Advice welcomed! :)

Summer_Rain_5

Hi Guys & Gals,

I am a long time lurker, and very occasional poster. :hello:

Apologies if this OP is a little long, but I am putting everything on the table so to speak, so thank you if you make it all the way through, and as way of thanks please accept a virtual beer or two from me! :beer: :beer:

My good lady wife and I are in a bit of a fix, and so I am hoping to benefit from the collective's wisdom, kindness and sage advice

Here is the situation currently...

INCOMINGS
I earn £22,000/annum so I take home £1400/month
The wife works part time [we have 3 young-uns, 2 of which are pre-school] and takes home circa £350/month
We get child benefit amounting to circa £160/month
We get child tax credits amounting to circa £250/month

Total Monthly Income is thus £2160

OUTGOINGS
We have a 32-year repayment mortgage for £120,000 with Halifax which is fixed term and is costing us £600/month.
We have two secured loans also with Halifax which are in total costing us £225/month
We have a credit card with a circa £6000 balance costing us about £100/month
We have a credit card with a circa £4500 balance costing us about £78/month
Shopping is circa £400/month
Council Tax is £110/month
Mobile Phones [1 contract & 1 PAYT] £50/month
Landline £50/month
Car Insurance £45/month
Petrol £70/month
Electricity & Gas £112/month
Water £30
Haircuts/magazines/books/little treats £50/month
MOT/Repairs[I have tried to average/guess this] £20/month
TV License £12/month
Car Tax £10/month
Life Insurance £57
Home Insurance £27
Clothes £20/month
Tobacco £30/month

Total Monthly Outgoings is thus £2096

SUNDRIES
Abbey National Overdraft Maxed to £2400
Car has just had it's cam-belt snap, valves bent and head is cracked. MOT is due and so minimum cost is £1200



Unless I have missed something off, that leaves £64/month. Unfortunately we have been living past our means for some time, and this is why our credit cards and secured loans have come about so quickly and gone up so fast. Each month we spend more than we bring in, and the debt noose tightens just that bit more. To further complicate the mess, my current job which I have been in for six-years is severely unstable as the company I work for is struggling with cash-flow. This means that although I do get paid, sometimes it's up to 2-weeks late, and so we have had bounced direct debits by the shed-load, and the accompanying charges to go with them. The company has covered some of them, but not yet all of them as they are finding it hard to free up more cash. I *am* looking for alternative employment.

Wife & I have been growing ever more aware of our plight and the fact that unless we changed things in a major way, it would be just a matter of time before we came totally unstuck. We tried to consolidate the mortgage, secured loans and CCs into a re-mortgage with our own bank, Abbey, but they declined because they did not like the way our account has been managed [steadily growing overdraft, loads of bank charges etc]. We appealed and explained why this is happening, and even though they said our credit rating was perfectly fine, they would not change their position. We tried the same with Halifax, and they too declined for the same reasons, except that they also added our salaries did not support such large outgoings.

So here I am today....We have put our house on the market in the last few days to sell for £190,000. I figure that this will clear all debts, leave us a good few thousand to get a second hand family car, put an emergency fund in the bank and take the pressure right off. We can rent a 3-bed in our area for about £800/month, and consider this as a new start, a learned lesson if you will about the dangers of credit, debt, loans and not spending carefully. SPEND LESS THAN YOU EARN.....I know, I know. :rolleyes:

Friends have said we are being silly as we will never get back on the housing ladder, and although having all debt gone sounds great, I am worried that we might be making *another* great big fat mistake.

What say you? Any advice, thoughts, criticisms and general replies are so greatly appreciated.

Thanking you muchly in advance.

SR

Uniscots97

Summer_Rain wrote: »

Here is the situation currently...

INCOMINGS
I earn £22,000/annum so I take home £1400/month
The wife works part time [we have 3 young-uns, 2 of which are pre-school] and takes home circa £350/month
We get child benefit amounting to circa £160/month
We get child tax credits amounting to circa £250/month

Total Monthly Income is thus £2160

OUTGOINGS
We have a 32-year repayment mortgage for £120,000 with Halifax which is fixed term and is costing us £600/month.
We have two secured loans also with Halifax which are in total costing us £225/month
We have a credit card with a circa £6000 balance costing us about £100/month
We have a credit card with a circa £4500 balance costing us about £78/month
Shopping is circa £400/month Check out the OS boards, you can easily half this Potential saving 200 pounds
Council Tax is £110/month
Mobile Phones [1 contract & 1 PAYT] £50/month Can this be cut down anyway? Potential saving?
Landline £50/month Which provider are you with? Is this for just more than calls? Can be reduced by about half. Potential saving 25 pounds
Car Insurance £45/month
Petrol £70/month
Electricity & Gas £112/month
Water £30
Haircuts/magazines/books/little treats £50/month Sounds boring but stop buying magazines and books, use the library instead. Potential saving 10 pounds minimum
MOT/Repairs[I have tried to average/guess this] £20/month
TV License £12/month
Car Tax £10/month
Life Insurance £57
Home Insurance £27 Try quidco for a better deal
Clothes £20/month
Tobacco £30/month

