£51000 in debt and growing

Debt_Free_Chick

apear2die4 wrote:

Hi

A better breakdown of my outgoings my income fluctuates between £2200 to £2500 per month

Mortgage £843.00 I am tied in until 2007 and this will incresase by £90 next year.
Council Tax £109.51
Housekeeping/Food etc £325
Day to Day Money £325
Electric £22
Gas £64
Egg Loan £291.83 Balance £18255 @ 6.7%
Barclaycard £96.00 Balance £4740 @ 2.9% Life of Balance
A & L Car Loan £156.31 Balance £6220 @7.4% 3yrs to run
Sainsbury Card £181.00 Balance £6040 @ 13.9%
Egg Card £56 Balance £2400 @ 14.9%
Halifax £220 Balance £12200 @ 6.9% Life of Balance
Plus overdraft £3000 @ God knows what rate.
Esure B & C £24.00
BT Lines (H) £40 per month including calls with 18866/1899/and onetel for the weekend
Internet £17.99 with wanadoo use for work a lot as well
TV Licence £9.99 per month
LIfe insurance £24 per month
Mobile Phone £15 per month with 3 (well someone has too LOL)
Car Insurance £66.00 per month for 2 cars
Road Tax £26.66 for both cars

Hope this gives you all something to get your teeth into :rotfl:

Can I just rearrange this ....

Income £2,200

Expenses
Mortgage £ 843.00
Council Tax £ 109.51
Housekeeping/Food etc £ 325.00
Day to Day Money £ 325.00
Electric £ 22.00
Gas £ 64.00
Esure B & C £ 24.00
BT Lines (H) £ 40.00
incl calls with 18866/1899
and onetel for the weekend
Internet £ 17.99
TV Licence £ 9.99
LIfe insurance £ 24.00
Mobile Phone £ 15.00
Car Insurance £ 66.00 for 2 cars
Road Tax £ 26.66 for both cars

Essentials £ 1,912.15

Surplus £287.85



Egg Loan £ 291.83 Balance £18,255 @ 6.7%
Barclaycard £ 96.00 Balance £ 4,740 @ 2.9% Life of Balance
A & L Car Loan £ 156.31 Balance £ 6,220 @7.4% 3yrs to run
Sainsbury Card £ 181.00 Balance £ 6,040 @ 13.9%
Egg Card £ 56.00 Balance £ 2,400 @ 14.9%
Halifax £ 220.00 Balance £12,200 @ 6.9% Life of Balance
Plus overdraft £ ? Balance £ 3,000 @ God knows what rate


Debts (p month) £ 1,001.14 (excl overdraft)

Shortfall £ 713.29


If I am right, then you need to find at least £713.29 per month, just to stand still! Is that realistic?

There is nothing in your budget for clothes. What about petrol? What about a contingency for car repairs, MOT, tyres etc?

Sorry, this sounds like a rant and, really, it's not. It's to demonstrate that you are living far, far beyond your means and that is probably where the debt has come from.

I don't really know what to suggest, as you need to "find" more than £700 a month.

How much equity is in your house? Could you sell, release the equity, repay your debts and then rent for the same as you pay on mortgage?

What's your "day to day" spends? Are there essential bills in there? If so, get them in your budget.

You don't have the full picture yet and you need that to fully consider your options. Shuffling debt will be suggested - but I think that's of limited use as, currently, you can't make the minimum repayments

apear2die4

Fran

Me OH & Little one live in the house.

apear2die4

DFC

You are right I am slowly but surely getting deeper into the mire for want of a better word. The above does not include other business expenses which can easily put another £600 per month on top of what I need to turnover just to stand still no wonder I am suffering from depression. I have been able to keep my head just above water by using some savings in the hope it would turn around but I just cant see that happening.

rchddap1

Adding another £600 per month essential expenses on top of what you have already listed in my mind puts you past the point of no return if you understand my meaning. Cutting back £700 would have been very very hard, but £1300...

apear2die4

This is why I am contemplating giving up my current self employment (career) to do something else. Whilst I feel this is of my own doing and carry te guilt for this unholy mess. I have always endeavoured to pay just to keep my credit file clean. But I am at the point were I feel is it really worth it?

Debt_Free_Chick

apear2die4 wrote:

This is why I am contemplating giving up my current self employment (career) to do something else. Whilst I feel this is of my own doing and carry te guilt for this unholy mess. I have always endeavoured to pay just to keep my credit file clean. But I am at the point were I feel is it really worth it?

You're self-employed, is that right? If so, is your income (£2,200 per month) gross? So do you need to deduct tax from that and put it aside to pay the taxman? If so, then your net earnings are about £1,500 per month (depends on the expenses you claim).

