Any way out of this?

BillJones

getmeouttahere wrote: »

We do have a second house which is currently being rented out but it'd be foolish to sell that as we'd possibly only end up with £5,000 cash and at the moment the rent is covering the mortgage and the current tenants want to stay long term.

I disagree with this. I'd say that you'd be foolish not to sell. That'd be £5,000 towards your debts that you are not finding anywhere else.

longtermplanner

Presumably your wife will be getting a job soon and your SoA will look completely different? Because that SoA is unsustainable. Even if you make no payments to any of your unsecured debt, you don't have enough to live on because your provision of £80 for groceries and nothing for clothes, emergency fund etc is just not going to be possible for more than a month or so.

Is there any equity in the rental property? If there is, you ned to sell it and use that to clear your debts. Owning a BTL when you do not have surplus income yourself is a recipe for disaster. What will you do if the tenants leave, trash the place, stop paying the renat and need to be evicted, the place needs repairs etc. BTLs can be profitable investments but not if your overall finances are too tight to cope with ups and downs.

BillJones

Stewart_78 wrote: »

Not silly at all. If you can keep your tenants paying the mortgage then in the long term you will have a nice asset.

They are currently funding that asset at just under 45%.

The decision as to whether to keep it or not can fairly be "would you borrow at 45% to buy a buy-to-let property"?

I'd say that most people wouldn't.

purdyoaten

BillJones wrote: »

They are currently funding that asset at just under 45%.

The decision as to whether to keep it or not can fairly be "would you borrow at 45% to buy a buy-to-let property"?

I'd say that most people wouldn't.

Have to agree with this. The op cannot afford this 'investment'.

Additionally, if 'the rent covers the mortgage' there would be some profit, unless the mortgage is interest only, and tax to pay.

moxter

BillJones wrote: »

Please, don't go trying to blame the credit providers for this. They did not hold a gun to anyone's head. The OP asked for a service, was offered the service, and agreed to take it. They now need help to get out of it, whic hopefully they'll find here, but immediately looking to blame someone else for their problems makes no sense at all.

I'm not blaming credit providers for putting anyone in this situation. More saying that there are many people who are totally unsuitable to take a loan who want/feel they need one anyway. People with all sorts of weaknesses (naivety/ignorance/wilful denial/desperation) - as stated above I'm not making a judgement on the OP, who has already said that he accepts it's his own fault.

But he needs to be paying 60-odd percent of his salary towards his debts. I'm no fan of over-regulation, but objectively a loan is totally unsuitable for anyone who needs to be spending a vast proportion of their salary paying it back for many years to come. Yes, we are responsible for making our own decisions. That responsibility is something which is too much for many people, who simply need to have doors closed to them which instead are standing ajar, waiting to be rushed through. Yes those doors lead to a pit of snakes. Yes it's possible to have a peek through the door. The fact that so many people rush through those doors (perhaps I'm guilty of over-egging a poor analogy) means that they should be slammed in people's faces, and that means regulation. He's on a salary of £1500 a month with £30k of debt and credit card providers are extending the credit limit? What is the likelihood of sensible spending arising from that?

I'd be interested to know what the OP's history of borrowing is (does he have a history of borrowing large amounts and paying back on the terms specified? If so, fair enough). In the absence of such information, such loans are asking for trouble.

On the credit ratings, as you've got mortgages x2 already, then it's unlikely you'll need credit for anything in the near future, so that's probably the least of your worries. It probably means a future of pre-paid utilities and PAYG phones, but that's no hardship.

Not sure where I stand on the second property. Selling it to put the £5k equity towards £30k of debt sounds like a great loss for little gain, although there may be no alternative. The big risk as someone already said is that if there's a problem (either the tenants move out, or unforeseen major costs arrive...what happens if it needs a new roof/boiler?) you'll be in big trouble. Any way the rent can increase to go towards your unsecured debts as well as paying the mortgage? The other risk, with so little equity, is a dip in house prices, in which case your £5k could be wiped out.

[Deleted User]

getmeouttahere wrote: »

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 1550
Partners monthly income after tax....... 0 - Any chance your partner could get a job?
Benefits................................ 86
Other income............................ 0
Total monthly income.................... 1636

Monthly Expense Details
Mortgage................................ 611
Secured/HP loan repayments.............. 372
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 90
Electricity............................. 25
Gas..................................... 25
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 15
Mobile phone............................ 80 - This is expensive, even for 2 phones. Go PAYG/sim only (about £10 per phone) ASAP.
TV Licence.............................. 12
Satellite/Cable TV...................... 30 - You can't afford this, Switch to Freeview/Freesat ASAP.
Internet Services....................... 30 - Including the phone line, this is £45pm. Check U-Switch for a cheaper deal.
Groceries etc. ......................... 80 - Only £18-46pw for two of you?
Clothing................................ 0
Petrol/diesel........................... 120
Road tax................................ 10
Car Insurance........................... 0 - No insurance :huh:
Car maintenance (including MOT)......... 0 - Nothing?
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0 - Never?
Pet insurance/vet bills................. 0
Buildings insurance..................... 22
Contents insurance...................... 0 - You need this. Cost about £10.
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 - Not even cards?
Haircuts................................ 0 - Never?
Entertainment........................... 0 - Never? Not even renting a DVD or popping out for a drink?
Holiday................................. 0
Emergency fund.......................... 0 - You need something in here.

