Need to do something now

MandM90

Is the HP for one car? Seems very very expensive - is there a way to trade down cars and give you some breathing room?

swimminginaseaofdebt

Your SOA shows that you have a surplus of £185.46 each month, is that right? If not I'd suggest starting a spending diary to see where it's going.

You've nothing for clothing, presents or haircuts in your SOA and £14.99 for entertainment seems low particularly if you take the little one to soft play etc.

enthusiasticsaver

FKIW99 wrote: »

Yes we are def over spending on groceries, that is something we are trying to work on - thank you I will have a look at that thread it should definitely help!

Life insurance also covers critical illness cover for us both - we felt that it was important as particularly if my husband fell seriously ill i would have no chance of paying for everything myself!

Normally I would say critical illness is a good thing to have but it depends on your financial situation and yours is not good due to the high level of debt and the sort of income protection you get through work. If your employer gives you good sickness protection then I would not pay that high level of insurance payment when you have such high debt. Presumably if you have workplace pensions then you have life cover included there?

The interest rates are not phenomenally high and although your budget is tight you can afford your minimum payments so I do not think a DMP is for you. What you do have to do is prioritise the debt and getting it paid off before you sink into a debt spiral. I would cut back on everything as far as I could and use the childcare money to either save or pay off debt.

Consolidation of old debt is never recommended on here especially on to your mortgage so it is a good thing you were turned down. You are heavily over committed so looking to reduce your debt as much as possible is the best way forward as this is holding you back not only from having a second child but from living especially as your child gets older. You are using £1000 minimum just paying back for things you have bought in the past. Surely that money would be better spent on living today and preparing for the future.

Cancel the cable tv, reduce the mobile phone bills which are ridiculously high. Even we don't pay that much and we don't have debt. The groceries can be cut back considerably, reduce the insurances. What is the situation with the cars? You have said the car is only worth £700 but you have a phenomenally high HP loan of almost £18k. If that is for cars then the cars should show in assets unless they are on PCP contracts (ie leased). You have over committed there so is there a possibility of giving one or both back and getting cheaper cars?

You have not allowed for clothes (unrealistic with a child),presents, haircuts or emergency savings which is critical to stop you using cards when you have an emergency. Cut up the cards and start making paying them off a priority or your situation will get worse. Ideally this would have been tackled a few years ago but it is never too late. If you don't sort it soon though before interest rates rocket up on them then a debt solution like a DMP may be your only option.

FKIW99

enthusiasticsaver wrote: »

Normally I would say critical illness is a good thing to have but it depends on your financial situation and yours is not good due to the high level of debt and the sort of income protection you get through work. If your employer gives you good sickness protection then I would not pay that high level of insurance payment when you have such high debt. Presumably if you have workplace pensions then you have life cover included there?

The interest rates are not phenomenally high and although your budget is tight you can afford your minimum payments so I do not think a DMP is for you. What you do have to do is prioritise the debt and getting it paid off before you sink into a debt spiral. I would cut back on everything as far as I could and use the childcare money to either save or pay off debt.

Consolidation of old debt is never recommended on here especially on to your mortgage so it is a good thing you were turned down. You are heavily over committed so looking to reduce your debt as much as possible is the best way forward as this is holding you back not only from having a second child but from living especially as your child gets older. You are using £1000 minimum just paying back for things you have bought in the past. Surely that money would be better spent on living today and preparing for the future.

Cancel the cable tv, reduce the mobile phone bills which are ridiculously high. Even we don't pay that much and we don't have debt. The groceries can be cut back considerably, reduce the insurances. What is the situation with the cars? You have said the car is only worth £700 but you have a phenomenally high HP loan of almost £18k. If that is for cars then the cars should show in assets unless they are on PCP contracts (ie leased). You have over committed there so is there a possibility of giving one or both back and getting cheaper cars?

You have not allowed for clothes (unrealistic with a child),presents, haircuts or emergency savings which is critical to stop you using cards when you have an emergency. Cut up the cards and start making paying them off a priority or your situation will get worse. Ideally this would have been tackled a few years ago but it is never too late. If you don't sort it soon though before interest rates rocket up on them then a debt solution like a DMP may be your only option.

I am self employed so don't get sick pay. I don't actually have a pension at all. My husband has one through work but I don't know much about it. I think only the minimum is paid in.

I agree that we need to budget and sort out our spending to start paying off. We have been talking tonight about what we have to sell to put off the cards.

Funnily enough I only actually have one card that occasionally gets used - all of the others are from balance transfers and money transfers.
We are definitely going to make paying them off a priority.

Yes the amount we spend on repayments is ridiculous, we often talk about what life would be like without having to pay that each month. I think today has been my lightbulb moment.

We have one car on the HP its obviously a nice one - I do a lot of miles for work and like having a new reliable car. But we are looking into changing it to something cheaper. We have another car that is only worth £700 which we use as a run around - my husband has a work van for work. I think I have persuaded him this evening that we should sell that car and put it off the credit cards. Will put it off his barclaycard that has £1800 left on it - he doesn't pay the minimum on that card he pays £150 on it which has been set up as a direct debit for a year or so - so my thinking is get that card gone then that £150 can be an extra payment on another card.

