New and bit scared

David72_2

Erm hello.

Like many before me I am here not knowing where to turn and in need of guidance.

I have a good job as does my wife but in the last 4 years or so we've accumulated about £23500 debt on 4 credit cards. We make the minimum payment each month but these are rising and this month had to use a card to pay for a weeks shopping with 2 weeks to go til payday.

Tried to swap one of the cards but got rejected yesterday even though the mse site told me I had a 70 % chance. Earlier this week my equifax report gave me a credit score of 530 telling me this score was excellent so I don't understand why I was turned down.

I am reluctant to apply for anything else in case I get rejected again. I would like to consider a loan though as the interest rates on the credit cards are horrendous.

I have never defaulted on anything and am sure we earn enough to be ok but I really need to get this interest down. This is all starting to keep me awake at night and make me very unhappy.

I do want to know that I am not alone and reading some of the threads does give me some hope but at the moment I am struggling to see the wood for the trees.

I also worry that if interest rates my mortgage will too and I need to be prepared for that.

Is the best way to start listing my regular incomings and outgoings?

David

Tixy

Hi David and welcome.

You have taken the first step in posting and you will get lots of advice on here.

Doing a statement of affairs (income/outgoings/debts) is the best starting point to work out what is happening with your finances and by how much your outgoings are exceeding your income.

Are your debts just general overspend rather than from a specific event/item?

I wouldn't apply for anything else new at least not just yet before you have had chance to look closer at your finances.

For the statement of affairs we recommend this format - http://www.stoozing.com/calculator/soa.php as well as things you spend each month try to estimate a monthly cost of annual items so you can build up a true picture.

sleepygirl126

you've taken the first step.....realising you have a problem and need to sort it out!! good luck...you'll be fine:D

David72_2

Thanks Tixy.

Don't know how I would attach a separate spreadsheet so will list in this post - hope that is ok.

INCOMING

My salary 2585
My wife salary 1407
Child benefit 134

Total 4126

OUTGOING

Mortgage 877
Bank loan 425
Life insurance x 2 56
Gas elec landline and broadband 191
Income protection 31
Car and house insurance 38
Car finance 234
Repayment to bank of Dad 50
Sky TV 32
Council tax 136
Mobile phone x 2 44
Water 36
TV licence 12
Next 63
Pet insurance/vet 18
Nursery/child care 82
Mbna credit card 160
Barclaycard 230
Tesco credit card 35
Santander credit card 90
Fuel 160
Overdraft fee (overdraft is 2500) 20
Prescriptions 15

Total £3035

Which leaves £1091 to cover food (there are 4 of us we shop at asda and are not extravagant!) birthdays haircuts school costs car parking car repairs/mot and cost of childrens extra curricular sports etc (about £350 a month which I know is a lot but my son plays tennis at a very high level and to stop would crush him). It should be doable just (and there won't be any contingency) if I can just reduce the amount of interest. 24.9% on Mbna 18.9% on barclaycard and 23.9 % on Santander. Tesco 0 % at moment though that rate ends in January.

I think it all went wrong as we bought a house we couldn't fully afford - interest only mortgage as well.

It's a bit embarrassing putting all of this so nakedly on display!

merlot123

http://www.stoozing.com/calculator/soa.php

Do your incomings and outgoings on this soa calculator and press the MSE button on the bottom.

merlot123

Sedge123

On face value your debts don't seem too bad as you have a decent income, maybe complete a soa in the link above and then try keeping a spending diary so you can see where every spare penny goes - its an eye opener!

FBaby

The SOI will help as you are likely to find that it is the things you haven't listed that cause you trouble. How much is your weekly shop? How much is food and how much is 'other'. I have found that we often count only food in that weekly amount, yet once you had things like books/magazine; birthday cards/presents for family and friends; socks/underwear replacement; cleaning products; ustensils replacements etc... the weekly shopping is much more inflated than we think. Assuming you are spending £400 for all the above, adding activities, that's already £750, leaving you with only £350 for everything else, hair cuts, school trips, clothes, items for these activities, savings for birthdays/christmas, holidays, emergency fund, car maintenance, and the other things you listed. That's not a lot.

[Deleted User]

I suspect the reason you were refused is, your borrowing is already almost half your annual income.

I agree with others, that you need to post a proper SOA as, what you have posted so far, isn't specific enough.

For instance, "Gas elec landline and broadband 191" doesn't tell us how much each one is, so we cannot know if you are paying over the odds, for some/all of them.

BTW. Are the salaries you have listed, gross or nett?

tallyhoh

You really need to look at where the £1091 is going every month. Don't mean to sound harsh but that more than some families have to start with. As a family of 3 adults & 2 dogs I manage the household on £900 PCM & run a car out of that.

Decked

David,reading your post, it is a similar situation that I was in 12months ago. Except my debt was more like £56000. I too was reused credit, I had never defaulted on anything but the minimum payments were crippling me. Credit was refused on affordability because they consider all of your current credit card payments as a certain percentage of the balance . My credit card payments were in the order of £1800 per month and I was only just clearing the interest.

I wasn't' sure if there was anything I could do but I was concerned that I would never get out of the cycle of just about keeping my head above water.
I haven't reviewed your outgoings in detail as I am no expert but what I did was ask for advice. (Your situation may not be as bad a mine but why not ask, it won't cost you anything)

I eventually got in touch with Stepchange, they have been absolutely superb and got me set up on a debt management plan. My payments got reduced to about £650 per month and virtually all interest has stopped, therefore 12 months on I Have now cleared about £8000 off my debt, I haven't borrowed a single penny more and it feels good. Since then I have managed to increase my monthly payments to almost £1000 per month and I can be debt free in about 4 years. We too have 2 cars which are a necessity for work. Everybody's case is different but that call to Stepchange totally changed our lives. Don't be tempted Companies that charge for a DMP. The early days of a DMP can be a bit scary with lots of letters but now I hardly get any, I am not sure what will happen in the coming years but for now my debts are reducing every month and we have got our life back. Good luck.

Sazzie23

Good advice Decked, and good for you.
Stepchange for anyone reading are a charity and do not charge for advice or running a DMP.
More advice and support on the DMP support thread If you have questions.