Loads of Debt - Nowhere to turn

dancingfairy

I'm sure Martin has written on article on refusing rate rises/rate jacking. It might be worth having a quick search. I beleive you can write to them and ask them to close your account and ask that you continue paying it off at the old rate but I'm not sure how long after they notify you of a rate rise you have to write to them (i think it might be 90 days but I'm really not sure). It's worth bearing in mind in case they threaten to put them up again.
df

dancingfairy

It might be worth redoing your SOA or ammending it to show the additional debts to family and the overdraft and additional outgoings you have identified.
Basically you have 2 main option: 1) you claw yourself out of this, this will become a lot easier soon once you have one debt paid off and the childcare drops dramatically or 2) you admit you can't cope and start defaulting and look at payment plans (including a dmp or IVA). That's basically what it boils down to.
Unfortunately credit is a lot harder to get than it used to be and they don't know you will use it to repay the debts. Sadly many people consolidate and then start to ease up, to enjoy themselves a little, or slip back into old habits and before they know it they're back where they started (or worse). The bank will consider you paying back 28k on your salary. If you want to borrow say 5k for consolidation as they can't guarantee you will repay debt with it or not wrack up more they will assess whether you can repay 35k. It is therefore progressively harder to borrow.
Borrowing on the house is a bad idea too. Default on unsecured debts can be a pain but if you consolidate and end up with a large mortgage, what happens if you can't keep up repayments then or something unexpected happens? It doesn't bear thinking about. This is a big no no.
I think 6 months worth of cutbacks and frugal living and then review things. You may find eventually you are accepted for a small low interest rate debt which you can shift some higher interest debts to but if not, leave it 6 months and try again (by this time you'll be well in the money saving way ). Generally borrowing your way out of debt doesn't make sense and leads to more trouble but after a period of budgetting and cutbacks you may then be able to shift the debts without being tempted to go out and respend.

df

longtermplanner

"I know my biggest problem at the moment is me going over my overdraft (£25 each time) "

No not really - that is just a symptom of the fact that as a couple you are spending WAY more than you can afford. Both gym memberships have to go, not just one. £60 on presents is just daft! And another baby is on the way. Things are going to be getting more expensive not less.

You and your OH need to get very serious about budgetting. It might feel painful now, it will feel a lot worse when your kids are in their teens and want their own smart phones and clothes allowances.

Have you looked at YNAB? It is a bugetting system with a good smartphone app so you and your OH can both check before you make a purchase that you can afford it. If you can't, you just say No, Sorry that sounds a bit insulting, it's not meant to be, I know how easy it is to drift into a general level of expenditure that is too high and how hard it is to say "I can't afford that" when you earn good money and feel that you ought to be able to.

There are lots of enthusiastic YNAB users here on the MSE forums, it's not just me You can often get it cheaply on Steam but at the moment this offer seems to be fractionally cheaper: http://debtcamel.co.uk/ynab-review/. There is a free 1 month trial - it's worth a try if you and your OH can make a joint commitment to get very serious about clearing your debt..

ViolaLass

Do either of you cook from scratch? I'm trying to work out whether your food bill is so high because you're living off ready meals or because you will eat only gold-covered food.

(I'm being silly but the point matters, because it affects how you fix it).

jaydeeuk1

Are you an LTD?


I had a similar sized debt with a slightly lower income which took 15 months to pay off, so yours is definitely doable within 18 months, if not a year. Now I've paid everything off, it feels like I've given myself a payrise of £1k a month!

[Deleted User]

almondp wrote: »

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 4500
Partners monthly income after tax....... 1200
Benefits................................ 135
Other income............................ 0
Total monthly income.................... 5835

