Dealing with debt

taffy41

Hi
Looking for any pearls of wisdom, advice or coping mechanisms.
Really in a sticky situation. For about a year now we've struggled as OH self-employed and business took a down turn. We had re-mortgaged in March 2006 but at this moment back to square one with a high mortgage and not really much money coming in.

I visited CAB at the beginning of Oct to try and confront the debt as we were living off credit cards which were becoming maxed out. Whereas they've been really helpful in writing to the creditors offering a reduced amont for six months until business picks up (hopefully) and have been very supportive. Things are taking a long time and I'm still getting letters from the creditors asking for money.

Feeling at a really low ebb, and almost wish I'd never gone and just struggled on. I didn't expect things to be easy, but can longer trust my own judgement in making decisions when it comes to dealing with the debt.

Would value a response on how others manage and if there is light at the end of the tunnel!

The debt without the mortgage is £41,000 on credit cards. Mortgage is £120,000.

Apologies for going on - as you can tell it's my first post.

C_Ronaldo

If you havnt done so already you could do a SOA, its just a list of your monthly outgoings and what comes in each month, its easy for you and other to see where the money is going and if you can cut back anything

taffy41

Hi,
Thank you for your reply - here goes with the SOA.

Income
Me - £1140
OH - £1200 (varies huges as self employed)

Outgoings
Mortgage - 941
Mortgage Ins - 22 for OH only as will cover mortgage if business fails
Life Ins - 63 (OH only covered for half of mortgage as has diabetes and over weight)
Council tax - 87
Water rates - 34
Britis Gas boiler/appliance cover - 23
OH mobile - 25
My mobile - 35 (only just had new contract in August - lots of free minutes so don't use house phone)
BT phone - 22 per month
BT Broadband - 27 per month
OH NI - 10
House Ins - 22 (house leasehold have no choice for cover)
OH pension - 46.82
DFS sofa - 60 (started paying in May 07 finishes in 3 years)
Car HP - 206 (needed for business)
Food - 240 (really looking for ways to reduce this)
Sky - 46 (just got rid of multi-room and Setanta sports)
Gym membership for both - 40
Inland Revenue - 200 (this is what I aim to save - £2200 bill due in Jan)
Business Advertising - 184
Gas - 24
Electric - 34
Professional bodies - 10
Car tax - 13
TV license - 12
Ground rent - 10
My petrol - 60
Clothing - 40 (don't manage to save this)
Car repairs -20
Creditors - 10

This is the budget compiled by CAB.
Debts:
Egg 1: 3999
Egg 2: 4105
MBNA 1: 13500
MBNA 2: 500
CAP 1: 540
CC 1: 10500
CC 2: 8400
Cataloge: 940

Ok, just realised debt more than I thought
Have only heard from one of my creditors that they agree to reduced payments for six months with the interest stopped. I never realised it was such a long process. I know I won't have a credit history after this, which is another worry when we come to change the business car in 3 years time.

I really feel like crying all the time, dread coming home to see what mail has arrived.

Any advice would be appreciated
Thank you

C_Ronaldo

taffy41 wrote: »

Hi,
Thank you for your reply - here goes with the SOA.

Income
Me - £1140
OH - £1200 (varies huges as self employed)

Outgoings
Mortgage - 941
Mortgage Ins - 22 for OH only as will cover mortgage if business fails
Life Ins - 63 (OH only covered for half of mortgage as has diabetes and over weight)
Council tax - 87
Water rates - 34
Britis Gas boiler/appliance cover - 23
OH mobile - 25
My mobile - 35 (only just had new contract in August - lots of free minutes so don't use house phone)
BT phone - 22 per month
BT Broadband - 27 per month Seems a tad high, what speed do you get for £27
OH NI - 10
House Ins - 22 (house leasehold have no choice for cover)
OH pension - 46.82
DFS sofa - 60 (started paying in May 07 finishes in 3 years)
Car HP - 206 (needed for business)
Food - 240 (really looking for ways to reduce this) Try and get this down if you can, you tried out lidl/aldi for food
Sky - 46 (just got rid of multi-room and Setanta sports) How often do you watch all the channels on sky, could you not move to a cheaper tv package but its purely up to you
Gym membership for both - 40 Could you not go on walks instead of going to the gym
Inland Revenue - 200 (this is what I aim to save - £2200 bill due in Jan)
Business Advertising - 184
Gas - 24
Electric - 34
Professional bodies - 10
Car tax - 13
TV license - 12
Ground rent - 10
My petrol - 60
Clothing - 40 (don't manage to save this)
Car repairs -20
Creditors - 10

