What a Right Pickle!

nomoredebtplease

Hi there. My wife and I have just recently seen the light and realised that we cannot continue to live like we have done up until now.

A mixture of enjoying too much of the good life (mostly on the never never) pre-children, money on IVF to have children and wanting to continue spending beyond our means after having children means that we're now staring into a huge debt laden abyss.

I've completed a SOA (see below) and have also been in touch with Step Change who have recommended a DMP. We are both at the stage where we are willing to go along with anything and make whatever changes we need to make to our spending habits to get out of this mess - APART from ONE thing. We want to continue to send our children to a private school. It would kill us to have to withdraw them from there.

It's pretty clear to me from looking at the SOA where the savings need to be made. But what I'm most interested in knowing is if anyone has any advice or experience of starting up a DMP when there is so clearly an item (such as private school fees) which is such a large 'optional' spend per month. What are our creditors likely to think?

Thank you to anyone who can help us get out of this mess

Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 4300
Partners monthly income after tax....... 2900
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 7200

Monthly Expense Details
Mortgage................................ 1800
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 180
Electricity............................. 100
Gas..................................... 100
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 15
Mobile phone............................ 100
TV Licence.............................. 15
Satellite/Cable TV...................... 40
Internet Services....................... 20
Groceries etc. ......................... 400
Clothing................................ 50
Petrol/diesel........................... 300
Road tax................................ 38
Car Insurance........................... 60
Car maintenance (including MOT)......... 83
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 325
Other child related expenses............ 1800
Medical (prescriptions, dentist etc).... 47.5
Pet insurance/vet bills................. 30
Buildings insurance..................... 25
Contents insurance...................... 25
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 65
Entertainment........................... 200
Holiday................................. 200
Emergency fund.......................... 0
Total monthly expenses.................. 6158.5


Assets
Cash.................................... 0
House value (Gross)..................... 525000
Shares and bonds........................ 0
Car(s).................................. 10000
Other assets............................ 5000
Total Assets............................ 540000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 410000...(1800).....3.99
Total secured & HP debts...... 410000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Bank of Scotland...............6000......180.......18
Barclaycard....................18000.....410.......18
Barclaycard....................12665.....380.......18
Virgin.........................11500.....200.......18
Santander (Overdraft)..........2500......125.......0
Santander (Overdraft)..........1500......75........0
Natwest........................8600......258.......18
Natwest (Overdraft)............5000......250.......0
Natwest........................6000......180.......18
Nationwide.....................3000......90........18
M&S............................2200......66........18
Barclaycard....................4200......126.......18
Total unsecured debts..........81165.....2340......-


Monthly Budget Summary
Total monthly income.................... 7,200
Expenses (including HP & secured debts). 6,158.5
Available for debt repayments........... 1,041.5
Monthly UNsecured debt repayments....... 2,340
Amount short for making debt repayments. -1,298.5

Personal Balance Sheet Summary
Total assets (things you own)........... 540,000
Total HP & Secured debt................. -410,000
Total Unsecured debt.................... -81,165
Net Assets.............................. 48,835

thatsean

My only advice, and this isn't too (at all) ethical is to talk to Step change, understand the budget headings that they use and then distribute the school fees through these categories, leaving a chunk as 'other'. I use Payplan, and did this for university fees, which whilst optional, are my get out of debt card!

Good luck. It's an emotional start, but the relief of mailing off that pack with everything signed and done is fantastic!

Tonnes of advice on here from helpful people - you're in good company.

Oh, don't forget to open accounts with banks outside of the groups' of your creditors. Make them basic accounts to avoid the temptation of an overdraft.

heartbreak_star

nomoredebtplease wrote: »

Hi there. My wife and I have just recently seen the light and realised that we cannot continue to live like we have done up until now.

A mixture of enjoying too much of the good life (mostly on the never never) pre-children, money on IVF to have children and wanting to continue spending beyond our means after having children means that we're now staring into a huge debt laden abyss.

I've completed a SOA (see below) and have also been in touch with Step Change who have recommended a DMP. We are both at the stage where we are willing to go along with anything and make whatever changes we need to make to our spending habits to get out of this mess - APART from ONE thing. We want to continue to send our children to a private school. It would kill us to have to withdraw them from there. Why? Seems a bit crazy if you can't afford it!

