does my plan make sense

debtfree1day

Hi

Situation is we are in lots and lots of personal debt, but over past 6 months have spent less than earned and began to make inroads - VERY SLOWLY

DEBT

79,199 including 45k loans and 8k od and 26k credit cards (mnainly expensivce - run out of good deals, no one lending us anymore)

157k MORTGAGE

SAVINGS

14K - can only acces 1500 as the rest is in bonds which expire oct 07 through to april 08 and share scheme with hubbys work which if he cashs in means he pays income tax and NI


ASSETS

Car - 4k. Hubby drives with work so needs to maintain and keep reasonable type car

House - approx 200-205k

INCOME

Hubby take home after shares and tax etc 2,700 pr month
Me take home approx 600 pr month
Motrtgage is over only 12 yrs, and with loans over short period, income only covers mortgage + loans + DDs such as council tax, water, elec, TV license and about £300 of credit cards

BUT we have to live so alot of shuffling goes on

THE PLAN

Ok, Tell Mortgage company house is worth 230k and attempt to convinvce them to lend us additional money up to 205k. Restructure mortgage over 20 yrs to reduce overall payment

Use 48k spare to 1 of the loans, and 20 k of credit cards
Leaving only zero or 4.9% cards

Mortgage reduces from 1400 to 1200 pr month. allowing £200 extra per month. Also lose £450 loan payment as this is cleared and constant credit card pressure.......

I am working part time and hope to go fuill time in sept perhaps extra 300 per month. Also trying to scramble a few quid from ebay / mystery shopping etc etc

If the mort. company say no I am worried about what we do as the interest on some credit cards is more than 25%.......should I write a letter now asking for a interest freeze as we are in trouble?



Lisa

chevalier

So what you are suggesting is that you take unsecured loans and other debt and secure them on your property. What happens if you get ill or lose your job? Suddenly all your debt is secured on your property and you could lose your home.
Have a play around with the snow ball calculator at https://www.whatsthecost.com.
This will show you how much more interest you will pay if you restructure you debt in this way.

It seems to me that if you can hang on until September/October then you will be getting a significant increase in your income, either from bonds or from you going full time with work.

So can you cut back in the mean time?
If you post a statement of affairs (see southernscousers sticky at the top of the forum) then we may be able to spot where you can make savings so you have more disposable income to throw at your debt.

However as a thing you can do tomorrow, phone up the cards with the highest apr and ask them to reduce their apr's as you have found a better deal (DON'T tell them at this stage that you are in trouble). You may find that they cut the apr anyway which would give you a bit of a breather.

best of luck
chev

debtfree1day

chev

great tip about ringing up and telling the Card companies I have a better deal - nothing to lose!

I will do this tomorrow morning. Working tomorrow and kids in evening as hubby is away - think SOA is beyond me on my own, so will do that later this week

thx for reply

lisa

debtfree1day

albatross

the bonds were gaureenteed stock market bonds

taken our in 2003 with market at around 4300...4500 range. dont think i can cash in wiuhtout accepting 5k which is gaurentter capital and losing profit of about 40%

on eof them was cash / propoerty index based so may be realisable easier...i'll find out

thx
lisa

debtfree1day

chev

that link is really good. one of the issues we have though is our loan repayments are more than the total we can throw at debt meaning we pay 6% loans off but only play with 25% credit cards, so think some tinkering / consolidation will be required, be it mortagge or not

will bank allow loans to be stretched over longer period?

lisa

hypno06

debtfree1day wrote: »

chev

that link is really good. one of the issues we have though is our loan repayments are more than the total we can throw at debt meaning we pay 6% loans off but only play with 25% credit cards, so think some tinkering / consolidation will be required, be it mortagge or not

will bank allow loans to be stretched over longer period?

lisa

Hi Lisa, this is where the SOA then comes into its own, as you can actually see where the money is coming in and going out, and the members of the great DFW community who have been there, done that can highlight other areas that perhaps you could make changes in.

As Chev says above, it seems that we need to get you through the next 4 months or so before you can have another re-jig of circumstances through bond selling, etc so that is certainly doable I reckon without the need to remortgage or freeze interest.

One thing that does spring to mind is that if OH cashes in share scheme early he has to pay tax, but if you are paying interest at 25% ish anyway on credit cards, this is offsetting any benefit from the tax you are saving (to a certain extent) so perhaps the gain from holding onto the shares is not as great as first thought?

Also, keep a spending diary - write everything, and I mean everything, down in it for the next month - then you can look back and see all those wasted things you have bought but not needed. It really helps to focus your mind to whether it is something you need, or merely want and can't afford, if you have to write it down!

Good luck and keep posting. Use the snowball calculator, it is fab!

debtfree1day

Hi guys

Thx again for comments...just got back from very very long 2 days at work and tomorrow am travelling again....I WILL update with SOA at the weekend.......

Just wanted to assure you I am coming back and committed to this

Lisa

debtfree1day

AAAAAH......things going from bad to worse

Opened mail and found one card is moving from 15.9 to 24.9

phoned them, they said it followed a review of my account they complete every year. explained I had not missed a payment. She asked lots of questions about whether I was in financial difficulty, and when she seemed to accept I was keen to make payments and improve my finances, she agreed to move me to 21.9!

Exp[lained again I wanted back to 15.9 but response was basically tough

Thats another £22 in interest every month now

Seriously frustrated

Lisa

Sea78

Hi Lisa

I can imagine you're feeling frustrated at that - once you've managed your SOA,we'll be able to help much more. I would be very cautious about telling the mortgage that your house is worth more than it is - they will often check and if the worst happened, you'd be stuck with no house and still debt to repay.

Look forward to seeing you SOA

Sea xx

Seaxwyn

Hi lisa

Sympathies.... card companies are evil!

Apologies if I've missed something, but have you tried to get any low-life-of-balance credit cards to transfer this debt to? If not, it might be worth a go.

If that's not an option, well done for the damage limitation, and use your frustration as fuel to motivate your drive to pay off those debts.

debtfree1day

THANKS SEA

Can you tell me where I find the SOA link I need to fill in and share with you all......im not that PC literate