This is the budget compiled by CAB.
Debts:
Egg 1: 3999
Egg 2: 4105
MBNA 1: 13500
MBNA 2: 500
CAP 1: 540
CC 1: 10500
CC 2: 8400
Cataloge: 940

Ok, just realised debt more than I thought
Have only heard from one of my creditors that they agree to reduced payments for six months with the interest stopped. I never realised it was such a long process. I know I won't have a credit history after this, which is another worry when we come to change the business car in 3 years time.

I really feel like crying all the time, dread coming home to see what mail has arrived.

Any advice would be appreciated
Thank you

Ive marked things that i feel you could cut down or lose altogether, im sure there will be others who could pick up on other things

Hopeful1

Do any of any of the loans or credit cards have charges that can be reclaimed? Do any of them carry PPI that is not worthwhile to you?

My OH is self employed and i know how hard that unpredictability is. Once i'd got to grips with my debt and stopped borrowing to tide myself over, i've focused on paying off the smaller things as fast as i can. Whenever he has a good week / month i pay extra off. I started with outstanding household bills and am now doing the same with a catalogue debt. I'm also trying to reclaim charges.

Best Wishes

CLAPTON

As I see it:

your income is 2340
your spending is 2556 before debt repayments
so you are spending 200 more than your income even without paying your debts

a. income... your OH works self employed.. how realistic is it for him to continue .. what would be earn if he become employed.

b. is the OH income his minimum or average for the last few months.

c. if its correct that you are spending more than your income by 200 you need to address this immediately.. because soon you will not be able to get any credit at all


so

a. you are spending over 100 per month on communication.. 2 mobiles, landline, broadband.. these are luxuries not essentials (10 years ago no-one had broadband, no-one (except business people) had mobiles
so ..reduce BT to option 1 (£11) use www.call1899.com for calls (4ppcall not per minute), tiscali broadband is only 15 or less, use PAYG mobile and think £5 per month

b. appliance cover... nice to have but you can't afford it.

c. OH pension.. at the moment you can't afford that

d. probably too late but although OH may need a car for business but does it need to cost 206 a month?

e. sky at 46..nobody had Sky 10 years ago and we managed

f. gym at 40 ... you can't afford it.




How much is the house worth and how much is the mortgage?

Bill_Gates_2

As others have said

1. Get rid of the appliance cover - saves £23
2. Change your broadband to Sky and you will get 2MB for free - saves £27
3. Buy non branded essentials, milk, cheese, eggs etc switch to lidl/aldi, smartprice etc Try and save £20
4. Switch to Sky for your phone. Will cost you £5 per month plus BT rental. Will only cost £15.50 per month in total. Make all your calls to mobiles from the mobile. Saves - £6.50
5. Ditch the gym - saves £40
6. Would say ditch the contract phones for payg but it's on a new contract so...

That's £116.50 in total so far saved. These are easy changes and you wouldn't really lose anything but it's not enough. The car HP is huge and would bring you up to breaking even each month and also having £100 over each month to pay debts.

If you could do something about that or maybe even switch your mortage to a better deal. I feel for you but you have to make some drastic changes quickly or hope the business picks up. Good luck

Homework

Does self employment require 24 hour attention? If there are weeks between work or work could be done at evenings then what about temp work or 2nd job for regular income? Likewise you, is there anything you could do? We reduced our self employment to part time and took on temp jobs which gave a regular income and took the pressure off a bit. In between jobs we increased the self employment and we were able to keep things going well.

