Had my light bulb moment

Tino_2

It's be coming for a while but the 1st of this month, when I literally came within 10 minutes of missing my mortgage payment, and was only saved by a loan from my brother, was what did it.

I've done the budget planner and it doesn't make good viewing, at the moment I've got a monthly decifit of apx £1500! The main reason for this is that I'm self employed and haven't been doing as much business as I would like lately. However, that's for me to sort out, and I'm in the process of doing so.

What I can also do is reduce my outgoings, and that's where this website, and you friendly people, can help.

Overview of my situation:

Credit Cards
RBS Gold Card - £1899.00 - 0% until October '08 - £43/month
Egg Card - £2079.19 - 7.9% - £42.50/month
Egg Money - £1650.91 - 17.9% - £40/month
IF Card - £1363.77 - 5.0% - £27/month

Loans
Clydesdale Financial Services - £532.50 - 0% - £70/month
Student Loan - £3600 (apx) - ??% - Currently £0/month

Overdraft
RBS Graduate Account - Always around the £2000 limit - 9.9%(I think)

Private Debt
Ex-girlfriend - Apx £400
Brother 1 - £4500
Brother 2 - £1850
Mum - £10,500
Best mate - £50

Mortgage
Alliance & Leicster - Apx. £111,000 - Fixed until September 09 - £697.22/month

So the totals are:
Cards, Loan, Bank - £13125.37
Private - £17300

Total - £30425.37 + Mortgage

Grand Total = £141,425.37

Not a pretty sight! But one I feel I can sort out with a bit of hard work, discipline, self belief, and some help from MSE

So my 2 main priorities as far as reorganising go are

1) Better current account (I'm thinking A&L) for my overdraft.
2) A loan to consolidate some of what's outstanding and reduce both the interest being paid and the monthly outgoings.

1) Does anyone know, will I be able to get a £2000 overdraft with A&L or am I likely to have to reduce some of the debt in my account first?

2) What best to pay off with a loan? This isn't as straight forward as picking the most expensive debts, and here's why.

- I need to pay the £400 to my ex-girlfriend soon. Without going into my life story, things ended pretty well with us, and she hasn't even asked for the money, but I would feel a whole lot better if it was paid.
- I need to pay brother 2 most, if not all of his money soon because it was agreed as a short term loan.
- I would ideally like to have paid £750-£1000 to brother 1 by summer 08.

So with that in mind, what should I try and pay off with a loan. My thinking is definitely the Egg Money card because it's the most expensive debt, the Clydesdale Financial Services (CFS) loan because although interest fee, it is costing £70 a month, and then not sure what on top of that, maybe the Egg Card?

So a loan of £6600 would clear all that, and remove monthly payments of £152.50. Getting a loan over 5 years (from the current best deal, 'Your Personal Loan') would be just under £130.

My only concern with this is I don't particularly want to have inflexible debt that I can't pay off, because my income is very unpredictable.

I know credit cards would be a more flexible option but to get £6600 I would be looking at 3 or 4 cards, which I don't think I would get due to my current amount of debt.

So that about sums it up, and any advice would be greatly appreciated!

Thanks for taking the time to read all this.

Regards,
Tino.

Sea78

:hello:
Welcome to the site! Well done on your LBM. What are your other outgoings? (food etc) Also are you claiming for benefits etc that you might be entitled to?

I'm sure you'll get so much support and help here - it's wonderful!

Homework

Well done for working it all out. Are you making any payments towards your private debt just now?

I think the first thing you need to do is esablish your income and make sure you have something coming in on a regular basis. Until you know how much you are earning you don't know what you can afford. You cannot borrow more if you don't have the income to pay it back and having a better current account won't help if you do not have enough money.

Can you post a Statement of affairs showing your income and expenditure working out an average income perhaps. There are lots of people who can help on here.

CLAPTON

Need to see full details of income and expenditure as well as the debts

Tino_2

Thanks for the welcomes.

Average income from the last 6 months from my main business is apx £400/month, I have also recently started a secondary business which is at the moment making me about £150-£200/month. I also receive £250/month from my brother for rent, as well as halving the council tax/electricity and sharing the shopping. I've realised that I'd forgotten to add my brother's rent to my budget planner, so my deficit is £1,160 a month.

This obviously needs to increase so I'm working on that just now (spent the last couple of hours in the 'boost your income' article), and looking at getting a p/t job for some regular income.

How detailed a breakdown do you need of my expenditure?

This is the totals from the budget planner:
Home Total £896.36
Insurance Total £25.00
Eats, Drinks & Smokes Total £184.13
Transport & Travel Total £237.94
Debt Repayments Total £222.50
Fun & Frolics Total £195.00
Big One Offs Total £89.17
Clothes Total £20.00
Odds & Sods Total £40.24
MONTHLY EXPENDITURE TOTAL £1,910.33

There are no payment being made to my debts just now, but as mentioned in my OP, there are some I need to pay off soon.

