Struggling - whats my next move

rotherham123

hi

1st time post, been looking at debt management all last week but dont know what my first move should be.

I earn -35-40k per year, home owner with approx £90k equity, and 50k outstanding on my mortgage.. mortgage with nationwide

have around 20k of debt on 3 cards ( virgin, nationwide, barclay card), tesco loan, and a car on HP.

my main problem is my payment amount each month, struggling to pay them as my wages are up and down due to its commission structure. I fear that to get through next month i will need to borrow money from a card.

Currently have no arrears, all debt is upto date and paid on time. I have tried to get a tesco loan to consolidate and was declined, then tried ocean finance, was accepted but when i worked the rate out it was 10% flat for 5 years, i work in car sales and we dont even charge our customers that type of rate on lower balances... so i backed out of taking that loan.

Tried remortage, declined... when i asked tesco and mortgage lender why i was declined when i was upto date and no arrears both said i was a risk as i was over committed.

I am not trying to get out of paying, i'm just looking to freeze interest on cards and reduce payments somehow.

looked at IVA's, DMP's, payplan etc but i donty which would be best for me thus i dont know who to contact first...

any advice would be greatly taken on board

thanks

Money_Saving_Scot

Hello Rotherham123,

My advice to you is to call all your relevant creditors inc Nationwide, and ask to be put in touch with there debt management departments, and start a constructive, open and transparent dialogue with them because they may be able to help you. My ex partner was in serious money problems with her bank and they offered her a debt and money management service to help her, however there is serious implications if you take these services for example your ability to get credit, however they can explain the pros and cons, However my main advice is get talks and negotiations started because if they can understand your position they can maybe freeze the interest or they could provide you with much more personalised advice. But good luck in getting it sorted, just remember in the future the lessons you have learnt from this experience!!!

catwoman73

Hi OP

With a 50k mortgage and 35k salary, you should be able to afford all your bills. However, to get proper help you need to post your statement of affairs - see http://www.stoozing.com/calculator/ for details.

I would base it on your lowest salary and then if you earn any extra you can save this to an emergency fund and/or pay a bit extra off your debts.

If you can't afford all your debts on your base salary or most of your payment is taken up with interest (have a look at your statements to see) then it may be necessary to go on debt management, but no-one can advise for sure without seeing the full picture.

rotherham123

hi

thanks for the link to the stoozing calculator

heres my SOA

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.................... 0

Monthly Income Details
Monthly income after tax................ 2000
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2000

Monthly Expense Details
Mortgage................................ 471
Secured/HP loan repayments.............. 157
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 113
Electricity............................. 58
Gas..................................... 110
Oil..................................... 0
Water rates............................. 43
Telephone (land line)................... 32
Mobile phone............................ 60
TV Licence.............................. 12
Satellite/Cable TV...................... 26
Internet Services....................... 25
Groceries etc. ......................... 500
Clothing................................ 30
Petrol/diesel........................... 140
Road tax................................ 10
Car Insurance........................... 27
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 28
Buildings insurance..................... 35
Contents insurance...................... 0
Life assurance ......................... 70
Other insurance......................... 12
Presents (birthday, christmas etc)...... 50
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Boiler insurance........................ 11
Total monthly expenses.................. 2040


Assets
Cash.................................... 0
House value (Gross)..................... 150000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 150000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 50000....(471)......0
Hire Purchase (HP) debt ...... 4000.....(157)......0
Total secured & HP debts...... 54000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
BARCLAYCARD VISA...............5000......131.......0
MBNA...........................3000......42.46.....0
NATIONWIDE C/CARD ............6600......100.......0
TESCO LOAN.....................2500......212.......0

couple of things to note:

i have an apartment in bulgaria st vlas worth 30k, cant sell it .. already taking a 10k loss if i sell at 30k

i am 6 months away from a VT on my car as its hp

i have started looking for better deals on my out goings and have found a £10 saving on car insurance :T

thanks

soontobemrsg

Having had a quick look at your SOA there are definitely savings to be had on your base wage. Does your partner work and contribute to the household bills?

You also havn't put any interest rates in for any of your debts though earlier you say that you are trying to get the interest reduced?

Anyway, back to the possible savings.

Your gas bill is HUGE, it's over double what mine is. Consider turning it down a few degrees and off when you are not at home. Is there an outstanding debt on this that you are paying back? Is it based on actual readings? Send the company a most recent reading (you can do this online) and get into the habit of turning the thermostat down or not turning it on at all with the warmer months looming.

Same goes for the electricity - may be worth switching supplier and getting a better flat rate?

Your grocery bill is the biggy...there are 5 people and 3 dogs in my household and we don't spend that on our groceries and household products combined. Have a look on the old style board for some inspiration.
I would expect you to be able to save at least £100 here (probably a lot more).

Congrats on getting your car insurance down.

When you get bonuses from work and your pay is much higher to you spend more or pay more toward the debt? Do you have any savings at all? You do really need to consider an emergency fund.

Good luck!

rotherham123

soontobemrsg wrote: »

Having had a quick look at your SOA there are definitely savings to be had on your base wage. Does your partner work and contribute to the household bills?

No, full time mum for 2 children

You also havn't put any interest rates in for any of your debts though earlier you say that you are trying to get the interest reduced?

