New and bit scared

David72_2

Wow thanks all.

Yes sorry included mobiles twice. Is £44 for both. Both on contract for another year.

Yes the Council Tax is over 10 months.

Re gas and elec I will look into getting them cheaper.

Re Sky £32 a month is the lowest I could bargain them down to - I know it is a luxury and may have to go.

The house insurance of £19 is buildings and contents combined.

The £600 shopping is food and all household type products.

The mortgage is probably the biggest worry. Yes it is interest only and I have no investments to pay it off in 20 years (yes I am in my early 40s - I am 41 - good guess!). My wife thinks I should call the bank to try to put some of the debt on the mortgage though in reality they are unlikely to do so - with a mortgage of £260K and a house value of perhaps £290K there isn't much room there. They would also want us to go on a new deal with them (at present we are floating 2 % above base rate since our 5 year deal ran out) which would cost us more each month. We shouldn't have bought this house in the first place probably, at a time when my wife was on maternity leave and not working . . .

I forgot to mention the bank of Mum and Dad, to which I pay a nominal £50 per month - I owe them approx. £9000 still.

The one vague ray of sunlight is that the First Direct loan (£425 a month and which only charges v low interest) finishes in June 2015!

Yes I'll put the figures on the stepchange website and see what they say.

Thanks again.

David72_2

Whilst I was typing that the postman came with a letter for my wife from our bank Santander offering her a credit card with guaranteed acceptance and 0% interest on balance transfers for 17 months with a fee for balance transfer of 3%. Now all of the other credit cards are just in my name though the bank account and mortgage are in joint names. Acceptance is only subject to fraud and money laundering checks. Very tempting to accept, then cut up the card, having transferred the Santander balance and hopefully some of the MBNA or Barclaycard. And then diary on for 17 months.

Any thoughts please?

Broke_Kitty

My advice?

Cancel sky. Get a freeview box, and if you need to get Netflix. I have Netflix and a VPN, together it costs me £9 a month and it gives me access to both UK and US netflix. Without the VPN I think it would be about £5. Between that and BBC iPlayer etc I have more than enough things to watch. You can use Netflix on multiple profiles so you can have seperate ones for you and the kids, and you can use them on PC or any consoles you may have. Significant saving there already!

Cut down your grocery spend. I'm just starting to do this myself, planing meals, only doing one big shop and not top up shops, don't be tempted by those diet cokes because you could just as easily drink some free water, let's be honest, and all those £1.20s add up.

The balance transfer sounds like a good idea, you'll bring your interest down and that's a great thing. Try to keep your minimum payments the same as they are now, so you'll be paying them off quicker, and obviously any extra money you save through lifestyle changes throw at them too.

Once you get that lot tackled you'll be in a much better position to deal with your mortgage when the time comes!

triple_choc_chip

Hi David, well it was all looking rosy till I got to the food shop! This will have to be a work in progress but three months from now you could be amazed how little you can spend. You should be able to eat well (and plenty) spending £400 a month - over on the old style threads they would say even this amount is excessive! Take notice of the bill and you will see that the non-essential / no nutritional value things are the most expensive - wine, beer, biscuits, desserts, cakes crisps etc. It would be boring to cut them out completely but you could probably half it and not even notice. Anyway that would give you £200 to throw at the highest interest card.

Taking the saved interest into account, that's £2.5K extra gone in a year - I always round stuff up for impact, e.g. parking at £2.30 a day = £530 a year; I now walk around the corner and plump up the holiday fund.

I doubt you would be able to re-negotiate your mortgage now, most places have ceased IO mortgages and I think the ones that still offer them, insist on 40% deposit /equity. That your wife is thinking of ways to ease the burden but not reduce the debt indicates she hasn't had a proper light bulb moment yet - that comes when you realise there's no other way other than to change spending habits...

dancingfairy

You have a good income but a lot of that is taken up by the house. Say you get the debts paid off in 6 years. You would then have 14 years to save up to pay the house off. Not only that but in that time interest rates will almost certainly rise. I think the house is going to be a massive millstone around your neck. Have you considered downsizing at all as sadly I think some drastic action is required or you could spend the next 20 years with money problems of one sort or another
If you were repaying the Capital then I'd say you were on the cusp of affordability vs a dmp but sadly I fear some hard decisions have to be made here.

df
Edit: On paper the most sensible thing to do would be to downsize, use any equity to repay debts and start again but on a more affordable house on a repayment mortgage. I appreciate it's not that easy though in practice.

tulip28

Hi David

You are in such a good position to tackle this now rather then float through until the p00p really does hit the fan.

I can only echo what the other guys & gals have advised and that's to knock the sky, even the tennis lessons for your son (I know it will be hard for him) but priorities for the debt must come first.

If you have been offered the 0% - take it.

When the bank loan finishes - throw that money at the largest debt.

The hardest part is the first step. x

triple_choc_chip

Ref. the 0% card, yes it will save on the interest so go for it but pay just over minimum payment and increase payments to the card with the highest interest rate so that balance decreases faster.

Also don't be too quick to cancel the cleared card as sometimes they post out new 0% offers when it's been clear a couple of months. You could spend the next 3-4 months shuffling until you have it all on 0%

David72_2

Thanks all so much.

Am crying here.

I agree we might have to sell the house and maybe rent for a bit. The house is worth about £290K so we'd make £30K but we've then got to take off estate agents fees, legal fees etc and a rental deposit. And there aren't many places for rent round here - I do not want to move my children from their school. I am seeing a mortgage broker next week.

Stopping the tennis and the gym/ballet would damage my children so much.

I've been through stepchange and they have recommended a DMP - I have asked for the application pack but it looks so scary. I've seen the threads on it too. I don't think I am going to go down that route yet - will try the income reducers and the new 0% card and go from there.

tulip28

Please don't get upset. It wont come to selling your home. Worse case scenario yes - but don't think of that yet. There are plenty more options for you yet.

I have just finished my DMP and although my credit is shot - I am building it back up, I had a good experience with my DMP and my creditors were helpful because I was honest.

They will all go through with you your monthly costs so be prepared - they will urge you to cut costs here and there. I have been there and I know how it feels - it is soul destroying but you aren't they only person to be in this situation so don't fret about it. You are sorting it and that's something to be proud of.

Whilst you can help yourself do it - I am going to stick to my earlier suggestion of stopping or cutting down the children's activities for a while - even if it gives you more breathing space and to get ahead of yourselves.

I know you say it would damage them but they would be more damaged to see Mum and Dad go through DMP/house repossession. I am sure they would understand.

Go for the 0% - cut the luxury and live within your means.

triple_choc_chip

Please don't cry.... It's not like you're sinking, you are managing your repayments and it's already about to get easier.

I don't know which part of the country you are in but I'm south west and you couldn't rent much that's decent for less than your mortgage payments.

Get on with cutting that food bill down, losing a couple of inches off your waist is better than losing your home!

For what it's worth I think you can clear all your unsecured debt in 2 and 1/2 yrs, your Dad's loan 6 mths after that and then have 17 yrs to clear the mortgage at less than £1300 a month which will be easy with no other debts.

This is infinitely doable so get that smile back on your face