Statement of Affairs and Despair

cakeforbrains

Hi there.

Basically, over the last couple of months I've been working really hard to get our budget in order. We have a lot of debt, but I have been trying to juggle it onto the best interest rates and do the best I can. I have also been really tight with my budget, making spreadsheet after spreadsheet, even down to the last penny I have spent on Christmas.

The last week, however, has been hell. Looking below you can see that we have a flat which we rent out. We desperately want to sell this flat to release some money to go towards our debts, but having tried twice before know that we will struggle with a tenant in there. My husband has a debt to his brother, which we pay off at a rate of £500 per month and we asked if we could suspend the payments so that we could afford to cover the mortgage on the flat while it was empty and on the market. His brother agreed to this, but then a few days later rescinded. This is his right, of course, but has meant that we can now no longer see a light at the end of the tunnel.

Next, my partner went for his vetting interview, which is renewed every seven years due to him working with national secrets. The interviewer looked at his financial details and told him he posed a potential risk (ie. he might take a handout from a spy because we are in so much debt). They are still in decision mode and may issue a temporary vetting pass, but if they don't then he will probably lose his job.

I'll post our SOA below. Basically, we don't know what to do next. We owe a lot of money, but we are able to just about keep up with (slightly above minimum) payments. A lot of it is on 0% cards, which is a worry, but I know when all the deals end and have been able to successfully jump the balances around so far. I have also unpicked our budget so that our 'housekeeping' is completely separate from our other bills making it all a lot more clear and user-friendly.

Yesterday I phoned Stepchange, and we are waiting for an interview, but looking online I don't know if any of their options suit us. We don't want to go down the IVA or bankruptcy route because we are not ready to give up on the idea of getting a mortgage for a family home somewhere in the next decade. I am unsure of the pros and cons, and the credit footprint, of a DMP.

The guy at Stepchange told me to shift our income and priority debts to a basic bank account and then go ahead and default on all our credit. I am reluctant to do this because I know it'll mean kissing goodbye to 0% balance transfers etc..

Also yesterday my husband went to see his parents and told him everything. He was shouted at a lot (understandably) but they were also sympathetic and not completely adverse to the idea of releasing some money from their house as a kind of living inheritance, but that we would make the monthly payments for.

Please, please don't tell me how stupid we have been. I know. I feel an utter and crippling guilt and so does my husband. We had an expensive wedding and bought a car and then lived beyond our means for five years, meaning it spiraled. I have literally spent the last four days sobbing. We can't sleep. I have thought about piling as much of the debt into my name as I can and then packing a bag, leaving, and going bankrupt. I have thought about ending my life.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 3000
Benefits................................ 203
Other income............................ 798
Total monthly income.................... 4001

Monthly Expense Details
Mortgage................................ 460
Secured/HP loan repayments.............. 0
Rent.................................... 1000
Management charge (leasehold property).. 40
Council tax............................. 193
Electricity............................. 60
Gas..................................... 60
Oil..................................... 0
Water rates............................. 80
Telephone (land line)................... 0
Mobile phone............................ 76
TV Licence.............................. 12.12
Satellite/Cable TV...................... 45
Internet Services....................... 44
Groceries etc. ......................... 450
Clothing................................ 50
Petrol/diesel........................... 100
Road tax................................ 30
Car Insurance........................... 53
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 30
Other child related expenses............ 30
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 19
Life assurance ......................... 13
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Union fees.............................. 15
Total monthly expenses.................. 2900.12


Assets
Cash.................................... 0
House value (Gross)..................... 95000
Shares and bonds........................ 0
Car(s).................................. 5000
Other assets............................ 0
Total Assets............................ 100000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 76000....(460)......2.5
Total secured & HP debts...... 76000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Nationwide credit car..........8314......97........10
MBNA...........................4572......49........0
Barclaycard....................3037......50........0
Nationwide loan................5600......169.......13.4
Lloyds loan....................6500......138.......10
Debt to brother................15000.....500.......0
Natwest overdraft..............2000......0.........0
Barclaycard....................549.......30........21.9
Natwest credit card............922.......20........0
Natwest Credit card............2336......48........0
Total unsecured debts..........48830.....1101......-


Monthly Budget Summary
Total monthly income.................... 4,001
Expenses (including HP & secured debts). 2,900.12
Available for debt repayments........... 1,100.88
Monthly UNsecured debt repayments....... 1,101
Amount short for making debt repayments. -0.12

Personal Balance Sheet Summary
Total assets (things you own)........... 100,000
Total HP & Secured debt................. -76,000
Total Unsecured debt.................... -48,830
Net Assets.............................. -24,830

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

Just to note that the mobile phone costs are for four phones: ourselves and our two older sons.

