My scary SOA

midlander81

jackieblack wrote: »

While I do agree with this given your current income, maybe consider how a change in your circumstances at any point in the next 30 months might derail your good intentions.
What if, for example, one of you has your hours cut or is made redundant, what if your wife finds she's expecting baby no.2, what if your boiler or one of the cars needs major repairs/replacement?

I think I would throw every available penny at the debt for the next 12 months and then re-assess, rather than planning a longer term repayment period.
The longer the debt lingers the greater the likelihood of some unexpected circumstance derailing plans that seem sensible at the outset.

Hi, thanks for posting. Your comments do make sense and we did discuss this. We are fortunate to be in secure jobs and the likelihood of either of us losing our jobs are very slim. I think that perhaps we need to either use some of the surplus to overpay the debts or at least build up an emergency fund that we could fall back on. Need to have a real think about this.

midlander81

retepetsir wrote: »

Well done on completing an SOA but I echo the above regarding the accuracy. If your income is that high and outgoings that low, why do you have so much credit card debt and what has it been spent on?

Make the minimum payments on the 0% debts and put everything towards the higher-percentage ones!

We racked up a lot of debt when we purchased our house 8 years ago. We couldn't really afford it in hindsight and some unexpected repairs forced us into debt. We managed to tread water for a few years and then we had a child, got married and had to fund more house repairs. We got into the habit of using the CC's for food/fuel etc.


Our income has increased quite significantly over the last 2-3 years and we are now in a position to really tackle the debt. (I have already paid off 12K of the loan that ends next year)

PinkPoppies

You don't have to spend a lot of money to enjoy life with your child and create lots of wonderful memories, there are so many wonderful inexpensive and even free days out to be had- especially this time of year when the weather is good.

From your SOA, you have a lot (£25400?) of CC debt on 0% cards- how long until the 0% cards run out? Do you have enough available credit on your cards to make shuffling to a new 0% deal an option when the time comes?

If for whatever reason you find you are not able to move to fresh 0% deals you are going to find yourself with a much tougher challenge because so much of your payments will go towards interest. If, for example, those cards moved to a rate of 16% after the 0% deal you would be paying over £300pm in interest that you are not having to pay at the moment- that's a hefty big chunk of your minimum payments down the drain.

With that in mind I think I would be tempted to really knuckle down and try to pay off as much as you can in the meantime.

Have you seen the snowball calculator? Brilliant tool that would be well worth inputting all of your cards into- it has the facility to add 0% deals into the data so you can see how your situation will look when the standard interest rates kick back in- http://www.whatsthecost.com/snowball.aspx

It's easy to put 0% debt to the back of your mind and see it as a bit of breathing space (been there, done that!) but much better to use it as an opportunity to really use the time to blitz CC balances.

blisteringblue

Hi midlander, while I have a little more debt than you I can see how I was in a similar position to you a few years back.

I still had access to credit, and some for the OH so we maxed all the cards we could get to 0% which at the time saved us a fortune in interest. Great we thought, however roll forward 3 years, we've an extra 20k of debt and no more 0% left. Coupled to the fact the OH went back to uni we were knackered. Hence our now DMP (which is the best thing we've ever done financially I must add, you totally "GET IT" at this point though, so hopefully my love of credit is done and dusted)

You seem quite clued up but I thought I was, and all of a sudden you hit a tipping point that is very difficult to come back from. I would suggest you are very close to this.

Good luck with it though.

rockm87

Mr Money Mustache is awesome.
make sure you read his article about things to do with your children, he has a son, and they dont require heaps of money for entertainment!

some brilliant ideas

midlander81

blisteringblue wrote: »

Hi midlander, while I have a little more debt than you I can see how I was in a similar position to you a few years back.

I still had access to credit, and some for the OH so we maxed all the cards we could get to 0% which at the time saved us a fortune in interest. Great we thought, however roll forward 3 years, we've an extra 20k of debt and no more 0% left. Coupled to the fact the OH went back to uni we were knackered. Hence our now DMP (which is the best thing we've ever done financially I must add, you totally "GET IT" at this point though, so hopefully my love of credit is done and dusted)

You seem quite clued up but I thought I was, and all of a sudden you hit a tipping point that is very difficult to come back from. I would suggest you are very close to this.

