"Lightbulb moment - 67k down. Need to execute a recovery plan"

bamgbost · 25 March 2020 at 7:07PM

Hi Guys
Gonna post my SOA in a sec....
Need some advice on what can be done, to trim some of the fat we have as we are up to our neck in debt.
This has been mainly due to my reckless spending and gambling. I am now doing my best to stop....used Gamcare, etc.

But the lightbulb moment with all this has to be the whole Coronavirus thing, which just shows that we need to have an emergency account and find our way out of this mess. Right now, if the worst was to happen dunno how we'd survive it.
I wanna use the current situation to help rebuild ourselves... with the reduced childcare costs (as kids are home) and the option for mortgage holiday. Perhaps by making use of these we can get some breathing space.

The SOA posted assumes still making full payment on everything, so hopefully all being well the next few months, with a bit extra in our pocket each month...some of the debts can be tackled even more. Although maybe some things like food cost may go up...due to us all being on lockdown.
Will take a look at the Stoozing calculator seperately, but i know it will prob suggest clearing the highest interest balance first... whereas I would prob prefer to clear the small cards first, and at least remove the minimum payment outgoing.

Not sure there is a lot to suggest to change, but will take whatever tips or suggestions you have.

thanks in advance

bamgbost · 25 March 2020 at 7:08PM

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 2

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 3100

Partners monthly income after tax....... 1550

Benefits................................ 145

Other income............................ 0[b]

Total monthly income.................... 4795[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 1075

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 150

Electricity............................. 50

Gas..................................... 50

Oil..................................... 0

Water rates............................. 35

Telephone (land line)................... 0

Mobile phone............................ 66

TV Licence.............................. 15

Satellite/Cable TV...................... 16

Internet Services....................... 26

Groceries etc. ......................... 280

Clothing................................ 0

Petrol/diesel........................... 240

Road tax................................ 34

Car Insurance........................... 65

Car maintenance (including MOT)......... 30

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 550

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 13

Pet insurance/vet bills................. 0

Buildings insurance..................... 10

Contents insurance...................... 10

Life assurance ......................... 35

Other insurance......................... 0

Presents (birthday, christmas etc)...... 40

Haircuts................................ 40

Entertainment........................... 25

Holiday................................. 0

Emergency fund.......................... 0[b]

Total monthly expenses.................. 2855[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 370000

Shares and bonds........................ 0

Car(s).................................. 7000

Other assets............................ 0[b]

Total Assets............................ 377000[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 284000...(1075).....2[b]

Total secured & HP debts...... 284000....-.........- [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Friend 1.......................200.......50........0

Friend 2.......................1500......200.......0

Paypal.........................1400......35........20

cred 7 (b1)....................1000......50........29

cred 6 (b).....................3700......100.......29

cred 5 (c2)....................1500......50........29

cred 4 (c1)....................2700......105.......29

cred 3 (s).....................1500......25........29

cred 2 (ha)....................4500......55........29

credit card 1 (m)..............2700......55........29

loan 4(rs).....................12000.....299.......9.9

loan 3 (aa)....................8200......205.......9.9

loan 2 (boo)...................12500.....390.......15

loan 1 (ha)....................14000.....290.......10[b]

Total unsecured debts..........67400.....1909......- [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,795

Expenses (including HP & secured debts). 2,855

Available for debt repayments........... 1,940

Monthly UNsecured debt repayments....... 1,909[b]

Amount left after debt repayments....... 31[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 377,000

Total HP & Secured debt................. -284,000

Total Unsecured debt.................... -67,400[b]

Net Assets.............................. 25,600[/b]

[i]Created using the SOA calculator at www.stoozing.com.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

EimearF · 25 March 2020 at 7:51PM

Check out Dave Ramsey as he suggests the snowball method you prefer and it really seems to work.
I had most sucess in clearing debts when i stopped balance transferring but it may help you as you have a lot on really bad rates.
Personally i would prioritise your friends. Owing money to people rather than financial institutions is not a good idea for you personal relationships.
you also need to build up a £1k emergency fund so you dont dip back into debt in crisis.

what is the debt from, as you SOA shows you daily expensens outside debt are well within your means?

bamgbost · 25 March 2020 at 8:00PM

Just You tube'd him. Dave Ramsey -The christian American guy?

Yes exactly... my plan was to do friends and small credit cards first.

