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Debt advice please :)

edited 23 February at 8:02PM in Debt-Free Wannabe
10 replies 691 views
bloomfield89bloomfield89 Forumite
18 posts
Seventh Anniversary 10 Posts Combo Breaker
edited 23 February at 8:02PM in Debt-Free Wannabe
Good evening - thanks for reading!
I am sure there are people who have asked for advice who are in similar circumstances so I'm sorry if this is the case but I would really like some advice if possible.
I currently have over 16K of debt, the debt has been accruing over the past 5 years and I've reached the stage where I'm having sleepless nights worrying about it, not ideal when I have 2 children under 6 and a full time job which is stressful enough...
This time last year I was diagnosed with anxiety and depression, I'm now in a much better place. I also have a new job which pays slightly more. I think I'm now ready to tackle my debt... but where to start??!!
I don't feel I have enough money to cover my bills as well as large chunk of the debt every month and the interest on a couple of the debts is very high.
My query is whether I should write to the companies advising them of my financial circumstances to see if the interest can be frozen, whether I should let the accounts go into default or have a debt management plan? Not sure what to do!
Thank you in advance for your help.

Debt Free Wannabe!

Replies

  • edited 23 February at 8:18PM
    Unicorn_cottageUnicorn_cottage Forumite
    456 posts
    Third Anniversary 100 Posts Photogenic
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    edited 23 February at 8:18PM
    Hello bloomfield89. The first thing we suggest is filling in a statement of affairs (SOA) which details your current financial situation and we can advise from there. https://www.lemonfool.co.uk/financecalculators/soa.php
    Well done on beating your anxiety & getting a new job!
    "Everything comes to him who hustles while he waits" Thomas Edison
    Following the Martin mantra "Earn more, have less debt, improve credit worthiness" :money:
  • bloomfield89bloomfield89 Forumite
    18 posts
    Seventh Anniversary 10 Posts Combo Breaker
    I think this is correct  :#

    Statement of Affairs & Personal Balance Sheet

    Summary

    Monthly Budget SummaryAmount(£)
    Total monthly income2,695.6
    Monthly expenses (incl. HP & secured loans)2,148.61
    Available for debt repayments546.99
    UNsecured debt repayments697.93
    Amount short for making debt repayments-150.94

    Personal Balance Sheet SummaryAmount(£)
    Total Assets (things you own)4,000
    Total Secured & HP Debt-492.68
    Total Unsecured Debt-15,958.08
    Net Assets-12,450.76

    Household Information

    Number of adults in household1
    Number of children in household2
    Number of cars owned1

    Income, Expense, Debt & Asset Details

    IncomeAmount(£)
    Monthly income after tax1975
    Partners monthly income0
    Benefits137.6
    Other income583
    Total monthly income2695.6

    ExpensesAmount(£)
    Mortgage0
    Secured/HP loan payments171.3
    Rent550
    Management charge (leasehold property)0
    Council tax50.5
    Electricity80
    Gas20
    Oil0
    Water Rates40
    Telephone (land line)0
    Mobile phone31
    TV Licence12.88
    Satellite/Cable TV58.99
    Internet services21.95
    Groceries etc.285
    Clothing50
    Petrol/diesel150
    Road tax10.5
    Car Insurance36.49
    Car maintenance (including MOT)10
    Car Parking5
    Other travel0
    Childcare/nursery350
    Other child related expenses20
    Medical (prescriptions, dentists, opticians etc.)5
    Pet Insurance/Vet bills0
    Buildings Insurance0
    Contents Insurance10
    Life Assurance15
    Other Insurance0
    Presents (birthday, christmas etc.)50
    Haircuts15
    Entertainment30
    Holiday50
    Emergency Fund20
    Total monthly expenses2148.61

    Secured & HP Debt DescriptionDebt(£)Monthly(£)APR(%)
    Mortgage0(0)0
    Hire Purchase (HP) Debt492.68(171.3)0
    Secured & HP Debt totals492.68--

    Unsecured Debt DescriptionDebt(£)Monthly(£)APR(%)
    Aqua Credit Card3203.2417341.18
    Argos Store Card335670
    Next Directory Card2030.239823.9
    Family70000
    Loan7522.042320
    Capital Credit Card1495.5771.930
    Westcot672560
    Unsecured Debt totals15958.08697.9300000000001-

    Asset DescriptionValue (£)
    Cash0
    House Value (Gross)0
    Shares and bonds0
    Car(s)4000
    Other assets (e.g. endowments, jewellery etc)0
    Total Assets4000

