As the username suggests, I need help...

InNeedOfHelp73

OK this is quite hard for me as I didn't actually realise what a bad situation I'm in before today so please bear with me.

My SOA
Mortgage/Rent - £350
Council Tax - £50
Gas - £20
Electric - £20
TV License - £22
Phone - £25
Food - £150
Car Insurance - £35
Petrol - £30

Debts
Egg CC - £5,234.62 APR 21.9%
Mint CC - £3,211.83 APR 18.9%
Barclaycard CC - £6,080.59 APR 24.9%
Lloyds CC - £4,873.88 APR (Not sure but the monthly rate is 2.21% if that helps?
Overdraft - £6,865.72 APR 16.8%

All of the above are my complete responsibility with the exception of the overdraft which is a joint account with my wife although read the next bit...

My Situation
My wife and I have recently separated. She has remained in our house (£67K joint mortgage, about £90K value) and I have moved into rented accommodation.

I have agreed with her that I will handle all the miscellaneous debts above and she will need to pay the mortgage repayment (£400 p/m Interest Only mortgage). Traditionally in the past she dealt with all the credit card bills and after contacting all the companies today I was actually physically sick as I had no idea things had spiralled to the point where they are today.

I have contacted all the cards concerned and given them my new contact details and promised to call them back within the next coupe of days with a view to paying the debts.

My Income
I run my own business and so my income is very flexible as I can pay myself whatever I like. This historically though has not been more than £1,500 p/m

To be totally honest I am terrified. Not just from the debts that I personally have accrued but also for my wife who, although we have separated, care deeply for. She has no income at this time and has said she has no option but to sell the house.

So that's the situation, reading through the board it does look like I could be one of the worst here so I really could do with some sound, solid advice. I don't want sympathy (I know it's my fault ) or the attrition of blame, I just want to get myself and to any extent I can, my wife out of this hole.

Any advice or help you can impart will be appreciated more than you realise...

Kevicho

First off iwould like to say please keep your chin up, i can imagine now is a terrible time for you, and can only say the advice id give myself in some situation like this, which is "as one door closes another opens"

Also well done for facing up to these debts now, and making efforts to sort it.

Anyways in red are some ideas to help make savings

InNeedOfHelp73 wrote: »

OK this is quite hard for me as I didn't actually realise what a bad situation I'm in before today so please bear with me.

My SOA
Mortgage/Rent - £350
Council Tax - £50
Gas - £20 - is this the cheapest, check uswitch or other comparison sites and then use a cashback site if you do change, some extra cash is always handy to get the ball rolling on a credit card
Electric - £20 - as above
TV License - £22 - is this for two houses?
Phone - £25 - can you cut back on this, if its not a contract you could switch to PAYG to save some money (if your usage is a certain level)
Food - £150 - check out the old school board for meal planning andeconomising food budget tips
Car Insurance - £35 - as with the electric/gas, this may be cheaper elsewhere
Petrol - £30

Total 702

Debts

Barclaycard CC - £6,080.59 APR 24.9%
Egg CC - £5,234.62 APR 21.9%
Mint CC - £3,211.83 APR 18.9%
Overdraft - £6,865.72 APR 16.8%
Lloyds CC - £4,873.88 APR (Not sure but the monthly rate is 2.21% if that helps?

Total 26266.64

I have put in order the priority of your debts, pay off the maximum you can to the top card, while paying the minimum on the others.
Once debt one is paid off use that money on debt 2.
This is known as snowballing and is a proven way to clear debt quicker.

I will say this now, i know you still care about the wife, but reality is that she needs to start taking care of herself financially, and she should not be the sole benefactor of the house sale, in fact the money made should be used to pay off these debts, as yes they are in your name, but im sure that along the way she has helped run up these debts.

Now looking over your SOA and the possibility of 1500 a month, that would leave you with 800pm to clear debts with (Id make sure this is best for your business), alternatively you could get your business to give you a loan at a cheap rate to clear off some of the higher rate debts.

Id talk to your accountant about this.

Other things to consider is selling things on ebay, make some extra cash that way.

You are not the worst on here, people have 4* or more the amount of debt, so remain positive about that


24K at 800 pm is 30 months, (give or take interest), so it will be tough, but im sure you can do this.

Best wishes and welcome to the board

Kevin

lunar

Hi

Just look at my sig, you are definatly not the worst on here. Stay on the boards and you will get loads of advice and support on dealing with your debts.Just wanted to wish you good luck.

InNeedOfHelp73

Thanks Kevin for taking the time to reply so quickly, it's good to know (in a revers fortune kind of way) that I'm not the worst although I feel for those people as the stress must be incredible.

