Debt advice please?

Youolddog

This is...a complicated one folks. I hope this is in the right place and I really hope you can help me.

I have been juggling debt for about 6 years now. I manage to keep a lid on it, pay it off piece by piece and then I get hit with a bill that sinks me back in. We've had 3 cars give up the ghost in the past 2 years and suddenly I'm back in the hole again. It's complicated this time as I'd booked a holiday 9 months ago to take my aging parents and family (8 of us total) on a nice holiday as I'm self employed and work 55 hours a week pet sitting. That, and it's been over 2 years since I last had a day off and I'm exhausted. The holiday is 5 weeks away. I also am about to purchase a car, ordered 6 months ago. It will save around £1200 net a year in fuel (electric), let alone the service and extras that my again skoda is beginning to cost me. That, and my skoda's pcp deal running out next June meant that this was a better long-term move.

Now the crux.

Our household income is around £50000 annually. Pet sitting is seasonal, so there are ups and downs, but the total has been consistent over the past 4 years (around £37000 after tax). My outgoings are around £35000 annually. This leaves very little wiggle room.

My issue is this - with the holiday and the car deposit, my bank balance isn't great. But a bigger issue is that my seasonal work is set to die (Nov, Jan, Feb and Mar worst months of the year by far bringing in just 17% of my yearly income). And an even bigger issue is I've miscalculated my credit card juggling and I have £4000 to pay off in April, right after my barren period.

I applied for a debt consolidation loan of 3% with Santander in Sept, and was approved. Then the next day I received a letter telling me that my approval rate was actually 16% (thanks Santander). I called them immediately and cancelled the loan. And my credit rating is decimated...2 months later and it hasn't budged, even though no money was taken. I spoke to my bank (barclays) and was told that when it would eventually recover, it'd be in dribs and drabs only, maybe 20-50 points a month.

I asked Barclays if they would extend my loan with them in order to pay off the cards (and leave some money for the barren months to, you know, eat) and they said 8.9% is the best they'd offer and that there was zero guarantee it'd be approved. If rejected, my credit score wouldn't recover in time for me to get an offer at a later date and pay the bump credit card payment in Apr. If approved, ain't a great offer, but it'd get the job done.

If I cancel the holiday, I face the wrath of my family (plus I do need a break). I'd also only be able to get back around £1500. If I cancel the new car, I lose the £200 deposit, but in June I have the same problem because of the balloon payment (and thanks to the skoda's value, negative equity). The deposit in December will be £1700.

My income Nov-Jun is roughly £23000. My outgoings will be £16000 (plus £1000 holiday and £1700 car deposit), so about £19000. But the card payments of £4000 in Apr and £4400 in June are the killers. Cancelling the hols and car means I might be able to get past April, but not June.

I'm sorry this is so long winded, I'm exhausted and my thought process is a bit ropey. Any advice would be much appreciated.

I guess my biggest question would be do I apply for the debt consolidation loan now, and risk it, or wait for a couple of more months and hope my credit score improves? Or if there's a better way forward?

Pixie5740

Youolddog wrote: »

This is...a complicated one folks. I hope this is in the right place and I really hope you can help me.

I have been juggling debt for about 6 years now. I manage to keep a lid on it, pay it off piece by piece and then I get hit with a bill that sinks me back in. We've had 3 cars give up the ghost in the past 2 years and suddenly I'm back in the hole again. It's complicated this time as I'd booked a holiday 9 months ago to take my aging parents and family (8 of us total) on a nice holiday as I'm self employed and work 55 hours a week pet sitting. That, and it's been over 2 years since I last had a day off and I'm exhausted. The holiday is 5 weeks away. I also am about to purchase a car, ordered 6 months ago. It will save around £1200 net a year in fuel (electric), let alone the service and extras that my again skoda is beginning to cost me. That, and my skoda's pcp deal running out next June meant that this was a better long-term move.

Now the crux.

Our household income is around £50000 annually. Pet sitting is seasonal, so there are ups and downs, but the total has been consistent over the past 4 years (around £37000 after tax). My outgoings are around £35000 annually. This leaves very little wiggle room.

My issue is this - with the holiday and the car deposit, my bank balance isn't great. But a bigger issue is that my seasonal work is set to die (Nov, Jan, Feb and Mar worst months of the year by far bringing in just 17% of my yearly income). And an even bigger issue is I've miscalculated my credit card juggling and I have £4000 to pay off in April, right after my barren period.

I applied for a debt consolidation loan of 3% with Santander in Sept, and was approved. Then the next day I received a letter telling me that my approval rate was actually 16% (thanks Santander). I called them immediately and cancelled the loan. And my credit rating is decimated...2 months later and it hasn't budged, even though no money was taken. I spoke to my bank (barclays) and was told that when it would eventually recover, it'd be in dribs and drabs only, maybe 20-50 points a month.

I asked Barclays if they would extend my loan with them in order to pay off the cards (and leave some money for the barren months to, you know, eat) and they said 8.9% is the best they'd offer and that there was zero guarantee it'd be approved. If rejected, my credit score wouldn't recover in time for me to get an offer at a later date and pay the bump credit card payment in Apr. If approved, ain't a great offer, but it'd get the job done.

