£40k in debt!

skip30

Over the last 7 years me and the wife have accumulated just shy of £40k in unsecured debt.

Finally gave myself a slap in the face yesterday and have vowed to get this sorted as it's starting to affect our lives and I can see a snapping point approaching.

I know for a fact this spending has come from living outside of our means so I've started a budget for the first time ever and I'm hoping that this will at least put the brakes on increasing our debt.

I recently completed a form on Step Change and the recommendation was to start a DMP but I think I can tackle this myself without starting one. I don't like the idea of asking for help when I got myself into the this mess in the first place. I have 31 months remaining on my loan which is £500 a month. Once that is cleared I'll have extra $ to start snowballing the credit cards. What's everyones thoughts on this?

Thanks in advance.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2205
Partners monthly income after tax....... 500
Benefits................................ 398
Other income............................ 0
Total monthly income.................... 3103

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 350
Management charge (leasehold property).. 0
Council tax............................. 114
Electricity............................. 40
Gas..................................... 35
Oil..................................... 0
Water rates............................. 56
Telephone (land line)................... 0
Mobile phone............................ 61
TV Licence.............................. 10
Satellite/Cable TV...................... 0
Internet Services....................... 30
Groceries etc. ......................... 400
Clothing................................ 30
Petrol/diesel........................... 200
Road tax................................ 21
Car Insurance........................... 34
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 30
Life assurance ......................... 41
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 10
Entertainment........................... 40
Holiday................................. 0
Emergency fund.......................... 30
Total monthly expenses.................. 1612


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 4000
Other assets............................ 0
Total Assets............................ 4000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Lloyds Loan....................13097.....500.......13.9
Barclaycard CC.................9818......246.......0
Virgin CC......................7211......72........0
Lloyds CC......................4126......96........0
MBNA CC........................4974......95........0
Total unsecured debts..........39226.....1009......-


Monthly Budget Summary
Total monthly income.................... 3,103
Expenses (including HP & secured debts). 1,612
Available for debt repayments........... 1,491
Monthly UNsecured debt repayments....... 1,009
Amount left after debt repayments....... 482

Personal Balance Sheet Summary
Total assets (things you own)........... 4,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -39,226
Net Assets.............................. -35,226

Mnd

Hi, first point without reading all you SOA.

If you are married and a basic rate tax payer, your wife can gift you some of her income tax allowance. Thi's is worth about £200 a year..BUT it can be backdated. .something to get on with while you wait for further suggestions

Mnd

Further thoughts
Mobiles. Go sim only or payg .we pay £17.50 for 2
Groceries. .you could save £100 here..meal plan, batch cooking, use what you've got
TV licence is a little bit more than what you eat got here..12.39 I think

skip30

Thanks. I've done the marriage tax allowance.
I pay the TV license quarterly so I just rounded it up monthly.

I'll try the batch cooking thought thanks!

National_Debtline

Hi skip30 and welcome to the forum


From your SOA it looks like your debts are affordable, but some outgoings look very low for a family of your size. Your rent is particularly low, do you receive housing benefit? Or is the accommodation tied to your employment? Haircuts and entertainment are also not much.


If you can afford your debts you don't need to enter into a debt option like a DMP, but I would be cautious about making your outgoings too low. They need to be realistic figures that you can stick to in the long term.


Best wishes


Susie
@natdebtline

skip30

My house is tied to my employment so I'm lucky in that sense. My contract doesn't end for another 10 years so I don't have that worry.

My sister is also a hairdresser so thats a perk.
We don't really do much in the fear of adding to our debt but I'll take your advice and factor some into our budget.

I've only really come here to get a second opinion as it can feel like we're up to our neck in it sometimes!

madvicker

Water rates seem high. You have 3 kids, but my wife and I together pay £13 a month (and she loves a bath). Nothing else among your expenditure seems too high (mobile cost you could trim)

As for your debts: If your credit cards are all at 0% interest I would set those payments to the minimum.
But not a minimum set by the bank, look at what the minimum payment is. For example it could be £87.65. In this example, set your payment to be £90 and leave it. Then with the remaining cash start overpaying your loan. As the 0% periods begin to expire, direct those overpayments to the credit cards in order of interest. Check out whatthecost.com snowballing for a payment plan you could follow.

Smellyonion

Contents insurance seems high.


Where did the money from your loans go?

Suseka97

Even with shaving off a few £s here and there on certain expenses, I'm not convinced your budget covers all your likely outgoings - not with 3 children, assuming they are all dependant on you and your spouse.

When does the interest start to kick in on the credit cards? If it's in the near future you won't have much time to get that interest charging loan out of the way and once the CCs start pilling on the interest, your overall debt will obviously increase.

As it stands, if you were to set up a DMP and pay £1,009 a month and all debts remained fixed at their current level you'd be debt-free in a over 3 years. But of course there are consequences with regards to your credit file, but only for 6 years post defaults - so not life altering in your case.

What you might want to do is sit down and work out the maths - get hold of a 'snowballing' calculator and plug the numbers in - see what it tells you in terms of do-ability and timescales and then you have something to compare against.

Willing2Learn

http://www.stoozing.com/calculator/snowball-calculator.php

ViolaLass

Do you actually have £482 left each month?

And where is your emergency fund? You have money going into it each month but no cash in the bank...