We've discussed waiting a year or so before having another child to concentrate on getting this down a bit.

In terms of entertainment for my daughter I don't often take her places that cost money - there is a small holding down our road so we walk to see the animals there, we have a dog so walk her and we have chickens and so spend time in the garden with them. the £14.99 for entertainment is actually spotify which I use for work.

As you've all said we need to get a handle on our spending and make savings that we can put off the cards, also we need an emergency fund, I think it's doable. Up until now I hadn't told my husband the full amount of our debt (I handle all our banking etc - and he liked to keep his head in the sand) but today I took a deep breath and i told him so he is more understanding now and motivated to get this sorted.

Thank you everyone

enthusiasticsaver

Well done on telling your husband and I think you seem motivated to sort this out now.

If you are self employed are you sure that you are covered with these insurance policies and what do they actually cover you for? Most pensions, even with a minimum paid in provide some sort of life cover. Paying £120 a month for insurance on income when you have such a high level of debt is unusual.

You can get free spotify.

[Deleted User]

FKIW99 wrote: »

I wrote on this forum a few years ago when I was feeling stressed and out of control with our debt, nothing has really happened since, the debt hasn't gone down or gone up, just stayed the same. But we need to get a handle on this now its ridiculous. I have just asked our mortgage company if we could remortgage to consolidate but they said no.
I have done an SOA:


Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 1200
Partners monthly income after tax....... 2800
Benefits................................ 82
Other income............................ 50
Total monthly income.................... 4132

Monthly Expense Details
Mortgage................................ 698
Secured/HP loan repayments.............. 341
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 146
Electricity............................. 89
Gas..................................... 0
Oil..................................... 70
Water rates............................. 54.5 This seems very high, consider changing to metered water.
Telephone (land line)................... 0
Mobile phone............................ 100
TV Licence.............................. 12
Satellite/Cable TV...................... 40.5
Internet Services....................... 27
Groceries etc. ......................... 400
Clothing................................ 0
Petrol/diesel........................... 200
Road tax................................ 24
Car Insurance........................... 75
Car maintenance (including MOT)......... 20
Car parking............................. 4.5
Other travel............................ 0
Childcare/nursery....................... 400
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 70
Buildings insurance..................... 10.35
Contents insurance...................... 0
Life assurance ......................... 120
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 14.99
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2946.84


Assets
Cash.................................... 0
House value (Gross)..................... 250000
Shares and bonds........................ 0
Car(s).................................. 700
Other assets............................ 0
Total Assets............................ 250700


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 171231...(698)......2
Hire Purchase (HP) debt ...... 17818....(341)......5
Total secured & HP debts...... 189049....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Natwest CC part 1..............2658.46...57........17.43
Natwest CC part 2..............3344.5....57........4.896
Barclaycard F..................14725.....330.......17.68
Tesco Loan.....................8998......272.......4
Virgin.........................6160......62.22.....0
MBNA C2........................1536.7....25........0
MBNA C1........................11427.....147.2.....17
Barclaycard C..................1860.41...49.28.....17.68
MBNA F.........................6041.9....0.........0
Total unsecured debts..........56751.97..999.7.....-


Monthly Budget Summary
Total monthly income.................... 4,132
Expenses (including HP & secured debts). 2,946.84
Available for debt repayments........... 1,185.16
Monthly UNsecured debt repayments....... 999.7
Amount left after debt repayments....... 185.46

Personal Balance Sheet Summary
Total assets (things you own)........... 250,700
Total HP & Secured debt................. -189,049
Total Unsecured debt.................... -56,751.97
Net Assets.............................. 4,899.03



Any suggestions?! We want to have another baby, I know this is potentially not sensible but there isn't a quick fix for this debt and if I wait till we've sorted it then my children would have a massive age gap and I don't want that. From April next year my daughter will get the 30 hours free childcare so that will be extra money we can then use to pay off stuff.

Help!!

Re: highlighted area above -
That water bill seems very large, I changed this property to metered and I pay less than £100 per 6 month billing.

angela110660

Just popping in to say water rates will depend on your area/company. We were given a water meter several years ago as there was a drive by the company to change everyone. Our bills went up gradually over a period after the installation and are now higher than we have ever paid after living here for years in this property. Not necessarily the easiest save area for people. Agree mobiles, cars and food would be a better first look again though and pet insurance too perhaps. Good luck - check out Dave Ramsey for some enthusiasm too I would suggest!

warby68

This is a little pedantic but is probably relevant nonetheless - you say your debt hasn't moved since you posted a few years ago. It was actually only last year and like for like unsecured debt has actually gone up by £3k by my 'sums' even though your income has risen by about £400pm

I know your secured car debt has come down but that that tends to be a revolving facility as you will replace the car.

