Help needed - no judgement please

SuzyN

Unfortunately our house backs onto a river which always pushes the price up and we had a claim last year.

The other insurance is my husbands morotbike insurance which he uses to try and keep petrol costs down for commuting in the dryer months.

I am going to go through it this weekend and see what I can cut. Sky would be the first thing but it’s in a contract unfortunately. I have been paying everything but with my £400 childcare costs from next month I’m starting to panic a bit.

The thing I am struggling with is that I will never ever pay off the credit cards as I only pay the min payment.

D_M_E

Itunes and Neflix - can you stop these?

Ipad - is this to pay for one of the things, or something else?

Landline and internet - can you get a deal which combines both of these for less than £20?

Entertainment - you cannot afford so much for this, can you cut this in half or more?

Council tax - if this is over 10 months ask council if you can pay over 12 months instead.

There's a few more things, the above is just a start.

Grumpelstiltskin

Is the motorcycle paid for or is it on one of the credit agreements?

SuzyN

It!!!8217;s paid for but not worth much. It prob saves us annually in petrol more than what it!!!8217;s worth. Still have to have the second car as no other way of collecting the children & taking them where they need to be etc....

Grumpelstiltskin

Ring Sky and threaten to cancel everything, hopefully they will give you a reduction for a few months.

Cancel Netflix and I Tunes they are luxuries you can't afford.

lindens

A few thing that you maybe able to cut back
Sky - can you leave the contract without penalties or at least reduce the package to the bear minimum?
Entertainment - sorry has to go
Presents - cut in half and make up the shortfall by shopping all year round in the sales, go round the boot sales now while they are in season, make things at home with the kids for grandparents etc
Groceries - if you really tried hard you could halve this. Look around on the groceries and shopping boards on this forum for hints and tips

I can see why that large list of debts is panicking you. There are a couple of small debts which, if you made the above savings, you could get rid of in the next 2 months. That is a psychological boost as the list is smaller! Play around with whatsthecost.com (snowball calculator)
It's unlikely you would get a 0% balance transfer card but take a look at that section of the forum and do a soft search which tells you the likelihood of getting one. If you do, then transfer your balance with the largest APR across to it, then you are paying no interest.

I wouldnt contact the cards yet to freeze the interest as that will trash your credit file.

Another tip i did which helped me was to open a basic bank account with no O/D and just a basic cashpoint card. Pay all your DDs the DAY AFTER PAYDAY - what is left transfer to this basic account and you KNOW it has to last you all month. Having late payments because the payment date is wrong is a bit pathetic - get it changed!!

beanielou

I think one of the debt charitys mentioned above is your best way forward.

Treadingonplaymobil

Others will advise on whether something like a DMP is a better course of action for you than trying to continue as you are, but if you want to make cuts and continue without a DMP, some suggestions below...

SuzyN wrote: »

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 2200
Partners monthly income after tax....... 2000
Benefits................................ 137
Other income............................ 0
Total monthly income.................... 4337

Monthly Expense Details
Mortgage................................ 807
Secured/HP loan repayments.............. 544
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 72 This seems slightly low to me, depending on your house size. Is it definitely accurate?
Electricity............................. 56 Check whether you can change suppliers for this and gas for a cheaper deal/cashback.
Gas..................................... 55
Oil..................................... 0
Water rates............................. 0 No water rates?
Telephone (land line)................... 15
Mobile phone............................ 37
TV Licence.............................. 13
Satellite/Cable TV...................... 52 This is huuuuuuuge. Leave if you can, or reduce to the minimum package.
Internet Services....................... 17 We get phone and internet for <£20pm. Might be worth looking for a better deal.
Groceries etc. ......................... 400 How old are your children? This is reasonably high - I have three children including a preteen and our groceries budget with lots of organic/local/health conscious expensive stuff is £460. In my early days of mega cuts a year ago I got it down to £325
Clothing................................ 50
Petrol/diesel........................... 320
Road tax................................ 24
Car Insurance........................... 81
Car maintenance (including MOT)......... 40
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 400
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 50
Buildings insurance..................... 25 High for just buildings - I think we pay around 25 for buildings and contents - can you switch?
Contents insurance...................... 25
Life assurance ......................... 76
Other insurance......................... 18
Presents (birthday, christmas etc)...... 50 I am in no position to criticise, but others will suggest you cut this.
Haircuts................................ 20
Entertainment........................... 100 This is quite high, could be cut to £50-60 for a few months without much bother, especially after summer hols.
Holiday................................. 50 This might need to go temporarily.
Emergency fund.......................... 50
Itunes.................................. 15 Can you cancel this?
Netflix................................. 8 You definitely don't need netflix and sky.
Ipad.................................... 31 Is this a contract for 3G or a repayment for buying it? If it's a 3g contract can you reduce to just wifi and pay less/nothing?
Total monthly expenses.................. 3531


