Please Help

kraft_2

I have being telling my friend about this site, and she is going to sign up, but i have made her have a LBM, and have tonight been trying to help her with her debts, i am stuck, can you see anything else, and advise on hers loans..

Here is her SOA:

Salary 1 = £1700
Salary 2 = £2400

Total = £4100

Outgoings:

Mortgage - -£1101.11 - 3 years remaining 5.75% 170k
Cancer Research - £2
Account charge - £10 (cant be cancelled)
Life/home Ins - £19.55
Council Tax - £139.00
Water - £20
Electric - £41.00
Gas - £45.00
Car Ins. - £29.65
Car Ins - £38.89
Mobile - £38.89
Mobile - £17.62
Phone/internet - £32.31
TV Licence - £11.37
Sky - 45.00 (cant lose sky+ she loves it)
Child main. - £200

Now here goes the bad bit,

Loan 1 ---6.9% £18,000 remaining 6 years left £290pm
Loan 2 ---6.7% £19,000 remaining 4.5years left £366.16pm
Loan 3 ---8.5% £44,000 remaining 4 years left £586.11pm
Credit Card 1 ---13% 10,000 remaining £290 min payment
Credit Card 2 ---12% 5,000 remaining £95 min payment
Credit Card 3 ---0% 2,000 remaining £50 min payment

all in all she has around £500 pm to spend on shopping/general living


Now she wants to use her equity in her house pulling £40k out to pay off the 40k loan, but is this right thing to do??. i dont think so, but i really really appriciate help here.

I have advised her to search cheaper GAS/ELECTRIC/PHONE etc etc, which she is doing tomorrow, but what to do about the loans, please please help/// cheers!!! :beer:


Mark

hypno06

Generally consolidating, especially when it is being put on the mortgage, is a bad thing - it doesn't change the bad habits that have resulted in the debt in the first place, and it also puts the house at extra risk - what happens if one of them loses a job?

So my suggestion would be to show your friend the snowball calculator on www.whatsthecost.com and put the details of existing debts in there - it is a pretty good motivator and can help to focus on getting those debts right down, learning good habits along the way.

Just remember, you can't force someone to have a lightbulb moment - unless she truly has that moment, you may be banging your head against a brick wall. Frustrating though that may be for you, you may have to let her find her own way to the light switch!

Good luck!

kraft_2

she does want to be debt free, and really wants to plough into her finances, but needs to know where to start...

Would changing the 2 high interest credit cards to and low rate loan (15k) be worth it?

liz105

kraft wrote: »

Loan 1 ---6.9% £18,000 remaining 6 years left £290pm
Loan 2 ---6.7% £19,000 remaining 4.5years left £366.16pm
Loan 3 ---8.5% £44,000 remaining 4 years left £586.11pm
Credit Card 1 ---13% 10,000 remaining £290 min payment
Credit Card 2 ---12% 5,000 remaining £95 min payment
Credit Card 3 ---0% 2,000 remaining £50 min payment

all in all she has around £500 pm to spend on shopping/general living


Now she wants to use her equity in her house pulling £40k out to pay off the 40k loan, but is this right thing to do??. i dont think so, but i really really appriciate help here.

I have advised her to search cheaper GAS/ELECTRIC/PHONE etc etc, which she is doing tomorrow, but what to do about the loans, please please help/// cheers!!! :beer:


Mark

Does she want to sell up and use the profit from the sale (is this £40k or more than £40k?) to clear the loan? Or is she planning on getting a loan based on the equity and clearing it that way? ie making it secured debt??

Has she REALLY had her LBM?? Its just I think she could be heading towards negative equity really soon.

Is the £500 all used up each month? Or can some of that go on paying more than the minimum on the CC's???

liz105

Turning unsecured debt into secured debt really is not a good idea. What if there was an issue with income? They could lose their home.

kraft_2

liz105 wrote: »

Does she want to sell up and use the profit from the sale (is this £40k or more than £40k?) to clear the loan? Or is she planning on getting a loan based on the equity and clearing it that way? ie making it secured debt??

Has she REALLY had her LBM?? Its just I think she could be heading towards negative equity really soon.

Is the £500 all used up each month? Or can some of that go on paying more than the minimum on the CC's???

sorry, yeah the 40k is to include the £44k secured loan from first plus by using her equity in the house.

Then to get a loan to cover to of the higher amount credit cards and cut them up.

Adrasteia01

Hi,

First of all, she has a *lot* of debt and she and her partner must have been spending beyond their means to have accumulated so much.

The earnings that she and her partner have coming in are actually quite high.

I worked out the following totals for her outgoings:

outgoings before debt repayment:
1791.39

outgoings incl debt repayment:
3468.66

So she has over 600 pounds left over every month. Where is it going? Does she pay more off the credit cards, or is it going on unnecessary stuff? How much does she spend on food shopping - because this is an area that can often be cut down on. What about clothes shopping etc?

£86 a month for electricity and gas seems very high. Can this be cut down on? Can she change to cheaper providers? She may get money back if she does this through quidco.

