Advice for an Idiot!

National_Debtline

Hi BA1985


Selling your home is a big decision, and only you and your partner can decide if it the right choice. What I would point out is unsecured debts do not put your home directly at risk. Even if you can't afford to pay them, you're not going to lose your home because of it.


As others have pointed out your SOA has a few holes (home & buildings insurance for example), and there may be areas that you can make a few savings. But overall you can afford your home and to pay your mum. Another option is to ask for reduced payments and a freeze on interest on your debts. When you've paid the debt to your mum you can use all your spare money to clear the rest of the debt.


Admittedly creditors do prefer you to treat family debts in them same way as them, so it would be preferable to split your money proportionally between all your debts. You may choose this is not the route for you but it's worth noting payments of £961 per month will clear a debt of £41702 in around 3.5 to 4 years (assuming creditors freeze interest).


Susie
@natdebtline

D_M_E

1. Buildings insurance - I think you MUST have this as a condition of your mortgage.

2. Sky - £88 is a fortune for tv, with your level of debt consider ditching it altogether and use Freesat or Freeview at no cost. If you are stuck to contract end then make a diary note and cancel ASAP or ask what the cancellation fee is to stop it all now, could be cheaper than paying to the end.

3. £140 for phones - when do contracts end and again what would it cost to terminate contracts and go PAYG

4. Other child related costs - what are these and could they be trimmed?

Dobbibill

No-one is here to judge you - we have all made mistakes and hindsight is always 20/20 vision.

While your Mum's intentions were honourable and from her heart it probably didn't help you in the best way. Now you are in the situation and forced to deal with it yourself you will learn a valuable lesson from it, one for the future which you can hopefully pass on to your children.

Firstly, I would park the idea of selling up - consider things carefully, talk things through but there is no reason to risk your home for unsecured debts.

You've already got some good suggestions above, I would definitely consider ringing sky and your mobile phone provider - you've nothing to lose by asking the question.
The entertainment and haircuts need to be ditched for the moment while you work through a plan.

You need Home insurance, use cashback sites like TCB or Quidco to save money. Also have a look on the old style board for suggestions on batch cooking and freezing meals.

Make sure you get an emergency fund in place - borrowing from this months bills to pay next month is not sustainable.

Utilise the free debt charities - stepchange, national debtline or CAP. check out their websites for tools to help with your decision and/or debt remedy.

Don't beat yourself up, you won't be the first nor the last for this to happen to. How you deal with it is what's important

cms-help

Don't you claim any Child Benefit - your take home (unless you have lots of hidden deductions) doesn't seem to come out above £60k which is when Child Benefit stops? I'm assuming you earn over £50k so there would be some you would have to repay but certainly no where near all of it.

Does your partner not receive any maternity pay?

Your water is expensive. Is it metered?

Sorry but your mobile phones are ridiculous with this level of debt - you simply can't afford them.

You could easily shave £100+ a month on shopping. We generally spend £300 for a family of 4 and it is Tesco. Am sure we would save more if I went to Aldi etc.

What are the child related expenses if your partner is on maternity leave?

If mbna has already defaulted you, it might be worth letting it go to debt collection (interest is invariably frozen at this point) and then negotiate £50 a month. Once you have repaid some of the other debts then you could increase the payment on this. That would free up £200 a month.

So save £200 on that card, £100 on the child related expenses, £100 a month on the shopping, £100 on the phones, gain some additional income and you're an awful lot closer than you were. Certainly not a perfect situation as it is a very tight budget with that level of debt. Would the parents consider reducing repayments to £500/£600 a month for a year or so to give you chance to clear away some of the smaller cards?

enthusiasticsaver

You have a shortfall of £686 and no savings or provision for emergency fund so tinkering with your soa is not really going to help you. There are savings to be had and as soon as you can get out of the expensive satellite tv and mobile phone contracts you should.