We also discovered that we were spending full time doing something that we could do part time.

Delighted that you have started working on this now before anything bad has happened and you can consider what to do. You really need to take action now and get this under control to protect your future. Please consider cutting back (especially on the phone when you have lots of free minutes and don't use the home phone) and if things don't add up please contact CCCS or Payplan who will work out a budget and debt payment plan for you to pay off all your debt and still have enough money to live.

Please also get your husband involved, it helps when there is someone working with you. I would think that both of you took out the debt and working together to clear it will help.

dsljfreeman

taffy41 wrote: »

Hi,
Thank you for your reply - here goes with the SOA.

Income
Me - £1140
OH - £1200 (varies huges as self employed) is this the basic or average?
Total £2340

Outgoings
Mortgage - 941 Could you change to interest only for a year or two?
Mortgage Ins - 22 for OH only as will cover mortgage if business fails
Life Ins - 63 (OH only covered for half of mortgage as has diabetes and over weight)
Council tax - 87 Is this 10 months or 12? if 10, could pay £72.50 over 12
Water rates - 34 is this metered
Britis Gas boiler/appliance cover - 23 I would cancel this
OH mobile - 25 can this be lowered
My mobile - 35 (only just had new contract in August - lots of free minutes so don't use house phone)
BT phone - 22 per month If you don't use house phone, why is this so high?
BT Broadband - 27 per month this is very high, do you need high speed for work, could you downgrade for a while, I pay £18 pm
OH NI - 10
House Ins - 22 (house leasehold have no choice for cover)
OH pension - 46.82 Might be worth putting this on hold or minimum payment for a year so you can concentrate on debts
DFS sofa - 60 (started paying in May 07 finishes in 3 years)
Car HP - 206 (needed for business) can you get a cheaper car, this is huge
Food - 240 (really looking for ways to reduce this) look on os board, meal plan, collect coupons, buy own brands, is there just the 2 of you, i spend about £100 for 2 adults, a child and a dog
Sky - 46 (just got rid of multi-room and Setanta sports) this is still really high, either downgrade to basic package or cancel and you still get free channels
Gym membership for both - 40 Cancel, this is a luxury
Inland Revenue - 200 (this is what I aim to save - £2200 bill due in Jan)
Business Advertising - 184 could this be reduced
Gas - 24
Electric - 34
Professional bodies - 10 is this business related
Car tax - 13
TV license - 12
Ground rent - 10
My petrol - 60
Clothing - 40 (don't manage to save this) at the moment this has to go
Car repairs -20 is this to save, put towards your debts instead
Creditors - 10
Total £2566.82 ~ Deficit £226.82
If you were to cancel the boiler cover, downgrade internet, have no clothes allowance, put pension on hold, reduce your food shopping to £150 and cancel sky you would save £294.82. Then look at changing your mortgage or taking a payment holiday, and reducing outgoings little by little, could be more savings

This is the budget compiled by CAB.
Debts:
Egg 1: 3999
Egg 2: 4105
MBNA 1: 13500
MBNA 2: 500
CAP 1: 540
CC 1: 10500
CC 2: 8400
Cataloge: 940

Ok, just realised debt more than I thought
Have only heard from one of my creditors that they agree to reduced payments for six months with the interest stopped. I never realised it was such a long process. I know I won't have a credit history after this, which is another worry when we come to change the business car in 3 years time.

I really feel like crying all the time, dread coming home to see what mail has arrived.

Any advice would be appreciated
Thank you

I've put my thoughts above.

You have made the first move by coming here, now the only way is up.

~with regards to your insurance policies and utilities, have a look at Quidco.com and see if you can lower the payments while earning cashback, plus you can sign up to various websites and earn cashback for free.

~is there anything you can sell on Ebay or Amazon

~is there any scope for a second job

Laura xx