Need to kick the habit before disaster strikes...

tunnie123

Morning all, to avoid drip feeding i will start from the beginning. During university and few a few years after i had a bad gambling addiction. got into about 20k worth of debt... Managed to work hard loads of overtime and night shifts and reduced this down to 9k after a few years. {for the record i am now gamble free for nearly 5 years :]}

my wife and i then got pregnant and my grandad wanted us to save for a house so he paid off the last 9k for me and i would pay him back monthly so i would not be paying the interest. so over a couple more years we carried on working hard while living at her parents and had enough deposit to get our first house with the help of the help to buy scheme. now while this was happening myself and my wife both had a modest credit card debt of about 4k each through silly purchases, nothing that we couldn't handle but that is when these silly purchases seem to become a problem.

now last year i heard from my mum that my grandad was struggling with money and after he helped me out during my gambling i couldn't watch him suffer so i rightly or wrongly took out an 8.5k loan in my name to pay him all the money back.

we then find out that we are expecting a new baby and we at the time only had a huyundai i10 so we part exchanged that for a second hand dacia duster my wife then decided and i had no objection {something we both look at now as a huge mistake and cant really understand why we thought it would be a good idea} that she wanted a new car aswell. however we could get a loan for a better rate than the finance so we took out the loan for 25k to get both cars and consolidate one of the credit cards.

so a year or so down the line and now we are only just about getting by every month although we have never missed a payment, we have already decided we will be selling my wife's car which should get us about 9-10 which will clear off one of the loans. my wife is retraining to become a teaching assistant to fit around school times so hopefully she will be back in work soon.

im not really sure what i am looking for from posting this but it just feels much better to finally get it off my chest. I think our main issue was a couple of years ago my FIL told us he was applying planning permission on some of his land for over 100 houses and if it went through and when he sold the land he wanted to give us a sizable amount of money. now this still could happen in the next few months {final stages of it all now} and solve all our problems but we have decided we dont want to rely on it happening and also want to change our habits to stop it happening again in the future.

just writing this all its baffling to see how much credit they have let us have considering we have a fairly low income...


Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 1525
Partners monthly income after tax....... 0
Benefits................................523
Other income............................ 0
Total monthly income....................2048

Monthly Expense Details
Mortgage................................423
Secured/HP loan repayments..............0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax.............................108
Electricity............................. 46
Gas.....................................24
Oil..................................... 0
Water rates............................. 42
Telephone (land line)................... 0
Mobile phone............................ 30
TV License.............................. 0
Satellite/Cable TV...................... 0
Internet Services.......................39
Groceries etc. ......................... 300
Clothing................................ 20
Petrol/diesel........................... 100
Road tax................................ 50
Car Insurance........................... 66
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 12
Buildings insurance..................... 0
Contents insurance...................... 20
Life assurance ......................... 20
Other insurance......................... 0
Presents (birthday, Christmas etc)...... 50
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Professional subscriptions.............. 0
Total monthly expenses.................. 1385


Assets
Cash.................................... 1000
House value (Gross)..................... 185000
Shares and bonds........................ 0
Car(s).................................. 15000 {2 cars}
Other assets............................ 0
Total Assets............................ 0


Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 123000...............423.............1.8
HTB LOAN.................38000...................0..................0 FOR ANOTHER 3.5 YEARS
Total secured & HP debts...... 161000

Unsecured Debts
Description....................Debt......Monthly.. .APR
loan 1 .............23000...........383............8.4
loan 2 .............7200.............180............9.6
mbna1 .............4500............125.............0
mbna2 ..............2800..............25...............0
Total unsecured debts.................37500


income 2048
amount left after outgoings 663
debt repayments 713

shortfall £53
this sounds about right in reality every month our debts seem to increase by 50-100

Happier_Me

Well done for posting. I'm sure someone with more experience than me will be along to offer advice on your SOA.

It's your last comment that has made me post... If your SOA is accurate then your total debts would be reducing by £653 a month (less a bit for interest on the loans) not increasing £50-£100. This allows for a bit of spending on credit cards to offset what appears to be a small shortfall in your budget of around £50 a month.

I would pull out all your bank and credit card statements and document exactly where your money has gone in the last 6 months, then compare it to this SOA. I would also start a spending diary from today and record every penny you both spend. There are savings to be made in your fixed costs in your SOA but you have not accounted for any entertainment costs... that's unrealistic for a family of 4 so I expect you're spending far more than your SOA indicates.

You're right to get your second car sold to pay down your debts. Do you have anything else you can sell to pay down those debts?

The general consensus would be to pay down the debt with the highest interest. But it looks like you have 0% deals, so check out when these deals end and what the interest will be, before paying off any loans.

tunnie123

sorry my mistake when i say increasing i mean we pay the minimum off them then normally have to put 50-100 pounds worth of food shopping or baby milk on it etc at the end of the month before pay day.

the 0% deals are recent so i have a bit of time before i need to look at them i can normally earn extra on my salary a month {between 100-200} but that is my basic.

my big worry is the house is up for remortgage in about 6 months i am aware with natwest i can just choose a new deal and no credit or affordability checks need to be done however i know they also ask if we know of any changes to income etc obviously there has been as my wife is now not working but worry if i put that they may offer us a terrible deal.

just realized as well we also have £500 in our "chip" account however that will most likely see us through Christmas and both DC birthdays are in November and January and wife's in feb so hopefully that money can be used towards these things.

thanks for the reply

monetxchange

Welcome and congrats on making the terrifying first post. You've come to the right place!

