New SOA - next steps

a_silver_lining

I would take a look at your previous overspending to try and find areas to cut down. Print off your bank statements for 6 months and with a highlighter pen highlight different colours for food, entertaintment, unknown cash withdrawels, takeaways or eating out (like coffees) and then add up and average for the months.

I imagine with 47K those overspends are much higher then on your SOA, and that your SOA is in fact aspirational.

I would probably then work out how long you have for those expected big spends, car inurance etc and put that money aside each month in a seperate account. Perhaps an extra £100PM for emergencies.

After a month with no fun spends you could start allowing little treats in. Say, £50pm per person. And over pay the rest.

Ultimately you seem to be saying that this is 47K of overspending, so spending less is the answer.

shteca

Good morning Grazeley!
Well done on your first step posting your SOA, it really is the first step to clearing all this up and I have been in your shoes!
Looking through all your expenses your consumer debt is crushing. Once this is all cleared up you have £1,110 to be putting into savings each month so there is something to look forward to. In the meantime just got to clear up the mess.
Couple of questions, is your partner on board with you getting out of debt? Have you both decided that this is happening together and agreed on doing everything necessary?
Have you cut up your credit cards and pinky, blood promised to never ever borrow again?
Finally, are you on a budget together?
With regards to how I cleared a similar amount of debt, I saved £1,000 as an emergency fund (sell everything in sight, the extra TV, the golf clubs, the lawnmower, get an extra job) then call up each lender to ask to pay minimum payments on everything, then list your debts smallest to largest and attack the smallest debt, in your case Creation and fire every penny at it..
The smallest to largest process ignores interest rate (unless you have something like a payday loan at 500% and gets your ball rolling. Very quickly your life will change the pressure will lift. This is what you need right now, start clearing these debts asap.
Just look at my signature. I have been to stupid town too. I am best mates with the mayor.
MASSIVE GOOD LUCK WITH IT
Please do update everyone with your progress.

Grazeley

Thank you all! This is massively helpful advise.

I have written a to do list as part of my masterplan! And today I have taken advantage of some quiet time at work and done the following:

1) cancelled my Amazon music subscription £10.99 per mth

2) cancelled my car insurance 2 mths before renewal and taken out a new policy saving me £18 per mth /£219 per year. I had budgeted for this months car insurance payment which instead covered both the cancellation fee of the old policy and the deposit for the new policy, also the 1st payment on new policy is not due until October which gives me the money from Septembers car insurance budget to pay to debt!

3) changed my vodafone plan to £15 per mth - saving me £5 per mth/ £60 per year

4) I changed my mthly credit card payments on the 4 credit cards from 'minimum amount' to a fixed amount. I settled on a fixed amount by rounding up this mths min amount payment which I know I can afford to pay every mth (e.g my Barclaycard payment this mth £184, I have fixed all my payments on this card at £190, and likewise for all cards). I know the min payment goes down ever so slightly each mth but if I can afford to pay that amount as I paid it last month I can continue to pay it going forward.
3 of my CC's are on 0% so I have calculated by doing this by the time their 0% term ends ( in April, May and last one in October '20) I will have cleared £5830 off of them, amazing!! Key is to not spend on them, I will cut them up.

5) tracked my spending in my spending app - had to buy lunch today at work but went with soup and spent £1.90.

Overpay these savings to debts by snowballing.

Next steps from my to do list:
- change pet insurance to make savings
- check better deal on Virgin or other internet
-check my energy (this confuses me as I am in a contract for another year and the jargon blows my mind. I am in MSE energy club already)

Thanks again!

Dobbibill

Grazeley wrote: »

Thank you all! This is massively helpful advise.

I have written a to do list as part of my masterplan! And today I have taken advantage of some quiet time at work and done the following:

-check my energy (this confuses me as I am in a contract for another year and the jargon blows my mind. I am in MSE energy club already)

Thanks again!

I do love a good to-do list - well done.


If you get into a bit of a tiswas with the energy, pop over to the energy boards - there are lots of knowledgeable regulars that will be happy to help you with any questions.

enthusiasticsaver

Do you know how you got to almost £47k of unsecured debt? That plus the £280k of secured debt is what is crushing you when £2679 is going on your mortgage or repaying debt each month. Until you address how you got to this point there will be no fixing it.

