My debt is out of control please help

damsidebear

Hi all I've got myself into a pretty bad debt situation. Long story short I am paying all bills and haven't missed any payments but I know it will take many years to clear my current Credit Card debts due to the amount plus interest!

I currently have 2 credit cards, 1.store card and an overdraft.

Total debt 19k.

Credit cards are sitting at £7,700 & £7,900
Apr on them are 20.9% & 24.9%.
Store Card is sitting at £2,677 at 22.9%
Overdraft is at £1,100 with BOS.

I am now struggling after I pay all the above and household bills, can someone offer some advice?

I tried to take a low Apr loan to address the CC debt but it was rejected. So I'm running out of options.
I've stupidly been in a similar situation many years ago and ended up taking out a trust deed and I'm ashamed to say that I've failed to learn my lesson.

Please help.

Sanctioned_Parts_List

And breathe!

Start here: http://www.stoozing.com/calculator/soa.php

This is the statement of affairs (SOA) calculator to put together your income and outgoings. There are other calculators around, but this one presents in a format with which the regulars here are familiar.

You don't have to post the output up here, but it will help us if you do. Advance warning that some of the suggestions people make tend to be drastic, but in good faith.

yasmin2

HI, you're not alone as you will see in other people's stories on this site and it can be done. Paying off the debt that is? I personally am not a believer in getting out loans to cover payments - I did that and I ended up racking all that debt again. Sometimes it can take a while to learn that lesson..

What about posting up a SOA and letting people comment on how you can costs down further?

I had about £20,000 debt when I first started out and have been slowly chipping away at the debt. I used to sell unwanted things on ebay, books on amazon, cut down on buying things asking "do I want this or need this?". Any money I made, even a few pounds went towards paying the debt and still does. I used to buy lots of magazines/books/coffees - that's all stopped and you think why didn't I do this earlier. The best thing for me was signing up to some challenges here as that not only kept me on track but also made me realise I wasn't on my own and you're not..

So post up that SOA and see how you can start chipping away at that debt..

Good luck!!

damsidebear

I'll do the SOA and post my output sometime later today, thanks for the quick responses.

EssexHebridean

There's pretty much nothing that's not resolveable one way or another damsidebear so don't panic. Get that SOA up and we can take a look. Well done for acknowledging the issue too - that's the hardest bit over already!

damsidebear

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 3
Number of children in household......... 2
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 1670
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 390
Total monthly income.................... 2060
Monthly Expense Details
Mortgage................................ 290
Secured/HP loan repayments.............. 200
Rent.................................... 210
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 60
Gas..................................... 55
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 40
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 250
Clothing................................ 0
Petrol/diesel........................... 80
Road tax................................ 10
Car Insurance........................... 40
Car maintenance (including MOT)......... 12
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 100
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 13
Buildings insurance..................... 14
Contents insurance...................... 0
Life assurance ......................... 17
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1421

Assets
Cash.................................... 0
House value (Gross)..................... 50000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 50000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 39900....(290)......0<
pcp............................13600....(200)......0
Total secured & HP debts...... 53500.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................2700......150.......20.9
Credit Card....................2900......200.......24.9
Store Card.....................2600......70........22.9
Overdraft......................1100......0.........0
Total unsecured debts..........9300......420.......-

Monthly Budget Summary
Total monthly income.................... 2,060
Expenses (including HP & secured debts). 1,421
Available for debt repayments........... 639
Monthly UNsecured debt repayments....... 420
Amount left after debt repayments....... 219
Personal Balance Sheet Summary
Total assets (things you own)........... 50,000
Total HP & Secured debt................. -53,500
Total Unsecured debt.................... -9,300
Net Assets.............................. -12,800
Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

Welshie28

Please contact stepchange who are in my opinion, amazing! I was in the same position as you, plodded along month to month paying my bills and debts but barely being able to live on what I had left, I reluctantly contacted stepchange after being given advice on here. There is always help out there. Good luck!

Sanctioned_Parts_List

Thanks for posting your SOA. I've made a couple of notes below as there are a couple of lines that don't quite make sense. Basically your SOA shows a very healthy £219 monthly surplus, but you say you're struggling to make ends meet, which to me means that there are some expenses missing.

It's important to know exactly where all of your money is going and why you're struggling to meet repayments otherwise the advice you'll receive will be wrong. On the basis of the SOA below, for example, a Stepchange-style debt management plan would be unnecessary, but maybe when all other expenses are factored in, it would be the right solution.

Note the fees and interest on your overdraft will work out to somewhere in the region of 25% APR.

