just answered my own question!?

slowlyfading

I'm sure more experienced people will be alone soon, but I thought I'd suggest, can you sell anything on amazon/ebay? have a look around and clear out everything that you dont use/need. Its a bit of extra money coming in that you obviously need at the minute. Chin up, you've taken a great big step in the right direction
SF :heartpuls