Need to face up to the reality of this mess I am in

jimmy08

yes I definitely need to do that. thank you

jimmy08

I have sorted out the errors - here is the updated version
Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 2874
Partners monthly income after tax....... 996
Benefits................................ 133
Other income............................ 350
Total monthly income.................... 4353

Monthly Expense Details
Mortgage................................ 547
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 124
Electricity............................. 35
Gas..................................... 40
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 15
Mobile phone............................ 45
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 15
Groceries etc. ......................... 300
Clothing................................ 50
Petrol/diesel........................... 200
Road tax................................ 5
Car Insurance........................... 80
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 200
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 15
Life assurance ......................... 38
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 10
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 50
Total monthly expenses.................. 2031


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 6000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 67600....(547)......1.9
Total secured & HP debts...... 67600.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
CC1............................4800......135.......19.9
loan 1.........................8900......245.......7.9
loan 2.........................13000.....364.......7.9
cc 7...........................6000......185.......19.9
CC6............................2200......70........0
CC 5...........................4600......127.......16.9
cc4............................3100......31........0
cc3............................7100......190.......19.9
CC2............................4500......108.......6.9
Total unsecured debts..........54200.....1455......-


Monthly Budget Summary
Total monthly income.................... 4,353
Expenses (including HP & secured debts). 2,031
Available for debt repayments........... 2,322
Monthly UNsecured debt repayments....... 1,455
Amount left after debt repayments....... 867

Personal Balance Sheet Summary
Total assets (things you own)........... 6,000
Total HP & Secured debt................. -67,600
Total Unsecured debt.................... -54,200
Net Assets.............................. -115,800

Smellyonion

If you really have 800 left over after all of your debt payments. This is entirely fixable without any changes to your day to day living.

Your everyday spending isn't bad at all. Your life insurance seems high but I am not sure of your personal circumstances.

You should be over paying in order of high to low intrtest. Go for those 20% credit cards first! Over pay those with any spare cash. Meanwhile checking elegibility on 0% credit cards(without hard searches) as you go along and transfering balances.

You have an emergency fund with no savings listed? No equity in the house?

I would consider spare savings into those credit cards due to the interest rates.

Take your 6k 20% credit card. You pay back 185 per month on some thing with 1200 interest a year. It's means your paying back only £85 of the debt.

The wider question here is how did you accumulate so much debt almost as high as your mortgage with nothing to show for it? Where did the money go? With 2.3k spare without debt payments. Why did you even need credit?

Fosterdog

jimmy08 wrote: »

I have sorted out the errors - here is the updated version
Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 2874
Partners monthly income after tax....... 996
Benefits................................ 133
Other income............................ 350
Total monthly income.................... 4353

Monthly Expense Details
Mortgage................................ 547
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 124
Electricity............................. 35
Gas..................................... 40
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 15
Mobile phone............................ 45
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 15
Groceries etc. ......................... 300
Clothing................................ 50 this could be cut down, just wear what you have and sell any surplus clothing
Petrol/diesel........................... 200
Road tax................................ 5
Car Insurance........................... 80
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 200
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 15 combined with buildings this is relatively high depending on your home value
Life assurance ......................... 38
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50 this could be cut down
Haircuts................................ 10
Entertainment........................... 100 not so bad through the summer holidays but it's a lot for entertainment in a normal term time month
Holiday................................. 0
Emergency fund.......................... 50
Total monthly expenses.................. 2031


Assets
Cash.................................... 0 if you are putting aside an emergency fund, present fund and car maintenance then there should be something here
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 6000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 67600....(547)......1.9
Total secured & HP debts...... 67600.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
CC1............................4800......135.......19.9
loan 1.........................8900......245.......7.9
loan 2.........................13000.....364.......7.9
cc 7...........................6000......185.......19.9
CC6............................2200......70........0
CC 5...........................4600......127.......16.9
cc4............................3100......31........0
cc3............................7100......190.......19.9
CC2............................4500......108.......6.9
Total unsecured debts..........54200.....1455......-


