We need Help! SOA included

savvy14

SOA for advice! Finally feel there's no way out.
Debt Balance: (gasp) £106,469.21

Below is the SOA of me and my partner. We have been together for 8 years, met at university and have never known what it’s like to have free money we are “allowed” to spend! Neither of us received grants and we both worked through studying. Following university (and Masters degrees) neither of us could find a good, regular job. Only one of us seemed to be in work at one time and we also had a few family health issues which forced us out of work temporarily/required us to support our family financially.

We are both now in full time employment – in good jobs for over a year. But our debts have grown larger over the years that even now it’s a struggle to see how we can get through each month. We’re not even close to affording a house…marriage…kids.

We can meet the minimum repayments on all our credit and haven’t missed any payments. We are also both self-employed and try and get extra money through private work. In addition to the moneysavingexpert methods of quidco, mystery shopping, surveys, ebaying, and amazon.

With a mix of loans and credit cards (all maxed out) we have managed to reduce our loan debt by £16,000 in the last year, but our credit cards have crept up so overall we are only about £2000 better off. Since all the publicity over bank charge refunds, all our interest rates on our credit cards shot up (supposedly not connected). About a month ago we cut them all up – no more emergency source. Which I am worried about. We are both "overcommitted" so cannot apply for any more credit, e.g. 0% cards to transfer balances to.

But we have to do something. The credit cards will take years to be paid off at this rate. We are maximising income as much as possible, using every spare minute to try and make money. Our non-essential outgoings are so low that I can’t see where to cut down enough money to make a dent. We don’t want to consider Bankruptcy or IVA’s – our debts have accumulated from university and then being unemployed, which is not the case anymore. So we want to try and solve this ourselves.

We would be very grateful for your advice. We don’t know if we are on the right track, or if it is possible to do it without help.

SOA to Aug-2007:

Credit: Balance outstanding Min Payment Interest Rate
Car Loan -£3,456.95 £98.77 9.0%
CC Bank of Scotland -£3,782.22 £77.00 24.9%
CC Barclaycard -£1,333.09 £30.00 24.1%
CC Barclaycard OH -£2,605.27 £67.00 24.9%
CC Egg -£3,779.07 £90.00 17.9%
CC Egg OH -£2,755.80 £80.00 19.9%
CC Halifax OH -£1,650.70 £33.19 19.9%
CC HSBC Mastercard OH -£7,541.82 £228.00 20.9%
CC HSBC Visa -£7,300.00 £220.00 20.9%
CC Lloyds TSB OH -£1,761.98 £36.00 14.9%
CC Mint -£5,900.00 £133.00 19.2%
CC Morgan Stanley OH -£1,191.51 £24.00 21.7%
HSBC Loan -£10,192.49 £208.01 11.9%
HSBC Loan OH -£7,405.92 £200.16 11.9%
Overdraft -£2,000.00 - 18.0%
Overdraft OH -£2,800.00 - 0.0%
Owe Parents -£500.00 £0.00
Post-graduate Loan -£4,131.78 £162.44 7.5%
Post-graduate Loan OH -£15,268.46 £308.96 7.5%
Stud Loan OH -£8,526.57 £0.00 3.0% (not repaying yet)
Student Loan -£12,585.58 £97.00 3.0%

Council Tax £133.00
Electric £40.00
Food £100.00
Gas £43.00
Interest on Overdraft £15.00
Internet £17.00
Mobile 1 £37.00
Mobile 2 £27.00
Pension £119.50
Rent £675.00
Sky £21.00
Telephone £11.74
Travel/Fuel 1 car only £60.00
Water bill £20.00
Leisure £75.00
Other, clothes, etc £40.00
Monthly Outgoings Total:£3,527.77

My Wages £1,789.38
Partners Wages £1,310.00
Extra Work £300.00
Quidco, surveys etc £15.00
Mystery Shopping £20.00
Monthly Income Total: £3,434.38
Shortfall: -£93.39

We are trapped in our mobile contracts and will change these to PAYG when contract if finished. Also, will be changing internet from £17 a month to £5 with Sky. I have recently just cancelled all the direct debits and set up standing orders of a fixed amount to try and reduce the debt quicker.

So that's it - I have finally posted our problems and would really appreciate any advice.

Thanks!

The 2 of us

bargainbetty

Hello Savvy,

Welcome to the boards - great first step by joining. Everyone here will help however they can.

My suggestions are simple to start: Firstly, although you are tied into contracts on the phones, could you ask your providers to at least reduce your tariff? Mine swapped me onto a better rate, as long as I agreed to an extra six months on the contract.

Second, the pension contributions should probably stop for a bit. That alone would cover the shortfall.... harsh but true.

Could you consider moving to a cheaper property, and reduce your rent a bit?

Would you be able to earn a better regular income getting contract work rather than being self-employed? At least for a year or two, to help you get things under control.

