I have stuck my head in the sand long enough, debts now standing at £22,000

Andrew_P

Hi All,

I have been browsing the forums for a long time, however I should of created an account and posted here a long time ago as I am in a really bad way with myself and my wife's current debts and I come to realize that we cant go on like this and living beyond our means.

Our biggest contributor to the debt has been going on a couple of holidays a year over the past 5 years and not thinking about how it was going to affect us. Now I have come to realize this was a big mistake and cannot be allowed to happen again.

The other thing at the moment is due to my Nan passing away a couple of years ago there has been some money that is currently with my parents which is available to use a deposit.

We had a meeting with a mortgage broker and he advised it would be possible for us to get a Mortgage for around £200,000 even with the card debts. However some of the money will go on paying off the cards before applying mortgage so that would lower out deposit so I am not sure what to do really. I have advised them about our situation and they were not very happy to say the least. Would it be best to wait a few years to try and pay off the debts before accepting the money? Any thoughts would be greatly appreciated.

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.................... 1

Monthly Income Details
Monthly income after tax................ 1355
Partners monthly income after tax....... 1337
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2692

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 925
Management charge (leasehold property).. 0
Council tax............................. 140
Electricity............................. 30
Gas..................................... 30
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 16.99
Mobile phone............................ 17
TV Licence.............................. 12.12
Satellite/Cable TV...................... 0
Internet Services....................... 20
Groceries etc. ......................... 200
Clothing................................ 50
Petrol/diesel........................... 100
Road tax................................ 11
Car Insurance........................... 30
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 14
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 10
Life assurance ......................... 0
Other insurance......................... 8
Presents (birthday, christmas etc)...... 30
Haircuts................................ 10
Entertainment........................... 60
Holiday................................. 0
Emergency fund.......................... 0
Cash Withdrawal Per Month............... 250
Total monthly expenses.................. 1984.11


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 0
Total Assets............................ 3000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................9800......220.......0
MBNA Credit Card...............8700......100.......0
Tesco Credit Card..............1000......25........17
Amex Credit Card...............2164......48........17
Total unsecured debts..........21664.....393.......-


Monthly Budget Summary
Total monthly income.................... 2,692
Expenses (including HP & secured debts). 1,984.11
Available for debt repayments........... 707.89
Monthly UNsecured debt repayments....... 393
Amount left after debt repayments....... 314.89

Personal Balance Sheet Summary
Total assets (things you own)........... 3,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -21,664
Net Assets.............................. -18,664

Created using the SOA calculator at stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

Thanks for anyone's help in advance

Cheers

Andrew

MissShoes

Hi Andrew

what stands out to me the most is the presents- £200 a month?

If you really have over £500 a month surplus, your tesco card can be gone in 2 months- if you don't, start recording your daily spends to see if you're frittering it away without realising on coffees, newspaper and magazines, pub, eating out, top up grocery shops, online shopping etc.

If the surplus is correct- you are in a good position to tackle the tesco card then the Amex then throw everything at the two bigger cards.

Shoes x

bexster1975

Wot miss shoes said! Also, I bet you could trim some off your grocery budget too. I get the feeling you don't have £500 surplus or this would not be the huge mountain it is! If you used all present money for two months, plus £500 surplus you would hapve £1400 so, all of tesco card and a good dent in the Amex.

Very fixable. Stick around, you will get loads more assistance

Bexster

ETA: am guessing you don't know interest rates for MBNA and Barclaycard?
And congrats miss shoes! A real Independence Day :beer:

Andrew_P

Thanks Both

Whoops! - I made a mistake it was meant to be 25 a month on presents as each year we spend roughly £300 on presents for all birthdays and Christmas's in our family's.

The interest rates on the Barclaycard is 0% on about £10,000 of the balance until November 2016 and the rest is 0% until Jan 2016. The MBNA is 0% on the balance until January 2016.

Would it maybe be best to consider a loan to pay off everything over 5 years or something?

Thank you both for your help so far

Cheers

Andrew

sourcrates

Andrew_P wrote: »

Would it maybe be best to consider a loan to pay off everything over 5 years or something?