You had lots of ideas to tackle the debt in 2018 but didn't - I just wondered what the reason is and if you really are at full lightbulb stage? I don't mean for you to answer here necessarily but if there is still some slippage going on, accounting for where all your money truly goes would be a good step. Perhaps review your statements for the last 12m and see.It certainly suggests your SoA needs a bit more work.

You are 'teetering' from a manageable position if you grit your teeth and get on with it to an unmanageable one, especially if you have another child before dealing with your debt.

From your comments it looks like disclosure was one issue. You mentioned your husband knowing the debt was serious last year but not the full amount and say now that you have only just told him.

I guess my point in making the comparison from your previous posts is that you went another 16m without tackling it or disclosing and it has got a little worse in that time. Normally I say, take your time to get the right fix and balance to posters who have build up debt over many years but it does feel quite urgent for you to get going straight away and build on your joint lightbulb moment ASAP and as much as possible, especially as you plan another child soon.

Good luck with finding the motivation.

Other suggestions

If you are self employed, is there scope for additional work (even employed part time work), to give income a boost short term?

Cars - stop trading up lol. Maybe a nice new but cheap one next time. I know you can get new cars for much less than £341 pm.

Find out where the surplus above and the £3k debt 'creep' has gone and tackle those items not currently in the SoA

Set some short term goals and targets and really measure your progress to get the motivation going.

FKIW99

enthusiasticsaver wrote: »

Well done on telling your husband and I think you seem motivated to sort this out now.

If you are self employed are you sure that you are covered with these insurance policies and what do they actually cover you for? Most pensions, even with a minimum paid in provide some sort of life cover. Paying £120 a month for insurance on income when you have such a high level of debt is unusual.

You can get free spotify.

We got the insurance policies through a friend who is a financial adviser and he knew I was self employed so I'm sure they cover me.. The amount in the SOA is 4 policies 2 for me and 2 for my husband. the first 2 were from when we bought our first house and they will pay off our mortgage plus a little if either of us die or get a critical illness. and then the other 2 are from when we bought our second house and cover the difference as the second house is worth more.

I know you can get spotify for free but in my work I need it to be ad free. I do write it off as a business expense.

FKIW99

warby68 wrote: »

This is a little pedantic but is probably relevant nonetheless - you say your debt hasn't moved since you posted a few years ago. It was actually only last year and like for like unsecured debt has actually gone up by £3k by my 'sums' even though your income has risen by about £400pm

I know your secured car debt has come down but that that tends to be a revolving facility as you will replace the car.

You had lots of ideas to tackle the debt in 2018 but didn't - I just wondered what the reason is and if you really are at full lightbulb stage? I don't mean for you to answer here necessarily but if there is still some slippage going on, accounting for where all your money truly goes would be a good step. Perhaps review your statements for the last 12m and see.It certainly suggests your SoA needs a bit more work.

You are 'teetering' from a manageable position if you grit your teeth and get on with it to an unmanageable one, especially if you have another child before dealing with your debt.

From your comments it looks like disclosure was one issue. You mentioned your husband knowing the debt was serious last year but not the full amount and say now that you have only just told him.

I guess my point in making the comparison from your previous posts is that you went another 16m without tackling it or disclosing and it has got a little worse in that time. Normally I say, take your time to get the right fix and balance to posters who have build up debt over many years but it does feel quite urgent for you to get going straight away and build on your joint lightbulb moment ASAP and as much as possible, especially as you plan another child soon.

Good luck with finding the motivation.

Other suggestions

If you are self employed, is there scope for additional work (even employed part time work), to give income a boost short term?

Cars - stop trading up lol. Maybe a nice new but cheap one next time. I know you can get new cars for much less than £341 pm.

Find out where the surplus above and the £3k debt 'creep' has gone and tackle those items not currently in the SoA

Set some short term goals and targets and really measure your progress to get the motivation going.

Only just saw this. Yes at time of writing my initial post i didn't realise it was only last year - feels like so long! And I didn't realise until I looked back that the debt had gone up - this has added to my determination to sort this now once and for all. The ridiculous thing is both my husband and I's monthly income can fluctuate and Iv put the minimum we earn in the SOA but often we both earn more yet instead of take the difference and out it off cards we go oh great lets go shopping and buy random stuff we don't really need. I have no doubt it is our willy nilly spending that causes our issues and we really need to get a handle on it now.

Yes there is scope for both me and my husband to do extra work to increase income slightly and Im looking into that (my husband is a plumbing and heating engineer so can do extra work in the evenings) and Iv got room to do a bit more - stupidly i reduced some of my work as I was feeling overwhelmed with everything but I can easily get more again. I just need to fit it around my daughters childcare as don't want to increase that.

Yep we are looking into cars to change to now. And we have agreed we are going to sell our little run around as its actually really expensive to run as massive car tax and does !!!!!! all mpg. On the rare occasion we need a second car we can either borrow a family members or hire one.

Thanks I needed that frank and to the point observation of our situation.

Just about to list a guitar and bag for sale on facebook - never used them as I have another guitar I use.