It's pretty clear to me from looking at the SOA where the savings need to be made. But what I'm most interested in knowing is if anyone has any advice or experience of starting up a DMP when there is so clearly an item (such as private school fees) which is such a large 'optional' spend per month. What are our creditors likely to think?

Thank you to anyone who can help us get out of this mess

Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 4300
Partners monthly income after tax....... 2900
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 7200

Monthly Expense Details
Mortgage................................ 1800 Silly question, but can you sell up and downsize?
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 180
Electricity............................. 100 Both fuels are huge. Do you leave things on overnight or have the heating on all day?
Gas..................................... 100 As above
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 15
Mobile phone............................ 100 Massive. Call them up and ask to downgrade a tariff.
TV Licence.............................. 15
Satellite/Cable TV...................... 40 Cancel and go Freeview
Internet Services....................... 20
Groceries etc. ......................... 400 Pretty big - pop over to the Old Style board to cut this
Clothing................................ 50 Adults wear what you have for now. Sell the kids' old stuff to offset new
Petrol/diesel........................... 300 all essential journeys?
Road tax................................ 38
Car Insurance........................... 60
Car maintenance (including MOT)......... 83
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 325
Other child related expenses............ 1800 This is massive. You really can't afford this.
Medical (prescriptions, dentist etc).... 47.5 High. Can you buy a certificate?
Pet insurance/vet bills................. 30
Buildings insurance..................... 25
Contents insurance...................... 25
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100 Halve this, or quarter it.
Haircuts................................ 65 Leave it an extra week or two between cuts and look for cheaper salons or colleges.
Entertainment........................... 200 Halve this.
Holiday................................. 200 You can't afford this.
Emergency fund.......................... 0 Need something here to stop relying on credit.
Total monthly expenses.................. 6158.5


Assets
Cash.................................... 0
House value (Gross)..................... 525000
Shares and bonds........................ 0
Car(s).................................. 10000
Other assets............................ 5000
Total Assets............................ 540000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 410000...(1800).....3.99
Total secured & HP debts...... 410000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Bank of Scotland...............6000......180.......18
Barclaycard....................18000.....410.......18
Barclaycard....................12665.....380.......18
Virgin.........................11500.....200.......18
Santander (Overdraft)..........2500......125.......0
Santander (Overdraft)..........1500......75........0
Natwest........................8600......258.......18
Natwest (Overdraft)............5000......250.......0
Natwest........................6000......180.......18
Nationwide.....................3000......90........18
M&S............................2200......66........18
Barclaycard....................4200......126.......18
Total unsecured debts..........81165.....2340......-


Monthly Budget Summary
Total monthly income.................... 7,200
Expenses (including HP & secured debts). 6,158.5
Available for debt repayments........... 1,041.5
Monthly UNsecured debt repayments....... 2,340
Amount short for making debt repayments. -1,298.5

Personal Balance Sheet Summary
Total assets (things you own)........... 540,000
Total HP & Secured debt................. -410,000
Total Unsecured debt.................... -81,165
Net Assets.............................. 48,835

£81k of unsecured debt!? :eek: *faints*

OK, OP, I've made some suggestions in purple - I've had a couple of glasses of plonk so I hope I'm not harsh!

I must ask...how much of your spending is "keeping up with the Joneses"? Why do you HAVE to send your kids to a private school? In a year you could pay off a quarter of your debt just with those fees.

Good luck!

HBS x

redpete

nomoredebtplease wrote: »

But what I'm most interested in knowing is if anyone has any advice or experience of starting up a DMP when there is so clearly an item (such as private school fees) which is such a large 'optional' spend per month. What are our creditors likely to think?

I don't know what a creditor would think, but I think that this is unsupportable when you have such a shortfall each month. Hard to believe that state schools of acceptable quality don't exist in an area that has £500k+ houses.

