Feel like I'm drowning in debt!

HDawson17

Hi,


First time poster, long time lurker!


I was hoping for some advice! I've gotten myself in a right mess with credit cards and was hoping someone may be able to give me some advice on how to move forward...


I bought my own house last year at £110,000 - I managed to save £7,000 to put down and have done it all on my own - was so proud of myself!


However, Afeter buying my own place, bills started to creep up, a few things went wrong and I decided that it would be a great idea to buy some new furniture!


Anyway.... mover forward a year and I am now in £17,000 of credit card debt!!!! I don't know what I was thinking or how I have even done it! It was all 0% on purchases for a year, which has now gone so I'm on 17% apr with a couple of them!


I have put an soa below - could anyone help shed some light for me? It says that I have a little left over to meet more than the minimum payments, however I have not accounted for any entertainment, etc (which, I'm not expecting by the way!).


My concern is, now the APR rate has gone up, the minimum payments aren't covering much more than the APR. It will take me 36 years to pay it all off :-( I have looked at possibly doing a DMP as I would much rather pay off my debt if I can, however I am concerned about my credit rating. I can get a couple of pounds bonus every year (fingers crossed) so I was thinking of plowing as much as I could into the debt as and when is possible. I'm already worrying about my mortgage rate not being fixed from February - which will then mean credit checks, etc. I'd also like to look into buying with my partner eventually - he has his own house and me, mine (which at this rate, is rather unhopeful seeing as I've got myself in a right mess!). I've looked at consolidating with a loan but that was a no, I've also looked at another 0% card, but that was also a no.


Although I'm just meeting all my payments, I am feeling so anxious and sick with worry. I'm putting things on ebay, scpock, etc to try and raise some more money, but there's not much else to self to be honest! :-(


Please does anyone have any advice?


Thank you for taking the time to read! x


Household Information[/b]


Number of adults in household........... 1


Number of children in household......... 1


Number of cars owned.................... 1





Monthly Income Details


Monthly income after tax................ 1678.85


Partners monthly income after tax....... 0


Benefits................................ 80


Other income............................ 82


Total monthly income.................... 1840.85





Monthly Expense Details


Mortgage................................ 462.7


Secured/HP loan repayments.............. 162.8


Rent.................................... 0


Management charge (leasehold property).. 0


Council tax............................. 80


Electricity............................. 35


Gas..................................... 30


Oil..................................... 0


Water rates............................. 23.6


Telephone (land line)................... 0


Mobile phone............................ 40


TV Licence.............................. 12.12


Satellite/Cable TV...................... 0


Internet Services....................... 24


Groceries etc. ......................... 200


Clothing................................ 20


Petrol/diesel........................... 120


Road tax................................ 10


Car Insurance........................... 29.8


Car maintenance (including MOT)......... 10


Car parking............................. 0


Other travel............................ 0


Childcare/nursery....................... 100


Other child related expenses............ 50


Medical (prescriptions, dentist etc).... 0


Pet insurance/vet bills................. 10


Buildings insurance..................... 12


Contents insurance...................... 0


Life assurance ......................... 0


Other insurance......................... 0


Presents (birthday, christmas etc)...... 50 (this is put away)


Haircuts................................ 20


Entertainment........................... 0


Holiday................................. 0


Emergency fund.......................... 0


Total monthly expenses.................. 1494.02








Assets


Cash.................................... 0


House value (Gross)..................... 110000


Shares and bonds........................ 0


Car(s).................................. 0


Other assets............................ 0


Total Assets............................ 110000








Secured & HP Debts


Description....................Debt......Monthly...APR


Mortgage...................... 103000...(462.7)....4


Hire Purchase (HP) debt ...... 9000.....(162.8)....7


Total secured & HP debts...... 112000....-.........-





Unsecured Debts


Description....................Debt......Monthly...APR


Paypal.........................700.......25........17


amex...........................682.1.....25........0


Barclaycard....................2000......40........17


First Direct...................500.......10........7


Tesco..........................7057......85........17


Virgin.........................6285......75........17


Total unsecured debts..........17224.1...260.......-








Monthly Budget Summary


Total monthly income.................... 1,840.85


Expenses (including HP & secured debts). 1,494.02


Available for debt repayments........... 336.83


Monthly UNsecured debt repayments....... 260


Amount left after debt repayments....... 126.83





Personal Balance Sheet Summary


Total assets (things you own)........... 110,000


Total HP & Secured debt................. -112,000


Total Unsecured debt.................... -17,224.1

[Deleted User]

Just a couple of points having looked through are you getting the 25% discount off council tax? and are you out of contract on your mobile? as £40 a month is very high, also I'm concerned that you don't seem to have contents insurance?

MerryGoRoundAvoider

Honestly that seems an eye watering amount of debt for your normal salary and outgoings (sorry to be harsh).

Your ability to repay appears to be limited so it might be better going down a debt management plan route? (I'm sure someone will be along in a minute to better advise on that as I don't know a whole lot about it - I think it affects your credit record for the next 5-10 years, and I don't know what that'll mean for re-mortgaging - I expect you are screwed here either way as the affordability checks will fail).