Total Monthly Outgoings is thus £2096

SUNDRIES
Abbey National Overdraft Maxed to £2400
Car has just had it's cam-belt snap, valves bent and head is cracked. MOT is due and so minimum cost is £1200



Unless I have missed something off, that leaves £64/month. Unfortunately we have been living past our means for some time, and this is why our credit cards and secured loans have come about so quickly and gone up so fast. Each month we spend more than we bring in, and the debt noose tightens just that bit more. To further complicate the mess, my current job which I have been in for six-years is severely unstable as the company I work for is struggling with cash-flow. This means that although I do get paid, sometimes it's up to 2-weeks late, and so we have had bounced direct debits by the shed-load, and the accompanying charges to go with them. The company has covered some of them, but not yet all of them as they are finding it hard to free up more cash. I *am* looking for alternative employment.

Wife & I have been growing ever more aware of our plight and the fact that unless we changed things in a major way, it would be just a matter of time before we came totally unstuck. We tried to consolidate the mortgage, secured loans and CCs into a re-mortgage with our own bank, Abbey, but they declined because they did not like the way our account has been managed [steadily growing overdraft, loads of bank charges etc]. We appealed and explained why this is happening, and even though they said our credit rating was perfectly fine, they would not change their position. We tried the same with Halifax, and they too declined for the same reasons, except that they also added our salaries did not support such large outgoings.

So here I am today....We have put our house on the market in the last few days to sell for £190,000. I figure that this will clear all debts, leave us a good few thousand to get a second hand family car, put an emergency fund in the bank and take the pressure right off. We can rent a 3-bed in our area for about £800/month, and consider this as a new start, a learned lesson if you will about the dangers of credit, debt, loans and not spending carefully. SPEND LESS THAN YOU EARN.....I know, I know. :rolleyes:

Friends have said we are being silly as we will never get back on the housing ladder, and although having all debt gone sounds great, I am worried that we might be making *another* great big fat mistake.

What say you? Any advice, thoughts, criticisms and general replies are so greatly appreciated.

Thanking you muchly in advance.

SR

Just implementing the changes in red would see a reduction in your outgoings by 235 pounds. Only a start but every little helps.

marksandsparksgal

Hey!

• Your landline seems bloody dear, maybe look at changing and if poss. go via a cashback site?

• Give up smoking (easier said than done I know)

• Books - join the library, cheaper, magazines can also be borrowed from most libraries, if not, sign up for a subscription so they're cheaper, you sometimes get free gifts you can put on Ebay

• Have a look at the Old School board to get the food bill down

• Life insurance also seems a bit dear, shop around

• ebay/car boot everything that ain't nailed down! Kids toys and books usually do well from what I've seen.
• look at transferring credit cards to a cheaper one (you've said your credit rating is ok, so hopefully this can be done).

I'm sure everyone else will come up with some stonking ieas too, good luck!

*edit*
Re selling the house, not sure it's the best thing really, others may disagree but if you can cut your outgoings down maybe you can keep the house...after all renting is paying someone else's mortgage. Seems a shame after you've got it to go back to renting!

Lalala_3

Summer Rain, like unixgirl says there are definitely ways even the seemingly tightest belt can get even tighter, a few little changes will help so much. Can you find out out what the interest rates are on your cards, I've seen other posters ask this and if you do know them it usually means that someone with a lot more DFW experience than me can give some decent advice about which debt to tackle first. There's a snowball calculator which is really helpful in determining which one to pay off first, think it's in one of the stickies at the top of the index.

I'd agree with some of your friends re: housing ladder, I'd do everything possible (each get second jobs, no holidays, no treats for a while) before selling up. But, on the other hand, if you do decide that enough is enough and you have exhausted every other possible avenue, then sell. A roof over your head is still a roof, no matter whether it's yours/banks or the landlords.

Good luck, and well done for confronting the fear!

CAFCGirl

Hi!

Firstly I'd just say Well Done on taking control and recognising your situation. You are definitely in the right place for some great advice!

I firstly apologise as I dont know much about mortgages as I myself am not a home-owner. I understand what your friends have said about getting back on the housing ladder, but in all honesty, you will be able to if you tackle this situation head on! Plus renting is not all that bad! Someone else is responsible for that house, so heating breaking down etc is not an expense you will have to incur, although things like that are a major inconvenience!

Right I'll get started!
Firstly check all your benefits and ensure you are getting the most you can. Albeit tax benefits, child support and even contact your council regarding your council tax as you may be eleigible for some form of discount on this, especially if you explain your situation to them!