So you realise the cars were a stupid idea. It appears like you spent more on them than you make in a year. If I were you, I'd sell BOTH and get a couple of grand run around. You're really too broke to justify anything else. That would be a massive weight off your shoulders.

Another thing - your wife really needs to get some work. Look, I realise it's hard with kids, but you might have to just knuckle down and do a system of you work in the day, come home and take over looking after the kids, while she goes out to work in the evening in a bar or restaurant or anything. It's great she's studying - but she can also take a part time job. I've friends who did their full teacher training as single mothers with full time jobs, so even though hard, it's doable. With an income of 24K for four people, you're always going to struggle and gain even more debt.

It's great that you might be coming into money soon, but please don't fall into the trap of just treading water until it comes - because the reality is it might never come and you'll stack up more debt. You need to work out how to budget on what you have now and use that as the worst case scenario.

Accepting money from family can be a poisoned chalice. Who's to say your father in law won't also be in money troubles in a few years and needs the money back, like what happened with your grandfather? And if you don't get a hold of your bad spending habits now, you'll end up with even more debt if that happens. Wasn't really clear from your post, but it sounded like you borrowed £9K from him and then had to take a loan of £8.5K four years later to repay it. Think about that before you accept any more financial help. In four years you only paid off £500 AND accumulated thousands of credit card debt in the meantime. I'm not trying to be mean here - just want you to see how you need a budget to get out of this. There's no magic get out clause. I've been in exactly the same position!

As far as your SOA goes, there's lots you can cut down. Groceries, for example. Presents cut right down to the bare necessities. Have you checked your benefit entitlements are up to date? It's also unrealistic that you never spend anything on entertainment - do you never really take the kids to soft play etc, even for a couple of quid? Being realistic with your budget now will save you failure in the future.

Good luck!

Grumpelstiltskin

No TV licence? You don't watch any live TV?

How old are the children? Young children don't need expensive toys etc.

tunnie123

yes definitely taking all this on board,

wife has applied for some part time work so hopefully she will be bringing in a bit more soon. we have discussed selling both the cars and cutting our losses on that and just writing it off as a bad expensive mistake. This is why we want to tackle this now we spoke about seeing where we are in january but decided we need to at least change our habits now or like you said we could be much worse off in the future.

we have drawn cash out this week for shopping, we normally say 200 to spend but always end up spending more so to be realistic i put 300. will be going to lidl this week instead of ALDI. DD has ASD and gets full time 1 on 1 support at school with it not sure if we would qualify for DLA with it? Little one is 9 months so you are right we may just get toys from the charity shop for her birthday as she will grow out of them fast anyway.

All great advice so far

MasterG83

Morning

Lets look at the positives, you have a reasonably low mortgage payment and some equity. You also have a £1000 emergency fund right ?

My first observation is that can you lower the monthly payments on the debts below and start snowballing ?

I would start with the MBNA 2 and get it paid off, then once thats paid off you can add this payment and start on the next debt.

There is conflicting advice but I think personally you should snowball on the smallest debt first, despite interest rate, doing this is emotionally and physiologically beneficial, most people cant sustain many years at this so knocking off debts quickly can be hugely motivational.

Unsecured Debts
Description....................Debt......Monthly.. .APR
loan 1 .............23000...........383............8.4
loan 2 .............7200.............180............9.6
mbna1 .............4500............125.............0
mbna2 ..............2800..............25...............0

My second observation is that you need to increase your household income, I now have 3 jobs, I work in Sales for a Dealership, deliver for Amazon Flex and also just about to start weekends at the post office sorting office on Christmas Casuals.

The other thing is, as previously advise, sell the cars, quickly. And then throw whatever money at the debt you are currently tackling on the snowball.

tunnie123

yes emergency fund is already saved up, yes i think it would be better for us to get rid of a whole debt then move onto the next...

im no mortgage expert but i know there are some out there, so what is the chance our remortgage will be at a similar rate if we just go with Natwest?

thanks

kangoora

tunnie123 wrote: »

yes emergency fund is already saved up, yes i think it would be better for us to get rid of a whole debt then move onto the next...

im no mortgage expert but i know there are some out there, so what is the chance our remortgage will be at a similar rate if we just go with Natwest?

thanks

I've no particular knowledge of Natwest but on our latest renewal with Santander we got a competitive 5 year rate. It certainly wasn't the best available 5 year rate but with me retiring early we decided to go with it as the savings weren't that big on a monthly basis and avoided the hassle of changing lenders.

You may be best posting this particular question on the Mortgage board

cha97michelle

I would definitely put some time into applying for DLA and possibly carers allowance for your child. If he needs one on one carer at school, that suggests he might qualify. I get it for my son for autism and he has never had that level of support within school.

I was given forms to apply for it when my son was diagnosed.

tunnie123

Ah thanks have downloaded the forms tonight so will get them done,just out of interest how much do you get? She is part of the reason my wife isn’t going back to work yet as with the new baby etc she is really struggling with the changes etc so my wife wants to be there for her....