Not sure whether to go DMP route

MrHanky

Hi,

I have been thinking about going into a DMP for about the past year and a half now but each time I go to do it I change my mind and continue plodding along.

Im not really sure if my situation is that bad yet (maybe just trying to convince myself its not). I havent missed any payments and earn a decent salary but my debt is slowly creeping up despite my best efforts. I have done everything I can to reduce costs and have really cut down the use of the credit cards but I still have to go to it every now and then and basically not reducing my debt.

I have a spreadsheet to monitor income and outgoings and know that after all my bills have been paid we have £650 to our name to cover fuel (I work 110 miles away and have already accounted for £200 a month rent for living away) and food for the 5 (3 little ones 2, 4 and 8) of us.

Im very grateful to have a good job and im sure £650 is a lot for some people so feel like im moaning for nothing, but this goes pretty fast and when things go wrong with something (car or washer) then we have to use card and so it continues.

To put things into context my debt (excluding mortgage) is around £53k (my salary and wifes salary is less than that just). Like I say I am meeting commitments (just) and am also in the process of making a PPI claim which could pay back a potential 8k (which would be used to pay back some debt). My wife works nights at the weekend and has been trying to go back work full time for a while now, but jobs are obviously tough to get. If she can get a full time job then things could change quite a bit, but I have no idea when this would happen.


Also I am worried about other things if I have to take this route. I.e. for my job I am required to travel and use an Amex charge card to pay for stuff and then claim expenses. Will this have to go if I go into a DMP? If so then that places my potential to fulfil my role in jeopardy which is obviously something I dont want to do.

Is it time for me to accept that I could do with sorting this out or am I worrying too much?

Thanks for any advice.

Mark

startingtogetoutofdebt

I can fully understand your doubts about going with a DMP. My debts add up to £24,000 and I've been managing to make the payments but the debt is still going up as there just isn't enough money left once I've made minimum payments.

I've made an agreement with CCCS to enter into a DMP and have all the paperwork prepared and ready to go in the postbox but just haven't got myself prepared mentally enough to actually post them.

All the advice I've received on here and independent advice I received before contacting CCCS was that a DMP was the best way forward.

It's a hard thing to do but considering your situation may be the only way forward.

Good luck:)

Allypops

Does the £650 left really only have to cover food and fuel? Have you got everything else on your spreadsheet like: entertainment, clothes, haircuts, presents (birthday, christmas etc), contingencies, newspapers/magazines etc. These things if not accounted for elsewhere might really impact on that £650.

Would you consider posting a Statement of Affairs (SOA) and then som eof the more experienced peeps on here will be able to offer ideas and advice on other areas to cut back and whether you should be snowballing or whether a DMP is a more realistic option.

Allypops

Sorry I meant to ask, do you know how much of the £650 goes on food, and how much on fuel?

Are you only paying minimum repayments on ccs? Do you know all of the APRs on any loans/ccs?


Allypops

MrHanky

Yep it definately feels like a mental thing with regards to preparing yourself. Thats whats really been stopping me going further as it just feels wrong considering I (and my wife) got us into this mess. Feels like cheating if I go into DMP as I have always paid my debts.

Good luck to you with whatever you do, and thanks.

Mark

startingtogetoutofdebt wrote: »

I can fully understand your doubts about going with a DMP. My debts add up to £24,000 and I've been managing to make the payments but the debt is still going up as there just isn't enough money left once I've made minimum payments.

I've made an agreement with CCCS to enter into a DMP and have all the paperwork prepared and ready to go in the postbox but just haven't got myself prepared mentally enough to actually post them.

All the advice I've received on here and independent advice I received before contacting CCCS was that a DMP was the best way forward.

It's a hard thing to do but considering your situation may be the only way forward.

Good luck:)

Heffi1

A DMP does not mean you don't pay back your debt, it just means it is paid back in a way you can afford without leaving other important areas of your budget unaccounted for.

MrHanky

Hi,

Nope nothing like that is on the spreadsheet so when clothes for kids are needed it does impact and pretty much goes on a credit card.

Based on my fuel consumption fuel for my car costs about £130 a month. My wife then uses about £100 a month also. At the minute I am considering selling my car (worth about 2.5k) and buying a friends old Rover 220 for £300 in a bid to raise capital and knock a bit more off the debt.

I haven't got a statement of affairs currently but of my bills, the only things left that are classed as non essential are 2 mobile contracts which total £30 and Netflix at £6 a month. Sky channels have been switched off and I need to keep broadband (free for next 4 months and then £9.50) for work purposes.

Enery bill is horrendous and I am getting loft re-insulated next month under goverment grant as well as just doing a few other little bits to help. So with any luck I can get that down a bit.

Other than that I am out of ideas to save money.

I have 2 credit cards and 3 loans.

Nationwide CC is £4700 and currently costs £86 a month.
Tesco CC is at £3300 and currently minimum payment is £30 due to 0% on purchases for initial period.

Tesco loan is at 7.8% IIRC and this is £453 a month for 7 years. This has been going for about 20 months currently.

Savvi loan is for 15k and costs £294 a month for 5 years. This has only been going 2 months and rate is around 7.8%

Nationwide loan is the worst rate at about 12%. There is £7100 left on this at £167 a month, but this still has about 5 years left (need to check on this one).

Also have 2k overdraft which I am pretty much always in.

Wife also has £900 overdraft and store card with £200 on at the moment.

Mortgage is one good thing as is 1.6% rate and £832 a month, so less than other debts.

Only other things are usual Energy (£170), Council tax (£144), water (£60) and home insurance TV & phone.