I am sure others will be along too, to offer more tips, but hang in there, and good luck x

madmoney_2

hi there first of all, well done for confronting the demons!!! why not have a look at the snowball calculator on www.whatsthecost.com it will give u arough idea of what debt.loan to pay off first, and the date u will become debt free, the main thing on your soa that jumps out at me is "leisure" and clothes etc, what does etc entail? and under the title leisure im assuming you could cut this back a bit, if u could cut both out, that would cover your monthly shortfall, hope this helps and im sure others will be posting to help, good luck xxx

bargainbetty

Oh, one other thought. If you have any spare capacity on any of your cards, could you try the switch and swap? Empty the card that has the best balance transfer rate, and then empty the highest interest rate card back onto the now empty one. Naughty, but if you do it right, you can then count that as the monthly payment for the two cards involved, so those payments can be thrown at another card.....

You may incur a fee, but if you could swap 29.9% for 1%, it might be worth it over a year.

Complex, but a friend just did it, and it worked for them. PMme if you want more info.

BBx

Gemmzie

Leisure, other, clothes is the most obvious saving - that's £115 saved already

lunar

Hi, im really new to these boards so there are prob better people to advise you than me. i just wanted to say good luck. I was terrified when i added up all my debt, i was convinced that i would end up bankrupt and too scared to do anything because that made the problem real.

Im sure with all the help you will get here you will be saving money in no time.

firesidemaid

i wonder whether a dmp might be a better idea - through payplan or cccs. you would still have to pay everything back, but at least the interest would stop. whilst you are only making the minimum payments it will take years.

hopefully someone with more experience of dmps will come along.

otherwise if you want to tackle this only by yourselves then you must stop all unneccessary spending until all is paid off - make you you both keep a spending diary.

stop the pension, reduce the mobiles, no clothes, leisure etc (do what you can for free). renting a smaller/cheaper property was also a good idea - this could also reduce your council tax.

again, as someone mentioned, use the snowball calculator and also pay a few of the slightly lower balances/higher rates to make things seem a little better.

have you been claiming back all your bank/credit card charges?

i hope more help comes along soon too x

calleyw

don't forget you can council tax over 12 months helps spread it over the year better.

I agree drop mobiles to the lowest tariff they will let you.

Also what about insurance and MOT for the car these are mentioned.


Yours


Calley

savvy14

Hi,

Cor that was fast! Thanks for all your comments. I just wanted to uddate you on a few suggestions:

Mobiles: calling them to reduce plan - sounds like a good idea - we can both try although we both got cashback offers so I'm not sure if we will lose those if we reduce our plans. We only have 3 and 2 months left anyway.

Work: We both have full time jobs in companies and are self employed for evening and weekend work, so already maximised. We are both trying to go for as many promotions as we can at work as well.

Rent: moving to a cheaper property - we already have a cheaper property compared to our area - most equivalent rents are about £800/month but luckily we negotiated to £675 when we moved 18 months ago and the landlord has not increased it. Plus, moving costs are far too high - you would need £1800 min for a deposit on renting (plus 1.5 month rent), and we wouldn't get our current deposit back until 1 or 2 months after.

Leisure: We spend about £15-£20 a week on 1 meal out. That's it, that's our leisure. Hence our food budget is only £100 per month. We could not go out at all but we feel we both need this time to spend together not at home working or going mad. We also use vouchers whenever we can.

Clothes, etc : £40 a month covers anything extra for both of us, including for e.g. birthday presents, occassional bus money for me, plus, we only buy work clothes if we need to - we don't spend any money on our "weekend" clothes, can't afford it!

Credit Cards: As I said all our cards are maxed out, however, I wanted to stress that transfering a small balance to counteract the minimum payent is how our credit card debt got so big in the first place. This is never a good idea to reduce debt. You don't actually pay anything off and every month the interest gets added. (Sorry)

Claiming back bank charges: We have never incurred any - apart from the odd 1 or 2, which were refunded when we called them. We always make my payments and am never over my limit.

Pension: Should I really stop my pension? I am 28 and have only started paying it recently. My company match it so surely I would be losing money in the longterm. It's also a final salary pension so the more I put in, the better. If you think it's a good idea I will need convincing!

I have been over our situation so many times, our credit cards are the biggest problem.

I read about a DMP but that can affect your credit rating/chance to get a mortgage. But maybe I could look into this further.

Thanks again - keep those ideas coming. I feel much happier that I have started to talk about it!

savvy14

Council tax - yes I will ring them tomorrow. Thanks!

bargainbetty

I wasn't suggesting that you paid one card with the other, I was suggesting that you transferred out and back to get better interest rates. I did mention that anything you saved on one payment should be thrown at another debt....

If you're maxed out, OK, it can't be an option, but please don't misunderstand my intention - I would never recommend a course of action that wouldn't help control your debt.

With regard to your pension, look at the rate of return. If the savings interest rate is less than the interest you are paying, then consider how much extra you lose/save each way, and base your decision on that.