Do you think you could get a job paying more than £1,500 a month net? If you are FSA authorised, then I would have thought you could, depending on where you are in the Country.

I'm sorry, but I think you need to take 2 steps backwards in order to get on the track and then move forwards.

My suggestions?

Get a job - especially if it pays more than you currently earn (£2,200 (gross) or £1,500 (net) a month)

Look at renting - look at costs.

Consider selling house and using any equity to pay off mortgage and then (some of the?) debts

Depending on new job prospects, consider bankruptcy. This will take the equity from your house, but write off all your debts. Clean slate. With a good budget and a job not affected by bankruptcy, you would be debt-free in a year. Not ideal, but a solid base on which to build for the future.

Re my username ... hasn't always been so. I've been in the !!!!!! too.

Let us know what you think. I really hope this will help get things into perspective. You have to know where you are in order to know where to go next.

apear2die4

To rent aproperty in the area I live would cost just as much as the mortgage but I see what you are saying.

the £2200- £2500 is net income after my deductions.

I am happy if necessary to default on the debts and enter into an arrangement with my creditors but would rather avoid Bankruptcy.

Any Ideas on this.

Fran

Is your partner working or could they do some?

Are you claiming Working & Child Tax Credits?

apear2die4

MY OH looks after little one and by the time she would have travelled to work etc and childcare it would not be worthwhile I would rather have our child looked after by one of us not a stranger.

Munki_2

Ok, here's my 2 pennies worth, for what its worth.. ;-) I'm going to highlight areas I think you might be able to save... and what I can see is unavoidable costs...

Unavoidable :

Mortgage £843.00 I am tied in until 2007 and this will incresase by £90 next year.
Council Tax £109.51 - bloody council tax... but it's unavoidable :-(
Barclaycard £96.00 Balance £4740 @ 2.9% Life of Balance
Sainsbury Card £181.00 Balance £6040 @ 13.9%
Egg Card £56 Balance £2400 @ 14.9%
Egg Loan £291.83 Balance £18255 @ 6.7%
A & L Car Loan £156.31 Balance £6220 @7.4% 3yrs to run
Halifax £220 Balance £12200 @ 6.9% Life of Balance
TV Licence £9.99 per month - sadly we all have to pay for it...
Mobile Phone £15 per month with 3 - seems a reasonable amount.

Total unavoidable outgoings (based on your details) : £1977 p/m

Areas where you may be able to save...

Plus overdraft £3000 @ God knows what rate.

- Have you looked into applying for a current account with someone like A&L, who (I think) do a 0% overdraft for a fixed length of time. The interest you are paying must be huge.

Housekeeping/Food etc £325

- I know it's been discussed already, but you really have to break down all the aspects of your spending. 'Housekeeping/Food' really isn't detailed enough, and perhaps forcing yourself to address the exact amounts spent on each aspect of housekeeping and food will make you think where you can save. Do you shop in the same supermarket, or do you shop around for bargains? Do you buy your veg & meats at the local farmers markets, for example. My wife, baby girl and myself spend approx £30 - £35 a week on food - and we eat well. Petrol for one car is about £70 for the month, so I'm guessing this is where a lot of the money is going...

Day to Day Money £325

- Not sure why this is the same amount as housekeeping & food... maybe I misssed an explaination in anothe post (sorry if I have), but I'm assuming you've 'guestimated' this figure. Plus 'day to day money' is pretty much as ambiguous as it can get... so please try to break down the individual items.


Electric £22

- This seems average for a 3 bed semi like ours... is that the sort of property you live in? Is it on a prepay key, or meter? If it's via a key then maybe you can save money by switching to a billed meter.

Gas £64

- Somewhat high... we have gas central heating and gas oven and ours only costs about the same as the electric each month (if not a bit less). Are you able to explain why it's so high?

Esure B & C £24.00

- May be able to shave money off of this. Be sure to get requotes with your insurers each year and get quotes elsewhere. Also you probably know this already, but try not to fall for the old 'buy both b&c with us and get a discount' trick... it's rare one company is cheapest for more than one product... so shop around. I use ecclesiastical (if that's spelt correctly) for contents and lloyds tsb for home insurance. Combined mine works out a little less than yours, but specifics such as location might be the reason for yours being more.

BT Lines (H) £40 per month including calls with 18866/1899/and onetel for the weekend

- Hoooow much? Ok, now I'm quite a light user, but if you're using 18866/1899/onetel and still spending £40 a month on calls, I would question whether you are putting the calls through the wrong providers a tthe wrong times. Are you calling mobiles lots? Or calling abroad lots? Even a pretty heavy user shold only spend about £15 in my opinion, if they are using all the call providers you've mentioned. Do you use it for business too? If so, then that might be acceptable.

