Bad Debt,please Help!!!!!!

teddy_2

HI,im a newbie here,this is my 1st post,myself and my partner have gotten into a spiralling debt problem mainly due to our bad money management,we have credit card debts of £8,000(between us),an unsecured loan of £32,000(paid off previous debts),we are both unhappy that we have aloud ourselves to get into this bad situation,our current mortgage is £35,000,property is valued at £145,000,we are thinking of reducing our monthly and clearing all of our debts this time by Re-mortgaging our property,our combined salary is £24,000pa,here are our approximate outgoings for cc's,loan and mortgage-:£330(mortgage),£352(loan),£230(cc's minimum payments),we are desparate for any helpful advice A.S.A.P.
Thanks Teddy.


BG note: Split from original thread for clarity:)

JULIE

hi there..have you tried moving your credit cards to 0% ones?
a lot of the other threads have really useful info on reducing outgoings.. even small ones like food budgeting etc... april grocery challenge.. and queenies pin money challenge are good to check out.. and i'm sure you'll have rreplies from others with more knowledge than me that can advise you. Good Luck x

JULIE

just a thought.. if you cant tranfer cc's to 0% ....try and pay off the highest interest rated one first .. you can even transfer money from your lower rated ones on to your higher rated one to get that one paid off quicker

Bargain_Rzl

One question I must ask is, do you still have a problem with "bad money management"? In other words, are you still spending more than you can afford? If so, resolving your immediate debt problem by borrowing against your mortgage is a VERY bad idea. If you do this and your debts continue to increase, you might very easily get into a situation where your house is at risk of repossession. You should only secure debts against your home when you are confident that the debts are extremely unlikely to go out of control.

Suggest you draw up a budget. Income, essential outgoings (be realistic -don't fail to allow for things you KNOW go out every so often even if you currently think of them as "ad hoc expenses") and debt repayments. If it is possible to meet your debt repayments simply by cutting back for the next few years, this is infinitely preferable to putting your home at risk.

If the figures just don't add up then further help will be forthcoming from this forum.

teddy_2

Hi julie,thanks for your advice,we are currently paying off the highest interest rated cc's first as you have already suggested
cheers Teddy x

teddy_2

Hi Bargain RZL,Thankyou for your prompt reply,We feel as though we are gaining control of our debts by prioritising them,i.e,paying off highest rate interest cc as
quickly as we can whilst maintaining all the other monthly debt payments by DD,but if poss we would sooner try to resolve in clearing the debts sooner rather than later,we have never defaulted on any payments especially the mortgage repayments,in this case would we still be better off Re-mortgaging?????.Thanks Teddy.

humbug_4

teddy wrote:

we have never defaulted on any payments especially the mortgage repayments

As you haven't defaulted on any payments you are likely to still have a good credit history so there is a good chance that you could get a 0% credit card balance transfer and as has already been said - you won't be putting the roof over your head at risk as you would with a remortgage.

moggins

I have to say I agree with trying to reduce your debt instead of increasing the mortgage, a £35K mortgage is a rarity these days and if you don't change your spending habits then there is the likliehood that you will end up in the same position in a few years time and again looking for a quick fix.

The Money Saving oldstyle board is great for learning how to work to a budget and how to free up money so that you have more to throw at the credit card bills, even paying a little over the minimum payment will lower those interest payments quite quickly. We have a 5K loan and by paying an extra £20 a month we will have paid it off 4 years early. It's helped us alter our spending and budgeting considerably.

HLK

Hi there...

Your mortgage payment seems quite high for an outstanding amount of £35K. Are you overpaying ? Just wondering if you could be getting a better deal on your mortgage anyway.

You've obviously tried to sort this out in the past, hence the loan of £32 to consolidate previous loans.

Personally I think that if it's in your natures to let things slide a bit then juggling 0% cards won't help. It may be easier to move all the debt to a mortgage and get rid of cards altogether. No temptation then you see.

If you look for advice on this site re re-mortgaging, get a good product that allows overpayments and do it that way. Once you've paid all the credit card companies cut up the cards and do without.

This may not be the cheapest way to do this but it may have more chance of succeeding.

Hope this helps.
HLK

Magentasue

I think what everybody is saying, is that who you owe the money to (loan/mortgage/CC) is only part of the story.

You are in debt because you spend too much. Me too! But you can only clear debt if you don't add to it. As previously suggested, you need to draw up a budget - I use Microsoft Money but you can you the spreadsheet on this site or one from the online debt management packs.

If you're like me, you will find your outgoings exceed your income - that's why we're here! In the beginning, I got rid of the TV, had the phone cut to incoming calls only, cut food bill to shreds etc. Now our income has increased, we can afford to live less frugally but I know exactly what we can and can't afford and feel in control.

So, do the budget! The idea is that you work out your essential expenses, then allocate what you have left. Debt repayment comes after the essentials, not before, I know that's obvious but it's where I went wrong to start with. By the time I paid all the minimum payments, mortgage etc we didn't have enough to buy food. So ended up using credit, which meant more debt ...

Xbigman

Can I just add that if you remortgage you HAVE NOT cleared any debt, you've simply moved it. As mortgages are paid off over decades you will almost certainly pay more in the long run.

Like others I suggest you do a full budget. Cut up credit cards and pay off the highest APR's first. Follow all the advice on this site to cut costs. This might include remortgaging to a better mortgage deal to save money but NOT to consolidate.
Good luck.




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