Which path would you take?

Tixy

In terms of getting her to join, its very unlikely anyone would recognise her providing her user name is nothing to do with her actual name (she could pretend to be a guy if it would help her feel less likely to be recognised, nobody would know!)

Anyway - is the £974 the minmum income OH would get? or is that an average over 12months?
How soon will 3yo be at school? and how much will childcare costs reduce significantly then?

The costs listed don't look unreasonable really, so I suspect that its costs that are not listed that are causing the problems.
On the current costs is she able to reduce her mobile bills down a tariff?
Is the mileage all essential mileage? do they try to drive 'fuel efficiently' and fill up at the cheapest places (http://www.moneysavingexpert.com/travel/cheaper-fuel)
Her servicing / MOT / new tyres etc could probably be estimated at an average of around £30-40 a month as a starting point.

To me they look borderline, and in those cases it always harder to make the decision.
If they can see that things are going to improve (higher income expected and lower childcare costs at some point) then I'd likely struggle through for the next few months.
But I can also understand why some people don't feel they can carry on scrimping on everything and a DMP would mean she would have a bit more to spend on daily life and the little one.

The other thing to consider is their longer term plans and how their credit file could be affected by that. It looks like in a few years once the debts are paid and childcare is less they'd be in a good position to save quite quickly for a house deposit - if they are considering home ownership in the next few years then it would be better to avoid a DMP.
If that isn't something that interests them, and they have no plans for other big purchases on credit then a DMP may be the way forward.

(sorry longer post than I was planning to write!)

National_Debtline

Hello again,

I'm not sure how realistic that budget actually is. For example, they should factor amounts in to cover car maintenance and the MOT. They really should consider having contents insurance. In addition, they need to factor amounts to cover entertainment, emergencies, birthdays and christmas. Also, the amount listed for housekeeping is very, very low for a family of three. They need to also list an amount for clothing.

A financial statement is a long-term plan of action. People may be able to go without some of the items I've mentioned for a temporary period of time, but if we're considering a sustainable arrangement to help them choose the best route forward - it needs a little more revision.

Best wishes,

David @ NDL.

abby1234519

I hope the inserted text works!

Tixy wrote: »

In terms of getting her to join, its very unlikely anyone would recognise her providing her user name is nothing to do with her actual name (she could pretend to be a guy if it would help her feel less likely to be recognised, nobody would know!)

I hope to persuade her, I think she needs a little bit of time she is suffering from anxiety at the mo so I am trying not to overload her with too much information. I personally just got on with it and faced facts but everyone is different. I value the forum a lot so I am trying to show her its a good place!

Anyway - is the £974 the minmum income OH would get? or is that an average over 12months?
How soon will 3yo be at school? and how much will childcare costs reduce significantly then?

He gets £974 every 4 weeks so once a month apart from October this year (September next year). I count the wage as once every 12 months and then use the extra month as a "bonus" to pay off debt. She does the same. So yes the 974 is what he usually gets.

The costs listed don't look unreasonable really, so I suspect that its costs that are not listed that are causing the problems.
On the current costs is she able to reduce her mobile bills down a tariff?

Both her and her OH got new phones on a family tarriff (Which seems quite a lot to me) about 2 months ago.


Is the mileage all essential mileage? do they try to drive 'fuel efficiently' and fill up at the cheapest places (http://www.moneysavingexpert.com/travel/cheaper-fuel)
Her servicing / MOT / new tyres etc could probably be estimated at an average of around £30-40 a month as a starting point.

She is the only one who uses the car every day to travel to and from work. They do not drive at the weekends apart from going to Lidl which is a town away although sometimes I take her. I agree about the car costs however she feels if she saves money up for maintenance that she will pay more interest on her debts so she pays for tyres etc on credit. Ie puts £40 a month on the card and then buys the tyres when they are due

To me they look borderline, and in those cases it always harder to make the decision.
If they can see that things are going to improve (higher income expected and lower childcare costs at some point) then I'd likely struggle through for the next few months.

I worked out that if she continued the way she did then she would pay her debt off by October 2016 (I created a seperate file on my YNAB for her. However by putting car expenses and presents on card she would probably extend this by 2 months

But I can also understand why some people don't feel they can carry on scrimping on everything and a DMP would mean she would have a bit more to spend on daily life and the little one.

