Alternative to DMP/ Lower interest "Do it yourself" style??

judywoody

Sorry for the long post!!
My husband and I have been in a DMP for just under a year when we had to stop it for a few months due to changes in work and monthly outgoings (both new jobs after a drought, better paid but took ages to go through with DBS checks, one job paid in lieu..complete mess). I rang Stepchange and they said that they will suspend the plan for the time being and that we should ring back once we are all sorted.

The debt accumulated when we were self-employed a few years back and had very disorganized income and outgoings, were unable to claim benefits when we had no work.. bladibla..so basically we mainly pay our cost of living back now. Hence why we went employed. At first the DMP was good and it all worked well but now we earn more. The only reason why we were able to live on their suggested budget was, that we worked some overtime in our old jobs when we could and basically lived on the surplus. However, once the new jobs were sorted and I wanted to ring up they had closed my account just a day earlier.

Now we earn more, which is good, but we wanted to re-instate the DMP so we can get debt free quicker. However, not only can we now pay more we can also afford a higher budget. However, Stepchange won't "allow" us to budget higher than suggested. I personally feel the budget is very restricted and doesn't allow for much wriggling. Sorry if I moan on a high level here but we are experts in things going wrong pretty much every month of some sort and although we don't go out very often and/or spend a lot of money on clothing, I can't seem to be able to stick to the low budget Stepchange suggests. Often, me or my husband aren't well and then, things start going off course (ie rather than preparing meals we end up buying them at work and similar things) - I really need that flexibility, also I don't want to live like a hermit. We are not the "all we need is a TV license" kind of couple. eg There are a lot of things we don't have (for example a car, Children, don't drink or go clubbing or a Telly) and in turn we spend a little bit more on food and health and spending time with friends (travel not clubbing). I will probably soon need to see an Osteopath as the NHS couldn't care less about my health issues and hubby and I might rejoin the Gym soon as we really need to get better. But whereas Stepchange allows for owning a car, kids or a telly for example it doesn't allow for "Luxuries" like privately paid health care the gym or the odd car hire or trip to a health professional. For example they allow 16 quid for emergencies and 15 quid for Activities (haha...yeah of course..whoever came up with these figures needs a reality check or maybe could ask companies to give people on Stepchange a massive discount).

So with our new job we would still pay considerably more to Stepchange than before but I would like to have a higher budget too (to be honest we probably still use less money than people who own a house, TV, car, children etc). So when I rang up they basically told us that they cannot go outside the suggested budget and if we can afford it than maybe we should pay the creditors directly. I did say though that paying Stepchange would be a lot easier for us as we are dealing with a number of creditors (I am notoriously disorganized and get very stressed when dealing with a number of companies) and also we will pay a lot less interest which we probably won't get if we pay directly (unless someone knows a trick). And after being in a DMP we couldn't apply for a new 0% credit card. They also said that it's not the right reason to do a DMP if we "just" do it for the low interest rate..Well. we would pay 50 £ interest for one of the cards (conveniently after we told them we are struggling financially they bumped it up when they suspended the DMP) which I think is pretty hefty and although we earn more now it would take a lot longer to pay it off if we paid directly because of that.

Here is our budget by the way (if anyone has any suggestions..I am not sure how much interest we pay at the moment on the other debt)

Income Hubby £730
Income Wifey £1270

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Total: £2000

Outgoings:

Rent £450
Water £34
Gas & Leccy £90
Council Tax £85
Mobiles £30
Internet £30
Cat Ins £10.50
2x Life Insurance £20
Savings £24 (can't be cancelled as it would result in loss)
Food, Transport and everything else (can vary hence no set amount) £600 <--- that's the budget I am talking about

---

Total £1373.50

Debt:

MIL £150 (payng directly)
Tax £2300 (paying directly)
Council £220 (paying directly)
Overdraft Halifax £600
Overdraft Santander £318
Overdraft First £300
Simply Be £ 60
Argos £360
Capital One £460
NPower £100
Barclaycard 1 £6300
Barclaycard 2 £2082
MBNA £160

---

Total £ 13410

So I could pay about £ 620 a month towards our debt and at that rate we would be debt free in 21 months, much quicker than with our original plan. But if we go by Stepchange's budget we would have to pay a lot more. Also, I don't have a fixed figure for stuff like transport as sometimes I take the bus sometimes I cycle and it doesn't always justify a monthly or weekly ticket. But maybe one month I don't wanna cycle at all. Also health doesn't always go to plan either. You see what I mean? And a lot of other things are a lot more flexible .. I mean this is life!