Assets
Cash.................................... 0
House value (Gross)..................... 95000 Is this correct? Your house value is less than your mortgage?
Shares and bonds........................ 0
Car(s).................................. 15000
Other assets............................ 0
Total Assets............................ 110000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 119352...(807)......4.74
Secured Debt.................. 23629....(160)......4.74
Hire Purchase (HP) debt ...... 6767.....(172)......6.9<
Car Red .......................10137....(212)......9.9
Total secured & HP debts...... 159885....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Next directory.................2436......122.......22.9
Mbna ..........................869.......30........29.9
Santander .....................869.......13........30.24 This and the one above are the same. Are they for something specific that you bought that you could sell?
Overdraft 2 (£1/day)...........100.......6.........0
Overdraft 1- zero a/c..........3600......41........18.9
Barclays phone zero %..........396.......44........0
Barclays phone zero %..........396.......44........0
Credit union...................9960......166.......12.6
Halfords zero %................222.......37........0
Gas finance zero 0%............1914......66........0
Barclaycard ...................4472......133.......26.9
Barclaycard ...................14336.....322.......25.9
Bank of Scotland...............3570......95........22.2
Tesco..........................3452......93........24.09
Capital one....................56........5.........34.08
Mbna...........................2687......64........17.9
Barclaycard ...................2322......53........28.9
Total unsecured debts..........51657.....1334......-


Monthly Budget Summary
Total monthly income.................... 4,337
Expenses (including HP & secured debts). 3,531
Available for debt repayments........... 806
Monthly UNsecured debt repayments....... 1,334
Amount short for making debt repayments. -528

Personal Balance Sheet Summary
Total assets (things you own)........... 110,000
Total HP & Secured debt................. -159,885
Total Unsecured debt.................... -51,657
Net Assets.............................. -101,542

Created using the SOA calculator at
Reproduced on Moneysavingexpert with permission, using other browser.

This SOA is also missing things you mention in your first post - the cleaner, cat and dog food, vet fund.

There are things you are tied into, but if you can limp on for a little longer by making some extreme cuts, as you get to the end of contracts for Sky, iPad, phone repayments etc and start to cut those.

I would also be investigating the options with the cars - they are both worth significant sums - could you sell the more expensive one and replace with a cheap runaround, and pay a big lump off the car debt?

enthusiasticsaver

You could explore the option of getting rid of one of the cars but if they are PCP this may not help depending on when you took the contract out. If you have defaults then I think you are unlikely to be able to move to 0% deals so you are probably in DMP territory. Ring stepchange, the free debt charity and see what they advise but at that level of debt and with those interest rates you are right in that they will never be paid off.

Taking out a debt management plan means no more access to credit. You will need a basic bank account with no access to overdrafts and you will not be able to use credits. Your mortgage and secured loans/car loans will be unaffected and if your budget allows then you can continue to pay these. You would have to default on the credit cards and unsecured loans and save up emergency funds as you wont have access to credit in the future. Once defaulted most creditors will freeze the interest and the DMP monthly payment is shared out between them.

Bankruptcy is not an option though as you have a house and cars.

National_Debtline

Hi again Suzy


The good news here is you can easily afford your essential outgoings to run your home, so there is no risk to any of your assets. However your unsecured debts are clearly going to be unaffordable when you have to start paying for childcare.


I would also suggest a free DMP could be a good way to get the debts under control. Make sure you don't use a company who charges you a fee. To give you a rough idea, paying £806 per month (the amount you currently have available to pay your unsecured debts) towards £51,657 (assuming all creditors agree to freeze interest) would take you just under 5.5 years to be debt free.


If during that time any of the car finance finishes you'll be able to plough that extra money into your DMP, reducing the term of it even further. Your credit file will be affected but you will have a manageable way to repay your debts, all without putting your home or assets at risk. I'd recommend your next step is to get in touch with one of the free debt advice agencies to talk it all through.


Susie
@natdebtline