47k credit crunch (advice welcome)

iiMatjeii

I will make this a quick introduction and try to keep the info concise.

My wife and I have been together for 8 years and have a 2 year old boy. I met the Mrs with some debt, and long story short, it got worse. Through holidays to the Maldives expensive wedding rings and the wedding itself we managed to amass quite the sum of debt. (Mostly my champagne lifestyle)

I am a self employed electrician CIS contracted, and my wife is a "retired" nanny (stay at home mother due to the lack of childcare support from our government). I earn between £30k-38k gross yearly, but week to week is so volatile it's hard to prove what I'm actually earning.

See we finally bit the bullet after years of denial and spoke to Stepchange about the £47k (through 5 creditors). We have a budget in place based on my 40hr week (£1870 per month) only as thats pretry much gauranteed, and it only worked out at £33 per month of disposable income. However I often earn double that due to price work and overtime (average £2810 per month for the last 3 months) but can't use that as it's hit and miss.

Stepchange are advising an IVA but I am worried that I may earn way more than the agreement and end up having to change it, to find that my wages drop soon after and default the agreement. I also attempted to speak to MBNA direct about one of my cards (£16k) and they straight up cancelled it. Oops, I was going to buy food with it this week lol.

I asked about a debt management plan, but they advised that due to my low available income that it wouldn't be suitable. But I think that if I could get all creditors to agree 0% over a 5 year term, I could afford the minimum payments through overtime and private work.

So that's my scenario, I have no idea what I am asking for, but any advice is welcome to give me some context to the mountain we have started to climb. Thankfully my wife is very supportive, and although she tends to let me make these decisions as "you know best" in her words, she is actually shouldering some of the burden, so thanks Sam if your reading...

iiMatjeii

Well I spent most of the day talking to Stepchange and they were unbelievably helpful. They have set me on the right track to realising my debt clearing dream and we are going to be budgeting ad fiddling with as many of the bills as we can to strike the best deals, as expected.

One other major step I took today, I called each creditor to discuss my situation, and cancelled all credit cards and direct debits until I get my thoughts in order. The next plan is to put together a package offering a debt management plan that I can afford without overstepping the possibilities of my income. The hardest thing for me today was staying realistic. This isn't going to be a quick fix, I need to stay the journey.

Surprised there hasn't been much interest in this post tbh. This place is buzzing with people.

-taff

The diaries board moves fast. Plus there are a lot of posters who post once and disappear....
Good luck

Scott_Weiland_2

Put up whats called an SOA on your page i know you mentioned your income in the post above but its good to look at the bigger picture

Ie

what do you pay each month for gas and electricity??? re your electricity do you know what they are charging you per kwh, i recently switched from utility warehouse to co-op for electricity i was paying 17.28 per kwh with UW i am now paying 12.36 i think it is with Co-op

Mobile Phones are you overpaying is there the option too maybe switch to sim only contracts or a pay as you go package, or have you capped bills so you cant go over your data mins allowances etc

The same re tv packages its amazing the discounts sky and virgin will give you if you say the words i am leaving too go too........... what can you offer me. Do you really need that 60-70 quid sky package could you survive with a now tv box with movies and entertainment package for say 6.99 and 9.99.

Other things re insurances look on top cashback.co.uk and see if you can get better deals via gocompare when deals are up.

All these things sound minuscule i know but freeing up an extra say 50-100pm extra disposable income in the bigger scheme of things will make you clear your debt miles faster.

going through your stuff and checking whats not needed is another option ie selling junk on ebay, getting rid of old clothes via cash for clothes, selling old phones you have lying about on mazuma mobile, and old books on webuybooks.co.uk

I understand your oh is a stay at home mam get her to have a look at this

http://www.moneysavingexpert.com/family/make-money-surveys

Treadingonplaymobil

Sounds like you need to do a proper SOA, using your current expenditure and your minimum income level, so you can see where you're going wrong, then look at how you can trim that to suit your worst month (I have done this process just in the last few days, and it was good advice, as I also have variable income).

Have stepchange offered advice re: what your creditors might do if your income increases? To be honest I don't know how they'd know unless you volunteer the info.

ani*fan

Hi there and welcome to the boards

Sorry your post didn't attract much attention, I don't know where everyone is but if you keep bumping up your thread then that'll help.