My main concern is obviously the big credit card debt and the interest attached to that. I'd rather pay the extra £50 towards my tax debt (which is a priority debt but HMRC doesn't seem all too worried as they never get in touch..occasional reminders but that's it, doesn't mean I don't wanna get rid of it though). Also my husbands job is temporary till April 2016..so who knows what happens after that.

So I am probably over complicating things but has anyone an idea what we could do instead as I really can't face dealing with all these people again - being on the phone for 50 minutes really stresses me out. And every time there is a reason why I have to call back.

Puzzcat

You have 2 choices.
Fit your budget to fit stepchanges...Don't forget cigerettes, dry cleaning, magazines etc and go maximum on all of them to ensure you can afford your own budget....or
Diy....
Puzz.x

judywoody

actually, I just realised that I won't be able to do DMP anymore.. put all my figures into stepchange and it came up (even managed to put my budget in) saying that I can pay them myself.. argh!!

bennyhill_2

Probably need a bit more info to get the full picture. Are the accounts defaulted now? How old are they? Have you CCA'd the creditors yet?

rockm87

Hi
I think you need to focus on one thing at a time, if you try to spread yourself too thin and do everything (pay off debt, get fit, live life with luxuries, private medical care..etc etc) you will be stressed and it wont really work!

try to do what you can for the moment and pay off your debt, then you have the money to spend on what you like.

I think you need to change your way of thinking, and dont feel like you are always missing out because you are on a budget. this is why you are in debt in the first place.

I always encourage people to look at Mr Money Mustache, he's extreme sometimes, but it was the kick in the pants i needed to focus me onto what I was doing, rather than just complaining!

definitely get a proper SOA together though, and see what you can realistically afford.

lovehackney

I'm sorry but this reads like "I can afford to pay back my debt but would like to do a DMP because it means I pay back less interest."

Apologies if this is not the case but this really is whingeing. People who are in debt and really want to clear it quickly make decisions that enable that - if that means cycling every day, even if you can't be bothered, that's what they do. You don't want to make these trade offs so it can't be that big a deal for you.

A DMP is for people who are struggling to make repayments. It sounds like you are not.

National_Debtline

Hi judywoody


A couple of things that would make this all a little clearer are:


The rate at which you are paying off your MIL, council tax and income tax debts (as these were presumably not paid by Stepchange as part of the DMP)?


The size of the minimum contractual payments on each credit debt (or their total)?


Separate estimates of your grocery shopping and travel expenditure - I acknowledge your spending in these areas may fluctuate, but it doesn't make sense to lump them together as one figure in your budget.


DIY negotiations would not need to involve repeated phone calls to creditors. In fact, there's no need to speak to them at all. Many people have chosen to go it alone using the CASHflow scheme, which is effectively a form of supported self-negotiation - more info via the link below, but please note you would have to get advice from one of the free services first:


https://www.nationaldebtline.org/EW/factsheets/Pages/40%20EW%20CASHflow%20-%20an%20approved%20way%20to%20deal%20with%20debts%20yourself/Default.aspx


In the meantime, as others have suggested you should put together as detailed an SOA as you can. The most common version recommended by forum users here is http://www.stoozing.com/calculator/soa.php as it is easy to paste the results into this thread.


Dennis
@natdebtline

judywoody

lovehackney wrote: »

I'm sorry but this reads like "I can afford to pay back my debt but would like to do a DMP because it means I pay back less interest."

Apologies if this is not the case but this really is whingeing. People who are in debt and really want to clear it quickly make decisions that enable that - if that means cycling every day, even if you can't be bothered, that's what they do. You don't want to make these trade offs so it can't be that big a deal for you.

A DMP is for people who are struggling to make repayments. It sounds like you are not.

Oh here he is..the forum patroniser! I was waiting for him!

Ok here is my issue: The DMP allows you to budget money for fags but not for a cheap Gym membership and possible health appointments?? Do you see what I am trying to say here?

