SOA Suggestions Welcomed...

Warriorsith

Hi

My G/f and I have been together for nearly 2 years, for the majority of that I asked her to be carfeul onapplying for loans etc as I could seee the way she was heading. Finally last night my OH told me that her outgoings vs income was more than she could cope with. We have made some inroads the last few months from reducing Sky for £45 per month down to £15 and combining our phone/BB rather than have two providers.

Here's the money outgoings:

Rent £550
Coucil Tax £108
Elec. £87
Water £12
Sky £15
BT/BB £23
Home insurance £15
Tv License £11
Food £100 (this changes frequently as we do a big shop then have a purchase items from the local shops)

So each month we both pay £450 each towards the above, which covers that.

My OH earns £1591 per month inc Child benefits/Tax Credits, her monthly personal outgoings are:

Welcome loan: £115
Provident loans: £192
Her Nana: £100 (she got stuff form her names catalogue)
Aunt Wendy: £120 (who got a loan for my Oh last year to help her clear some other debts)
Blackheath loan: £ £138
Natwest loan: £65
Nursery fees 1: £160 (owes £1660 in back fees)
Nursery fees 2: £180 (cost per month inc vouchers provided)
Cataulgues (2 of ): £80
Rent: £550 (due to the fact that for 2 months she was inbetwen jobs and used the money I had worked for to cover the rent to pay towards other items, so she's repaying it)
Car insurance: £80

In all, all her total personal debt is:£16300

I earn bout between £800-£850 per month dependant of hours worked, my outgoings are:

Rent/Bills: £450
CC 1: £20
CC 2: £20
Provident: £120
Catalogues: £ 80

I own altogether £6300 in personal debt but £4500 is in two defaulted loans that I haven't repaid since 2004, the rest in provident loan, and 2 CC.
Once we've put our money towards the bills, what's left is our own and used to clear our own personal debts.

We currently owe £252 in C.Tax which we got behind in and the bailiffs are coing round next few days to collect. The nursery is insistant on regular payments as my OH hasn't kept to her word before. And as my OH was wanting to pass her driving test etc she has forked out over £500 this month alone to get lessons/test/car tax/insurance. There's a further £150 going out to drivind etc as she failed her test last week and has rebooked this for April.

So last night we worked out that her outgoings were £1783 verses her income £1591 and that will be permanent until Provident clears in Jan next year.

As a temporary measure we've cancelled the electricity bill and 2 of her loan payments otherwise she'd recieve bank charges for failing to pay and we've already claimed charges back and can not do so any more ( as she signed an agreement)

Can you lot please suggest some ideas to reduce our outgoings more, and to help her clear her personal debt, I've suggested cancelling PPI, we both thought of her taking a temporary p/t job on top of her full time mon-fri 9-5 job, and my OH is thinking of getting an IVA but am not sure that would be wise.

ALL Opinions welcomed, should she consider the IVA or a DMP , both our Credit histories are poor and I doubt we'd get a loan and to be honest we really don't want an extra one.

Many Thanks

nethesi

Hi There,

You've done the right thing by coming on for advice - this is a really helpful board and even though my debt is my mortgage I get loads of ideas and help from this board!
I'm sure some really helpful people with more experience of IVAs etc will be along in a minute

A few quick thoughts on your SOA:
Sky - could you cut that out - freeview is a really good alternative and has loads of channels?
What about Christmas, kid's birthdays emergencies etc?
Also you haven't included anything for transport - do you own a car or take buses or what?
Which leads me to my next question which is why does your OH need to pass her driving test? Obviously if she's already booked the test she should take it but once that's done I think that getting a car would be financially very difficult for you guys at the moment - and if you've managed so far I'd suggest you leave it as a goal for once you've cleared off some of your debt?
We don't own a car and as well as saving money it means there's no unexpected bills that colleagues and friends are always complaining of - the last thing you want right now!

I would also suggest you give your OH a break from paying you back? It's obviously every couple's personal decision how the deal with money but right now you both need to pull together?

In terms of payments I think that it's fairly clear you can't afford to pay all these loans off at once, I suggest you mimimise the payments on all but one and then pay back the hihg priority ones first. I normally see people suggesting highest interest rate ones first but I think probably council tax comes first for you to stop the bailiffs followed by nursery fees which are pretty essential for you! I'd also consider paying your partner's nan back as a priority especially if she's not well off? If she doesn't mind not being paid back quickly then obviously from a purely financial perspective you should put it off, but I always think we need to be able to depend on our families? Your call I guess, depends on


In terms of extra money - obviously if you're able to take on extra work that'd be great, also have you considered ebay/amazon as places to sell of your clutter. Your food shopping isn't outragous at £100 a month but by using coupons, BOGOF, last minute reductions etc you might be able to do more.

Good luck! I'm sure that by working together and with some determination you can solve this, there have been people on this board in really dire circumstances who've done amazing things, so take your inspiration from them!

Warriorsith

Thanks for your reply, I had mentioned selling stuff on ebay and believe you me she's had the reality check as last night was her full on lightbulb moment.

I don't see how the APR's will help out, that's only on my CC and am relaiming charges on one of them so should get enough back to clear both of them.

I don't fully understand what a DMP or IVA does and how does it affect your Credit rating for the years after you join either a IVA or DMP?

nethesi

Afraid I don't know much about DMP and IVAs either!

