Where to start...HELP!

rhr83

I'm relatively new to this site and been lurking for a while, but today is the start, the beginning...of the end...

You've probably heard it a millions times before, but sheer stupidity as got me where I am today, with around £15k of debt between 2 loans and one credit card. I've been shifting from one 0% balance transfer to another for a while now, but I can't carry on like this. I was diagnosed with breast & cervical cancer in 2014 (all going well now :T) but pretty much chalked up this debt running away on holidays, retail therapy etc. My husband was completely oblivious to my spending, until last Wed night I told him the honest truth. He was fantastic and I have to be honest he pretty much runs the house single handed which was making me feel worse, adding to my hiding the debt.

Long story short, I applied for a consolidation loan with The AA a few months back, for whatever reason they provisionally approved the loan, then declined it. I've now applied for one with my bank again it's been provisionally approved and I sent the loan agreement back this morning. I don't know if I'm doing the right thing taking out another loan it's over 5 years, but does reduce my monthly outgoings by nearly £200 meaning I could be starting an emergency fund.

What's do you think the best way out of this hole is?? Any help much appreciated

EssexHebridean

Firstly, yes, you're far from the first, and I double you'll be the last top find yourself in this situation! the good news to start with is that your health is all good - that's great news. Also, we pretty much never come across an unfixable situation, so it's pretty sure yours isn't, either!

Your first job is to put together your SOA (Statement of Affairs) - you'll find the link in the "sticky" post at the top of this board. Fill it out as accurately as possible - you may find 6 -12 months bank and card statements will be of help. You need to fill it out to reflect your financial position now - not as you think it should be!

If you post the SOA in here (choose "format for MSE" from the options once you've completed it) then we can take a look and see where savings can be made, and what your situation actually is.

To tell you the truth, a consolidation loan is often the worst way of dealing with things, so it may actually be a good thing that it was declined - as things stand at the moment, you would presumably still be able to decline the other one you've applied for if a better route can be found.

Have you cut up the credit card to cut off your route to easy credit?

Drawingaline

Consolidation loans are seen as a bad thing on this site, mainly because most people take the loan and then run the cards up again as they haven't addressed their spending. It sounds like you have done this so it may work for you, and the idea of using the £200 to set up an emergency fund is certainly a fab idea.

Post up a SOA and more experienced people can take a look for you, to see if there are savings to be made. The fact that you are working with your husband is great, be a team and this is doable.

If you do go with the loan, clear the card and destroy it and close the account. Use the £200 for an emergency fund and then see if making additional payments to the loan is an option , that way you can get debt free quicker.

It's a total change of mindset which is achievable, but having that card paid off is unbelievably tempting........

rhr83

I think this is why I'm having doubts over the consolidation loan, the way I'm looking at it, I'll just be in debt longer... I've done a SOA, it's my first so not sure where I should be putting spends it doesn't ask for, but here goes -

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details[/b]
Monthly income after tax................ 1500
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1500

Monthly Expense Details[/b]
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 45
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 130
Clothing................................ 20
Petrol/diesel........................... 120
Road tax................................ 15
Car Insurance........................... 29
Car maintenance (including MOT)......... 85
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 15
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 12
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 851


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 1000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Loan ..........................10000.....260.......16.9
Loan ..........................4000......156.......16.69
Card ..........................3992......175.......0
Total unsecured debts..........17992.....591.......-


Monthly Budget Summary
Total monthly income.................... 1,500
Expenses (including HP & secured debts). 851
Available for debt repayments........... 649
Monthly UNsecured debt repayments....... 591
Amount left after debt repayments....... 58

Personal Balance Sheet Summary
Total assets (things you own)........... 1,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -17,992
Net Assets.............................. -16,992

I'm in the fortunate position that my husband pays the mortgage, utilities etc. I just transfer £300 to him each month, that goes towards the household bills. It was £600 until last week. I'm also in the process of bailing my mum out of a difficult domestic situation and for the foreseeable I'm giving her £150 per month, as you can see I can't afford!!

Should I be entering the original loan amount or current balance? Sorry I've went with original amounts just now.

One credit card account balance transferred to the other and closed, one to go!

enthusiasticsaver

What rate is the consolidation loan?

Usually they are not a good idea as people tend to build up debt again having not addressed the root causes.

What were the other two loans for?

You can't afford to give your mum £150 a month so I would not do that.

What is the new loan monthly repayment?

Don't take out any more credit cards and start up emergency savings.

Why is car maintenance so high? That is more than £1k per annum.

rhr83

The new loan rate is also 16.9%, the monthly repayments are £355.

The first loan was for our wedding abroad, honeymoon, reception back home. That was £10k in 2013, now down to £6k. The 2nd loan... I got offered it from the bank and rather stupidly took it, even more stupidly blew it. I had 4 holidays in 2014 just after my diagnosis, 5 last year and I still kept spending. I'm mortified admitting to this.