Monthly Budget Summary
Total monthly income.................... 4,353
Expenses (including HP & secured debts). 2,031
Available for debt repayments........... 2,322
Monthly UNsecured debt repayments....... 1,455
Amount left after debt repayments....... 867

Personal Balance Sheet Summary
Total assets (things you own)........... 6,000
Total HP & Secured debt................. -67,600
Total Unsecured debt.................... -54,200
Net Assets.............................. -115,800

You are not massively overspending but there are a few areas you could trim down and while your debt is high it is also serviceable with your income. You definitely need to keep a spending diary as you are currently "missing" over £800 a month (quite a bit more with the missing emergency, present and car funds), you need to log every little thing the coffee you get on your lunch break, the bar of chocolate you buy when getting fuel, the £2 you give the kids to pop to the shop, it is all adding up to a significant amount each month.

It would be worth seeing if you can do a balance transfer from one of your 19.9% accounts to your 0% even if you can't do the full balance, even £1000 will save you in interest. Then if you put every spare penny towards your £4800 19.9% debt that will be cleared in six months giving you an extra £135 a month towards the next highest debt. As you start to pay some off you will start to get better deals offered to transfer the remaining balances to better interest rates.

Realistically you are in this for the long run but you also have enough income to still live relatively comfortably while paying it all off

jimmy08

HI,

The money has gone on genera;l overspending for many years. Holidays, weekends away, new clothes, things for the house etc. I have no excuses as this situation didn't need to happen. I have seen lots of stories on here of people who have found themselves in debt due to uncontrollable circumstances, however this is not my experience. We didn't need to get into debt and I am deeply embarrassed.

We do have a lot of equity in the house. Not sure of its exact value but I think in the region of 210K, so around 140K equity. I am resisting the urge to explore remortgage options as I don't think that this will solve anything. I need to learn how to manage my money. Remortgaging would effectively give me 50K of 'spare' credit. I have seen lots of stories on here of people who have remortgaged and then ran up the debt again. I cannot take that risk. I also don't want to mess with our home as its where my family live!
Thanks for post

jimmy08

I have just been playing around with the snowball calculator and it seems that with the right approach, I could clear the debts in 29 months. That is with me paying 2k per month towards the debts. My SOA suggests that I could actually pay more than this.

This is massively reassuring to me. I thought it was going to take me 10 years plus. I have also been stressing about being made bankrupt or having to sell the house, but it doesn't look as though I will need anything this extreme.

Smellyonion

You have had your breakthrough moment at the correct point in time. Any longer and you could have been in serious issues.

It's never wise to transfer unsecure debts into your mortgage. Your issue is behavioural and not a lack of income. If you do not change your behaviour, you are putting your property at risk. Think long and hard about spending money on services because once that service is used (holidays) you have nothing to show for it. That is the worst kind of spending.

jimmy08

I have spent half an hour this morning looking back through my last couple of months statements.Last month I spent around £600 on things that I would say were unnecessary. In a strange way I feel quite relieved to by this. This is spending that I can reduce/eliminate. That £600 would have paid off a chunk of my debt. I am going to ask my wife to do the same later on.

I want to set up a budget that is sustainable, but that pays back this debt asap. I am not going to apply for any new 0% cards for 6 months. I am going to make sure that I overpay on everything so that my chances of securing an additional 0% offer(s) are increased.

We have an empty credit card that will periodically offer 0% transfers. We haven't used it for a while and we have stopped receiving statements. I assume that the account is dormant. I am going to spend a £10 on it this month and pay it off in full, to see if that generates a 0% offer!

lindens

That is definitely doable - time to stop worrying about bankruptcy
Have you used You Need A Budget app (YNAB)? lots of people find it helpful

Working_Mum

This definitely sort out able!!

Keep a spending diary (keep every receipt) - cut up or hide your cards - set a weekly budget for spending - do an audit of your food cupboards and eat from them until you have to buy more food - meal plan - cook meals from scratch - all of these things will make you more mindful about how you are spending your money.

Dave Ramsey is really inspirational and his way walks alongside a lot of the teachings here. You can buy a book or YouTube him when you feel you need motivation!

Good luck