i9 want to be debt free

dan160987

Hi everyone,

just joined the website as i want to become debt free and im after your advice and experiences.

basically i am 25 and owe a lot of money. my salary was fairly high but has come down with a bump and i now owe £25800.

most of it too lloyds across several products.

lloyds loan 12500 25.9% 400pm
lloydst overdraft 3500 18.5% 50pm
credit card 1500 29.9% 50pm

asda credit card 3750 29.9% 125pm
thomas cook cc 1650 29.9% 45pm
post office cc 2700 19.9% 75pm

745pm with 500 going to lloyds.

i have spoken to lloyds customer care unit tody and theyhave agreed a loan of 17200 t 9%apr for 84 months.
bringing my payments to them down to 270pm total.

im not sure whether to go head or not? should i just go straight to dmp or iva or bankruptcy?

or should i try this route first as they are saving me nearly 250 per month which should e fine.

shoudl i contact my other provideds aswell to get the payments to them cut??

thanks

dan

TeamNicholson

You havn't mentioned your income or outgoings. If you post a SOA someone will be able to help you try to reduce your outgoings. If you can afford the payments on the new loan I would inclined to say go with it as a DMP, IVA or bankruptcy should not be taken lightly.

Tixy

Hi and welcome to the forum

First off you need to work out how much you can afford to your debts on your reduced income. As suggested above doing a full statement of affairs is probably the best starting point as that will remind you to budget for everything and see how much is left over,
Once you know that you can decide if the new loan and the remainig debt are affordable or not.

This is the calculator we use - http://www.makesenseofcards.com/soacalc.html

dan160987

here is my soa

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1613
Partners monthly income after tax....... 300
Benefits................................ 80
Other income............................ 0
Total monthly income.................... 1993

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 209
Rent.................................... 350
Management charge (leasehold property).. 0
Council tax............................. 90
Electricity............................. 50
Gas..................................... 50
Oil..................................... 0
Water rates............................. 10
Telephone (land line)................... 25
Mobile phone............................ 70
TV Licence.............................. 10
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 50
Petrol/diesel........................... 80
Road tax................................ 5
Car Insurance........................... 74
Car maintenance (including MOT)......... 15
Car parking............................. 15
Other travel............................ 15
Childcare/nursery....................... 0
Other child related expenses............ 80
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 20
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1458


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


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 9000.....(209)......13
Total secured & HP debts...... 9000......-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
consolidation..................17200.....273.6.....9
asda cc........................4000......125.......24.9
thomas cook cc.................1650......40........19.96
post office cc.................3000......75........19.69
Total unsecured debts..........25850.....513.6.....-


Monthly Budget Summary
Total monthly income.................... 1,993
Expenses (including HP & secured debts). 1,458
Available for debt repayments........... 535
Monthly UNsecured debt repayments....... 513.6
Amount left after debt repayments....... 21.4

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -9,000
Total Unsecured debt.................... -25,850
Net Assets.............................. -34,850

currently my partner is on mat leave so the income is 0 but her benefits are an extra 280 permonth, this is a soa for when she returns to work at th end of april.

any help is appreciated

dan

lvm

Usually consolodation is not a recommended option but in this case I'd be inclined to go for it. Would they not give you enough to cover your other credit cards?

If you do decide to do it, I'd recommend cancelling your Lloyds CC and overdraft (or reducing the limits to a couple of hundred pounds each).

Did you spend the money on anything you can now sell? Your insurance seems high - is this a flash car you could sell and downgrade to a cheaper one?

taffy056

Spending £50 a month on clothes any way to reduce that down ? Mobiles at £70 a month, maybe ask for a cheaper deal ? Also have you tried asking lloyds for a cheaper apr on the loan ? And the remaining cards seem to be quite high apr wise, ask them for a lower apr the worse they can say is no. Have you thought about selling on eBay the stuff you don't need like the items in the loft you know you'll never use again but are worth a few quid.

dan160987

Hi thanks for your speedy reply,

No they will only consolidate the lloyds tsb lending and have advised i contact my other creditors.
my car is not particularly flash but it is fairly new (my partner took out the hp 2weeks before being made redundant 1 year ago)

There are a few things i can sell and i am in the process of doing so (a pram now my daughter is in a stroller and various clothing items) i have a few pieces of jewlery tha could probably fetch a few thousand (about 3-4) but i want to keep these incase things get really bad...

does everybody think my spending is proportionate to a two parent 1 child family?

we are also looking to move to a smaller housing association property that should decrease our rent slightly.

thanks

dan

dan160987

thanks taffy,

the clothing will hopefully reduce soon, my daughter is growing at an astounding rate! and i need to wear clothes from my store as uniform (they give us an allowance but expect us to wear(discounted) new season at all times.

the phones are fairly new but will reduce asap, alot of this is a hangover from when my partner was earning mre money (she was on 1600 too but was made redundant, we also lost her considerable maternity allowance due to the companies insolvency)

with regards to lowering the apr lloyds have alreay reduced by approx 20%! the saving made by this consolidtion are circa 9000!

273.6 x 84 = 22982.4

vs

398+45+50 * 60 = 31080

i will be contacting the other card providers to hopefully cancel these cards and set up a monthly payment plan at reduced interest over 5-7 years? anybody had experience with this and the likleyhood of acceptance?


as i said the clothing that my daughter is growing out of we are selling on mamatrader.

cheers

antonia1

Hi Dan and welcome! Your SOA looks pretty good for your family, the only things I can see you have already explained, except that you should put something in for medical expenses (even if it is just dentist once per year). Also, have you checked you are getting all the benefits you are entitled to (turn2us.org.uk)? Is there any chance your partner will get more hours at work or a new job? If her company couldn't pay her statutory maternity pay then you may be able to claim Maternity Allowance from the government, but I'm not sure if this is retrospective (see direct.gov.uk).

The reason many people on these boards are wary of consolidation is that plenty have consolidated then spent on the credit cards again. Can you be sure that you won't do this?

dan160987

thanks antonia,

im glad yuo think it looks ok.

i can be sure as nobody will lend to mee anymore :rotfl:

but on a serious note i have requested that lloyds put a block on any appication for credit with them over the next 24 months which they were happy to do. they are leaving me a 250 interest and charge free overdraft hich im happy with (allows an extra cushion to stop any unwanted unauthorised od fees)


i have actually taken the consolidation now thus saving me arox 240 per month and only extending mlloyds debt free date by 12 months! which i think is pretty good.

i was unsure whether ot go this route or just the whole hog and a dmp? but i really want to pay my creditors back in full, i spent the money and i need to return it!

as they say when does 5000 cost 7000? wwhen youdon't have it!

dan

taffy056

Ok so you've done it, so look to get the apr's down on your cards that are left, a dmp will have an impact on your credit file, and I think you'll have to include lloyds loan in it as well. But I think you don't need that anymore tbh , have you tried some of the challenges on here that help encourage you to pay a little extra off your bills, just a couple of quid a day is one of them, you will hardly miss it but over a year almost £750 off your bills on top of what you are paying. And you will hardly miss the money because you make slight changes , do you think that on your SOA that you can lop off £2 a day off it ?