Also, is my health more important than throwing as much money as possible at debtors? Heck, yeah!

I am not talking about doing a wellness weekend or going on holiday here. I am talking about existing and persisting symptoms that prevent me sometimes from doing normal activities (like cycling to work!! To just mention one) that are not being addressed properly by a free NHS GP.

There is plenty we don't have like children, a car or being smokers..we don't even drink for goodness sakes - and let me tell you, these things would take me way beyond the budget I set for ourselves at the moment.

And just because I can afford it now, off course I'd rather pay less interest so I can pay another debtor more instead. Also, the other reason was that I get very stressed when ringing companies (I do suffer from clinical anxiety) so I'd rather just deal with one company. The main problem is not talking about it but being on hold for 40 minutes with each and every company.

Remember, the 600 pound would not just include food but also public transport (90 quid if I get a monthly ticket for both of us), maybe the Gym, but haven't signed up yet and the Osteopath (again, not sure yet how often I will have to go). I also have to put a little money aside to travel back home once a year.

To everyone else:

I tried to be more accurate with my figures but I struggle to be very rigid in budgeting food, transport, entertainment etc. as they are not set in stone like Rent and Council Tax for example and things are pretty unpredictable in my life (no, we don't just switch the telly on after work..that would be a cheap life!). That's why I just set a rough budget. So if 600 quid don't last me till the end of the month that's just tough luck basically (ie I lost my buss pass last month and had to buy a new one, once I forgot my lunch at home so had to buy something cheap at work ..all these little things add up). I get also extremely stressed and anxious over constantly looking at figures and making sure I don't spend a quid more - I tend to display OCD like behaviors and I don't think anyone would find that pleasant (and I am not using this word loosely).

I haven't set a rate yet at which I am paying of my MIL, council tax and income tax debts. When I was still with Stepchange I paid 150 a month to HMRC and 50 to the Council (still paying to the council but not HMRC) and we didn't have the debt with my Mother in law.

As it is, I put all my figures into Stepchange and in the end I actually managed to get an extra 600 pound budget after bills without going over their suggested figures but they also said I earn too much to be in a DMP. Well, fair enough. I went to http://www.whatsthecost.com/snowball.aspx to set my own snowball repayment and it seems quite a good tool.

So we can be debt free within 2 years (paying 600 a month towards out debt) and that is good enough for me. In the meantime, we will be ringing Barclays and ask if they can slash the interest, they can't say more than no.

judywoody

bennyhill wrote: »

Probably need a bit more info to get the full picture. Are the accounts defaulted now? How old are they? Have you CCA'd the creditors yet?

Yes, not very old. I actually never stopped paying before, we only got into the DMP when I realised that money is getting tight. Stepchange gave them heads up when I suspended the account for a while.

What does CCA mean?

National_Debtline

judywoody wrote: »

Yes, not very old. I actually never stopped paying before, we only got into the DMP when I realised that money is getting tight. Stepchange gave them heads up when I suspended the account for a while.

What does CCA mean?

Hi again judy


CCA here stands for Consumer Credit Act and in this context it means asking creditors to provide a copy of the credit agreement - they have an obligation to supply this if requested. This is sometimes used as a negotiating tactic as lack of paperwork can mean a creditor is in less of a position to threaten legal action, and therefore more open to negotiation (in theory).


Whether it would serve any purpose here is hard to say; if the debts are still with the original lenders, as opposed to debt collection agencies, the paperwork is more than likely to be fully intact.


I hope that makes sense.


Dennis
@natdebtline

judywoody

National_Debtline wrote: »

Hi again judy


CCA here stands for Consumer Credit Act and in this context it means asking creditors to provide a copy of the credit agreement - they have an obligation to supply this if requested. This is sometimes used as a negotiating tactic as lack of paperwork can mean a creditor is in less of a position to threaten legal action, and therefore more open to negotiation (in theory).


Whether it would serve any purpose here is hard to say; if the debts are still with the original lenders, as opposed to debt collection agencies, the paperwork is more than likely to be fully intact.


I hope that makes sense.


Dennis
@natdebtline

I see. Actually a couple of debts have indeed gone to debt collection agencies when they were still in the DMP. But they are relatively small compared to the rest.. it's like £100 and £350 respectively. So not sure if it's worth the hassle?