Electricity............................. 100
Gas..................................... 100
Electricity and Gas both very high - ours are each around £70 a month for a 5-bedroomed house and I thought this was high.
Mobile phone............................ 100
High again, you can get smartphone contracts for less than £25 a month, might need to cut your usage to fir the contract.
Groceries etc. ......................... 400
Consider moving to the next lower brand to cur this down.
Petrol/diesel........................... 300
Huge - is the mileage required for work or can it be cut down.
Car Insurance........................... 60
Again seems high for one car, are there reasons for it to be around £800 a year instead of a more reasonable £400?
Car maintenance (including MOT)......... 83
Seems a lot for a relatively new / expensive car.
Presents (birthday, christmas etc)...... 100
Need to cut down on these.
Haircuts................................ 65
and these
Entertainment........................... 200
and these
Holiday................................. 200
Can't afford expensive holidays with this much debt.
Emergency fund.......................... 0
Would be useful to have some savings so that you don't have to rely on loans to cover emergencies.

Description....................Debt......Monthly...APR
Bank of Scotland...............6000......180.......18
Barclaycard....................18000.....410.......18
Barclaycard....................12665.....380.......18
Virgin.........................11500.....200.......18
Santander (Overdraft)..........2500......125.......0
Santander (Overdraft)..........1500......75........0
Natwest........................8600......258.......18
Natwest (Overdraft)............5000......250.......0
Natwest........................6000......180.......18
Nationwide.....................3000......90........18
M&S............................2200......66........18
Barclaycard....................4200......126.......18
Total unsecured debts..........81165.....2340......-
Is the APR on all debt really the same? Need to understand this so that payments can be prioritised.

Amount short for making debt repayments. -1,298.5

The above would give maybe £300-400 a month savings without taking into account the school fees. I'm afraid the obvious answer is to cut the school fees until the debt is under control.

Treadmill

Amazing coincidence that all your APRs are 18% ?

Seems like a lot of debt but given your salaries it's proportionately lower than a lot of people's, I don't think I would be considering a DMP in your position until I had considered all other options such as 0% balance transfers etc.

merlot123

nomoredebtplease wrote: »

We are both at the stage where we are willing to go along with anything and make whatever changes we need to make to our spending habits to get out of this mess - APART from ONE thing. We want to continue to send our children to a private school. It would kill us to have to withdraw them from there.

It's pretty clear to me from looking at the SOA where the savings need to be made.
Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 4300
Partners monthly income after tax....... 2900
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 7200

Monthly Expense Details
Mortgage................................ 1800
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 180
Electricity............................. 100
Gas..................................... 100
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 15
Mobile phone............................ 100 reduce
TV Licence.............................. 15 This should be 12.12 a month
Satellite/Cable TV...................... 40 reduce to basic package
Internet Services....................... 20
Groceries etc. ......................... 400 reduce by £50 per month
Clothing................................ 50
Petrol/diesel........................... 300
Road tax................................ 38
Car Insurance........................... 60
Car maintenance (including MOT)......... 83
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 325
Other child related expenses............ 1800 :eek: Going to be really blunt, YOU can't afford a private school, not today or in the foreseeable future with the level of debt you have.
Medical (prescriptions, dentist etc).... 47.5
Pet insurance/vet bills................. 30
Buildings insurance..................... 25
Contents insurance...................... 25
Life assurance ......................... 0 - You need this - more important than sky or a mobile phone
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100 reduce, too much each month
Haircuts................................ 65
Entertainment........................... 200 reduce, too much each month
Holiday................................. 200 reduce, too much each month
Emergency fund.......................... 0 you need something here
Total monthly expenses.................. 6158.5


Assets
Cash.................................... 0
House value (Gross)..................... 525000
Shares and bonds........................ 0
Car(s).................................. 10000
Other assets............................ 5000
Total Assets............................ 540000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 410000...(1800).....3.99
Total secured & HP debts...... 410000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Bank of Scotland...............6000......180.......18
Barclaycard....................18000.....410.......18
Barclaycard....................12665.....380.......18
Virgin.........................11500.....200.......18
Santander (Overdraft)..........2500......125.......0
Santander (Overdraft)..........1500......75........0
Natwest........................8600......258.......18
Natwest (Overdraft)............5000......250.......0
Natwest........................6000......180.......18
Nationwide.....................3000......90........18
M&S............................2200......66........18
Barclaycard....................4200......126.......18
Total unsecured debts..........81165.....2340......-