Thank you both for your help so far

Cheers

Andrew

not usually recommended on this forum, many people on here have consolidated at least once, some more than once, the fact they are still here says it very rarely works.
The problem is that the temptation to re-use the lines of credit proves to be too great, they then end up back at square one, with twice the debt.
Of course if you have the steely determination to not re-spend, then it may be an option, but most people fail on this point.

mum2one

I'm another who would say no to the consolidation, been there done that brought the tshirt, and like many another, it was too tempting to use the cards again...

x

Reya

Just a bit of advice on that 'whoopsie' about the presents, Andrew: go back and edit your original post to change it. Some people will read the SoA first and respond to that before reading the other posts, so unless you want to be making quite a few, "Sorry, that was a mistake!" posts in response to people saying, "your amount for presents is high" I'd just change that while the thread is young

One other little thing: I noticed you don't have anything down in your SoA for water rates. Is this included in your rent, or elsewhere? You also have nothing down for entertainment. No days out/occasional takeaways/movie nights, etc?

Otherwise, it's a pretty trim-looking budget, and - as others have said - if you don't actually have that spare £540 at the end of the month, you and your wife both need to keep a spending diary to find out where it's going. It's surprising how easy it is to just fritter away a few hundred quid in a month without even realising it: a newspaper and coffee on the way to work, a takeaway (which I'd put in the entertainment section of the SoA) because you didn't feel like cooking, etc. For those little expenses, I'd suggest that you and your wife agree on a monthly amount you can both withdraw in cash and once that's gone, it's gone.

And, as others have also said: nonono to consolidation. I, too, have been there and done that. The t-shirt I got for it was very expensive

sxcizme3010

Can I ask where you live as 925 is a disgusting amount to spend on rent. With there only being 2 of you could you not move to somewhere smaller or cheaper?

andyfromotley

Hi Andrew,

forget about buying a house for now. It would be a financial disaster for you at the moment. It would eat up any spare cash you have and i pretty much guarantee that you will incur a load more credit to furnish the house, make small alterations etc etc

You need to
1.learn how to live on less than what you earn. (a lot less until you get rid of this debt!)
2. Budget properly
3. Stop using credit to buy stuff (holidays) that you can't afford.
4. Repay your debt


OK first things first, you need to start using a budgeting tool. I and many others on here use YNAB but there are many others, find one that you like. Work it like a pit pony!
You then need to stick to you budget, with an iron will. Hopefully your other half is on board. Find free stuff to do, check on each others spending, hold budget meetings, you get the picture

Now the big question is how hard do you really want to go on this debt?? If you want to go 'all end of the world' crazy on it you could shift this inside a year? Impossible i hear you cry!! Really? Rent the cheapest place you can survive in, both get extra evening jobs, both get weekend work, get promoted, find a new better paying main job, sell everything that you haven't used for the last 6 months, throw every penny at the debt!! Still think you couldn't do it inside a year?

This is easily fixable for you and your other half with hard work and application, i'm guessing you are fairly young, child free, good health, low low overheads potentially. Sort this out now and you are changing THE REST OF YOUR LIFE!!! You can live it debt free, happy and have the things you want. Go get it mate!

Andrew_P

Reya wrote: »

Just a bit of advice on that 'whoopsie' about the presents, Andrew: go back and edit your original post to change it. Some people will read the SoA first and respond to that before reading the other posts, so unless you want to be making quite a few, "Sorry, that was a mistake!" posts in response to people saying, "your amount for presents is high" I'd just change that while the thread is young

One other little thing: I noticed you don't have anything down in your SoA for water rates. Is this included in your rent, or elsewhere? You also have nothing down for entertainment. No days out/occasional takeaways/movie nights, etc?

Otherwise, it's a pretty trim-looking budget, and - as others have said - if you don't actually have that spare £540 at the end of the month, you and your wife both need to keep a spending diary to find out where it's going. It's surprising how easy it is to just fritter away a few hundred quid in a month without even realising it: a newspaper and coffee on the way to work, a takeaway (which I'd put in the entertainment section of the SoA) because you didn't feel like cooking, etc. For those little expenses, I'd suggest that you and your wife agree on a monthly amount you can both withdraw in cash and once that's gone, it's gone.

And, as others have also said: nonono to consolidation. I, too, have been there and done that. The t-shirt I got for it was very expensive

Hi Reya

Thank you for your reply

I have updated my SOA - I didn't put down water rates as its currently included in the price of our rent each month.

The only other slight problem is our joint account is overdrawn at the wife's is as well so this potentially adds another £1,000 to the debt. What would be the best way about going to clear these do you think?

Thanks

Andew

Andrew_P

sxcizme3010 wrote: »

Can I ask where you live as 925 is a disgusting amount to spend on rent. With there only being 2 of you could you not move to somewhere smaller or cheaper?

I live in Thorpe Bay in Southend-On-Sea sxcizme3010, it is something we are thinking about even if we can save just a couple of hundred on rent.