will be able to fix this?

emmamc77

I hope so. I sit and listen to colleagues moaning about their 2k credit card bills or 8k car loans and I think to myself "if only you knew!" Nobody in our circle has a clue that we are in debt crisis

worriedDan

Hi Emma,

I am not sure that you are in debt crisis. I actually watched a Martin Lewis video about this as part of my own LBM process. Apparently if you can afford the minimum payments, regardless of the size of your debts AND still afford normal living expenses then you are not in debt crisis. I owe a similar amount to you, with a similar income. My debts FEEL like a crisis to me, however I am acutely aware that someone earning £1000 per month and owing £20k is much more of a crisis that my 57K debts on a 70K salary.

emmamc77

Thanks Dan,

I just need to get a bit of perspective I think. It all feels very 'heavy' at the moment.

enthusiasticsaver

Definitely snowball. Tackle creation card first then Asda then the 0%(if still 0) cards in order of first with deals expiring.

nkkingston

Can you shift any of the high interest debt to the 0% cards without incurring high fees? There's a calculator somewhere that checks whether the money transfer fees would wipe out the benefits. It may depend on how long the deals are and the interest once they expire as to whether it's worth it, but even a few month's interest saved could be worth it.

emmamc77

nkkingston wrote: »

Can you shift any of the high interest debt to the 0% cards without incurring high fees? There's a calculator somewhere that checks whether the money transfer fees would wipe out the benefits. It may depend on how long the deals are and the interest once they expire as to whether it's worth it, but even a few month's interest saved could be worth it.

I can't right now as I have just done a shuffle. Because I have applied for a few things my credit score has taken a dent. I don't want to run the risk of doing further damage as I will need the 0% deals later on.

I actually called Stepchange last night and spoke to an advisor. I felt that I needed to talk to someone who dealt with this everyday. The man I spoke to was amazing but told me quite clearly that we don't need a debt management plan as we are easily able to afford the contractual minimum payments. I bombarded the poor guy with questions but he was very obliging! He told me that our level of debt is something he deals with everyday and that the only thing that made us unusual was the fact that we are able to manage it and we are not in arrears.He also told me that our level of debt was not uncommon amongst people on far lower incomes than us. As much as I wouldn't want anyone to suffer hardship, there is some reassurance in knowing that we are not alone.

I was more relaxed after this conversation. I was totally convinced that my debts were totally extreme and that somewhere along the line we would be forced into an IVA
bankruptcy - totally irrational I know as we are paying it off BUT I have not been in a good place.

emmamc77

Hi Everyone,

I have done a new SOA which I think is more realistic. I have increased the amount that I had previously allocated for presents and entertainment etc as I agree that my first SOA was unrealistic. The last thing I want to do is make it so unachievable that I ended up giving up.

I am going to use the £1120 surplus to snowball the debts, starting with the 2 credit cards with the high interest rates. This effectively means that I could be paying well over 2k a month at the debts.

Can I really do this?

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

Monthly Income Details
Monthly income after tax................ 2100
Partners monthly income after tax....... 2120
Benefits................................ 82
Other income............................ 0
Total monthly income.................... 4302

Monthly Expense Details
Mortgage................................ 450
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 20
Gas..................................... 50
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 12.99
Mobile phone............................ 50
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 20
Groceries etc. ......................... 250 This will be achievable if we meal plan.
Clothing................................ 20
Petrol/diesel........................... 160
Road tax................................ 15
Car Insurance........................... 50
Car maintenance (including MOT)......... 20
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 140
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 0
Life assurance ......................... 28
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50 - £600 per year is surely enough?
Haircuts................................ 10
Entertainment........................... 150 - Not sure about this. Perhaps too high??
Holiday................................. 0
Emergency fund.......................... 50
Total monthly expenses.................. 1622.99


Assets
Cash.................................... 0
House value (Gross)..................... 145000
Shares and bonds........................ 0
Car(s).................................. 7000
Other assets............................ 0
Total Assets............................ 152000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 68000....(450)......0
Total secured & HP debts...... 68000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
cc1............................15000.....300.......0
cc2............................8500......180.......0
loan...........................20000.....489.......0
dh cc..........................10000.....350.......6.9
asda...........................4500......100.......19.9
creation.......................3000......88........27.9
hallifax.......................4400......50........0
Total unsecured debts..........65400.....1557......-


Monthly Budget Summary
Total monthly income.................... 4,302
Expenses (including HP & secured debts). 1,622.99
Available for debt repayments........... 2,679.01
Monthly UNsecured debt repayments....... 1,557
Amount left after debt repayments....... 1,122.01 - This will be thrown at the debts using the snowball method ( I might save £100 of it)

Personal Balance Sheet Summary
Total assets (things you own)........... 152,000
Total HP & Secured debt................. -68,000
Total Unsecured debt.................... -65,400
Net Assets.............................. 18,600

worriedDan

Welcome back Emma. Glad to see that you are working through this.

Lumanous

Hello Emma I agree so much with what others are saying here, it can seem daunting at first but you will feel better once it settles, it's that realisation/panic moment that can bring you down but you are in a good enough place to fix it and you are definitely not alone!

Look forward to reading more on your journey if you feel like sharing. I wish you good luck and lots of positive energy in your clearing mission you can do this!

When you feel up for it I would definitely recommend checking in on other stories here there are a several people who have either come back already from a similar level or they are just starting out and working on bringing down those monthly outgoings too. Might help with some ideas and help with seeing steps others are taking to make small changes to bring forward that date doesn't have to be on every front all at once but little bits here and there can all help.

emmamc77

Just been number crunching and I actually think that I can do this in 30 months by paying between £2200-£2400 per month off the debts. This will leave us with a small surplus that we can add to emergency fund. 30 months doesn't sound too bad! At the start of my journey I thought it would take me at least a decade.