I've got myself into a MASSIVE debt in 9 months...

weebit

Hi everyone,

Below is my very sorry story. I'm not looking for advice as such because I've been around these forums for years to know what I need to do to handle my situation, but I just need an outlet to make my money worries known.

I have got myself into such a massive amount of debt recently, I don't know where to start to sort it. It's a really long story, but to try to shorten i down, me and my wife were living together in the UK for just over a year. She's South African and I'm English. She needed to renew her work visa at the end of 2012 but this was rejected due to a stupid admin error and she was told to leave the country. We're currently in the process of getting her a new visa but everything has taken so much longer than it should have. We're expecting that she can return to the UK towards the end of September.

In the mean time, I've had all sorts of issues money-wise. I already had around £21,000 of debt and was gradually working on bringing this down, and it was working too. Before all the issues, I had a debt of £15,000 in total. But ever since our troubles, the debt between the two of us has increased massively and is currently standing at around £32,000 and climbing.

There are many factors that have contributed to this:
1. I was reduced to just 1 income. I also work freelance so my income isn't steady either. We also didn't bother looking for work for my wife because we didn't think she would be away for as long as she was. She's currently living with her mum who is helping her out by providing a room and food etc. She lives in a very small town where there are not much jobs going, and she also doesn't have a car to drive to another town to find work, so we were kind of stuck.
2. Secondly, I've made several trips out to see her. Flights to South Africa are not cheap!
3. We decided to move out of our old house because we fell out with the landlord. This meant additional costs involved with moving house, and we now also live in a place where the rent is a bit higher than our old place. We also needed a much bigger deposit. We borrowed money from my wife's mum to help pay for this.

All of these factors have left us in a massive amount of debt. I'm trying by best to minimise my outgoings but none-the-less, we're still paying out more than we're earning. The silver-lining is that as soon as my wife returns to the UK, she's been promised her old job back and so she can start earning money straight away. We're going to put as much as we can onto the credit cards and cut back our social lives.

At the moment, I'm earning around £20,000pa on average, but am on the verge of stepping up to the next level in my career when I can earn more. When my wife returns, she'll be earning around £23,000pa basic pay, plus the chance for paid overtime. So when she returns, we hope to be able to pay off between £600 and £1000 a month towards our debts.

Below is all our debts:

Mine:
• Halifax Current Account = £2000 @ £1/day (always at the £2000 mark, paying interest only)
• Barclaycard = £1350; £670 @ 0% till 1st November, £680 @ 6.9% Life of Balance (29.9% standard rate)
• Halifax One Credit Card = £800 @ 20.95% standard rate
• Virgin Credit Card = £4000; £2600 @ 0% till Sept 2013, £1400 @ 0% July 2014, (16.8% standard rate)
• Nationwide Credit Card = £2500, £1600 @ 0% till August 2014, £900 @ 19.9% standard rate
• Tesco Credit Card = £1450 @ 0% till October 2014 (16.9% standard rate)
• MBNA Credit Card = £2400 @ 0% till December 2014 (16.9% standard rate)
• Rockwell DCA = £3720, paying £20/month
• Overpaid Housing Benefit = £1000, paying £55/month

Wife’s:
• MBNA Credit Card = £3090 @ 0% till May 2014 (16.8% standard Rate)
• Barclaycard = £6820 @ 24.9% (balance is climbing every month)
• Tesco Credit Card = £120 @ 21.9% standard rate
• Money borrowed from my wife’s mum = £4000

In addition to the above, I have 2 credit cards which I have for cashback, these are Aqua Reward for 3% cashback (max £100/year) and a Capital One Visa with 1% cashback (unlimited). These are always paid off in full every month.

Approximate minimum payments:
• Halifax Current Account = £31
• Barclaycard = £34
• Halifax CC = £15
• Virgin CC = £40 (will increase next month when interest is charged)
• Nationwide CC = £25
• Tesco CC = £25
• MBNA = £25
• Rockwell = £20
• Housing Benefit Repayments = £55
• MBNA (wife’s) = £31
• Barclaycard (wife’s) = £170 (and increasing each month)
• Tesco (wife’s) = £25

MILLYMOLLY

Didn't want to read and run. Have you any plans to work it out because you said you've been on the forums a while .
Have you tried writing to cc and ask them to freeze interest?

weebit

The plan is just to simply make payments to whichever credit card has the highest interest rate. I don't plan on asking the companies to freeze interest because i'm trying to minimise any damage to our credit files. I intend to close many of my accounts as the debt starts decreasing also. I never want to be in a similar situation again!

I've also been listing things on eBay to help raise extra cash, and also plan on doing a car-boot sale to get rid of the things that aren't really worth putting on eBay.

Siouxsie32

You have my support as well weebit. It must be really hard being apart from your wife.

I started 2013 in a similar situation, owing money on lots of credit cards/overdrafts and paying more each month than I earned. I went down the same route as you are planning, simply making as many overpayments as I could to the cards. Online banking makes this easy. In fact, I make it part of my morning routine to transfer any money that comes in straight back out again. I started with the card with the lowest balance (for the sake of my morale) and kept making overpayments til it was paid off...then I moved onto the second smallest balance etc. I cut all my spending to the absolute minimum. Set a food budget and stuck to it. Joined a few challenges on here for a bit of moral support and I have paid off an extra £8k since January.

