Finding the way through a £100k hole

I'm a long time lurker, and a person with long time financial challenges!

I'm self employed with a now-profitable business, but went through a very difficult period which has left me with with a legacy of debts that I'm desperately trying to work through. At its height, the struggles were bad enough that I resorted to short time, high interest loans and payday loans. Thankfully, through sheer hard work and bloody mindedness, I managed to pay these off in full. My biggest issue is a mammoth £75k HMRC debt which I have been trying to negotiate a repayment schedule with them over for the last 2 years. It is getting to a point where we need to agree something or they will just make me bankrupt. To add, I have been trying to engage with them over this period, but they have really mismanaged my case, and until they agree to something in writing, I'm reluctant to plow my money into it in case they just take what I have and petition for my bankruptcy anyway. We are still talking, so I do feel there is some hope. I veer between just thinking 'sod it' and making myself bankrupt, and being very stubborn and thinking 'no, it's my debt, I must pay it anyway I can'. I really want to pay it, a lot will depend if I can keep HMRC on my side. I've found talking to them, and being honest is by far the best approach.

I've just added up £20k of debts on my personal credit cards :eek: which to be honest has just been overspending. Nothing particularly crazy, it's just built up over a few years.

My business turns over around £800k, so I have some wriggle room in terms of raising cash. I am currently setting some serious budgets for the business next year to try and free up some funds to the HMRC debt (which are in my name as an individual). The business has some other borrowing which is being easily serviced. What I have learnt over the years is that bad financial habits follow you around whether you earn 8k or 800k - the problems are the same, the sums involved are just bigger. What this has meant is that personally I am leaving myself really vulnerable to any downturn in our already volatile industry. My pension is crap, my savings are zero, my children have nothing saved for them and we live in a rented house. So a lot of money passes though my hands but really I have very little to show for it.

I would really like this decade to be the one where that changes, as it is starting to send my anxiety through the roof. I lose a lot of sleep over it and over my children's future.

I thought a diary would keep me accountable. I am obviously not going to post my business related budgets on here, but will detail our household spending, as I feel like we need to take control and change our whole attitude.

Well done if you've got this far!:T
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Comments

  • Sounds like a massive task but I'm sure you can do it! What kind of profit are you getting from the business? Any other income?

    Good luck with HMRC. I'm sure they would rather you paid it than go through bankruptcy.

    I'll follow with interest

    STM
  • brizzlegirl
    brizzlegirl Posts: 1,260
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    edited 12 January 2020 at 2:05PM
    Well done for being brave and posting. Glad you made the move in from 'lurkdom' :)

    Very best of luck with your journey. Like you, we do have a good income, but the money has always just seem to have walked back out the door. We have a hugely different focus now tho, obsessive with YNAB and budgeting, both me and OH (his really joining in on the DF journey has been a revelation) rigidly fixated on the end goal of being DF and then MF so we then have some financial independence and so options for how we want to live our lives and support our kids and community

    Best wishes

    Brizzle
  • Sounds like a massive task but I'm sure you can do it! What kind of profit are you getting from the business? Any other income?

    Good luck with HMRC. I'm sure they would rather you paid it than go through bankruptcy.

    I'll follow with interest

    STM

    Thank you! Business is now making around £60-70k a year profit. But that's before I take anything out of it. I am sure we can streamline more. I've been going over the budgets and last year we went £35k over spend budgets - even with a 65k profit. If we'd stayed under budget that would have made a huge difference.
    I could do other work as well, but TBH it is simply hours in the day. I've got two young children - I already work every spare hour I have and into the evening. I've made a lot of mistakes over the years, but lack of effort has never been one of them! :D
    OH is involved too, so that income/profit is joint.
  • sourcrates
    sourcrates Posts: 28,493
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    Just a note of caution with regard to HMRC, its good you are still in talks with them, but make no mistake, if they decide to make you bankrupt, it will happen, common sense and logic do not apply to your dealings with them, they will make you bankrupt, if you cannot agree a repayment schedule they approve of, just because they can do it, and for no other reason.


    Our bankrupcy forum has many a tale from people, much like yourself, in similar circumstances, where HMRC has made them bankrupt, and they lost everything, in most cases less than 10% of the debt was recovered, but it didnt matter, so just be vigilant.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected]. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Well done for being brave and posting. Glad you made the move in from 'lurkdom' :)

    Very best of luck with your journey. Like you, we do have a good income, but the money has always just seem to have walked back out the door. We have a hugely different focus now tho, obsessive with YNAB and budgeting, both me and OH (his really joining in on the DF journey has been a revelation) rigidly fixated on the end goal of being DF and then MF so we then have some financial independence and so options for how we want to live our lives and support our kids and community

    Best wishes

    Brizzle

    This is one of the things I really struggle with. My OH is terrible with money (worse than me :rotfl:) and really wants nothing to do with it. I keep all our bank cards and do all the spending. I'm not sure if it would stress me out more if he was involved - he just can't be trusted with money - I just give him a small amount in his account every month which he can do what he likes with. I don't actually mind dealing with it all, but it does mean the mental load is mine and mine alone :(
  • Isitdoable
    Isitdoable Posts: 96
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    edited 12 January 2020 at 2:42PM
    sourcrates wrote: »
    Just a note of caution with regard to HMRC, its good you are still in talks with them, but make no mistake, if they decide to make you bankrupt, it will happen, common sense and logic do not apply to your dealings with them, they will make you bankrupt, if you cannot agree a repayment schedule they approve of, just because they can do it, and for no other reason.