A DMP will not help as they will not allow for the family debt and at £850 this is a significant amount to find each month. You are also paying interest on all the other debts so paying at the level you are will take a long long time to repay unless any of them agree to freeze the interest. This should be your first action to write to them and ask them to freeze the interest as you are not in a position to carry on paying £800 to credit cards whilst also paying £850 to your mum plus your mortgage.

You need buildings insurance. THIS IS URGENT AND I CANNOT STRESS THIS ENOUGH. If your only asset burns down not only will you have no home but you will still be liable for the mortgage. It is a term of your mortgage that you insure the property so you could have your mortgage pulled if this is not rectified. You can get it quite cheaply so this is a must.

Selling up is an option as you have a lot of equity but renting is insecure and probably more expensive in the long run. Also until you get to grips with managing your money better you are likely to go through any money left leaving you with a future of renting forever. You should get rid of your credit cards to avoid the debt going any higher and you being tempted to rob Peter to pay Paul. This is not sustainable long term and is stressful which with a new baby you do not need.

Consolidating, remortgaging, balance transferring is just moving the debt so I would not recommend this either.

Because of your family debt I would recommend a self managed DMP unless stepchange will agree to allowing you the £850 payment to your mum. I do not think they will take it into account so I think you would have to do this yourself. Contact all your creditors and offer them what you can afford pro rata. Ask them to freeze interest. Re do that soa with an amount for presents, emergency fund, buildings and contents insurance. You have already defaulted on some of the debts so I would ring Sky and your mobile company and say you cannot afford it and see what they suggest. Be prepared to default on those as the price of those is extortionate.

Your credit record will obviously be really bad as a result not only of the debt but the defaults and this may affect your mortgage when you come to remortgaging. When does your product deal come to an end? Sometimes if you stick to the same lender they wont credit score you but I don't think you have any choice but to go down the routes of defaults and self managed DMP. Bankruptcy is not an option because of your house.

Mnd

Please don't rush into selling your home

I have to say again. Phones! We pay £20 a month for 2
I know there are only 2 of us, but I spent £40 in aldi today and thought that was a lot this week

You can make changes but you both need to tackle this, and find £10 to get your mum some flowers

I hope everything works out for you

theoretica

Your partner earning anything she can is probably crucial, but also trimming costs in every little way possible. Is every car journey necessary? Plan your travel to save fuel. Trim the grocery bill by making the cheapest choices - the old style forum here will help. Explain to your mobile and TV providers that you will need to default unless they can significantly help you (and never exceed your data limits!).

What is the other child cost? How long until your council tax is back to normal?

And well done on quitting smoking!

Sncjw

Is the 3k just for one wage or for both of you as you didn!!!8217;t put partners income.

John-K_3

a_silver_lining wrote: »

Didn't want to read and ignore. In no way a judgement as we have all been there with consolidating debt and building it up again.

This bit is really not true. We have not all been there, and anyone that has needs to realise how dangerous it is, not have it normalised.

OP, I think that yes, you need to sell the house and start again. Looking at your spending, it is massively over what makes sense.

Magpie100

You've had some great advice, especially from enthusiasticsaver.

PLEASE sort the buildings insurance. You cannot spend £140 a month on mobile phones but not be able to find money for insurance. What is the £100 a month on child-related expenses? Can you stop that for mow and use it for the insurance (it won't even cost you as much as that). Your house is your home, and your only asset. You never know what might happen - in 2011 I owned a flat in London that was burnt down in the London riots. Did I imagine that might ever happen? No. Do it today. It is absolutely crucial.

I think a self-managed DMP as enthusiastic suggests is the way forward for the next few months. It might not be the ultimate solution, but if you can stabilise things and stop adding to the debt you can then consider your options. It is tempting to rush in to a decision and sell the house because of the pressure you are under, but in the long term it may not necessarily be the best thing.

It's good that you have recognised you have a serious problem with overspending. I hope your wife is on board with all of this, as you are going to need to work as a team. When will you have finished paying your mum back? Is it another two years? That would obviously free up a good chunk of ££ but it's a case of finding ways to get you through until then.

Good luck and please keep posting.