Have you done an SOA? I'm sure if you posted it on here some friendly people could point out areas where you could save a bit of money.

You sound like you're at a turning point. You've cleared a lot of debt before and I'm sure you'll do it again. I wish you the best of luck.

lamarsi

again didn't want to just read and run so just to say good luck you sound like your head is screwed on so i'm sure you'll sort it out!

poppasmurf_bewdley

weebit wrote: »

The plan is just to simply make payments to whichever credit card has the highest interest rate. I don't plan on asking the companies to freeze interest because i'm trying to minimise any damage to our credit files. I intend to close many of my accounts as the debt starts decreasing also. I never want to be in a similar situation again!

I've also been listing things on eBay to help raise extra cash, and also plan on doing a car-boot sale to get rid of the things that aren't really worth putting on eBay.

Don't bother about your credit files, and what's said on them.

You are in massive debt, and you need to concentrate on reducing it - not protecting your reputation so that you can get more. The last thing you need is to land yourselves with more debt.

Even if every one of your creditors put a default on your files, they'd be gone in six years, by which time you should have been able to clear what's owed. Debt such as yours cannot be cleared quickly. It needs time, effort and will power. I know - I've been there.

weebit

poppasmurf_bewdley wrote: »

Don't bother about your credit files, and what's said on them.

You are in massive debt, and you need to concentrate on reducing it - not protecting your reputation so that you can get more. The last thing you need is to land yourselves with more debt.

I'm not trying to get "more" credit, but i'd like to keep both credit files as clean as we can so that we're able to apply for new balance transfer offers etc. if we need to in order to reduce the interest we pay. I'd then close the account we transfer the money from (assuming it was cleared of course)

weebit

I think i'm going to turn this thread into some sort of diary to keep track of our progress. I don't have a DFD yet because we don't know yet when my wife will return to the UK. We'll get one planned later.

But I've taken advantage of the eBay free-listings long weekend and have listed 70 items including several collectible diecast NASCARs which have just been gathering dust (one already has a bid for £20). I have a lot more things to sell also which i'll either list for 99p or wait till the next free-listing day to sort out.

Today, as well as looking for my next work contract, I'm going to claim compensation for my last trip back from Cape Town which was over 4 hours delayed, so that'll hopefully be €600 coming my way too.

I also had a spend diary which i tried to maintain but stopped in March, so i'm going to back-date it and see my actual outgoings and then keep it up. I know I'm probably spending too much on groceries so will need to keep that in check.

Also... we're planning on having a wedding party also. We got married in February in a small ceremony in South Africa in order to make it easier to apply for the visa (we were already engaged before the troubles started, so we just moved it forward). We feel like we've missed out on doing the wedding properly. This will probably take place in about a years' time and we have a budget of between 4k-5k.

onamissionEU

weebit wrote: »

I'm not trying to get "more" credit, but i'd like to keep both credit files as clean as we can so that we're able to apply for new balance transfer offers etc. if we need to in order to reduce the interest we pay. I'd then close the account we transfer the money from (assuming it was cleared of course)

Why would you need bal transfers etc if your current creditors agree to freeze interest and agree to repayment plans with you? BT's are great for smaller debts where you plan to clear them within a year or so but you are in way to deep for that. You should focus on speaking to creditors and getting interest frozen etc. As a previous poster said, after 6 years all defaults etc will be wiped away - and you are pretty much likely to be paying these debts for years anyway - so what have you to lose?

weebit

onamissionEU wrote: »

Why would you need bal transfers etc if your current creditors agree to freeze interest and agree to repayment plans with you? BT's are great for smaller debts where you plan to clear them within a year or so but you are in way to deep for that. You should focus on speaking to creditors and getting interest frozen etc. As a previous poster said, after 6 years all defaults etc will be wiped away - and you are pretty much likely to be paying these debts for years anyway - so what have you to lose?

How would freezing the interest affect our credit files? Do they issue a default or mark the file in another negative way?

Like I said, I want to keep our credit files as clean as we possibly can. I did previously have 2 defaults on my credit file which dropped off at the start of this year (one is still outstanding and i'm paying it off). Prior to that, getting anything was difficult (and not just credit cards).

We're also planning on getting a mortgage eventually (after all the debt is gone). And not trying to be morbid, but my wife's grandad won't be around for long (probably another couple of years) and she is expecting an inheritance from him which would contribute towards our deposit.

I know i'm probably planning too far into the future, but I want to protect our future a much as we can, even if that means paying a bit more in interest. I can't risk yet another 6 years of a bad credit file.

weebit

Update:
I've managed to secure my next job. I start on Sept 9th and till last till at least Christmas, probably afterwards too. I will also be getting an extra £50/week from my previous job, which after tax and student loan is taken off means an extra £127ish a month can go towards our debts! I just need my wife back now so we can properly tackle all our debt.

I've worked out that we have the potential to pay this all off in 3 years, so right now I'm going to set myself a goal and say that by Christmas 2016, we'll be debt free!

In other news, I've switched our gas and electric supplier to npower (estimated o be £150/year cheaper than BG), and also been approved for £515 in compensation for a delayed BA flight!

My eBay auctions are attracting attention too. still only 1 bid across 70 items, but i'm getting loads of questions and watchers so i'm holding some hope at least! 2 days to go till the first auctions end