Good luck with it though.

Thanks for your post - We have managed to get the bulk of the debt on to 0% deals that will take us up to the end of our debt free journey - I need to check but I am sure that 2 of our Barclaycards are 0% for 30mnths. A couple of the others will need to be refinanced next year so I must focus on these now.


I do agree though that we cannot carry on relying on 0%. I am 100% determined to shift this debt by the end of 2016. Thanks for sharing your experiences with me though, it really helps to know that there are others going through the same thing.

foolsgold01

blisteringblue wrote: »

Hi midlander, while I have a little more debt than you I can see how I was in a similar position to you a few years back.

I still had access to credit, and some for the OH so we maxed all the cards we could get to 0% which at the time saved us a fortune in interest. Great we thought, however roll forward 3 years, we've an extra 20k of debt and no more 0% left. Coupled to the fact the OH went back to uni we were knackered. Hence our now DMP (which is the best thing we've ever done financially I must add, you totally "GET IT" at this point though, so hopefully my love of credit is done and dusted)

You seem quite clued up but I thought I was, and all of a sudden you hit a tipping point that is very difficult to come back from. I would suggest you are very close to this.

Good luck with it though.

I totally agree with this as we too were in a similar position of robbing Peter to pay Paul a few years ago and then I had baby number 2, moved house over Christmas (no choice) and we had to find a months deposit on top. Then I was on maternity leave for 10 months and all the while everything had increased in price..rent, council tax, bills, essentials as we needed nappies and baby things. My husband used credit cars and loans (without me being aware at this time) to pay for all this as we didn't budget (unlike now)!!!


You are in a good position to pull in your purse strings for a short period of time and then reassess. For us its going to take a very long time through no-ones fault but by simply trying to make ends meet!! As jackieblack also says sometimes these things happen without any planning. You are on the right track by the sounds of it but just don't forget that these unexpected things do happen just sometimes the costs too can be bigger than expected and the debts start to increase.


I do wish you luck though and hope that you have a smooth journey

midlander81

Thanks Foolsgold! I wish you well too!!
I am definitely going to have a chat to my wife tomorrow to discuss upping our payments a bit to try and bring our DF date forward a bit.


All the best and keep posting

mrssjs

Hi, if your take home pay is around £3k does that mean you earn around £60k - I'm just querying as you still have child benefit in your SOA, you need to opt out if you earn over £60k? Or pay a tax charge between £50k & £60k - which will need to be added I think.

Jagraf

midlander81 wrote: »

Hi, thanks for the post


I disagree that I haven't had my LBM. I don't necessarily think that LBM is the same for everyone but for me I do know that I am totally committed to clearing our debts.


A large proportion of our debt was accrued due to starting a family, maternity leave and getting married. We also earned significantly less that we do now up until around 3 years ago so we are now in a much better position to tackle the debt.


We have chosen the 'scenic' route that allows holidays and treats. Again, not everyone will agree with this but we have decided that 30 reasonable months are better than 24 months of torture!! I think that we would take a different approach if we didn't have a child.

Hello lovely op.

I have a teenager. I remember saying what you are saying about kids. I used to say "we have to live for today" etc. in my humble experience, sort your debt out now, so that when your child is older you have security for yourselves and you can help them at Uni or college or whatever, if you choose.

Anything can be a holiday for a young child.

I remember (gulp) spending thousands on a Holiday when my daughter was 5, skiing in America. We put the whole lot on a credit card (in the same way as not paying off the debts and using your 'surplus income' is). We had a great time. It was over in a week. The only thing she remembers about it are the huge onion rings in one of the restaurants.

Get rid of your debt first, every little bit. I had more debt than you, had my head in the sand for far too long. Just skip the hols, a three year old (if I'm right?) won't remember x