My husband's income is an average as he has erratic, yet consistent, overtime (if that makes sense).

The other income is made of maintenance (302) and rental income (490).

Also to say that the Nationwide credit card is mostly 0% and some not.

Pixie5740

And breathe....

The worst part is over, you've looked at your finances and can see what's what. Both you and your husband are on board which will make adjusting your lifestyle to pay off these debts that much easier.

It is kind of your husband's parents to offer to release money from their house but then that would be turning unsecured debt into secured debt which isn't really recommended.

You currently rent out a property and rent a property yourself, would it be possible to move into the property you own? If not selling the property might be a good option, I know selling a vacant property is easier than one with sitting tenants but you never know, you might get lucky. Alternatively could you find a cheaper place to rent? £1,000 seems like a lot but I guess it depends on where you live.

Your mobile phone and internet costs seem high so maybe you could save some money there and you could get rid of satellite/cable TV.

If you are thinking about ending your life please contact someone like The Samaritans for some help.

gallygirl

There will be people far better placed than me to give advice. One thought though - 2 cars and only £100 a month on diesel suggests you could manage with 1?

Also how big is the flat? If you absolutely had to, how could you all fit in there? See it as a logistical challenge rather than just dismissing it - it would help your situation greatly.

How would your husband's work feel about insolvency, would that be possible?

Does hubby's brother know how bad things are, if he really understood would he change his mind again? Could his parents maybe have a word?

Finally, as has been suggested, please contact Samaritans if you need help. Forget about your future credit rating and do what is needed now. Your mental health is far more important than leaving the door open to taking on more debt in the shape of a mortgage at some stage in the future. Credit ratings can be repaired, you and your family are far more important.

I wish you well x

Sedge123

I don't have any advice for you and hopefully there will be some much more experienced people coming along to offer advice but I just couldn't read and run.

Please think about the children before you do anything silly and don't despair - although you can't see a way out at the moment these boards are full of people who started out in desperate situations and have come out the other side.

Best of luckxx

Dozey_crow

Hi I'm not an expert on these boards but I do know that any amount of debt is not worth a life. I know these things consume you but you have taken a very brave step by coming on here and there are some REALLY helpful and knowledgeable people who will be along later to respond to your SOA.

The questions I have are:
1) are you working? If so can you increase hours. If not can you turn your hand to ebaying, etsy (if you are handy with crafts), car boots, work from home files of any type, online surveys, competitions, mystery shopping etc
2) Your food bill does seem high and if you pop over to the oldstyle board they can give you some advice.

Personally I would tackle it in the following steps.
A) write a list of all food in the house work out the absolute minimum needed to get by for the first 3 Weeks of the month and still eat well. Work out a budget and sick to it. Also put aside £10\20 and see what Christmas goodies you can make cheaper than buying them (Christmas cake is much cheaper to make than buyAlso look for hello sticker items that you can freeze or make use of.
have a pre-Christmas clear out and put things on eBay out Gumtree and get them sold. Use the extra money towards the Barclay card
C) have a really good think with the family and see what you could really do without ideas are sky, the additional car some luxury items possibly

Sorry to ramble on but I hope that having something to focus on and being proactive will help you feel more in control and capable. Remember the things that matter are your husband, your children and your family being healthy. Nothing else.

Wishing you the best of luck.

cakeforbrains

Thank you everyone.

In terms of moving into the property with the mortgage: it's a one bedroom flat and we're two parents and three children, so it would only be a serious emergency that would have us all going to live there.

Our rent could be reduced by perhaps £100 per month. We live in a very expensive part of the country. It's not something we've dismissed.

Because of the vetting etc. I don't think that any form of insolvency is an option. I don't know for certain, though.

I hadn't really thought much about reducing to one car. My husband drives to work, which is about 1 hour's round trip a day with no public transport option (from the middle of nowhere, to the middle of nowhere). I suppose he could use a car and I could take the bus, but with three children (one toddler) that would be a logistical nightmare. I mainly use the car for shopping and ferrying the children around to clubs etc.. I will weigh it up, though.

Agreed that the mobiles, internet and Sky costs are high. I see these as our only luxuries now that we have cut right back on spending. I think we are still tied into the Sky and certainly the broadband, but I will have a look at reducing the mobile costs. I pay £11 each for the two boys and my husband is still tied into his contract, but I could downgrade mine.

I do understand that turning unsecured debt into secured isn't necessarily a good thing, and it may not even happen at all. My husband's parents are quite old (especially his Dad) and own their house outright. I know this sounds utterly terrible and we don't really think about it, but I would be surprised if some kind of inheritance wasn't available within the next ten years.

Does anyone know any more about the pros and cons of a DMP in our situation?

Thank you again.