What further details are required of my debts?

Thanks.

CLAPTON

what does home total include?

Homework

Are you over 25 as you may be entitled to Working Tax Credits if you are only earning £600 a month. Can you get some temp work and be self employed around it? You need to bring up your income if you want to start paying off debt.

If you have a look at your figures you do not have enough to cover your home figure. Your priority is to bring down the expenditure and raise your income. Can you break down your figure please.

I'm glad you are seeing the position you are in and are able to start doing something about it.

Tino_2

CLAPTON wrote: »

what does home total include?

Home total breakdown:
Overdraft Cost £7.86
Mortgage / Rent £697.22
Buildings & Contents Insurance £24.56
Council Tax £37.50
Electricity Bill £16.44
Internet Bill £25.92
Mobile Phone Bill(s) £48.45
Other Home £38.41

Homework wrote:

Are you over 25 as you may be entitled to Working Tax Credits if you are only earning £600 a month. Can you get some temp work and be self employed around it? You need to bring up your income if you want to start paying off debt.

If you have a look at your figures you do not have enough to cover your home figure. Your priority is to bring down the expenditure and raise your income. Can you break down your figure please.

I'm glad you are seeing the position you are in and are able to start doing something about it

I'm 24, 25 in April 08.

Yes, temp work is an option, my main business is web design so I can work that around a p/t job, which is why I'm looking into it just now.

Yes, I'm glad I did the budget planner because although I knew I was earning less than I was spending, I didn't realise quite how much by!

What other detail would you like on my expenditure (don't want to fill up the thread with my whole budget unless neccesary).

Thanks.

CLAPTON

as I see it

your income is 800
your spending (without any debt repayment is ) 1690

so every month you're spending (excluding debt repayments ) 890 more than your income

in addition you have CC/Loans debt totalling 13k with monthly repayment of 220 per month plus private (family / friends ) of another 17k.


so stating the obvious you are increasing your debt by at least 1000 per month (presumably by borrowing from family and friends?)

unless your family is very accommodating this can't continue.

Questions

a. do you have a business plan and specifically do you have a cash flow forecast showing your net money coming in over the next 12 months?

b. have you made allowance for tax and NI contributions?

c. does the cashflow show when your net income will rise by at least 1000 per month?


If the business will provide sufficient income in not more than 3 months then it might be worth struggling on and living by borrowing money.

If however the business won't be generating sufficient money then you need to take drastic action:

Increase income:

- get a proper job ..........how much can you earn bearing in mind you need at least a total of over 1900 just to break even (and before paying any private debt)

- can you rent out a third room in the property?

- sell the house ... much much equity is there in the property?

- cut back on all your spending... at the moment you can't afford to spend a single penny unless its absolutely necessary so no fun and frolics, cut down on eat drinks and smokes, no big one offs etc etc.


At the moment your questions about the debts seems acedemic.. you simply have no money to repay any debt.

Tino_2

Thanks for the reply.

Yes, it isn't a good situation, which is why I'm here, the expenditure is based on the last 3 months and is before I went through the 'Money Makeover' section of this site, so I know I can reduce it by a good amount, £300-£400 over the next couple of months. That will mainly be by doing what you mentioned, cutting back on all my spending.

But the other way to reduce my outgoings some what is by reorganising my debt, so I wouldn't say my questions are academic. By getting my credit card and loan debts better sorted I can reduce my monthly costs by both how much it's costing me to repay, and how much I'm paying on interest.

Regarding your questions, the business plan, no I don't currently have a cash flow prediction, but to be honest I'm not sure how it would help, it would be complete guess work, so not really worth basing my plans on.

Class 2 NI is included in my monthly expenditure, and because my business will make a loss this year, I will have little or no tax or NI to pay at the end of the year.

I could get full time work but feel part time is the better option because that way I can have a regular income as well as having the time to improve my business and increase income that way.

My flat is 2 bedroom so further renting isn't possible, and neither is selling the flat. Least of all it would cost me over £6000 in early settlement charges, then I would need to find somewhere else to live, as would my brother, and I'd end up paying roughly the same on rent as I do on my mortgage.

As I said, I don't need £1900 a month, I have done in recent months, but having now taken control of my finances that will go down.

Thanks again for your input.

chocaholic110

Welcome and congrats on the lightbulb going on!

You asked would A+L give you a £2000 overdraft. When I took my A+L account out earlier this year, the condition was it would match your current overdraft limit if you sent proof of what it was. So if that is the same and you can send proof of your current agreed overdraft limit (mine was on my statement) they should! Definitely worth doing for 0% interest