New beginnings but need to clear debt

cosmicme

Difficult post to write but here goes - 4 years ago I had money, not a lot but enough to pay all the bills and not panic when an unexpected one arrived then I made a massive mistake. I got involved with someone who wasn't working due to an accident. I know now that was an excuse and he was just lazy, he had no income so I was paying for everything. I booted him 2 weeks ago and have just sat down to work out where I am financially.

It isn't good I owe about £11500 in unsecured debts, one credit card, £2k tax credit overpayment and most of it on 2 overdrafts. I think I can go debt free in 3 years, will be bloody difficult but I need to do this for my sanity. I also have a mortgage inherited from late husband along with a house I cannot and do not want to sell. What I need is advice on how to make it possible to do this. There is me, 2 kids (9&10) a dog and 4 cats. I am planning on selling my car to jump start repayments, I have access to a van for now & most places I need to get to are in walking distance but I need help

Sazzie23

cosmicme wrote: »

Difficult post to write but here goes - 4 years ago I had money, not a lot but enough to pay all the bills and not panic when an unexpected one arrived then I made a massive mistake. I got involved with someone who wasn't working due to an accident. I know now that was an excuse and he was just lazy, he had no income so I was paying for everything. I booted him 2 weeks ago and have just sat down to work out where I am financially.

It isn't good I owe about £11500 in unsecured debts, one credit card, £2k tax credit overpayment and most of it on 2 overdrafts. I think I can go debt free in 3 years, will be bloody difficult but I need to do this for my sanity. I also have a mortgage inherited from late husband along with a house I cannot and do not want to sell. What I need is advice on how to make it possible to do this. There is me, 2 kids (9&10) a dog and 4 cats. I am planning on selling my car to jump start repayments, I have access to a van for now & most places I need to get to are in walking distance but I need help

Hey Cosmicme - big changes ahead, well done for putting your family first. Think I would suggest you start by posting your SOA (links in stickies). Sounds like you can make your minimum payments but if not come back for advice on priorities.

cosmicme

Thank you Sazzie

this is what I have managed tonight - am waiting to hear from tax credit office about new single person claim and also need to contact the bereavement benefits team as I should be able to claim widowed parents allowance which is about £110 a week



Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 2052
Partners monthly income after tax....... 0
Benefits................................ 136.2
Other income............................ 0
Total monthly income.................... 2188.2

Monthly Expense Details
Mortgage................................ 1142
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 82
Electricity............................. 164
Gas..................................... 0
Oil..................................... 0
Water rates............................. 38.4
Telephone (land line)................... 35
Mobile phone............................ 0
TV Licence.............................. 12.18
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 150
Clothing................................ 50
Petrol/diesel........................... 40
Road tax................................ 0
Car Insurance........................... 65.52
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 32.4
Buildings insurance..................... 53.15
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 19.8
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 20
animal food ............................ 60
Total monthly expenses.................. 1964.45


Assets
Cash.................................... 0
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 216000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(1142).....0
Total secured & HP debts...... 0.........-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
am ex .........................336.......9.........0
vet............................260.......0.........0
overdraft 1....................5407......0.........0
overdraft 2....................4064......0.........0
Total unsecured debts..........10067.....9.........-


Monthly Budget Summary
Total monthly income.................... 2,188.2
Expenses (including HP & secured debts). 1,964.45
Available for debt repayments........... 223.75
Monthly UNsecured debt repayments....... 9
Amount left after debt repayments....... 214.75

Personal Balance Sheet Summary
Total assets (things you own)........... 216,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -10,067
Net Assets.............................. 205,933

Sazzie23

Hi,

I'm more of a realistic budgeter than a cost cutter, there's quite a few better at this than me, but Her are my SOA comments.

Think you need to include something for life insurance - you have 2 children and a mortgage, what happens if you get ill or have an accident?

I notice you didn't say how much you owe on the mortgage, if you can approximate it will help view overall picture of finances.

Also birthdays, even only for the children, Add up what you'd spend in a year and divide by 12. Same for haircuts and prescriptions and dentists.

is Contents insurance combined with buildings as that seems quite high for buildings alone...and you need contents insurance.

Re vehicles, see you are currently thinking of selling one, but even so needs to be some thought for maintenance costs, even if just a token amount for MOT unless it's a firms vehicle.

You are very lucky if you have 2 OD of that size which do not have any interest being accrued, again if you can get an approximate it will help posters advise on best way to tackle the debts.

Re benefits, not anything I know about but there is a benefits thread on the boards if you need any advice.

Watch this space for more advice for the knowledgeable folk.

ellesbellesxxx

Hi
First of all, well done for coming here and sorry to hear you have been going through a rough time..hoping it's on the up for you now!
Just a couple of places I wondered about cutting back...


Electricity - is it really 164? Are you paying arrears? A lot of cutting back could be done here - changing supplier/switching things off...
Landline 35 - we pay 5 with plu5net (they matched ta*kta*k for me)


Just playing devil's advocate here, but if you only spend 40 on petrol, do you really need 1 car let alone 2? That suggests only a few short journeys.
CAn your pet insurance be reduced?


If you really do have 200 left each month then you can wipe out Amex in 2 months as this will cost you most in interest. What are the overdraft charges? I am thinking you need to hit these asap.
Agree that buildings/contents ins looks a lot - we pay 17 a month inc buildings and contents and legal cover for a 3 bed house.