    Our bankrupcy forum has many a tale from people, much like yourself, in similar circumstances, where HMRC has made them bankrupt, and they lost everything, in most cases less than 10% of the debt was recovered, but it didnt matter, so just be vigilant.

    Thanks sourcrates....I've had lots of dealings with them over the years, so I know how ruthless they are. They've currently served me with two statutory demands - both of which have expired as they've done nothing with them! They tell me that if I can clear the balance within 12 months they will hold off, but I just don't know. To be fair, I don't really have 'anything' they can take. Its just my pride that is holding me off applying myself!
  • I've lurked a lot on the bankruptcy board while lurching from one point of view to the other!!
  • It's not yet a full SOA, but it is a budget of sorts, showing what we are spending at the moment. Total is £4187 per month, before we've even paid a credit card off. Which explains why we have been taking about £5k per month from the business, which is a lot more than I wanted to. I don't think we are crazily extravagant, but our car is ridiculously expensive. We need a 4x4 where we live as we would (and have been) cut off in bad weather quite easily, but it is a massive drain the rest of the time. I'm not sure what to do about that right now, as its on finance and we haven't paid enough off to give it back. Going to go through every line and work out where the cuts can be made. I know we also spend far too much on food shopping - my meal planning and frugal shopping could be far better!

    HOME
    Mortgage/Rent: £1,300.00
    Buildings & Contents Insurance: £16.74
    Bank Account Fee: £15.00
    Council Tax: £161.00
    Water Rates: £36.00
    Electricity: £78.00
    Oil - £83.00
    Cleaning Products/Cleaner £10.00
    Home Phone £32.00
    Internet £16.00
    TV Licence - £13.20
    Mobile Phone (x2) £100.00
    Sky TV £22.00
    HOME TOTAL £1,882.94

    INSURANCE
    Life Insurance £35.00

    INSURANCE TOTAL £35.00

    EATS, DRINKS ETC


    Food and Household Shopping £450.00
    Me Personal £200.00
    OH Personal £200.00
    EATS ETC TOTAL £850.00

    TRANSPORT

    Breakdown Cover/Roadside Recovery Inc in bank acc
    Car Maintenance £83.00
    Car Insurance £52.86
    Car Tax £47.25
    Petrol/Diesel £300.00

    TRANSPORT TOTAL £483.11


    Car Loan Repayments £352.00

    REPAYMENTS TOTAL £352.00

    FAMILY

    Childcare/Play Schemes £100.00
    Nappies/Baby Extras £80.00
    School Trips - £10.00
    Pet Food - £10.00
    Other Family
    Swimming lesson £66.00
    Clubs £53.00
    Adult sports/hobbies £95.00
    National Trust Memb £10.00
    FAMILY TOTAL £424.00

    HEALTH & BEAUTY

    Haircuts - £100.00
    HEALTH & BEAUTY TOTAL £100.00 £100.00


    CLOTHES

    New Clothes £30.00
    New Children's Clothes £30.00
  • The items that stand out for me are as follows:
    Haircuts: is it really £100 a month? Why do you spend so much?
    Food: £450 seems quite a lot when you also allow £200 a month each for both yourself and your OH. I found this the area where I could make the biggest improvement by shopping at Aldi or Lidl, and taking packed lunches to work.
    Rent: Can you move to somewhere cheaper?
    Car Loan: Can you sell it and buy something more economical?
    Clothes: Can always be improved on by buying on eBay; also consider selling clothes on eBay can help
  • The items that stand out for me are as follows:
    Haircuts: is it really £100 a month? Why do you spend so much?
    Food: £450 seems quite a lot when you also allow £200 a month each for both yourself and your OH. I found this the area where I could make the biggest improvement by shopping at Aldi or Lidl, and taking packed lunches to work.
    Rent: Can you move to somewhere cheaper?
    Car Loan: Can you sell it and buy something more economical?
    Clothes: Can always be improved on by buying on eBay; also consider selling clothes on eBay can help

    Hair is for all four of us, and mine to be coloured every six weeks. My hair is a bit mental :rotfl: and needs to be done properly.....I've tried going to student haircut nights etc and it's always been a disaster.
    Unfortunately we live in one of the most expensive areas in the country hence the high rent, it's where our business is and also where school is. We are close to everything so have not much travelling in terms of distance, which makes a difference when you have a car that costs a fortune to run.
    I've put something in for clothes but TBH I don't think OH and I will use it, it's more for the children and school shoes and clothes. We have plenty in our wardrobes to keep us going!
    I agree the food budget is excessive. I find I'm so busy, I really struggle to find time to meal plan properly, and just do the same shop online as I do not have the time to go to the shops, especially with the children in tow!
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