Firstly a DMP will not help. The entertainment figure is high as is groceries and if you trimmed that you can make minimums. If most of the debt is at 0% there would be no advantage to a DMP as your soa shows you can afford the repayments but as someone else said that soa must be aspirational and there are lots of other outgoings you have not included.

I understand why you think you should have £100 a month each plus days out but in your circumstances you now cannot afford it. There is nothing in there for clothing which with 2 children is unrealistic. Also no emergency fund and that needs to be a priority to stop you resorting to credit when you have an unexpected expense. A second job would help as would getting rid of one of the cars as quite honestly that amount on HP on top of a large mortgage and high unsecured debt is just unaffordable for you especially at 16%. You are getting to the point of being in a debt spiral meaning you will struggle to get 0% deals as the current deals expire and then the interest will just compound and make your situation much much worse. Can you sell anything to start reducing that secured debt loan? What was that for? It is an awful rate of interest for secured debt and you have risked your home for that. I would guess it was taken out relatively recently and you could not get a decent rate due to all the other borrowing. Was it for debt consolidation ?

Take lunches from home, use a budget supermarket, cancel everything you can and start looking for free things to do. The £200 pocket money will have to reduce or go and takeaways and cinema and pub trips rationed or removed until you are in a better financial position. It will be tough but it will not get any easier by leaving it and if you start to default that may affect remortgage deals and even one percent extra on that size mortgage will break you.

a_silver_lining

Fab first steps made

Check out the forum on 'Challenges' called 1% challenge. It's all about finding little ways to pay off your debt, which you have started doing yesterday. It all adds up. The forum massively helped me pay off 10k and so I know how much the small steps make a difference.

That said I bought lunch at work yesterday for over £6! So you have inspired me to bring a smoothie and snacks into work today to save money.

Good luck!

Humdinger1

Grazeley

Well done on facing up to this. Lots of good advice above; I wanted to say that you can do this and have fun en route. I paid off 100k of debt (business and personal, it took a while) and now consider myself a paid up explorer on the shores of crazy. That's the size of the lesson I needed to get my feet on the ground. Now you have had your light bulb moment earlier than me and the circs may well have been different; it seems daunting at first but there's much joy in facing the facts (which you're doing brilliantly) and pulling back from the brink. You'll end up with zero debt, money in the bank, and self esteem that doesn't depend on buying into the myth that possessions on credit equal your worth as a human being.

I do hope this doesn't come across as patronising or bossy; you'll find your way out of this and draw on it in the future. You'll be posting encouragement on here to newly horrified strugglers with debt.

Pls keep us posted; am subscribing

Humdinger

Wimbrel

You can do this! It's tough but it's so worth it!

Every time you don't spend a £ on something pay it off a debt. I found snowballing a useful technique and set up whatever debt I was prioritising as a payee on my bank account. Every time I didn't buy a coffee or saved a fiver on the week's shopping I transferred that money from the account to pay another tiny bit of the debt

Step by step and £ by £ you'll get there!

determined_new_ms

Hi op well done on making some goals to tackle

I just wanted to say re groceries, spend some time on the old school forum and get some ideas to bring down costs. There are 3 of us and we spend between £200-250 pm on groceries and included in that is likely a bottle of wine or sometimes 2 a week.

Main thing I do to keep costs down are always take lunch out. Whatever we are doing - work/school/day out - we are going to get hungry and eat! A bottle of water, a sandwich (soup or leftovers if working) and a piece of fruit and we are good to go

I don't buy multipacks of crisps/chocolate bars/biscuits. If we fancy a packet while we were out we will buy a single pack or if we all want one then a multipack. I found if it's not here we won't eat it all and so it works out cheaper. I also tend to make a cake once a week so we can have a sweet something when the urge calls.

if out for the day and fancy and icecream we will nip to a sm and buy a pack of 3

eat less meat, more veg with each meal. Eat seasonal f&v, buy from a market/farmers market if you can. Have a night or two a week when it's something cheap and cheerful - cheese on toast, omelette, soup - have a meat free night a week. I try to buy something nicer for once a week/fortnight and have some vaguely nicer pizzas in the freezer for when I really cba and would reach for the takeout menus

pancakes are great for breakfast at the weekend. Cheaper than chips but somehow feels a bit special

getmore4less

Still something wrong with the secured loan numbers.