As I said above, tbh... the debts have been down to years of gambling, and burying head in the sand about the problem. Currently managing that with therapy, gamcare, etc.

Fireflyaway · 25 March 2020 at 8:09PM

I second Dave Ramsey! Have a look at the debt free screams on his YouTube channel it's really motivating. People pay off crazy huge amounts of debt. The idea is that his method keeps you motivated.
I also second paying friends first. It's not really an issue if you owe a financial institution but relationship with friends is another thing. It does feel a proud moment when you hand back what you owe. I think your soa looks good. Doesn't seem like any category is unrealistic.

EimearF · 25 March 2020 at 8:23PM

Try and see past his a tad OTT Christian-ness. I try to see that he is trying to help and he believe that thats part of it.
Im glad you are getting help with gambling.
You have a good salary and this is totally doable. Its not ideal that we are in this stressful coronavirus situation.
Have you checked MSE eligibility calculator to see if you cna get any of the cards at 29% on to a 0% for a while.
It looks like you are rounding up your payments. Pick one and only make the minimums on everything else.
Presumably you will save a lot on petrol this month and you could pay back the friend you owe £200 to.
Once this coronavirus leaves us have you got anything you dont use you can sell? i know you dont get much but facebook marketplace got me a few hundred which made a dent for me and each credit line i paid off freed up more for the next one.

bamgbost · 25 March 2020 at 8:29PM

Will give Dave Ramsey a try. Thanks.
I agree with you both. Friends...and then blitz a card. and get the ball rolling.

EimearF · 25 March 2020 at 8:34PM

I still listen to him to prevent my urges to spend £10k on a holiday! (we all have our vices)
His baby steps keep you focussed, but i dont agree re paying off student loan or stopping pension while paying debt. Some things are different in the UK than America.
Make a signature for you profile to keep yourself accountable - it gives a little buzz when you can mark it down

EssexHebridean · 26 March 2020 at 9:52AM

bamgbost said:

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2[b] Do you need two cars or could you manage with one? Obviously you can't sell right now - but that could be worth thinking about.

Monthly Income Details[/b]
Monthly income after tax................ 3100
Partners monthly income after tax....... 1550
Benefits................................ 145
Other income............................ 0[b]
Total monthly income.................... 4795[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 1075
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 150 [b] If this is currently being paid over 10 months as is often standard, then request a change to 12 monthly instalments as this helps with budgeting[/b]
Electricity............................. 50 [b] Check that you are on the best tariff for this and the gas.[/b]
Gas..................................... 50
Oil..................................... 0
Water rates............................. 35 [b] Metered? If so think about ways of cutting use.[/b]
Telephone (land line)................... 0
Mobile phone............................ 66 [b] How many phones? This seems a bit high but depending on numbers may not be to far north of where it should be. On the other hand, if any of those phones are contract you can likely get a better deal by switching to SIM only when the contract ends.[/b]
TV Licence.............................. 15 [b]You sure about this? Mine is only £13.XX a month - the pennies vary hence the X's[/b]
Satellite/Cable TV...................... 16
Internet Services....................... 26 [b]Are you in contract for this? If not look to switch using the deals posted regularly on the MSE main site - then diarise to switch again when that deal ends.[/b]
Groceries etc. ......................... 280
Clothing................................ 0 [b] You need to budget something here - even if just for essentials[/b]
Petrol/diesel........................... 240
Road tax................................ 34 [b]If this is paid monthly, then set aside the same amount again each month ready to pay up front when the renewal happens as paying monthly carries a premium. If you already pay annually, then do make sure you set this amount aside each month, along the with the servicing and MOT Test money[/b]
Car Insurance........................... 65
Car maintenance (including MOT)......... 30 [b]This seems a little low for two cars on reasonably mileage? Have a look back at what you have spent over the past year - remember MoT Test, servicing, tyres, screenwash, car wash costs, wiper blades...then add 10% to that figure and divide by 12 - that is what you need to be putting aside each month.[/b]
Car parking............................. 0
Other travel............................ 0 [b]Nothing at all? You never use a train for any reason, or need to use a cab?[/b]
Childcare/nursery....................... 550
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 13
Pet insurance/vet bills................. 0
Buildings insurance..................... 10
Contents insurance...................... 10
Life assurance ......................... 35
Other insurance......................... 0
Presents (birthday, christmas etc)...... 40
Haircuts................................ 40
Entertainment........................... 25
Holiday................................. 0 [b] You definitely never take a long weekend to visit family, even? If so then that needs to be budgeted - otherwise those costs will trip up your budget.[/b]
Emergency fund.......................... 0[b]
Total monthly expenses.................. 2855[/b]
[b]