Sorry the car maintenance that's the year, I tend to just pay as and when so no idea how much this really is. But last MOT & Service i was £85

Fosterdog

Is there a reason why you and your husband seem to stay financially separate?

As the loans were used up on your wedding and I'm assuming he also joined you on the four holidays in 2014 is there any reason he isn't contributing to paying off the debt?

Really the SOA should include both of your incomes and all of the outgoings to get a more realistic figure for what is left over for debt.

rhr83

We've been together for 13 years, married for 3 and that's just the way it's always been. He's a good few years older and this was a 2nd marriage for him. He learned a few sore lessons from his first marriage.

If we were to 'share' the outgoings I'd be drowning further. So asking him to contribute to my debt isn't something I'm willing to do. He didn't join me on all of the holidays only 2. I was literally running away and burying my head in the sand. I'm can do a SOA based on both our incomes, but it wouldn't be reflective.

sourcrates

Hi,

Can i just ask you, are you named on the mortgage at all or is it solely in

your husbands name ?

EssexHebridean

OK - let's take a look. One thing I will say is that if the consolidation doesn't "feel" like the right thing for you, then it may be best to find another route - sorting the situation out should relieve stress, not create more!

rhr83 wrote: »

I think this is why I'm having doubts over the consolidation loan, the way I'm looking at it, I'll just be in debt longer... I've done a SOA, it's my first so not sure where I should be putting spends it doesn't ask for, but here goes -

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details[/b]
Monthly income after tax................ 1500
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1500 OK - already seen your comments that this SOA is "you only" - where there are zeroes against routine household bills I will mostly assume your OH pays them

Monthly Expense Details[/b]
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 45 Is this in contract? If not, look for decent SIM only deals
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 130 If this is just half then this can be reduced. if it's all of it then well done already!
Clothing................................ 20
Petrol/diesel........................... 120 Read Martin's "driving economically" guide
Road tax................................ 15 Do you actually pay this monthly? If so you need to think about saving towards paying 6 monthly or annually as neither of these attract a loading.
Car Insurance........................... 29
Car maintenance (including MOT)......... 85 Read your comments on this - if I were you I'd set up a separate savings account for car stuff and put in say £30 a month. This should mean that not only do you have money waiting ready when the MoT is done or it needs a service, but you may be able to pay your next lot of road tax up front too
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0 I take it you do have this it's just OH pays it?
Life assurance ......................... 15
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 12
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 851


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 1000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Loan ..........................10000.....260.......16.9
Loan ..........................4000......156.......16.69
Card ..........................3992......175.......0
Total unsecured debts..........17992.....591.......-


Monthly Budget Summary
Total monthly income.................... 1,500
Expenses (including HP & secured debts). 851
Available for debt repayments........... 649
Monthly UNsecured debt repayments....... 591
Amount left after debt repayments....... 58 Do you have this amount left?

Personal Balance Sheet Summary
Total assets (things you own)........... 1,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -17,992
Net Assets.............................. -16,992

I'm in the fortunate position that my husband pays the mortgage, utilities etc. I just transfer £300 to him each month, that goes towards the household bills. It was £600 until last week. I'm also in the process of bailing my mum out of a difficult domestic situation and for the foreseeable I'm giving her £150 per month, as you can see I can't afford!! I hate to be brutal, but you're right - you actually can't afford this. Do you have other siblings who can help out? Is there other support aside from financial that you can offer?

Should I be entering the original loan amount or current balance? Sorry I've went with original amounts just now. Current balance really but the main thing is that the payment figures are right.

One credit card account balance transferred to the other and closed, one to go!

There are savings you can make - personally I'd look to drop the car maintenance to £30 (-£55) Not buy clothes for a while (-£20), Cut back a bit on presents (-£10) and track down that £58 surplus. From that saving I'd stick £50 per month into an emergency fund savings account, and throw the balance at the debts.

You need to check whether the loans can be paid off early - sometimes there is a penalty. Also check whether either of them had front loaded interest some of which may come back to you if you pay off early? Otherwise it may be better to leave those running and focus on the card for now even though that's at 0%.

You may as well stop beating yourself up about where the debt came from by the way - it's done. Learn from the mistakes - and I have to say that in the circumstances I think anyone can understand your reaction - and be aware that your reaction to traumatic news is to spend. From that point though, move on. It's done, but it can also be fixed.

determined_new_ms

there's really not so much to cut back on - mobile is high change as soon as you can. I pay about £7 pm and get unlimited calls and texts & 5gb

groceries - is that your half/contribution? If it is then that could be cut a bit.

I think you probably need to find a way of bringing in more income. At the moment you cannot afford to pay your mum £150 less your husband would be willing to let you cut your household contributions