    Comments on the results

    You do not have enough monthly income to meet your expenses and your minimum monthly debt repayments. Seek ways to increase your income and/or reduce your expenditure by £150.94. Your total secured debt is greater than the value of your house. Is this correct? Whatever your results show, it always pays to seek advice or comments from others. Why not post your SOA details on our Debt Management discussion board or on your preferred discussion forum elsewhere. Thankyou for using the SOA Calculator at www.LemonFool.co.uk
    Debt Free Wannabe!
  • edited 23 February at 10:03PM
    bloomfield89bloomfield89 Forumite
    18 posts
    Seventh Anniversary 10 Posts Combo Breaker
    edited 23 February at 10:03PM
    Capital one cc is 0% interest until May 2020. 
    Currently not paying off the loan from family, although I would like to, there's no deadline for this as such.
    Aiming to put £20 a month into the emergency fund but currently have nothing in this.
    My youngest will get 30 hours free childcare in September 2020 which will reduce childcare costs significantly so I'll only be paying for childcare for them during the school holidays.
    Debt Free Wannabe!
  • edited 23 February at 10:33PM
    Willing2LearnWilling2Learn Forumite
    5.7K posts
    Seventh Anniversary 1,000 Posts Name Dropper Photogenic
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    edited 23 February at 10:33PM
    Double-post (sorry)
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    :smiley:
  • edited 23 February at 10:39PM
    Willing2LearnWilling2Learn Forumite
    5.7K posts
    Seventh Anniversary 1,000 Posts Name Dropper Photogenic
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    edited 23 February at 10:39PM
    My query is whether I should write to the companies advising them of my financial circumstances to see if the interest can be frozen, whether I should let the accounts go into default or have a debt management plan?
    Hi,
    I would write to all your creditors, with holding letters, asking that the accounts are frozen whilst you seek advice.  If it were me, the letters would be requesting that the accounts are frozen for six months and that DMP payments would be beginning DD/AUG/2020.  This would give you the breathing space to build an Emergency Fund before your DMP starts.  It also means that the accounts should all be defaulted, which is a good thing when you are on a DMP.

    Just as an example, if you were to start a DMP in August, and scheduled £500/month total DMP payments, you could be debt-free in just a little over three years.  This is not taking into account the fact that you will be having 30 hours free childcare from September...
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    :smiley:
  • vickyavickya Forumite
    23 posts
    10 Posts
    Looking at your SOA, I wouldn't be putting into a holiday fund. Holidays are a luxury, not a necessity and you shouldn't be going on holiday until your debts are cleared. Satellite / cable TV should go, and you should look at a SIM only deal on your phone to bring that down to about £10 a month. If you're in contract with these things and you can't get out of the contract then they'll have to stay for now but please make sure you don't renew them. You need the money you're currently spending on them more than you need those services. 
  • viv0147viv0147 Forumite
    1.7K posts
    Part of the Furniture 1,000 Posts Photogenic I've been Money Tipped!
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    I suggest you get yourself a DRO and then you will be able to start again from scratch debt-free, of course, you will not be able to have credit anywhere which could be a good thing.  
    Low Carb High Fat is the way forward I lost 80 lbs

    Since first using Martins I have saved thousands
  • sourcratessourcrates Forumite, Board Guide
    19.9K posts
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
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    OP may have trouble meeting the £50 or less disposable income requirement for a DRO.

    Although some of those figures could be juggled around to more realistic values.

    I suggest you use the stepchange "debt advice tool" play around with your budget figures so that it shows a £50 or less disposable income figure (not inc debt repayments) see what the advice is.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File and Ratings, Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to:
    [email protected].
    Any views expressed are mine and not the official line of MoneySavingExpert.com.
    For free debt advice, contact either : Stepchange, National Debtline, CitizensAdviceBureaux.
  • monetxchangemonetxchange Forumite
    252 posts
    100 Posts Name Dropper Photogenic
    ✭✭
    I think if you have an honest look at your true spends for the last year, you'll probably realise you're spending much more on these categories than you've put in your SOA. For example, two store cards in your debts indicates they're being used for furniture/presents. It's not a criticism, it actually makes it easier for you to look at it and see what are not essential. It seems like there's loads of cutbacks you can make. It won't solve the problems now, but will ensure you budget properly in future to stay out of debt. 

    For example, TV packages, mobile phones, utilities, clothes and holidays can all be greatly reduced until you're back on your feet. It's totally doable. Well done on facing up to it all!


    LBM: 05/05/2019 Highest Debt: £37,514 Debt Free: 06/03/2020 B)
  • edited 25 February at 10:41PM
    monetxchangemonetxchange Forumite
    252 posts
    100 Posts Name Dropper Photogenic
    ✭✭
    edited 25 February at 10:41PM
    Double post!
    LBM: 05/05/2019 Highest Debt: £37,514 Debt Free: 06/03/2020 B)
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