If you are (which I can't see at the mo) being stung with massive interest charges which make the debt bigger all the time, that's when a DMP might become an option.


Stepchange are a free debt charity so always worth giving them a call to know your options.


Moreover good luck!

[Deleted User]

I don't think you are in too bad a situation.

My debts were around £15k and, after Mortgage/Rent, I had a lot less left per month than you.

cosmicme wrote: »

Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 2052
Partners monthly income after tax....... 0
Benefits................................ 136.2
Other income............................ 0
Total monthly income.................... 2188.2

Monthly Expense Details
Mortgage................................ 1142
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 82 - 10 or 12 months? If over 10, swapping to 12 will reduce it to £68-33.
Electricity............................. 164 - This is £1968 per year, which seems high. Check for a better deal on U-Switch, reduce thermostat a few degrees, and ensure things are switched off when not in use.
Gas..................................... 0
Oil..................................... 0
Water rates............................. 38.4
Telephone (land line)................... 35 - Does this include Broadband?
Mobile phone............................ 0
TV Licence.............................. 12.18
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 150
Clothing................................ 50 - Every month?
Petrol/diesel........................... 40
Road tax................................ 0
Car Insurance........................... 65.52 - Is there a reason (accident, new driver etc.) why this is so high? Do you check comparison sites at renewal?
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0 - Never?
Pet insurance/vet bills................. 32.4
Buildings insurance..................... 53.15- This seems high. Check comparison sites.
Contents insurance...................... 0 - You need this. Cost about £10 per month.
Life assurance ......................... 0
Other insurance......................... 19.8
Presents (birthday, christmas etc)...... 0 - Never?
Haircuts................................ 0 - Never?
Entertainment........................... 0 - Never?
Holiday................................. 0 - Not even day trips?
Emergency fund.......................... 20 - How much do you currently have saved in this?
animal food ............................ 60
Total monthly expenses.................. 1964.45


Assets
Cash.................................... 0
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 216000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(1142).....0
Total secured & HP debts...... 0.........-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
am ex .........................336.......9.........0
vet............................260.......0.........0
overdraft 1....................5407......0.........0
overdraft 2....................4064......0.........0
Total unsecured debts..........10067.....9.........-


Monthly Budget Summary
Total monthly income.................... 2,188.2
Expenses (including HP & secured debts). 1,964.45
Available for debt repayments........... 223.75
Monthly UNsecured debt repayments....... 9
Amount left after debt repayments....... 214.75

Personal Balance Sheet Summary
Total assets (things you own)........... 216,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -10,067
Net Assets.............................. 205,933

Are all the debts really on 0% APR?

cosmicme

okay outstanding amount on mortgage is about £185K - I cannot do anything with it as it is still in late husbands name and no one would lend me enough to take out my own. The insurance policy covers this if I die or am diagnosed with terminal illness

Phone bill includes the tv/internet package

House insurance is buildings and contents - cannot shop around for buildings as the house was underpinned before we purchased it so only the company which was insuring it at the time will cover it

Prescriptions and dental should be free once the tax credits are sorted

Electric bill is duel fuel and yes it is high - have a 3 bed semi built in the 1920s so can be a pain to keep warm

clothing was high because both kids are growing fast including their feet but could cut it down - none of that was for me

Dog insurance I could probably change on renewal but dont want to not be insured as the cats aren't and 1 is currently on cage rest after being run over

I have nothing saved in emergency fund

Car insurance is high because the one on the road is a transit and was on a commercial policy

Debts are not on 0%apr but I dont actually know what the rates are and have been playing ostrich for a while

[Deleted User]

cosmicme wrote: »

okay outstanding amount on mortgage is about £185K - I cannot do anything with it as it is still in late husbands name and no one would lend me enough to take out my own.

Have you considered selling and renting?

clothing was high because both kids are growing fast including their feet but could cut it down

Are both children the same gender?

If so, why not hand-me-down?

I have nothing saved in emergency fund

Then you need to increase that a lot.

A decent Emergency Fund is necessary for someone renting, and it is far more important for a home owner.

Car insurance is high because the one on the road is a transit and was on a commercial policy.

Are you still using it commercially?

If not, switch to SDP+C.

Come to that, do you really still need a Transit, or could you sell/trade it for something smaller, cheaper to insure, and more fuel efficient?

Debts are not on 0%apr but I don't actually know what the rates are and have been playing ostrich for a while

You need to find out the APRs, if only to know where to target overpayments.

cosmicme

Both children same gender but also very close in age/size so no hand me downs - do get a few bits from friends but it is the shoes which hurt
I really don't want to let the house go unless I absolutely have to, trying to keep things as stable as possible for the kids

Think I need to reassess the SOA today, but clearly not at 2am

Ashingtonian

That mortgage really is a killer taking up half of your income. What would the equivalent property cost to rent?

[Deleted User]

Have to say I agree with Ashingtonian, that the mortgage is the killer.

It is taking up more than half your income, leaving you barely £1,000 to pay for everything else.

If rents are reasonable, selling and paying off your debts would make sense.

Aside from reducing your housing (Mortgage/Rent) costs, it would see off your debts, leaving you much more financially secure.