Is my brothers situation fixable?

MrsTinks

Timmymallett wrote: »

Met with my brother this morning to help put together his SOA - see below. He hadn't got all of the info regarding interest rates etc, however this does cover all of the debts that he has. It' quite shocking to see it written down...

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 3568
Partners monthly income after tax....... 3271
Benefits................................ 132 As someone said, what is this for? If it's child tax credit they will only be getting taken off someones income
Other income............................ 0
Total monthly income.................... 6971

Monthly Expense Details
Mortgage................................ 1299
Secured/HP loan repayments.............. 280
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 140
Electricity............................. 70 Check if there are any better rates
Gas..................................... 70Check if there are any better rates
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 25
Mobile phone............................ 60
TV Licence.............................. 12
Satellite/Cable TV...................... 36
Internet Services....................... 27 Between the landline and the internet it should be possible to get a better rate
Groceries etc. ......................... 350 It is not impossible to reduce this and I'm willing to bet that more gets spent on groceries than they think...
Clothing................................ 150 Work out how much is actually necessary - £150 for 4 people is a LOT! My husband and I both wear suits/office wear every day and although he needs the odd new suit then our clothes budget is no-where near this...
Petrol/diesel........................... 300
Road tax................................ 25
Car Insurance........................... 100 This is high - shop around unless one or both have points.
Car maintenance (including MOT)......... 0 None? no tyres or services?
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 1000 If either or both children qualify for the free places then try to find a way to use them. if this is child minder then try to reduce hours where possible, if this is private school... take them out fo that school
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 40 This and contents seem high - make sure they are not over insured and shop around
Contents insurance...................... 30
Life assurance ......................... 25
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100 This can be reduced - there is no way they need to spend £1200 a year on presents!
Haircuts................................ 40
Entertainment........................... 200 This is a luxury right now that they can't afford, it needs to come down. User deals for days out etc and reduce to at least £50
Holiday................................. 200 That can go by the by for a few years. Sorry but with that much debt they can't afford holidays costing £2400 a year, also betting they don't really stick this in a savings fund each month?
Emergency fund.......................... 0 This needs something - tyre blow outs, unexpected repairs to things or just flat out emergencies.
Total monthly expenses.................. 4619


Assets
Cash.................................... 0
House value (Gross)..................... 350000
Shares and bonds........................ 0
Car(s).................................. 17000
Other assets............................ 0
Total Assets............................ 367000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 245000...(1299).....2.45
Hire Purchase (HP) debt ...... 12000....(280)......6.5
Total secured & HP debts...... 257000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
credit card 1..................12000.....240.......0
Credit card 2..................14800.....315.......0
Personal loan (him)............25000.....415.......0
Very...........................400.......35........0
Argos..........................500.......30........0
HSBC Credit card...............5000......75........0
Barclaycard....................11900.....245.......0
Tesco Loan.....................15000.....364.......0
Personal Loan (her)............20000.....350.......0
Total unsecured debts..........104600....2069......-


Monthly Budget Summary
Total monthly income.................... 6,971
Expenses (including HP & secured debts). 4,619
Available for debt repayments........... 2,352
Monthly UNsecured debt repayments....... 2,069
Amount left after debt repayments....... 283

Personal Balance Sheet Summary
Total assets (things you own)........... 367,000
Total HP & Secured debt................. -257,000
Total Unsecured debt.................... -104,600
Net Assets.............................. 5,400

Your brother and his wife needs to deal with this right now because I suspect there is no money spare each month, that there is nothing really being put aside for holidays, presents and entertainment. Instead I am guessing eating out, more groceries than estimated and possibly clothes and treats sneak in there - because "We both have great jobs, we work hard and we deserve it" kicks in. I'm saying that from someone who struggles to control that exact mentality as bluntly as a household we earn probably a little more and I have this battle daily with my husband.

The reality is that they spent a lot of money on getting their family through fertility treatment. The harsh reality is that having children through treatment is not a right, it's a paid for luxury (I'm being very blunt and un-emotional because we're dealing with the debt here - not the joy that is their children) - now they have to pay for that luxury and it's going to take them a long time to pay off. They need to forego some other luxuries to get on top of this before it becomes unmanageable.

As you know the APRs would help greatly - I also expect the numbers for the debts are guesses - the exact numbers would again help but it's nitty gritty stuff really.

A quick scan makes me guess that with some belt tightening they could have £1000 left at the end of each month to over pay the debts if they shop around and cut back on luxuries. How fast that would allow them to settle the debts depends on APRs really... If foreaxnple they were all at 0% APR you're looking at 35 months to clear this including the existing debt payments... so this is not as dire as it looks IF they are willing to make the changes.

MrsTinks

enthusiasticsaver wrote: »

How has the debt arisen in the first place? That soa sows a surplus so they are seriously underestimating what they really spend to have accrued that much debt.

Fertility treatment and silly spending as per the first post Mainly fertility treatment, which is not unfeasible - at least 2 full rounds - I'm guessing more as they have 2 kids and it's rare for it to work first time.

enthusiasticsaver wrote: »

I have to say though this is the first time I have seen a family member posting re their relatives debts on this forum.

By no means the first time - some people find forums daunting and scary. They may be ready and have had their LBM. Admitting to your brother you are in a mess could arguably be a bigger thing than posting it on a forum. Not everyone here have admitted to their spouses let alone other family the extent of their debts... So let's assume the best as always

Timmymallett

enthusiasticsaver wrote: »

How has the debt arisen in the first place? That soa sows a surplus so they are seriously underestimating what they really spend to have accrued that much debt.

There is room to cut down but they have to want to. I have to say though this is the first time I have seen a family member posting re their relatives debts on this forum. Does your brother and his wife want to sort this out or do they not think it's a problem? Clearing debt is tough and requires commitment so your brother posting his own soa would have been a good start.

You are obviously trying to help them but they need to own this themselves.

Hi, thanks for post

You are right, they are underestimating what they are spending. In fact, it's a right mess at the moment which is why I am trying to help out. Things are very tough for them at the moment and they are not in a good place. I worry for his mental health as he is under huge stress. His wife has recently returned to work and it struggling a little too. I am the older and supposedly wiser big brother so I am trying to get him to a stage where he at least has a plan of how he can sort out the debts.

His wife knows about most of the debts but doesn't know that I am aware of the situation. This is a little sneaky I know but at the moment I do feel that it is for the greater good.

MrsTinks

Timmymallett wrote: »

You are right, they are underestimating what they are spending. In fact, it's a right mess at the moment which is why I am trying to help out. Things are very tough for them at the moment and they are not in a good place. I worry for his mental health as he is under huge stress. His wife has recently returned to work and it struggling a little too.

Ultimately they need to work out exactly what they spend - you may need to get them doing a spending diary so they can SEE where that money goes. If both of them are stressed then probably having a proper plan will help them both although returning to work will have it's own challenges if your SIL has been off for a number of years. She will probably feel out of touch and very out of the loop - whilst it's an expense then it may be worth them going to some counselling to make sure they feel in control and can deal with things. Just a thought.

Do either of them get free counselling through their work places? I know a lot of companies offer this. The important thing to repeat to them is that this is fixable with this income. Should either end up unemployed then they need to make sure they have policies in place to pay the important bills as it's likely they struggle at that point.

If you think they have forgotten stuff then get your brother to bring along all the statements - they have money set aside for clothes but yet they have bills with catalogs which I assume is clothes. So clearly there is some discrepancy in what they spend or think they spend.