Monthly Expense Details
Mortgage................................ 780
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 181 - If over 10 months, swapping to 12 months will reduce it to £150-83.
Electricity............................. 44
Gas..................................... 57 - This seems high. Check U-Switch for a better deal.
Oil..................................... 0
Water rates............................. 44.2
Telephone (land line)................... 30 - Does this include BB and TV? If not, you can get it cheaper. Check U-switch.
Mobile phone............................ 90 - Even for 4 phones, this is still high (£22-50 per phone). Go PAYG/sim only (about £10 per phone) ASAP.
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 17.99
Groceries etc. ......................... 600 - This is HUGE. You should be able to knock a couple of hundred off it.
Clothing................................ 50
Petrol/diesel........................... 150
Road tax................................ 12
Car Insurance........................... 45 - This is £540 pa. Is there a reason (accident, new driver, high risk car) for it being so high?
Car maintenance (including MOT)......... 50
Car parking............................. 15
Other travel............................ 20
Childcare/nursery....................... 1120 - Because of this, your partner is effectively working for just £80 per month.
Other child related expenses............ 100 - This is £1,200 pa. What does it consist of.
Medical (prescriptions, dentist etc).... 0 - Nothing ever?
Pet insurance/vet bills................. 0
Buildings insurance..................... 12
Contents insurance...................... 12
Life assurance ......................... 55 - Is there a reason this is so high?
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 - Nothing?
Haircuts................................ 10
Entertainment........................... 150 - This is high. Reduce by at least 50%.
Holiday................................. 0
Emergency fund.......................... 0 - You need this, particularly being you are a home owner.
Work Lunches............................ 100 - This is £1,200 pa. Reduce or take packed lunches.
Simply Health........................... 23 - What is this?
Washing Machine Cover................... 15
Boiler Cover............................ 20
Bank Charges (Exceeding overdraft)...... 100
Birthdays............................... 60 - £720 pa on birthdays. :eek: Give token presents to everyone but the children.
Equifax................................. 14.95
Netflix / Spotify....................... 15.98 - Could you dump one of these?
Gym (2 Memberships)..................... 90 -This is over £1,000 pa. Any public facilities you could use instead?
Take-Aways.............................. 40
Milk.................................... 9
Sofa.................................... 131
Total monthly expenses.................. 4276.12


Assets
Cash.................................... 0
House value (Gross)..................... 90000
Shares and bonds........................ 0
Car(s).................................. 4000
Other assets............................ 0
Total Assets............................ 94000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 141573...(780)......1.34
Total secured & HP debts...... 141573....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................11900.....285.3.....29.9
Santander......................4100......36.87.....15.9
MBNA...........................8276......272.......27
HSBC (Wife)....................4000......40........22

So, on just three savings, ie. £50 on the mobiles, £200 on groceries, and £75 on entertainment, you would have an extra £325pm to put toward your debts.

Putting that £325pm toward the Barclaycard (your highest APR debt), would reduce the repayment time from 539 months (almost 45 years), to just 27 months , and the interest from an eye-watering £102,102,445, to just £4,039.

If you could manage £1,000pm, the Barclaycard could be gone in barely a year (14 months), for less than £2,000 in interest.

You can most certainly clear these debts, but you need to be willing to make sacrifices to do so.

ETA: I see it's only 2 phones for £90pm, so going PAYG/sim only will save you about £70, giving you £345pm extra, which would allow yo to pay £630-30pm toward your Barclaycard.

At that rate, you could clear the Barclaycard in 25 months, and pay just £3,839 in interest.

Hollygoheavily

£600 doesn't seem a lot for food for a family of that size to me?

ViolaLass

Hollygoheavily wrote: »

£600 doesn't seem a lot for food for a family of that size to me?

Really?? OH and I eat comfortably on £150 a month. £300 should be more than enough for 2 adults and two small children.

PenguinJim

£150 sounds a lot to me! I cook from scratch and whatever I cook lasts days (Monday's bolognese for me, OH and a (Monday-only) guest has been going strong every dinner since, and there's still a bit left!). I think the big difference in our food spend is the drinks, as we mostly drink water. It's boring, but I used to drink a couple of bottles of spirits each week, not to mention fizzy pop, orange juice, etc. I noticed that a cheap bottle of whisky I bought myself on a birthday two years ago still had a bit left 11 months later, so that's a good improvement!

I came to post about the £100/month for clothes, though!! Since I stopped getting into knife fights, I might spend £60 on clothes in one of those rare years where I buy new shoes. I know growing kids need some new clothes on a regular basis, but stop spoiling them, as they really don't care! And perhaps invest in a sewing machine.

For the adults, either stop buying "labels" or stop getting into knife fights!

Although to be honest, almondp, now that you've written down your expenses you've literally got a wealth of options for tackling your problem. And your problem is not that you've got loads of debt and nowhere to turn. It's that you're spending so unbelievably wastefully every single day. Try living within your means.

Lily_rose_2

£600 does seem a lot....we are a family of 5 (2 adults, 3 kids aged 13,11 & 7).....we spend £380-450 a month & have lots of fruit & veg, cook from scratch & do 5 packed lunches every day. Try Aldi.... It amazes me that I got a trolley rammed with fresh food, meat, yogurts, bread, milk, cheese etc & it was only £84!!!! It'll last us another week -week and a half. Meal planning is the key;)