Internet £17.99 with wanadoo use for work a lot as well

- Not too bad, there are cheaper (look at martins articles on the main site). However if you are a heavy user you might be best to stick where you are.

LIfe insurance £24 per month

- You could possibly cut this. It depends what sort of cover you are after. I'm in the process of changing my life and accidient & sickness cover. Both me and my wife had seperate decreasing mortgage life insurances, plus I seperate accident & sickness cover. After umm-ing and rr-ing for a while, I decided the accident & sickness cover wasn't really wortht he paper it was written on... I would only get a payout if I was ill for a certain length of time, and only then after a number of months wait... or if I was made unemployed through involentary redundancy. This was costing me over £65 a month. Now I've decided to ditch the A&S cover (I am taking a risk, I accept that), and cancelling the seperate life policies and getting one joint cover for a larger amount, which costs less. That one policy, admitably will only pay out once, but is for more money. Total cost per month - £13. Big saving, and I still have the basic life cover policy in place.

Car Insurance £66.00 per month for 2 cars

- Probably not a bad amount. But it's not the insurance I'd like to address here... it's the fact you have 2 cars. I know it seems extreme. But over £50k is more extreme than selling one of the cars. It may appear impossible to work with, but my wife and I have done it and by doing so have saved us from serious money problems. Work out who needs the car most. Probably you to get to and from work. However if you don't travel far and don't drive as part of your job perhaps you can do what we do and share the car as-and-when you both need it. Your wife can buy a bus pass relatively cheaply, but we get by without one. The potential saving by getting rid of one of the cars is HUGE. Just make sure if you do get rid of a car, you channel the money you've saved to pay off the debt quicker ;-)

Road Tax £26.66 for both cars
- As above... if you get rid of a car... yo won't need this ;-)

Other areas where you could save are :

Credit cards. Please could you post the limits of each of the cards. You could then max out the lower % cards with the higher % debt from other areas (cards, overdraft). Dwindle your high % debt down as much as possible, as quickly as possible. Until you do this, most of your money is going on meeting the minimum payments, and you will never clear the debt.

Car loan. With the bullet-biting decision of selling one of your cars, you could perhaps pay off your car loan early. If there are no fees/penalties for doing so. However, a better idea would be to pay off all your egg card debit and some of your sainsburys card debt. Assuming you can sell your car for approx £5000 (rough guess), clearing these cards would save you approx £100 a month.

My ideas for you to set as targets are :

Housekeeping/food & day to day spending - £300 p/m - for both (not each!)
Switch to A&L acc (or similar 0% overdraft acc) - should save over £50 p/m
Gas - Half the costs. Shop around. Look at where it's going. I'm sure it's too much... Reduce to £32 p/m... somehow.
Phone - Half the call costs. Cut down on calls if need be. £40 spending when you are using so many call providers is astonishing really. Cut to £20 p/m
Car insurance - Sell car and cut this in half. £33 p/m
Road tax - again, sell a car, cut this in half. £13 p/m (of course, both estimated.)
Sell car - pay off egg card and some of sainsburys card saving at least £100 p/m

Over all, unavoidable spending £1977.
Other spending that could be curbed - £934.
New target for that 'other spending' (my view anyway) - £506
But total savings are possible of at least £548 p/m if you sell a car. Plus you will be paying off at least one credit card and taking a chunk out of one of the other cards.

Another thing to do now is CUT UP ALL YOUR CREDIT CARDS. You have to do this... otherwise you will keep overspending. You are spending over £2900 a month, although your fluctuating wages would rarely cover this. You have to cut back on the luxuries and expensive items (such as one of the cars) and accept the initial hassles involved in doing so. To start paying off debt properly each month, you have to work out ways to reduce the amount outgoing each month so you are not just getting more and more into debt. Only then will you end up with money left over to start throwing at the debt.

A lot the figures I've mentioned above are probably wildly out, and circumstances are different for everyone, but the principles are the same for everyone - outgoings must be less than or equal to incomings or the debt will increase... :-(

I'll shut up now, as I'm pointing out the obvious now. Sorry if some of the above reads a bit patronising... I've just skim read it and it does sound a bit. It's not intended... I just wanted to make a few obvious points... :-)

Good luck and remember to be focused and realistic. You've done good discussing it here... now it's time to take some drastic action - and believe me it HAS to be drastic. I'm pretty sure you will have to change you lifestyle a bit to get yourself out of debt :-(

HTH,

Munki.