Assets[/b]
Cash.................................... 0 [b]You say you are putting aside money monthly for car costs, presents etc, so where is that money if you have no cash at all?[/b]
House value (Gross)..................... 370000
Shares and bonds........................ 0
Car(s).................................. 7000
Other assets............................ 0[b]
Total Assets............................ 377000[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 284000...(1075).....2[b]
Total secured & HP debts...... 284000....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Friend 1.......................200.......50........0
Friend 2.......................1500......200.......0
Paypal.........................1400......35........20
cred 7 (b1)....................1000......50........29
cred 6 (b).....................3700......100.......29
cred 5 (c2)....................1500......50........29
cred 4 (c1)....................2700......105.......29
cred 3 (s).....................1500......25........29
cred 2 (ha)....................4500......55........29
credit card 1 (m)..............2700......55........29
loan 4(rs).....................12000.....299.......9.9
loan 3 (aa)....................8200......205.......9.9
loan 2 (boo)...................12500.....390.......15
loan 1 (ha)....................14000.....290.......10[b]
Total unsecured debts..........67400.....1909......- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,795
Expenses (including HP & secured debts). 2,855
Available for debt repayments........... 1,940
Monthly UNsecured debt repayments....... 1,909[b]
Amount left after debt repayments....... 31[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 377,000
Total HP & Secured debt................. -284,000
Total Unsecured debt.................... -67,400[b]
Net Assets.............................. 25,600[/b]

[i]Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

OK - you are right that there isn't a lot of fat to trim - so maybe take a look at the various lines of credit you currently have and establish whether there is any chance of moving any of them to 0%? If you are not already signed up to the MSE Credit club, get yourself on there as that will tell you your chances of being accepted for 0% balance transfers - and that in turn will help your monthly minimum payments to make more impact.

There are areas you may be able to trim a little in the SOA - and even pennies will make a difference - so start at the top and analyse every line - for example changing that council tax to 12 monthly if currently on 10 will free up £25 a month which you can divert straight to starting an emergency fund. Each time you make a saving, find a home for that money you are shaving off your spending - whether that is to start overpaying the highest interest debts, or building that EF.

Similarly on minimum payments - where it is workable to do so change those to a fixed amount each month slightly above the current monthly minimum - this means that the amount you pay stays the same each month - helping with budgeting, and over time that payment has more effect on the outstanding balance as it doesn't fall a little each month. You do need to keep a close eye on this though - and it is only suitable for credit cards you aren't using.

Hopefully you can make out my comments in the SOA - the bold formatting doesn't work inside a quote box!

bamgbost · 26 March 2020 at 10:38AM

Thanks for the comments.

Yes the council tax is already over 12 months.

The phone bill is 2 contracts. 1 is SIM only already.

Yes after paying friends, its to start building an emergency fund next!

Your right there should be money towards clothes and holidays ( ideally.)

I am already on the credit club... but as you can see. high debt: income ratio and high usage on unsecure debts. So near to 0% chance of a new card. Need to get rid of 1 or 2. And bring the overall balances down to below 50% i reckon first....

EssexHebridean · 26 March 2020 at 10:51AM

Had a feeling you might not stand much chance but it's worth keeping an eye on, particularly as you start to get shot of things with OP's.

One thing - there are a lot of "round figures" on that SOA - as someone else has said, this may well mean that you have rounded things up - it's worth going through and putting in truly accurate figures for things as that will free up a few odd £'s that can be paid off something. If you currently have the agreement with your friend to pay £50 a month I'm going to suggest sticking to that, and then moving any odd pennies and pounds plus anything left over at the end of the month to the lowest balance 29% interest debt. Then in another few months, there will be a £50 lump freed up when the debt to your friend has gone and that can be diverted the same way.

The next few weeks are a great opportunity to keep that food spend as low as possible as well - do a full stock take of everything you have and then work out what meals you can make from that. Then buy just the bare minimum you need to top up the fresh stuff, milk, bread etc.

MSE Forum

"Lightbulb moment - 67k down. Need to execute a recovery plan"

Replies

Did you know there's an MSE app?

Regifting: good idea or not?

Energy Price Guarantee calculator