Alternatively (and seeing there is a prospect of you moving in together) you could ask your partner for help clearing the debt, given when you eventually buy together you'll by that time have maybe £10-15k in equity. (As a guy that would totally spook me but everyone's different I guess and he might be loaded and able to bail you out?). I was sort of reticent to suggest this as it won't address the true problem ... in some ways you need to go through the pain to clear the debt and learn from the whole experience IMO (just not at 17% APR, hopefully).

Have you discussed this with your partner?

MerryGoRoundAvoider

Do you know the details of your mortgage?

E.g it's 4% at the moment, what is the SVR? (4% is pretty high but you are on a 90-95% LTV mortgage). I may have been a bit presumptuous about you not passing affordability checks but i really think that's something you should brace yourself for, just in case.

If your mortgage gets a lot more expensive that will further curtail your efforts to deal with your unsecured debt, and in a way will influence the best way to deal with the debt too.

enthusiasticsaver

You are heavily overcommitted but I would not go down the DMP route as you can make minimum payments. What is the HP for? Is it the car and if so when does it finish? The mobile cost could be brought down and you need something in entertainment and emergency fund. Out of the spare £126 I would put £50 a month into an emergency fund and £26 to entertainment as you have a child. The other £50 I would put to payplan in addition to the £25 you already pay. This would clear the payplan within 10 months. Then redirect the £75 to Barclaycard plus any savings from the mobile costs. Hopefully as the debt comes down you will get offered 0% deals. Look for snowball calculator but input the £260 plus the spare £50 from your amount left. You have to be disciplined and cut up the cards but you can get out of this.

MerryGoRoundAvoider

The last thing to say is that there will be a solution, you can sort it out and you've made the first step identifying there is a problem. So while it's serious try not to make yourself sick with worry.

This forum is littered with people that have mental health problems triggering (or as a result of) debt, which is really sad. It's only money at the end of the day and like I say you will find a way through it.

fatbelly

Most of your debt is 3 credit cards, which you can afford the minimum payment to.

Have you tried applying for a 0% balance transfer card? Use a pre-eligibility checker that does not leave a mark on your file.

Try to get your cards to 0% and then use your surplus to clear paypal (not Payplan, ES!)

Your soa looks good and your debt is manageable

HopefulHumphrey

Well done on facing up to it! That's the hardest part.

As some others have asked, when does your HP finish? These are always a killer and that money could be ploughed into repaying your debt and / or giving you some breathing space.
I had an expensive phone contract, I got rid of it and opted for a sim only contract with my landline and broadband provider. It has made such a difference! I don't have the latest phone, but I only pay £5 a month so who cares!

If you are really struggling to meet the minimum speak to your cc providers. Some providers will be willing to freeze the interest or take it to a lower rate to help you make a dent in repaying it. It will mean cancelling the cards though. There are lots of template letters on debt charity websites to help you start this conversation with the cc providers. I got mine from National Debtline.

GOOD LUCK!

EssexHebridean

Welcome - and well done for taking the first - and arguably hardest -
step, admitting there is a problem and you need help. Well done also for getting your SOA done - comments are, as usual, in red:

HDawson17 wrote: »

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


Monthly Income Details
Monthly income after tax................ 1678.85
Partners monthly income after tax....... 0
Benefits................................ 80 Child Benefit? I this amount correct as I didn't think it was a round amount like this? And have you checked that you're not entitled to anything else - working tax credits?

Other income............................ 82 What's this?
Total monthly income.................... 1840.85


Monthly Expense Details
Mortgage................................ 462.7
Secured/HP loan repayments.............. 162.8 Car by any chance? How close to the end is it and do you have a final balloon payment to think about?
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 80 Make sure you're getting single person discount for this and split payments over 12 months not the standard 10 as that makes budgeting easier.
Electricity............................. 35 Allowing that your heating is gas by the look of it you can probably get this electric down a bit. Turn everything off when it's not being used as a start, and if you use an electric shower use a timer to limit the time you spend with it on.
Gas..................................... 30 For this and the electric shop around regularly to be sure you're on the cheapest deal.
Oil..................................... 0
Water rates............................. 23.6 Metered I assume?
Take a note of the usual methods of water saving - shorter showers, only put as much water in the washing up bowl as you need, set the washing machine to a half load if only doing a few bits.
Telephone (land line)................... 0
Mobile phone............................ 40 Pricey - if you're out of contract jump to SIM only. If you have masses of data on your mobile plan and can tether to it then look at ditching the home internet and using it via your phone instead.
TV Licence.............................. 12.12
Satellite/Cable TV...................... 0
Internet Services....................... 24
Groceries etc. ......................... 200 You can knock this down by at least £50 - shop around for bargains, meal plan and shop to a list. Keep an eye on Aldi & Lidl's fruit and veg specials and look to base meals around those - a 69p Butternut squash can go a long way between two people!
Clothing................................ 20 This needs to be cut to essentials only for now. Knickers, socks & school uniform! Shop around for where things can be got cheapest - school uniform logo'd bits can sometimes be got second hand through the school.
Petrol/diesel........................... 120 This is massively high - can any of this be cut?
Road tax................................ 10 Do you actually pay this monthly? If so you need to budget to pay 6 months upfront at a time as there is a charge for monthly payments
Car Insurance........................... 29.8 use the comparison sites when you renew to make sure you're on the best price you can get
Car maintenance (including MOT)......... 10 Where do you put this away? You're showing no cash assets. Either way unless you have a very comprehensive servicing deal included with the car payments this is nowhere close to covering your costs on your mileage - you must go through a set of tyres a year, for a start, and £120 won't even cover that.
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 100
Other child related expenses............ 50 What is this for? Is it essential?
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 10
Buildings insurance..................... 12
Contents insurance...................... 0 I've put this in bold for a reason - SORT IT OUT. No contents insurance is SUCH a false economy - please don't put yourself and your child at risk of losing everything for the sum of less than £10 per month.
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50 (this is put away) Where? You're not showing any cash assets? In any event this is high for your current situation - cut back to minimums only.
Haircuts................................ 20 Try to reduce this a bit -
a change of style to a lower maintenance one or simply going longer between cuts?
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0 As a homeowner it is important to have something here - start by putting the £50 a month you'll be saving on groceries away - aim to build a starting basic pot of £1,000.
Total monthly expenses.................. 1494.02