Kate_fixing_it

My heart goes out to you. You are here now and amongst friends.

No matter what the situation it is NOT worth your life. Even if you have nothing material you have your family and you have hope for a better future. Practically speaking (and I know I'm going to sound harsh) it wouldn't solve a thing, your husband will still have to pay off the debt and he'll also have to cope with three grieving children and his own devastion and probably a good helping of guilt too. It always seems darkest right before dawn but the light always comes. You can and you will get through this.

I have no practical advice for you as I'm just starting out on the road to debt freedom myself but this is perfectly possible to get out of. There are some amazing people here that will offer you their advice and support. Keep on posting (it honestly helps to pour out the bad feelings and celebrate when the good happens - which it will) and read through some debt free diaries, there's a wealth of inspiration and experience for you at the click of a mouse.

Kate x

cakeforbrains

Dozey_crow wrote: »

Hi I'm not an expert on these boards but I do know that any amount of debt is not worth a life. I know these things consume you but you have taken a very brave step by coming on here and there are some REALLY helpful and knowledgeable people who will be along later to respond to your SOA.

The questions I have are:
1) are you working? If so can you increase hours. If not can you turn your hand to ebaying, etsy (if you are handy with crafts), car boots, work from home files of any type, online surveys, competitions, mystery shopping etc
2) Your food bill does seem high and if you pop over to the oldstyle board they can give you some advice.

Personally I would tackle it in the following steps.
A) write a list of all food in the house work out the absolute minimum needed to get by for the first 3 Weeks of the month and still eat well. Work out a budget and sick to it. Also put aside £10\20 and see what Christmas goodies you can make cheaper than buying them (Christmas cake is much cheaper to make than buyAlso look for hello sticker items that you can freeze or make use of.
have a pre-Christmas clear out and put things on eBay out Gumtree and get them sold. Use the extra money towards the Barclay card
C) have a really good think with the family and see what you could really do without ideas are sky, the additional car some luxury items possibly

Sorry to ramble on but I hope that having something to focus on and being proactive will help you feel more in control and capable. Remember the things that matter are your husband, your children and your family being healthy. Nothing else.

Wishing you the best of luck.

Thank you so much for replying. Funnily enough, a lot of your advice is stuff I've already started doing.

1) I'm not working at the moment because with a 2 year old our childcare costs would be so high and also because my husband often goes away with work. I desperately want to do something from home and have been looking into the options. Even an extra £200 a month would be brilliant.

2) Yes, I am definitely looking into reducing that. I have started baking a lot recently (cheap baking) and being much more economical and I think I have already reduced it to be honest. As I said, I now have one 'housekeeping' bank account so I can keep a good eye on it. I've also been making much better use of vouchers and coupons as long as they're for stuff I'd buy anyway.

A) I like the idea of doing a stock inventory of all the food we already have. I was meaning to clear out the cupboards anyway. I have already bought some small items (cellophane etc.) in order to make Christmas presents for adults. This year it will be millionaire's shortcake (ironically?) with edible gold glitter. I've bought all the presents for the children and spent £60 on each of them, which I am really pleased with. Luckily, they are very unmaterialistic for their ages (12 and 10 (and 2))

I've sold LOADS on ebay and facebook over the last few weeks. Mostly old baby things. I've made £460 so far. You're right about putting it on the 'little' barclaycard.

C) As mentioned above I think we are tied into Sky, but I will check. And I will think also about the second car. We honestly have cracked down a lot on luxuries in the last few months. I want our attitude to be one that means this never happens again.

rattters

Have subscribed to this post

It was like reading my very own situation (with a few little differences) and am at the very same point as you- mentally and financially!

Have just logged all my details with Step Change and am seriously considering a DMP for myself and my husband.

I am plucking up the courage to do a full SOA and start my own debt free diary- have followed a few on here and don't know where I would be without the info and help I have seen in these forums.

Most importantly- you are not alone- there are some wonderful, kind and supportive people on these forums

theoretica

Have you spoken to your bank about whether they would let you take a payment holiday while you sold the flat? How fast do estate agents htink it would sell?

tiger_eyes

cakeforbrains wrote: »

1) I'm not working at the moment because with a 2 year old our childcare costs would be so high and also because my husband often goes away with work. I desperately want to do something from home and have been looking into the options. Even an extra £200 a month would be brilliant.

How detail-oriented are you? Your written English is pretty strong so if you can read quickly and closely, I'd be considering the possibility of moving into editing and proofreading. There is a huge (and I do mean huge) market of self-publishing authors looking for affordable editing, plus a number of epublishers doing the same. If you have the skillset, you don't need any qualifications - you can get hired on the strength of a sample edit. You can make good, steady money working from home. Just a thought.