If I cancel the holiday, I face the wrath of my family (plus I do need a break). I'd also only be able to get back around £1500. If I cancel the new car, I lose the £200 deposit, but in June I have the same problem because of the balloon payment (and thanks to the skoda's value, negative equity). The deposit in December will be £1700.

My income Nov-Jun is roughly £23000. My outgoings will be £16000 (plus £1000 holiday and £1700 car deposit), so about £19000. But the card payments of £4000 in Apr and £4400 in June are the killers. Cancelling the hols and car means I might be able to get past April, but not June.

I'm sorry this is so long winded, I'm exhausted and my thought process is a bit ropey. Any advice would be much appreciated.

I guess my biggest question would be do I apply for the debt consolidation loan now, and risk it, or wait for a couple of more months and hope my credit score improves? Or if there's a better way forward?

1) There is no such thing as a universal credit score. https://www.moneysavingexpert.com/loans/credit-rating-credit-score/

2) You cannot borrow your way out of debt.

3) There is no debt problem that does not have a solution.

Put together an accurate statement of affairs so that you can see where your money is going and what you can cut back on. There is the option to format the SOA for MSE so you can post it here if you would like some feedback on your budget.

http://www.stoozing.com/calculator/soa.php

Youolddog

Will get on it, many thanks.

A bit confused - I've read in several places that there's no universal credit score and that it's calculated differently by individual institutions...why then does my bank suggest I sign up to clearscore? And why does Martin Lewis have a partnership with Experian? I can tell that it isn't universal, because clearscore say my score is 418 and Experian say it's 889, lol. Doesn't really help when you're already confused!

Youolddog

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.................... 2

Monthly Income Details
Monthly income after tax................ 2662
Partners monthly income after tax....... 818
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3480

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 378
Rent.................................... 850
Management charge (leasehold property).. 0
Council tax............................. 189
Electricity............................. 65
Gas..................................... 30
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 0
Mobile phone............................ 17
TV Licence.............................. 13
Satellite/Cable TV...................... 10
Internet Services....................... 40
Groceries etc. ......................... 400
Clothing................................ 59
Petrol/diesel........................... 150
Road tax................................ 2
Car Insurance........................... 34
Car maintenance (including MOT)......... 60
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 100
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 8
Contents insurance...................... 8
Life assurance ......................... 22
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 9
Entertainment........................... 21
Holiday................................. 125
Emergency fund.......................... 0
Total monthly expenses.................. 2690


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 18140
Other assets............................ 0
Total Assets............................ 18140


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 7400.....(199)......0<
HP.............................10780....(179)......0
Total secured & HP debts...... 18180.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
credit card mbna 1.............3980......40........0
credit card mbna 2.............4645......47........0
credit card mbna 3.............3143......32........0
wife loan......................2100......211.......0
barclays loan..................8160......272.......0
halifax........................3200......32........0
Total unsecured debts..........25228.....634.......-


Monthly Budget Summary
Total monthly income.................... 3,480
Expenses (including HP & secured debts). 2,690
Available for debt repayments........... 790
Monthly UNsecured debt repayments....... 634
Amount left after debt repayments....... 154

Personal Balance Sheet Summary
Total assets (things you own)........... 18,140
Total HP & Secured debt................. -18,180
Total Unsecured debt.................... -25,228
Net Assets.............................. -25,268

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

All updated

[Deleted User]

Youolddog wrote: »

A bit confused - I've read in several places that there's no universal credit score and that it's calculated differently by individual institutions...why then does my bank suggest I sign up to clearscore?

Because that's who they use to check your credit history. They are suggesting that you check the data that appears on there - not the magic made up number.

Youolddog wrote: »

And why does Martin Lewis have a partnership with Experian?

Because it was a profitable move for MSE. It drives traffic through the site.

System

You seem to have plenty of surplus and would be in a better position if you got that grocery bill down. Just remember, you may be saving £1200 per year on fuel, but you need to add about £40-50 per month to charge your car at home. Really a PCP is not really the wisest of moves but I suppose you're locked in now? Also rent is very high...could you perhaps downsize?

Youolddog

zx - which is magical and made up though? The experian one?

[Deleted User]

All of them. Experian, Clear score, Noddle. None of them are lenders.

You need to check the data on all your CRA files - as a lender would do.

Youolddog

Andy - yes, unfortunately I am. I did months of research and a new renault zoe over 5 years was much cheaper (several thousand pounds) than a second hand skoda, without trying to account for the servicing costs. No, pcp wasn't preferred, I thought i could maybe get a car loan at 3%, but that was refused too. And that's when the score was healthy...although that might have been the made up score, so who knows??

I know it makes sense with all the combined details, but my wife's accounts are very much separate from my own. So, shopping bills etc all come out of her account. The debts all come out of mine. I realise we're all under the same roof. The £400 makes allowances for clothes, toys, gifts etc.

Rent-wise...no hope. I rent from my folks and for a 4 bed place in Surrey you're looking at £1500-£1700 monthly. £850 is a very good deal around here.

Grumpelstiltskin

I don't think your SOA is realistic.

No TV licence?

No contents insurance?

Nothing for entertainment?

Nobody ever gets their hair cut?

Never pay to park your car?

etc. etc.

Youolddog

My apologies Grumpelstiltskin, was trying to get the basics down. You're absolutely right.

It's been updated. Hopefully it appears more realistic.