So for the items I think can be cut quite easily....
Your landline at £50 is high, esp if you are also spending £50 on mobiles!
Can you analysis your usage here, and possibly post back with what options you're on, with your landline?
Shopping at £400 is shockingly high. I think for a family of 5, three of which are small this could easily be knocked down to at least £250 without you really noticing it. I know many will say it could be lower but itsimportant not to push yourself and give yourself too tight a budget otherwise you'll end up getting narked with it and having a massive blowout!
Electricity and gas is also high. Is this on DD or do you pay the bills as they come in? Do you think that maybe you and your wife could sit down and discuss how to cut down on your usage here?Sometimes its simple things like turning off lights, and with young kids, you can make it into a bit of a game for them (obviously do NOT give them responsibility of switching off mains plugs!)

Life insurance is very high too, is there any chance you can negotiate on this or perhaps switch provider.
Three things I think could be easily got rid of, some forever and some just for a few months at least!
Tobacco - nothing good can come of smoking, trust me! You will have money in your pocket and air in your lungs! Think of your health as well as your families on this one!
Clothes and treats - For a couple of months at least could be cut right back. Look for ways to have inexpensive treats for the family, much easier when kids are so young, because often theyre happy to play with a cardboard box!
Look for cheaper haircuts, local colleges, friends of friends, mobile hairdressers are often much cheaper!

I would also suggest writing to any company with whom you have DD's and explain the situation. Also ask your company for a letter whihc backs up your story, as in the long run it will save you getting charges and save your company money by having to cover these. If it works, all well and good if not you've lost nothing!

Sorry if I havent written this out in the best possible way, and anymore questions do remember to ask. People on this site are a wealth of information!

Are you and your wife both aware of the situation?

Summer_Rain_5

unixgirluk wrote: »

Just implementing the changes in red would see a reduction in your outgoings by 235 pounds. Only a start but every little helps.

Thank you for the suggestions. Planning to talk with the wife tonight, and begin chopping the bills down where we can.

Summer_Rain_5

marksandsparksgal wrote: »

Re selling the house, not sure it's the best thing really, others may disagree but if you can cut your outgoings down maybe you can keep the house...after all renting is paying someone else's mortgage. Seems a shame after you've got it to go back to renting!

That's what I think as well. Hmmm, maybe I need to take it back off the market. But then Beales the estate agents will charge me £400 for coming out of the agreement early. Ah well, cant win them all

Summer_Rain_5

Lalala wrote: »

Can you find out out what the interest rates are on your cards, I've seen other posters ask this and if you do know them it usually means that someone with a lot more DFW experience than me can give some decent advice about which debt to tackle first.

Absolutely, I'll look them out and post them up. Thanks.

Lalala wrote: »

I'd agree with some of your friends re: housing ladder, I'd do everything possible (each get second jobs, no holidays, no treats for a while) before selling up.

Maybe I have been too quick in panicing....hmmm....

Lalala wrote: »

Good luck, and well done for confronting the fear!

Thank you very much, it's certainly not easy talking about the mess we get ourselves in!

Summer_Rain_5

CAFCGirl wrote: »

Your landline at £50 is high, esp if you are also spending £50 on mobiles!

I hear you, the wife bless her talks like a machine in the evenings Think it's time to cancel the home phone which is currently with Virgin. £20/month for 200 mins anytime or somesuch.

CAFCGirl wrote: »

Shopping at £400 is shockingly high. I think for a family of 5, three of which are small this could easily be knocked down to at least £250

That's very interesting because my wife is fairly set that £400 is the *minimum* we can safely spend without cutting what we really need to feed ourselves and the little peoples.

CAFCGirl wrote: »

Electricity and gas is also high. Is this on DD or do you pay the bills as they come in?

DD was with Scottish Power, but wife has just swapped for someone else, but not sure who.

CAFCGirl wrote: »

Are you and your wife both aware of the situation?

Totally!

peb

I cannot help on most of the cutting back etc but I would check your agreement with the estate agents before deciding what to do. It is usual for their to be an agreement that you will let them market the property for a time period - say 8 weeks - then if you are not happy you can serve notice of usually 2 weeks. It may be worth sitting it out even if you have decided not to sell. Moving is expensive so this should also be taken into account. Good luck whatever you decide.

Uniscots97

Summer_Rain wrote: »

Thank you for the suggestions. Planning to talk with the wife tonight, and begin chopping the bills down where we can.

Meal planning can help lots as well as brand swapping. Might be worth posting what you normally buy for a week, what you spend and what you make from it, on the OS board and see what the regulars think (I post there a lot and am happy to help). I thought I wouldn't be able to cut my food bills down from 30 pounds a week (thats just for me) but I did thanks to the OS board and I actually eat healthier now than I did before.