DMP & Mutual Support Thread - Part 11

KID77

Hi Future

Welcome to the forum.

If you can afford to pay £1500 to your debts each month then is the DMP really the best option for you, have you looked at "snowballing"?

Also my debt was around £45k and minimum payments were £1100 so will you be paying them more per month than the minimum? Based on this its unlikely they will stop interest....

Sorry if I have misunderstood as quickly reading from my phone but just wanted to mention the above.

Good luck x

Futuredebtfreecouple

Hi guys, thanks for your replies. Yes we thought this was ambitious too originally but we think it should be doable. Tight, but doable. We've got a couple of hundred as a buffer for emergencies and can build on that each month as its on our budget.

Step change advised us that this was our best method as we meet all our minimum repayments but have nothing left to live off at the end of the month, which meant we were then having to transfer money from the credit card to get by which in turn obviously meant the minimum payment would go up again and so the cycle keeps repeating. We've looked at snowballin before (although I didn't know it was called that) but once we've paid all our minimum payments we don't have anything left to pay extra onto the smallest debt, if that makes sense?

My understanding was that SC will focus on paying off the smaller debts first, is that right? So maybe if they do that then the other debts will be receiving less than the minimum. That's what I'd understood from what my hubby had said but I could be wrong if that doesn't sound right to you. We have tried so many things over the years to try to clear this debt and it just keeps building. It's not been a light decision but I hope it is the right one. We can't see any other way out of it all?

KID77

Hi Future

Completely understand about having to take money from your CC just to live, its such a relief when you start your DMP and no longer have to do that :-).

Stepchange distribute your payments based on what you owe and the contractual amount and pro rata that or something to that effect. To my knowledge, they do not pay smaller debts first.

My recommendation to you to ensure you have the beat chance of interest being frozen is to redo your SC budget and inflate some of your figures amd bring your monthly payment down. You can then save this money to put towards settling the debt later. I know this doesn't seem morally correct but I just think if you are paying such a high monthly payment that they wont see you as being in financial hardship and unlikely to freeze interest.

However, SC are the experts, not me :-)

Futuredebtfreecouple

Yeah you do raise a very valid point. Thanks for the advice. Will put those questions to our SC contact and see what they say/advise. Watch this space!

KID77

Hi Future

SC won't allow you to lie and inflate figures as they have to be seen to be treating creditors fairly so you may not want to tell them that plan.....

Have a read through as many of the DMP support threads as you can and take as much knowledge as you can from these.

Keep us posted on how you get on xx

Sazzie23

Futuredebtfreecouple wrote: »

Yeah you do raise a very valid point. Thanks for the advice. Will put those questions to our SC contact and see what they say/advise. Watch this space!

Hi, I'm with SC and I've no axe to grind, but they are funded by the creditors you are trying to pay and therefore their advice may not be completely impartial.....

SC will pay your creditors a portion of your available funds and this will be divided up depending on your balance and something else that I can't remember but the smaller ones get less than the bigger ones and overdrafts get proportionately more for some reason.

I totally understand your position, and a dmp is a great option but if you are going to try to pay a high amount off it's unlikely the creditors will all cut interest. I only got mine cut completely when I (due to circumstances) had to reduce payments. If you read through this thread it'll help you understand why.

Seriously if you still have some 0% options I'd look at snowballing but it would require discipline and not everyone can do that.

If you still decide to go to DMP I'd be highly tempted to review your budget with SC be realistic about things like household repairs and haircuts etc, stiick with your current plan for now, ie get your emergency fund ready, change your bank etc.

Saz

Sazzie23

Hi everyone.

I just wanted to say how I've been feeling lately.
I was lucky enough to get some unexpected back pay (£2k) recently.
I have invested in some essential new clothes, replaced the rusty microwave, saved a bit and have a small amount ready to buy that new car battery I've been harping on about for the last year !!!

I can't tell you (but I'm going to try) what a difference the small amount of extra money available has made to how I feel about living, not worrying about whether I can afford the car park closest to the station if I'm late (I go early to walk from the cheaper one), or worrying whether I can afford to buy a lunch if I don't have anything prepared. Knowing if a tyre goes flat or whatever I can actually access the money to pay for repair, means I spend less time worrying and more time living, and it's a good feeling. I think if you are a couple both in DMP or a single person you might understand this more than if your in a couple where one has free access to credit.

I don't think I've been flippant with the unexpected windfall, and I have one or two other essential things to sort, like new gutters and a security timer for lights, after 3 years in DMP I feel like I'm ready to start tackling these debts again with renewed vigour....

Saz

sourcrates

Hi sazzie,

Don't forget that battery !!!!

First foggy morning and the car won't start, you'll curse yourself lol !!!

Triangle

January2015 wrote: »

Another Excel user here as well.

However, I think you could play around with debt free date scenarios if you use the MSE overpayment calculator

For example, I input:

• Current mortgage debt as £81000
  • it doesn't matter that my debt is not mortgage debt - it's just a calculator at the end of the day and I'm using it to see what would happen to my unsecured debt

• Remaining mortgage term - I put in the 8 years remaining based on my current monthly payments

• Annual interest rate - I put in the monthly DMP payment amount in the next box (don't use the APR % box - it mucks up the results - or it does when you put 0% in anyway:rotfl:)

• Recurring overpayment - I put in £200 and left it at 'monthly'

• Press calculate and hey presto you have an idea of how much sooner you could be debt free.

In the scenario above - if I pay £200 per month extra towards my debts I could be debt free one year and 6 months earlier than my current forecast debt free date. I've checked (with Excel) and this calculation is right so it does work using the MSE calculator.


Give it a try and see what you think :beer:

Really helpful thank you :j

OK so one final question before I make the decision - in the complaint letter I sent to Argos I advised I would contact the Ombusman if unsuccessful. Do I do this and wait for their response before going self-managed? Or just go ahead and do it anyway at the same time?

Thanks all

TLJones

Hi guys,

It's gotten to the point now where I need to do something. My Income is ~£2100 a month (£1800 on a flat month with no overtime) and my monthly outgoings are now almost equal to my income, one flat month and I'll end up in arrears.

I went on the SC website and went through their questions, and I must have incorrectly inputted something because apparently I am capable of paying it all in full every month. I am a bit confused as to what to do.

My total debt is £13,990.