The other thing to consider is their longer term plans and how their credit file could be affected by that. It looks like in a few years once the debts are paid and childcare is less they'd be in a good position to save quite quickly for a house deposit - if they are considering home ownership in the next few years then it would be better to avoid a DMP.

She wants to save for a house once debt is paid off. Her son isn't 3 yet, I thought he was but not till June. So she will be entitled to 15 free hours from September 1st so her childcare should drop by £150ish. However tax credits will also drop and entitled to shows really she won't be better off really. By a few pounds I think. Next September her boy will go to primary school (Sep 2015) and I worked out if he went to breakfast and after school club that she'd pay £281 a month when he is at school. If she sent him to holiday childcare then the childcare would increase. so better off once the child goes to school for definite.


If that isn't something that interests them, and they have no plans for other big purchases on credit then a DMP may be the way forward.

(sorry longer post than I was planning to write!)

abby1234519

National_Debtline wrote: »

Hello again,

I'm not sure how realistic that budget actually is. For example, they should factor amounts in to cover car maintenance and the MOT. They really should consider having contents insurance. In addition, they need to factor amounts to cover entertainment, emergencies, birthdays and christmas. Also, the amount listed for housekeeping is very, very low for a family of three. They need to also list an amount for clothing.

Really? I budget about £150-£200 a month for house keeping but thats because I have a huuuuuge stockpile in my freezer and cupboards to work through so I never really considered what happens when you have to buy everything you need. Ie I have so much flour I am drowning!

A financial statement is a long-term plan of action. People may be able to go without some of the items I've mentioned for a temporary period of time, but if we're considering a sustainable arrangement to help them choose the best route forward - it needs a little more revision.

If it is for 2.5 years would youview this as sustainable or not. I only ask because I am trying to attempt to do a similar thing, not go on a DMP but problem for me is that I am getting married in August so I have to put everything on the cards. Once it gets to September I can overpay by £400 every month. I am hijacking my own thread about someone else!!

Best wishes,

David @ NDL.

Thanks for everyones responses. I'm still trying to persuade her to sign up

National_Debtline

Hello again,

£200 works out to be £46.15 a week. For a household of three that is very low. Bear in mind that housekeeping includes not only food but cleaning products, toiletries, personal care items and suchlike. I've no doubt that incredibly savvy people could live on £200 - but it is not a requisite.

Have a read of these pages from the excellent Debt Camel blog: http://debtcamel.co.uk/hard-choices/skinny-snowball-vs-comfy-dmp/
http://debtcamel.co.uk/hard-choices/how-far-to-cutback/

Best wishes,

David.

abby1234519

I don't think its low if you make everything from scratch, I can see that it would cost that if you weren't savvy shoppers but personally I don't spend that. And Joshua is still in nappies!

The first link is very helpful, she had a read of that and I think she wants to go for the non-dmp option. So shes going to plan her finances for a year and see how it goes. I've said we can have a money night once a month where we both sit down and see if she is on track, whether she has overspent (hopefully not) or whether she can make further cutbacks.

Stewart_78

Your friend needs to take a long hard look at this. Is that SOA really honest? I'm not saying she is being dishonest but money does wander off sometimes....

Second thing is that there are some pretty onerous interest rates on there. A big chunk of that min payment must be interest. Can she really be confident that she can pay in big chunks of cash to the highest rates first? How do they feel about really scrimping for 3 years? Like really scrimping, not just having 1 holiday instead of 2?

£14k is not a massive debt and you could cut into it quite quickly given a decent surplus at the end of each month.

I suppose my point is, if this is going to end in a DMP anyway, they might as well get it over with and start to get those defaults on ASAP as they will drop off sooner.

Really, they need to weigh up, very honestly, how likely they are to beat these debts with interest still happening. Hope is not enough. It will need serious will power and sacrifice to make the non DMP plan work. If they have that, then I say go for it, making sure to hit the 60% and 40% debts as hard as possible and as soon as possible.

Have they got stuff around the house they can sell? Can they raise a couple grand or even a few hundred on an ebay clearout? Most people would be surprised how much they could raise in a week from stuff that's just there.

Oh and one other point, is her partner on board and in the loop? Because they need to be totally committed as well.

patman99

The one big stand-out is Mobile phone @ £70. Is this for one phone or two ?.

abby1234519

patman99 wrote: »

The one big stand-out is Mobile phone @ £70. Is this for one phone or two ?.

2. They both have Sony Experia Z1s and are pretty new