Also, mobile phone costs can probably be cut down on. Where sky is concerned it's costing her £540 a year (which is a LOT, especially when you're in so much debt). Can she downgrade this or switch to another provider (do you have NTL over there?).

If she's serious about getting debt free, she's going to have to make some changes, otherwise the debt isn't going to shift easily or quickly.

kraft_2

yeah that is certainly right, they do need to think before reaching for the plastic.

Can i say to her not to put the 44k onto her mortgage, is that the right advise?

thanks so much for all your help so far!!.

Kevicho

kraft wrote: »

I have being telling my friend about this site, and she is going to sign up, but i have made her have a LBM, and have tonight been trying to help her with her debts, i am stuck, can you see anything else, and advise on hers loans..

Here is her SOA:

Salary 1 = £1700
Salary 2 = £2400

Total = £4100

Outgoings:

Mortgage - -£1101.11 - 3 years remaining 5.75% 170k
Cancer Research - £2 - it may be *only* 2 a month, but is 25 quid a year which will go towards debt, remember charity begins at home
Account charge - £10 (cant be cancelled) - change banks
Life/home Ins - £19.55 - if this is the cheapest option which covers all there needs then stick with it, otherwise get them to shop around
Council Tax - £139.00
Water - £20
Electric - £41.00 - again get them to shop around, use comparison sites for cheapest options and then cashback sites to make a little money out of it
Gas - £45.00 - as above
Car Ins. - £29.65 - as above
Car Ins - £38.89- as above
Mobile - £38.89 - if this can be cut down, ie cheaper contract, or move to PAYG or simply use less then savings can be made here
Mobile - £17.62 - as above
Phone/internet - £32.31
TV Licence - £11.37
Sky - 45.00 (cant lose sky+ she loves it) - oh dear, im sure she can get a cheaper package and not lose out on her viewing pleasure, i personally think sky is rubbish, non stop repeats
Child main. - £200

Now here goes the bad bit,

Loan 1 ---6.9% £18,000 remaining 6 years left £290pm
Loan 2 ---6.7% £19,000 remaining 4.5years left £366.16pm
Loan 3 ---8.5% £44,000 remaining 4 years left £586.11pm
Credit Card 1 ---13% 10,000 remaining £290 min payment
Credit Card 2 ---12% 5,000 remaining £95 min payment
Credit Card 3 ---0% 2,000 remaining £50 min payment

This is around 98000ish of debt,

all in all she has around £500 pm to spend on shopping/general living

This really needs to be acounted for via a spending diary

Now she wants to use her equity in her house pulling £40k out to pay off the 40k loan, but is this right thing to do??. i dont think so, but i really really appriciate help here.

To be honest this may make sense from a maths point of view, but realistically it wont stop the clear overspending.
They could also downsize and move to a cheaper area


I have advised her to search cheaper GAS/ELECTRIC/PHONE etc etc, which she is doing tomorrow, but what to do about the loans, please please help/// cheers!!! :beer:


Mark

Savings can be made, if she truly has had an LBM then she can make them

Pass on my best wishes

Kevin

Jacks_xxx

kraft wrote: »

Here is her SOA:

Salary 1 = £1700
Salary 2 = £2400

Total = £4100

Outgoings:

Mortgage - -£1101.11 - 3 years remaining 5.75% 170k
Cancer Research - £2 Drop it. £2 over the next 6 years whils she's paying off her debts will make a difference.
Account charge - £10 (cant be cancelled) Of course it can. Why not?
Life/home Ins - £19.55
Council Tax - £139.00
Water - £20
Electric - £41.00
Gas - £45.00
Car Ins. - £29.65
Car Ins - £38.89
Mobile - £38.89 Switch to a better tariff or renegotiate a better deal.
Mobile - £17.62 Switch to a better tariff or negotiate a better deal
Phone/internet - £32.31 We've got phone, internet and Sky+ for £26 a month.
TV Licence - £11.37
Sky - 45.00 (cant lose sky+ she loves it) We've got phone, internet and Sky+ for £26 a month.
Child main. - £200

Now here goes the bad bit,

Loan 1 ---6.9% £18,000 remaining 6 years left £290pm
Loan 2 ---6.7% £19,000 remaining 4.5years left £366.16pm
Loan 3 ---8.5% £44,000 remaining 4 years left £586.11pm
Credit Card 1 ---13% 10,000 remaining £290 min payment Get another 0% deal
Credit Card 2 ---12% 5,000 remaining £95 min payment Get another 0% deal
Credit Card 3 ---0% 2,000 remaining £50 min payment

all in all she has around £500 pm to spend on shopping/general living


Now she wants to use her equity in her house pulling £40k out to pay off the 40k loan, but is this right thing to do??. i dont think so, but i really really appriciate help here.

I have advised her to search cheaper GAS/ELECTRIC/PHONE etc etc, which she is doing tomorrow, but what to do about the loans, please please help/// cheers!!! :beer:


Mark

Well I calculate that if she can find another couple of 0% deals and another £400 from her budget she can snowball the debts and be debt free in under 4 years - so they'll be debt free AND mortgage free at almost the same time.


How cool would that be???!!! :eek:

http://www.whatsthecost.com/snowball.aspx

Love Jacks xxx