Monthly Budget Summary
Total monthly income.................... 7,200
Expenses (including HP & secured debts). 6,158.5
Available for debt repayments........... 1,041.5
Monthly UNsecured debt repayments....... 2,340
Amount short for making debt repayments. -1,298.5

Personal Balance Sheet Summary
Total assets (things you own)........... 540,000
Total HP & Secured debt................. -410,000
Total Unsecured debt.................... -81,165
Net Assets.............................. 48,835

Welcome to MSE and the Debt Free Board. I'm not going to judge as we don't do that on this board ever, but I'm going to be harsh and straight with you, you may have a large income, but you have huge debts, you cannot afford the private school, you are short each month by £1298.50, you need to take drastic action otherwise, the luxury of a private education maybe not the only thing that is in doubt, continue at this rate and I can see alot more trouble ahead.

You need to take action and take it today, you have the choice of selling your home and settling your debts with the equity, but that is a major step or you can make drastic changes to your lifestyle....champagne lifestyle on a lemonade budget springs to mind at this moment. (rather like myself a few years ago, I may add).

Your debt will not disappear overnight, it will take years to repay the amount you have, but you must fix the deficit immediately, I have added comments in above where I think you can save.

I have never heard of a DMP company allowing private education as most of the creditors will simply not agree to it, I think you may find you may not get your interest frozen or the creditors will simply not agree to the DMP.

I think you have been very brave and honest posting your SOA, it's usually the difficult bit, Martin Lewis has said he has never seen a debt problem that couldn't be solved and yours is no different, but you need to think differently from this point onwards.


merlot123

nomoredebtplease

Thanks for the replies everyone. I really do appreciate it and the open and non-judgemental nature of the responses has given me a massive wake-up call.

I'm going to digest all the comments and post again tomorrow.

Re: the interest rates, I didn't have the information to hand on the exact rates per card but suffice to say they all started at 0% and we've been unable to shift to any new 0% cards since being refused on any new cards.

New beginnings start now...

Bravehearted_2

I would approach slightly differently.

First - the "good" news is that, compared to your salaries, your 80k debt isn't too humongous. So strictly speaking, you can stop keeping up with the Joneses and cut down to "value" spending and clear the debt the hard painful way.

Two - the easier option which is painful to you is to find an alternative school for your children. This is an easy way, which if you also choose to combine with "value" spending can have you debt free probably in a few years.

OP, if you don't mind, how old are your children? If still quite young, Perhaps you could consider the best free school TILL you pay down the debt. The truth is without the debt, you are absolutely able to afford the private school.

If your children are still a long way till GCSE stage, then I wouldn't expect a couple of years in state to hinder them. In fact, it may be good for them - character building and all that? Help teach life lessons etc?

merlot123

Thinking:

Do you have any PPI on any current loans or had it in the past for any loans?

If you have been declined any credit in the past few months, DO NOT try again for a while to get a 0% card, it will impact on your credit rating.

Is your mortgage on interest or repayment? Is it on a fixed deal or the SVR? This is important, if you enter into a DMP, you may find it difficult to get a good mortgage deal in the very near future, as it will impact on your credit rating.

Do you have mortgage life/assurance cover? Do you have Life Insurance Cover with work if not a stand alone policy.

Sorry to bombard you with such questions so late and on the first day of your new beginnings.

merlot123

nomoredebtplease

thatsean wrote: »

My only advice, and this isn't too (at all) ethical is to talk to Step change, understand the budget headings that they use and then distribute the school fees through these categories, leaving a chunk as 'other'. I use Payplan, and did this for university fees, which whilst optional, are my get out of debt card!

Good luck. It's an emotional start, but the relief of mailing off that pack with everything signed and done is fantastic!

Tonnes of advice on here from helpful people - you're in good company.

Oh, don't forget to open accounts with banks outside of the groups' of your creditors. Make them basic accounts to avoid the temptation of an overdraft.

Thanks for the advice!

I presume opening another bank account in advance of a DMP is a good idea as existing creditors are likely to 'freeze' my accounts with overdrafts?

merlot123

The banks can and do withdraw the overdraft at very short notice, so if you have your salary being paid in, they can take it without consulting you. Also a very important thing, do not get a new bank account with anyone you have debts with, the bank can take that money too to repay the credit card debt, its called setting off, I get Martins link for you to read in a mo.