Total monthly expenses.................. 1542


Assets
Cash.................................... 0
House value (Gross)..................... 180000
Shares and bonds........................ 0
Car(s).................................. 0 - They still have a value, even though you owe money on them.
Other assets............................ 0
Total Assets............................ 180000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 134000...(611)......2.79
Hire Purchase (HP) debt ...... 8100.....(222)......0<
Hire Purchase (PCP)............3300.....(150)......0
Total secured & HP debts...... 145400....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Capital One CC.................1274.83...42.37.....34.9
Vanquis CC.....................4130.67...190.6.....39.9
Aqua CC........................3337.2....139.4.....35.9
Barclays Loan..................2400......144.3.....4.3
Jacamo.........................1438.57...70.98.....34.1
Woolworths.....................388.22....27.15.....39.7
Very...........................3446.78...101.7.....44.9
Littlewoods....................2402.9....271.5.....0
Nationwide CC..................2470......40........0
Barclaycard CC.................390.35....8.6.......34.9
Total unsecured debts..........21679.52..1036.6....-


Monthly Budget Summary
Total monthly income.................... 1,636
Expenses (including HP & secured debts). 1,542
Available for debt repayments........... 94
Monthly UNsecured debt repayments....... 1,036.6
Amount short for making debt repayments. -942.6

Personal Balance Sheet Summary
Total assets (things you own)........... 180,000
Total HP & Secured debt................. -145,400
Total Unsecured debt.................... -21,679.52
Net Assets.............................. 12,920.48

My comments in red.

You first priority is Very because, at your current rate of paying it, far from the balance reducing, it's racing upwards, at a frightening rate. :eek:

[Deleted User]

getmeouttahere wrote: »

The problem is even over the past 2 weeks my wife has had letters from two of her credit card companies telling her that her limit is increasing

Any chance these are low APR cards?

[Deleted User]

getmeouttahere wrote: »

Sky have just bumped their price up which may give us a get out clause there but we have no aerial so need some sort of TV package.

TV is a want, not a need.

In your shoes, I'd dump live TV completely (thereby saving £42-12 per month), and watch catchup online.

[Deleted User]

getmeouttahere wrote: »

We do have a second house which is currently being rented out but it'd be foolish to sell that as we'd possibly only end up with £5,000 cash

That £5,000 would clear Very, which is the priority, given its insane APR.

Two years from now, £5,000 won't be enough to clear it.

getmeouttahere

Thanks for all the comments. There are a lot of useful tips which I will take time to digest.

In reference to the comments about my SOA:

Any chance your partner could get a job?
We have discussed this at length and my wife suffers from asperges, dyspraxia and something else which I can't recall the name of. Her previous job was working for our own company and she was earning £1300 per month but we were ripped off to the tune of £34k and had to cease trading.


Mobile phone............................ 80 - This is expensive, even for 2 phones. Go PAYG/sim only (about £10 per phone) ASAP.
My wife's contract is up in January and mine in August 2015. They will both be moved to PAYG as soon as they end.


Satellite/Cable TV...................... 30 - You can't afford this, Switch to Freeview/Freesat ASAP.
Again it's mid contract unfortunately. I need to look into the options given them putting their price up.


Internet Services....................... 30 - Including the phone line, this is £45pm. Check U-Switch for a cheaper deal.
At present this is a part of the sky package and is already cheaper than what we were paying BT. This is also part of the same contract term as the SkyTV.


Groceries etc. ......................... 80 - Only £18-46pw for two of you?
This is £20 for the two of us per week. It can be done (farmfoods is amazing for money saving if you buy a months frozen food in one go).


Car Insurance........................... 0 - No insurance
Car insurance was paid in full before money became tight.


Car maintenance (including MOT)......... 0 - Nothing?
At the moment both cars are under warranty and we're going to look into handing my wife's car back to the finance company.


Medical (prescriptions, dentist etc).... 0 - Never?
Not that I can recall. If I need pain milers, I just buy cheap 16p asda ones.


Contents insurance...................... 0 - You need this. Cost about £10.
Contents insurance is included with our building insurance.


Presents (birthday, christmas etc)...... 0 - Not even cards?
Not it we can't afford them. We can always make them.


Haircuts................................ 0 - Never?
I cut my own hair. Wife has her hair cut once a year if that.


Entertainment........................... 0 - Never? Not even renting a DVD or popping out for drink?
Nope.


Emergency fund.......................... 0 - You need something in here.
Can't afford to have an emergency fund and I can honestly say I see no way of getting one.


Car(s).................................. 0 - They still have a value, even though you owe money on them.
Yes but technically they do not belong to us.