I know that if I could just knock this down in the next 2 years to a manageable level, all will be better but that just doesn't seem to be happening and my wifes job hunting just seems to be going know where.

Food bill is around £400 - £500 a month depending of whether there is a need for nappies and washing detergents (which seem to cost a lot). Thankfully my wife gets 10% off at Asda where she works, so at least we save a bit there.

I eat as cheap as I can whilst away up north for work.

Thanks for your help.

Mark

Allypops wrote: »

Does the £650 left really only have to cover food and fuel? Have you got everything else on your spreadsheet like: entertainment, clothes, haircuts, presents (birthday, christmas etc), contingencies, newspapers/magazines etc. These things if not accounted for elsewhere might really impact on that £650.

Would you consider posting a Statement of Affairs (SOA) and then som eof the more experienced peeps on here will be able to offer ideas and advice on other areas to cut back and whether you should be snowballing or whether a DMP is a more realistic option.

MrHanky

Hi, thanks for the comment. Yep I understand this, but I agreed to take these loans out based on the rates and terms agreed at the time. It still feels like cheating not paying it back as it was agreed.

Thanks

Mark

Heffi1 wrote: »

A DMP does not mean you don't pay back your debt, it just means it is paid back in a way you can afford without leaving other important areas of your budget unaccounted for.

Allypops

Mark,

It looks like you've got all the info to hand, so next step is probably to get that SOA done, or go the CCCS (Consumer Credit Counselling Service) website and do their Debt Remedy Tool (it's anonymous and gives a report on what action it recommends in your circumstances i.e continue with contractual payments, DMP or IVA and there is no obligation to take the advice offered). Personally, I'd do both

The link for the SOA is -http://www.stoozing.com/msoc/soacalc.php

Get it all down on the SOA to have a realistic view of whether you can continue to meet repayments.

A little lesson learned from bitter experience: - we put off going down the DMP route for 2 years but all that meant was that our debts ended up growing from 49K to 78k. Of course, now I wish we'd done it a lot sooner!! Equally though, I can understand wanting to continue with agreed repayments if at all possible.

Ally

MrHanky

Thanks again Ally. I have just done my SOA (below) and will continue to read on at the CCCS site.
Think I am coming to terms with the fact I need to do something.

Need to get exact rates on 1 or 2 items and go through again to make sure I have accounted correctly for things like car maintenance etc, but it is pretty accurate.

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 2800
Partners monthly income after tax....... 280
Benefits................................ 188
Other income............................ 0
Total monthly income.................... 3268
Monthly Expense Details
Mortgage................................ 832
Secured/HP loan repayments.............. 0
Rent.................................... 200
Management charge (leasehold property).. 0
Council tax............................. 144
Electricity............................. 90
Gas..................................... 80
Oil..................................... 0
Water rates............................. 65
Telephone (land line)................... 20
Mobile phone............................ 30
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 9.5
Groceries etc. ......................... 500
Clothing................................ 50
Petrol/diesel........................... 220
Road tax................................ 36
Car Insurance........................... 60
Car maintenance (including MOT)......... 40
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 25
Contents insurance...................... 0
Life assurance ......................... 16
Other insurance......................... 0
Presents (birthday, christmas etc)...... 40
Haircuts................................ 20
Entertainment........................... 60
Holiday................................. 40
Emergency fund.......................... 20
HMRC child tax credits mess up.......... 23
HMRC tax mess up........................ 55
Total monthly expenses.................. 2687.5

Assets
Cash.................................... 0
House value (Gross)..................... 190000
Shares and bonds........................ 0
Car(s).................................. 4000
Other assets............................ 0
Total Assets............................ 194000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 168000...(832)......1.6
Total secured & HP debts...... 168000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Tesco CC.......................3300......30........0
Tesco Loan.....................23000.....453.......7.6
Nationwide CC..................4700......86........12.9
Cahoot OD......................900.......50........0
Nationwide OD..................2000......26........18.9
Savvi loan.....................14700.....294.......7.6
Nationwide Loan................7200......167.......12.8
Total unsecured debts..........55800.....1106......-

Monthly Budget Summary
Total monthly income.................... 3,268
Expenses (including HP & secured debts). 2,687.5
Available for debt repayments........... 580.5
Monthly UNsecured debt repayments....... 1,106
Amount short for making debt repayments. -525.5
Personal Balance Sheet Summary
Total assets (things you own)........... 194,000
Total HP & Secured debt................. -168,000
Total Unsecured debt.................... -55,800
Net Assets.............................. -29,800
Created using the SOA calculator at
Reproduced on Moneysavingexpert with permission, using IE browser.

Allypops

Hello again,

Whilst there are a couple of things that you could cut back on like groceries (the Old-style board is a good starting point), trying to cut energy bills etc I think it will be hard to make up that level of shortfall in your budget. When will the HMRC and Tax credit amounts be paid back? That will free up a little bit? Some may also advise cutting out the entertainment and holidays but you don't want to give up everything!

You said in your earlier post that your wife was looking for a full-time position- could her potential salary cover the shortfall after any childcare costs?

Your salary range seems similar to my DH - we will be losing child benefit in April - will you be affected by this? Hopefully not but something to bear in mind.

If you are on a DMP you are not usually supposed to have any further credit so I am not sure where this would leave you with your expenses card. As it is work expenses it may be different. Hopefully someone else will be able to offer some advice. You could always discuss this with one of the fee-free debt advisors - cccs, payplan and debtline.

Hopefully some of those who are really good at going through SOAs will be along to offer some advice.

Best of luck