Apologies in advance if your SOA is completely accurate - I'm an old cynic.

damsidebear wrote: »

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 3 Lodger?
Number of children in household......... 2
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 1670
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 390
Total monthly income.................... 2060
Monthly Expense Details
Mortgage................................ 290
Secured/HP loan repayments.............. 200
Rent.................................... 210 How do you end up paying both mortgage and rent? Shared ownership house?
Management charge (leasehold property).. 0
Council tax............................. 0 Really?
Electricity............................. 60
Gas..................................... 55
Oil..................................... 0
Water rates............................. 0 Really?
Telephone (land line)................... 0 Really?
Mobile phone............................ 40
TV Licence.............................. 0 No TV?
Satellite/Cable TV...................... 0
Internet Services....................... 0 No internet connection?
Groceries etc. ......................... 250
Clothing................................ 0
Petrol/diesel........................... 80
Road tax................................ 10
Car Insurance........................... 40
Car maintenance (including MOT)......... 12
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 100
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 13
Buildings insurance..................... 14
Contents insurance...................... 0
Life assurance ......................... 17
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 For this take your average Christmas/birthdays spend per year and divide by 12. Unless you don't buy presents (not as unusual as it sounds)
Haircuts................................ 10
Entertainment........................... 20 ???
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1421

Assets
Cash.................................... 0
House value (Gross)..................... 50000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 50000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 39900....(290)......0<
pcp............................13600....(200)......0
Total secured & HP debts...... 53500.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................2700......150.......20.9
Credit Card....................2900......200.......24.9
Store Card.....................2600......70........22.9
Overdraft......................1100......0.........0
Total unsecured debts..........9300......420.......-

Monthly Budget Summary
Total monthly income.................... 2,060
Expenses (including HP & secured debts). 1,421
Available for debt repayments........... 639
Monthly UNsecured debt repayments....... 420
Amount left after debt repayments....... 219 You're showing a healthy surplus here
Personal Balance Sheet Summary
Total assets (things you own)........... 50,000
Total HP & Secured debt................. -53,500
Total Unsecured debt.................... -9,300
Net Assets.............................. -12,800
Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

damsidebear

Sanctioned_Parts_List wrote: »

Thanks for posting your SOA. I've made a couple of notes below as there are a couple of lines that don't quite make sense. Basically your SOA shows a very healthy £219 monthly surplus, but you say you're struggling to make ends meet, which to me means that there are some expenses missing.

It's important to know exactly where all of your money is going and why you're struggling to meet repayments otherwise the advice you'll receive will be wrong. On the basis of the SOA below, for example, a Stepchange-style debt management plan would be unnecessary, but maybe when all other expenses are factored in, it would be the right solution.

Note the fees and interest on your overdraft will work out to somewhere in the region of 25% APR.

Apologies in advance if your SOA is completely accurate - I'm an old cynic.

Hi, thanks for your reply, to answer some of your questions the '3rd' adult is my stepdaughter who is 18 and about to attend University in Sept, I have included a mortgage payment as I have a flat I rent out (nest egg- and would rather not sell) as I have very little equity in it. The reason for some blanks is that my wife pays these ones and I pay £210 towards rent, Christmas/birthdays I suppose £35 per/month.
Entertainment is gym costs.


What I can do is exclude the mortgage and run a SOA again.


I appreciate my potential surplus seems healthy!? my concern is by not entering into a debt management plan to pay off my current CC's etc could and would take 4/ 5 years compared to 2 1/2 or am I completely wrong assuming this?

Sanctioned_Parts_List

Ah OK, that all makes sense. Have a look at the Snowball Calculator - by rebalancing the payments prioritising the highest interest debt first and going all out to clear it, you end up clearing debts much faster and more efficiently.

Not knowing the full details of your credit cards, I assumed they required a minimum payment of 5% of balance, which came up with you having all your unsecured debts paid off in only 18 months. Not knowing the interest rate on your mortgage and secured loan, I didn't include those, but yes - total debt freedom in 5 years without a DMP is feasible.

The thing is, with a DMP are not without stress and completely trash your credit rating, so should be avoided unless you've absolutely totally run out of options. Responsible DMP charities (stepchange, for example) will make that clear as well.

If your wife is willing, could the pair of your work together to get it all paid off even faster? If you did a combined SOA of everything yours, plus everything hers, and based the snowball calculation on that, what would be the effect?

tori.k

First thing is to get a true accounting of you SOA if you don't have £219 left over each month, hit you statements and account for everything if you tend to deal in cash keep the receipts over the next month and find where your leaks are and plug them.

If you find the additional £219 and snowballed your debts you would debt free in 18months and in no need of a dmp.