I'm sorry I don't know much about Stepchange or ivas. From what I think I know, you'll have organised an soa for them anyway so as has already been said, post it up and we'll help.

I think you might need to open a new bank account that is unconnected to any creditor and start having your wage paid in there immediately. Is any of your debt with your current account bank? Once the creditors know there's a problem with you making your payments every month then they will cancel the accounts, as seems to have happened. It's part of the deal. Do you have enough money for food? I'm worried for you.

I'm also concerned that you have contacted them all yourself without deciding how you are going to progress, iva or not, wihout being able to make them any offers. Often the agency you have contacted, Stepchange in this case, do all of that for you. Like I said, I'm not an expert on this so hopefully someone more knowledgable will be along soon.

You won't be the only one with a fluctuating income so I reccomend you talk to Stepchange again and ask their advice about this. The agreements you will make with each creditor are legally binding so I would not advise making more money and then not letting them know. You'll be breaching the terms of your agreement and that's a huge problem legally.

Best of luck. Try to find some diaries of other iva people and see what happened with them. And sorry to not be able to help you more.

motivated

Hi

Wanted to pop in and wish you luck on your journey.

We too have a huge debt total wait for it...... £75,000 :eek: accumulated through stupidty consolidating (badly) and purely living above our means. So easily done as many on here have been and are still in the same boat.

I am in the process of setting up my DMP and also found SC to be wonderful, supportive and very helpful.

The main thing is you have faced up to and are dealing with it.

Have subscribed and will follow you on your journey.

Good luck with it all

iiMatjeii

Thanks to everyone who chimed in, it's nice to see that people are willing to throw their 2 pence in.

I have done a brief budget with stepchange but there were a few things on there that definitely needed work, so will do my own SOA today. Had a couple of quiet days at work so have managed to roll them up for the back of the week and spend 2 days sorting my life out ha ha.

Stepchange have actually advised that I speak to the creditors if I feel like haggling for a 0%, I did this and it backfired for every creditor, I have now snipped up all of the cards, but thankfully all of the direct debits were cancelled before the next round. So for once I will be buying a food shop and diesel for work with my own bank card and not recycled credit.

The next step is to gather as much info on my income as possible to prove my overtime is consistent, I have passed 38k already this year so easily done. This will help me to get on a DMP rather than an IVA. A DMP seems like the better option for me as it's works more like a fixed rate loan system and I get to pay back all debts in full.

So since the cc are now all gone, my hand has been forced and I have no choice but to deal with this problem, I can't just go back to normal like the previous times. I will post up my SOA and see what we can to do to knock those bills down.

With regards to the bank account, I bank with Yorkshire and only have an OD with them which will be cleared with my wages tomorrow. So don't see the need to change as of right now. But once the plan is in place I will probably drop the OD lower to save getting into the same problems.

Upsidedown_Bear

iiMatjeii wrote: »

Surprised there hasn't been much interest in this post tbh. This place is buzzing with people.

Welcome to MSE :hello:

I see you've now had some replies

If you want to you could post on the main Debt Free board for advice too:
http://forums.moneysavingexpert.com/forumdisplay.php?f=76

[Deleted User]

Hi welcome to the boards


Good luck on your journey, will be following.


Pmo2
x

enthusiasticsaver

Positives are you are a qualified electrician and earn a decent income. Do you or your wife keep on top of invoices etc for your business? Do you put money away for tax as well as that is a big issue for self employed?

Would you not be better getting a job for a larger electrical company so you get a steady wage, hopefully pension and no issues with book keeping. Without seeming harsh if you are undisciplined with your personal finances what are your business finances like?

I appreciate your wife is a stay at home mum and note your comment about paid childcare but millions of mums go to work and earn an income regardless of the fact they have to pay for childcare. You only have one child to pay childcare on and if you are at a stage of considering a DMP surely this is serious enough for your wife to return to work of some sort? Failing that can she register as a childminder to help bring some money in?

Hopefully you have now sorted out your spending habits and you are by no means the first nor will be the last to get yourself in a financial state by spending more than you earn. I hope you sort this quickly.