I just wanted to pick up on a few points you raised. The gas/electric I'm looking into. I literally only moved out hits weekend so it's on my to-do list. The phone is actually for a landline as well as my mobile which is a PAYG phone.

The TV license is just for me, I've just arranged it today to pay via direct debit so I'm guessing it's higher than normal as we part way through the year?

You are right in saying that both my wife and I are jointly responsible for the debts, but considering the fact that she has so little income as well as a 17 and 13 year old mouth to feed I felt it was only fair that I shouldered the majority of the burden.

We both feel that selling the house would be wisest and anything left over from the house sale would be split equally.

As I own the business I have got access to funds through director loans etc but I would rather keep at least on asset in place. The company is a limited company so for tax reasons there is a limit to what I can and cannot do with company money without getting into hot water.

24K at 800 pm is 30 months, (give or take interest), so it will be tough, but im sure you can do this.

Blimey! :eek: I did the snowball checker thing (http://www.whatsthecost.com/snowball.aspx) and I must have put something in wrong as it worked it out at debt free by June 2014 so I think I'll have to revisit that. I prefer your estimate to be truthful...

I've booked a telephone appointment with the CCCS for tomorrow so with a bit of luck they should be able to help somewhat.

Thanks again for your advice and input, it really is much appreciated. I've also updated my sig so I'm not a faceless member anymore

InNeedOfHelp73

lunar wrote: »

Hi

Just look at my sig, you are definatly not the worst on here. Stay on the boards and you will get loads of advice and support on dealing with your debts.Just wanted to wish you good luck.

Thank you Lunar, I know it sounds cruel but I'm somewhat cheered knowing that there are worse off then me and they are getting the job done

CharliesAngel

Welcome and well done on the realisation of your debts... it can be a shock! We've all been there... and we're all here to help you on your journey..

Just a couple (or twenty) of questions - will you have half of the proceeds from the sale of the house? Would you pay the CC's off with this? If so, in the short term can you meet minimum repayments?

Could you apply for or ask your CC lenders to reduce/freeze interest while you catch up? Surely they'd understand if they knew the situation... Ideally shift them over to 0% deals if your credit rating is okay.

Is the overdraft on your current account? Do you use that account? Could you move it to a cheaper account?

Keep plugging at it and keep posting!

CA x

InNeedOfHelp73

CharliesAngel wrote: »

Welcome and well done on the realisation of your debts... it can be a shock! We've all been there... and we're all here to help you on your journey..

Thank you, that means a lot

will you have half of the proceeds from the sale of the house?

Yes we have agreed this but she will need some funds to move into rented accommodation as well as paying legal fees etc

Would you pay the CC's off with this?

Well there won't be a great deal left as the equity is minimal but yes, any money I gain will go straight into debts

If so, in the short term can you meet minimum repayments?

Just...

Could you apply for or ask your CC lenders to reduce/freeze interest while you catch up? Surely they'd understand if they knew the situation...

I hope so too and with luck, after my meeting with the CCCS they will be able to help...

Ideally shift them over to 0% deals if your credit rating is okay.

Unlikely as my rating is not great.

Is the overdraft on your current account? Do you use that account? Could you move it to a cheaper account?

Well the account is in joint names, I've opened a separate new bank account for myself. We need to keep this account open for the mortgage payments and it's highly unlikely a bank will give me an overdraft of that level elsewhere.

Keep plugging at it and keep posting!

CA x

I will

lunar

Phil

I completly understand. When i first faced up to my debts i felt completly ashamed and that nobody could have possibly been as stupid as me. My partner is the only one who knows my situation so it is good to have the freedom to talk about things on here. Now i realise that although i was kidding myself that i could afford everything i was spending, im certinly not the only one, and i can fix it....eventually. I hope your diary helps, mine really keeps me motivated.

InNeedOfHelp73

OK I've spent the afternoon getting my head round this and downloading various spreadsheets etc. In the end I found an old copy of MS Money 2001 cluttering my drawer and it has a built in snowball planner as we as a budget planner so I've decided to use to keep track of stuff.

The one thing I cannot decide is whether to pay more off the debts with the higher interest or pay more on the one with the lower balance and just the minimum on the others.

Which way is best?

On a side note, reading through this forum is truly inspiring and it really makes you want to be in the debt free club...

Gemmzie

The best way financially is to pay the higher interest first and the minimums on the rest (so long as it keeps you inside your credit limit). But sometimes psychologically it can be a great boost to kick a smaller debt into touch.

InNeedOfHelp73

Well I think psychologically I had hit rock bottom so now that I know my target and what I have to do, I think I'll go with the former suggestion and crack on with Barclaycard first....