Glad your OH has had lightbulb moment and it's great you're in it together - I feel for the folks on here who have noone to talk stuff over with apart from this board (which is great obviously!)

There's a whole board about ebay so I'd pop over there and get some ideas - but I think it's fairly simple, doe it a couple of times but never much.

The reason albertross wanted your APRs (which in normal speak is interest rates) is to work out which debts you should concentrate on first - so for example if Natwest was 20% and Blackheath was 5% you'd be better off paying off Natwest first - there's a 'snowball' calculator somewhere (in a sticky at the top of this page) which you can use to work this out and how long it will take you!

Warriorsith

It tooks ages to get a reduction on the Sky package which had been the full package costing £45 up until a couple months back.

I ride a bicycle to work but have had to recently get a new one via my catalogue, she normally gets a bus/taxi to work but managed to get a 2nd hand car for £100 from her mates dad, once she passes then the cost of the car would be less than her monthly cost of transport via buses/taxis, I only get a taxi to work if am in early on really poor weather days ie gale force outside.

My Oh too smokes and is again going to try and give up this dirty habit saving atleast £75-£100 per month on them.

We have no money set aside for birthdays or emergancies, my OH isn't repaying anythink she is however having to repay for a months rent that she should have paid back in december as I worked hard for 2 months to ensure we'd be alright and gave her the money to pay bills but not all of it went to household bills hence being behind.

liz105

I think it may be worth contacting CCCS or PayPlan as soon as is realistically possible. Even if just for a chat.

If either of you have missed any payments recently your credit record will be adversely affected anyway. And I'm very sorry to be blunt but if you have missed a lot/not paid for a while it will already be shot to pieces.

And it may be a little after the event now, but was there any reason in particular you bought a new bike from a catalogue instead of from a shop or even a second hand one?

bikerqueen

It may have taken ages to get a reduction, but at the moment you can't afford the £15 either.

Both a DMP and an IVA will stuff up your credit ratings, as you are essentially defaulting on the payments. However, you need to do *something* as your first post says cancelling the payment on the electric and loans is a temporary measure but something proper needs sorting or these too will become debts.

Has your OH addressed her spending at all? (if she raised these debts alone) or will this problem continue to get worse?

I'd suggest a chat with payplan or the CAB or CCCS, someone who can give you advice tailor made to your situation.

If the car was 100 quid, is it likely to break down? What happens if it does, could you fix it? How will you pay insurance/tax/mot/service charges? After all these are allocated is it really cheaper than the bus? (taxis are a huge extravagence with her level of debt)

nethesi

HI Warrior,

Still would consider cancelling the Sky - it's not how much discount you're getting that's important: it's how much you're spending (something I always have to remind myself when going shopping!)

good on your about the bike - my partner and I also both ride to work, and it saves bags of cash...

... however these are all things to add to your SOA:
Bike maintenance (just an estimate but services, new inner tubes etc all add up!)
Smoking - although good luck with getting this down
Petrol money
Bus fare
Taxi fares etc (although with the weather improving hopefully this will be less)

One idea I find really useful is to keep a spending diary for a couple of weeks and then work out how much you both spend on everything. I actually have a spreadsheet going where I put every single thing we each spend in it and it really makes us disciplined. I personally find joint finances are another great discipline - I always think before I buy anything this is coming out of 'our' money not out of 'my' money and so I am more strict with myself - but as I say this is a decision for you as a couple!

Warriorsith

I know the differant APR's and worked out which order to pay off first, thing is that Provident (177%) is set to be repaid each week until Jan, Blackheath (77%) ends June 2008, Natwest 22% March 2009, Aunty Wendy £120 til March 2009.

The catalogues are interest free and we get codes that pay Sept 07 etc so theres a delay in repaying that to a point.

My CC are BarclayCard 27.9% Apr and Capital 1 25% Apr.

Like I said due to poor Credit Histories OH has got loans with companies that give money to her quickly but due to the high interest rate cost more to repay. I had to go with Provident twice thanks to OH being sick 6 months back and we needed money for bills and again just recently as I didn't have enough money for bills again when OH was inbetwwen jobs. I hate being with Provident as I could be using the money to clear my defaults. or in this case helping ease so burden of nursery fees.

SO are you lot suggesting that my OH gets a DMP/IVA instead of an extra job to combat this situation. At the moment I know her rating will be poor but how bad will a DMp/IVa affect it.

CLAPTON

you both need to work out realistic spending budgets... that include everything you actually spend.. only after you do that can you see how much you have left to pay the debts... and only then see the realistic alternatives.

a budget has to be for along time not just this month so you have to include something for clothes, socialising, presents, haircuts, and 100 for food seems very low to me..are you sure thats all you spend.

start a spending diary and write down everything that you spend and be absolutely realistic..if you spend it write it in the budget.

a DMP or IVA trashes your credit record for 6 years but without seeing a real budget its not really possible to form a proper judgement.

read this for more derails of the soa process


http://forums.moneysavingexpert.com/showthread.html?t=107280

tyllwyd

One problem with getting an IVA is the money owed to family members, which is going to make things more difficult. Do you owe money to the nursery you are currently using? - I don't suppose they would be too impressed if she asked them to agree to an IVA either.