Assets
Cash.................................... 0
House value (Gross)..................... 110000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 110000



Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 103000...(462.7)....4
Hire Purchase (HP) debt ...... 9000.....(162.8)....7
Total secured & HP debts...... 112000....-.........-


Unsecured Debts
Description....................Debt......Monthly...APR
Paypal.........................700.......25........17 make this your first priority to pay off and then close the PayPal credit route
amex...........................682.1.....25........0Is this still on 0%
Barclaycard....................2000......40........17
First Direct...................500.......10........7
Tesco..........................7057......85........17
Virgin.........................6285......75........17
Total unsecured debts..........17224.1...260.......-



Monthly Budget Summary
Total monthly income.................... 1,840.85
Expenses (including HP & secured debts). 1,494.02
Available for debt repayments........... 336.83
Monthly UNsecured debt repayments....... 260
Amount left after debt repayments....... 126.83 Do you actually have this amount left each month?


Personal Balance Sheet Summary
Total assets (things you own)........... 110,000
Total HP & Secured debt................. -112,000
Total Unsecured debt.................... -17,224.1

OK - not great but definitely fixable. Assuming that you DO genuinely have an amount set aside for presents somewhere along the line, set aside a small amount for modest christmas presents for your child, explain to everyone else that with the move etc money is tight so presents this year will be "token" only and move everything extra in that account to a separate account to start your emergency fund.

Start a spending diary to make sure that your surplus isn't getting frittered, and question everything that you think about spending on - do you need it? Do you REALLY need it? Do you have anything else that you can use instead? Can you manage without it at all?

Groceries - first job is to make an inventory of your fridge, freezer and cupboards. Then meal plan - your aim for the next few weeks is to buy as little as possible in the shops, so build your meals around what you have in. Use veggies to bulk out smaller amounts of meat and use the weekly deals in the supermarkets to build your meals around - a 69p butternut squash generally does risotto one day and curry another for me & MrEH for example. If you're buying branded or premium own brand then look at dropping to the next level, and always scrutinise the "value" fruit and veg ranges for cheaper alternatives. If you'd usually spend £50 a week in the shops then set yourself a challenge to half that for the next few weeks while you're eating through stores, and then keep it at least £10 - £15 a week less than that going forward.

On the Cards - set your payments to the amount you're paying now rather than just leaving them at minimum payment - this means that as time goes on you continue to pay the current amount (rather than it falling as it would naturally do) and so you make more impact on the capital balance without even realising it. Fatbelly's suggestion of looking for a 0% balance transfer is a good one too - even if you could get the Barclaycard onto 0% for a while that's one that will just trickle along to itself without you worrying about it. Remember that setting the monthly payment on cards at a fixed level only works when the cards aren't being used - but I imagine you've stopped using them anyway? Even better, cut them up to avoid temptation.

Mnd

You could get a lot better price for your mobile and probably cut back on groceries, we are two adults but don't spend £50 a week, but the one that leaps out is £50 a .
month on presents, to be blunt, I don't think you can afford that.
Good luck

laurenh1

Well done you on taking the first step. the good news is that you aren't alone and it is all fixable. I would start with looking into all of your outgoings, where can you make cut backs, have you got the best deal on all your utilities, can you get anything transferred to 0% etc etc. I think, if you aren't already savvy, you could well be surprised about what and where you can save. The next thing I would suggest is to keep a spending diary and write everything down, it gives you an honest over view about what you are spending day to day and once that is complete you can look at cutting it back. The good news is that I have yet to see anyone that actually cannot come out of the other side of debt if they are willing to commit to it! Good Luck xx