The reason there are no interest rate is that it was late last night and i need to dig out the statements

Your gas bill is HUGE, it's over double what mine is. Consider turning it down a few degrees and off when you are not at home. Is there an outstanding debt on this that you are paying back? Is it based on actual readings? Send the company a most recent reading (you can do this online) and get into the habit of turning the thermostat down or not turning it on at all with the warmer months looming.

No debt or arrears on any utilities, i will go and check whats happening. We only have it on low when its cold as the house is warm.

Same goes for the electricity - may be worth switching supplier and getting a better flat rate?

Same as above

Your grocery bill is the biggy...there are 5 people and 3 dogs in my household and we don't spend that on our groceries and household products combined. Have a look on the old style board for some inspiration.
I would expect you to be able to save at least £100 here (probably a lot more).

We use morrisons, theres a big shop each week plus bits through the week, nappies etc.

Congrats on getting your car insurance down.

thanks :j

When you get bonuses from work and your pay is much higher to you spend more or pay more toward the debt? Do you have any savings at all? You do really need to consider an emergency fund.

on average its £2000 a month and thats not enough at the moment, so i will dip into the cards with the stupid belief that when i get a bigger wage i can pay it off, that never happens so its a constant cycle of juggling money and hope!!... if its a good month it can be £2400 but thats just enough to break even at the moment.



Good luck!

i will go through each bill and try and find a saving.. but the credit cards are the one that i worry about the most, minimum payments and nothing come off them

thanks for the advice

rotherham123

we have looked at work options for my partner but ity needs to be between 9am and 3pm for school runs and we would need child care for our other child who is one..

also when the kids are ill employers soon get fed up with mums having time off..

catwoman73

Thank for the SOA! I now see that you have 2 children and a stay at home partner? So your salary might not look so generous, as I first thought. Is the £2000 salary your basic or does it include some bonuses? What are your average bonuses and do they significantly change the SOA (sorry, bonuses are unheard of for me so I have no idea how much they can be worth).

Some random thoughts:

Unless your bonuses are so large that you earn over £50-60K per year you will be getting child benefit as well - £145 pm for 2 children I think.

How has the debt built up - general overspending and interest on cards or has it been a significant event such as a wedding or house purchase?

Yes your gas and groceries are high, as are mobiles - go sim only for £10 or so pm each when the contract has run out - if you have smartphones on a contract, this is a luxury you cannot afford at the moment.

Is your partner on board with your financial situation? They should use the time at home to shop around for all bills (gas/electric etc) and make sure they are on the cheapest tariff. Also they can shop around for groceries and cook from scratch - if the children are small and not teenages, it should be easy to shave £100/200 pm off that amount. They can also sell unwanted household items/childrens clothes etc on ebay. Also check they aren't spending lots of money on childrens activities/clothes/coffees/lunches during the daytime. In fact you both need to make sure that the SOA is realistic and there's not loads being spent on extras that really add up (coffees/lunches/snacks/newspapers/mags) etc

You don't have anything for an emergency fund or entertainment. Are you still using the cards?

Also, could your partner work a bit - even one shift a week in a supermarket/restaurant when you are at home to look after the children could make a big difference financially.

Do you plan to send the car back when you can VT? Will you need to buy/lease another vehicle or can you do without a car?

Is the bulgarian apartment costing you anything (council tax type fees etc)? Can you rent it out. Sorry, but I don't see foreign apartments doing anything but losing value over the next 10/20 years as the values have been totally over inflated and there is a massive oversupply. Could you sell it for £10/20K? Don't look at it as losing money, but if you did this and used the money to pay off your credit cards, you would save tonnes in interest and be able to live better month to month.

You also haven't put the interest rates on the credit cards - you really need to do this as the credit card companies have reduced the minimum payment and increased the interest rates so much over the past few years so much that in some cases almost all of the minimum payment is taken up in interest and the debtor can make the minimum payment for years without reducing the balance by much - very unfair IMHO. If it looks like you are in this position, it might be worth you going on a debt management plan now - the interest will be frozen and the money you pay will actually go towards reducing your debts. However this will ruin your credit rating and you won't be able to get credit for a good few years, but you will learn to live on a budget and without credit - when you get through this, you will be in a much better place financially. Have a look at the problem debts section of this site - I think its Stepchange that are the offical free debt management service - don't pay for a commercial service.

Also, are all the credit cards in your name, or some in your partners? Do they have any debts other than those mentioned above.

HTH and good luck!

catwoman73

Sorry it looks like you answered some of my questions while I was writing my reply!

harrys_dad

If you have three children you should be receiving a significant amount of child benefit each month which is not shown on your SOA. With three children you may also just qualify for some working tax credit.

The apartment in Bulgaria is not "worth £30,000" if you cannot sell it for that. It is worth what someone will pay for it. On your current SOA you cannot afford to travel there to use it anyway, so maybe sell it for what you can get. Like many thousands of people you made a speculative purchase out there and you need to realise the money has gone. Alternatively, can it be used as a source of income by letting it out.

What sort of cover are you getting for £70 a month for life assurance, that is a large premium for someone of your age.

jessie4109

check out the benefits checker to make sure you haven't missed claiming for anything you maybe entitled to. https://www.entitledto.co.uk I also use it for working out different scenarios when applying for jobs.