Wowzers! debt a lot worse than we thought ....

plzhelpmesave!

Hi all

Me and DH have been ignoring our worsening finances for a while and have sat down today to go through stuff

In total over about 8 credit cards between us we owe just over £32k

We haven't been extremely frivolous - no holidays, gadgets, no sky, no smoking or drinking, new cars, extensions - just plan old bad budgeting and lots of extended family expenses.

We thought we were on top of things as we do 0% balance transfers, but as we only pay the minimum (or a bit over) we're getting more and more into debt.

He's been self employed for last 2 years - biggest mistake ever as he's hardly making anything and meant we've been putting more and more onto cards.

I set up a small business 6 months ago (paid for with cards and borrowing from family). Its just about breaking even, but im not getting a wage out of it yet - hopefully will start getting something in the new year.

We get child tax credit and without it would be truly up the creek!

We currently pay out just over £700 per month on credit card payments and its killing us right now. Its the same as our mortgage!

DH applying for jobs left right and centre, so hopefully will get something soon and can give up the seldf employed work.


We're looking at the new tesco low cost loans, we do both have very good credit histories and have never missed our payments or been late with payments.

I know a lot of people say don't consolidate, but right now it seems to be the best way forward for us. IF we could both get the £15 loans at 5.2% it would still be less than half of what we're repaying on cards right now. We've been juggling around balance transfers for the least 7-8 years and the amounts are just growing with normal living expenses, 3 kids and his parents and family that we help out.

Our mortgage is fixed for another 5 years. With fixed loan repayments, we'd be clearer about where we are and would be able to make the payments.

We've dont a ring round today and have closed 4 cards that had no balances on them, and are looking to pay of £250ish on 2 other cards that we have so we can pay off and close those accounts too.

Any advice/comments etc really appreciated

many thanks for reading & Happy New Year!

ALIBOBSY

I suspect the reasoning against consolidation is about the fact that you end up with a fixed payment for a fixed term so harder to repay faster (at least not without penalty), as well as the fact many consolidate cards, clear them, then later build the cards up again.

I would say put your SOA on here and get as much help as possible to cut down the outgoings. Once you have done that you can see how much you can throw at the debts. Look at the snowball calculator where you target the highest interest rates first and keep rolling the extra payments from one card to the next.
You can then work out how quickly you could clear the debts by that method.
You can then look at if this would be quicker and cheaper than the loan. If you decide to go with the loan definately clear and close the cards-perhaps keeping one or two for emergency use only and stick them in a drawer somewhere and be strict with them.

If your credit rating is good another option is perhaps you could get one or two 0% deals and transfer most of the balances to them to reduce interest whilst you throw all you can at the debts?

Firstly tho I would say maximise your income and minimise your outgoings to give you the max to clear those debts as quick as possible.
Good Luck


Ali x

rising_from_the_ashes

Well done for tackling it now - best place to start is with a SOA http://www.stoozing.com/msoc/soacalc.php and you'll get some suggestions of where cuts may be possible

It's a bit concerning if you've managed to accumulate the debt whilst living without the "obvious culprits" (holidays, sky, gadgets etc) and that you think it's down to budgeting ....

I'd personally never recommend consolidation as it rarely works as people just rack up the debt again - I'd be even more worried about this if you feel your debt is down to budgeting as it'll be even harder not to do it again

Pop up the SOA ....

merlot123

I'm almost certain I've just seen an SOA on here, have you deleted it OP?

plzhelpmesave!

Ok, SOA completed, please feel free to comment and make suggestions. have added in explanations in red



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 - both are bangers and wouldn't get much if we sold one. needs a lot of work done to get decent sale price
Monthly Income Details
Monthly income after tax................ 400 - new business
Partners monthly income after tax....... 500 - madly applying for jobs
Benefits................................ 989 - WTC & Child Benefit
Other income............................ 0
Total monthly income.................... 1889
Monthly Expense Details
Mortgage................................ 705
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 98
Electricity............................. 75 - switched last month to fixed - 3 bed terraces
Gas..................................... 75
Oil..................................... 0
Water rates............................. 38
Telephone (land line)................... 26and internet - looking to switch to primus
Mobile phone............................ 65 - in contracts for another 14 months 3 phones (1 work, 2 personal)
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 300
Clothing................................ 50
Petrol/diesel........................... 250
Road tax................................ 30
Car Insurance........................... 168 -insurance for 2 cars and rest is AA parts & labour used this for £600 work this year
Car maintenance (including MOT)......... 25
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 240 - childcare clubs
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 23
Contents insurance...................... 0
Life assurance ......................... 35
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 60 - days out & takeaways
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2316

Assets
Cash.................................... 0
House value (Gross)..................... 125000
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 0
Total Assets............................ 128000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 111000...(705)......5.39
Total secured & HP debts...... 111000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
DH cards ......................20598.....469.......0- all cards on 0% BTs
MY Cards ......................12511.....237.......0 - all cards on 0% Bt rates
Total unsecured debts..........33109.....706.......-

Monthly Budget Summary
Total monthly income.................... 1,889
Expenses (including HP & secured debts). 2,316
Available for debt repayments........... -427
Monthly UNsecured debt repayments....... 706
Amount short for making debt repayments. -1,133
Personal Balance Sheet Summary
Total assets (things you own)........... 128,000
Total HP & Secured debt................. -111,000
Total Unsecured debt.................... -33,109
Net Assets.............................. -16,109
Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

plzhelpmesave!

Hi merlot!

I'd done the budget planner on martins site but it just seemed really hard to read when I copied and pasted it - so I redid it using rising from the ashes link!

figures are the same though - and a lot more depressing in black, white and red!

merlot123

car insurance is incorrect?

merlot123

Do you have overdrafts? The site is playing up for me and I'm not able to quote your SOA at this time, so excuse all the seperate postings.

Do you work from home with your business?

You cannot justify the cost of petrol etc and childcare costs with such a small income.

Takeaways and Days out need to be put on hold for a while.

quintwins

Your insurance figure can't possibly be right, is that an annual figure?

eyeopener2

Have you tried getting loans for the consolidation? I think you may struggle with little or no income and i really don't see it as a way out for you (been there still paying it back and more) unless you get to grips with budgeting.

You say you've helped out, or are helping out, other family members. Could you ask for this back to help you out?

The takeaways have to stop. We haven't had one in 3 years and won't do until that debt is zero. It may only be a small amount but you must be borrowing to actually afford this. Knock the on the head until you've stabilised things.

I would start simply and begin using a spending diary to see where your money is going at the moment, I know your swimming against the tide till the employment situation improves, but it should give your an inkling as to where savings can be made. This isn't going to be easy with your income being so low but hopefully we can help you to stop things getting any worse.

Sort the SOA out with the insurance and lets see the true picture.

Any overdrafts as another poster has said?

[Deleted User]

quintwins wrote: »

Your insurance figure can't possibly be right, is that an annual figure?

That's what I'm thinking.

If it's monthly, the OP is paying over £24,000 per year. :eek: