181k in Debt - Need Help

daniellemaire

So, I guess this is the start of my debt free diary..... Oh boy, I just worked out my debts and I cannot believe how much I owe.  I bought a house within the last 6 months, I've done the house up and it's now worth £65,000 more than we paid for it.  The plan is (and always has been) to do the house up and remortgage in 12 months time, but currently I have so many outstanding loans that it's not possible.  So the plan in the mean time is work my butt off to pay these loans off, to get my credit score up! 

(I work in a business that does environmental cleaning for the police and hospitals so I am still working at the moment, for obvious reasons)

1 - £37,000 (loan in my parents name which was the deposit for this house) 
2 - £1399.80 (boiler & installation) 
3 - £4,000 £3000 (work loan) 
4 - £2837.82 (barclays loan) 
5 - £1273.18 (overdraft) 
6 - £1000.00 (overdraft) 
7 - 3757.11 (barclays loan) 
8 - £2815.37 (car finance that I've been paying off for 4 years!) 
9 - £124,333.30 (mortgage) 
10 - £2015.83 (credit card) 
11 - £291.12 (credit card) 
12 - £1352.74 (hmrc payment due in July) 
PAID IN FULL - 13 - £80 (electric bill that I cannot seem to pay, it's in the old owners name which we don't know and cannot get through ANY security without it but the company keep sending us letters chasing it - we've now switched providers)
14 - £300 (council tax)

I can't tell you how embarrassing this all is, and how overwhelmed I feel right now looking at this. 
Is it even possible to pay these off?

I am also self employed, and I was hoping the money coming in from my nail salon would pay most of the bills off (£1,000 a month) but the salon is now closed down until further notice so the thought of paying these debts off scares me a lot. 

My wages are around £1,600 a month 
And I do have a £1,000 bonus coming on my next wages for working through the pandemic

Wish me luck!!!

tacpot12

Hi 
Well done for documenting your journey on MSE. It will help, and you will get enormous satisfaction when you look back at how far you have come. 
181K sounds like a lot, but most of that is mortgage and there are two of you so clearing it is doable!
Good luck!

Sorry -  I just saw in the title that you also wanted help. 
You should post a Statement of Affairs (an SOA) here to get more help to reduce your outgoings. 
Have you prioritised your debts? You have some more important debts, e.g. the payment to HMRC, your Council Tax arrears and mortgage payment.  
To pay the bill, you just need to find out the sort code and account to pay to, and the reference number. If you have a bill all of this information should be somewhere on it. I would clear that bill asap even though it is not yours.
You should prioritise paying the loan that is your parents name (for moral reasons rather than financial), after that you should make the minimum payments on everything else except the credit card bill with the highest interest rate. Once that credit card bill is clear, move your focus to paying off the next credit card bill. 
Have you stopped using you credit cards?
Hope this helps.

Buffythedebtslayer

Hello, 
The mortgage is pretty low - hopefully the repayments are low? (bear in mind I am from the South so that does honestly look dreamy to me!!) 
It is completely possible to pay these debts off. What are your minimum payments? 
I am aware that some banks are freezing interest on overdrafts? And you could ring or write to the CC companies to explain that you have suffered a loss of income and can they freeze interest. It is hard at the moment as everything and everyone's finances are up in the air. 
I would set up about cancelling anything unnecessary, any subscriptions or sadly charity payments you might have. That bit is depressing. This sounds counter intuitive but I would set up a savings account in a new bank and pay money into that when ever you can.  I would also focus on the overdrafts first, if you can or do the majority of your banking elsewhere - perhaps with the bank you open the savings account with. 
Work out your minimum payments  and then you can see what you have to play with. 
It is possible tho. 

daniellemaire

tacpot12 said:

Hi 
Well done for documenting your journey on MSE. It will help, and you will get enormous satisfaction when you look back at how far you have come. 
181K sounds like a lot, but most of that is mortgage and there are two of you so clearing it is doable!
Good luck!  Thank you so much - unfortunately it's only me paying off the bills at the moment as my partner is out of work, but once he's allowed to work again he will be able to contribute again. 

Sorry -  I just saw in the title that you also wanted help. 
You should post a Statement of Affairs (an SOA) here to get more help to reduce your outgoings. 
Have you prioritised your debts? You have some more important debts, e.g. the payment to HMRC, your Council Tax arrears and mortgage payment.  Excellent idea, something I hadn't thought about!  I'm working on this as we speak   
To pay the bill, you just need to find out the sort code and account to pay to, and the reference number. If you have a bill all of this information should be somewhere on it. I would clear that bill asap even though it is not yours.  After your suggestions I went through the 12 letters they had sent and found the bank details - so that's all paid off - YAY!!   
You should prioritise paying the loan that is your parents name (for moral reasons rather than financial), after that you should make the minimum payments on everything else except the credit card bill with the highest interest rate. Once that credit card bill is clear, move your focus to paying off the next credit card bill. 
Have you stopped using you credit cards?  We stopped using the credit cards about 2 months ago and have been paying the minimum payment on them just to get by, but I'm pretty certain the minimum payment is only paying off interest as the amounts don't seem to be going down!!  
Hope this helps.

Thank you so much for all of your helpful ideas 

daniellemaire

Buffythedebtslayer said:

Hello, 
The mortgage is pretty low - hopefully the repayments are low? (bear in mind I am from the South so that does honestly look dreamy to me!!) Thank you, the repayments are £379.66 a month, and we had set up an over payment of £200 a month but I have temporarily cancelled the over payment until my partner is back at work, I'm so glad our mortgage payment is so little at this difficult time especially!! 
It is completely possible to pay these debts off. What are your minimum payments? 
Minimum payments are £164.27, £129.33, £69.34 and £40.00 on our loans and credit cards and the loan in my parents name is £500 a month not including the boiler installation which I also owe them for!
The car finance has allowed me to put it on hold for 3 months, but it's usually £217.82 a month. 
The HMRC bill is due in July, but I know that this can be put off until January 2020 with the new government announcement that came out recently, but I do want to pay off in July if I can manage it as I don't want to keep putting things off!!  Our usually income is £5,000 a month (my wages £1600, my partners £2400 and my nail salon £1000) but at the moment because of covid 19 it's been reduced to £1600 so I know at least in a few months time things won't be as difficult and I can start making larger payments towards the loans etc... 
I am aware that some banks are freezing interest on overdrafts? And you could ring or write to the CC companies to explain that you have suffered a loss of income and can they freeze interest. It is hard at the moment as everything and everyone's finances are up in the air. This is an excellent idea, I will definitely do this tomorrow - thank you   
I would set up about cancelling anything unnecessary, any subscriptions or sadly charity payments you might have. That bit is depressing. This sounds counter intuitive but I would set up a savings account in a new bank and pay money into that when ever you can.  I would also focus on the overdrafts first, if you can or do the majority of your banking elsewhere - perhaps with the bank you open the savings account with. That's another great idea, we do have a savings account set up but it's too easy to access and we always end up moving the money out and using it to pay things off so I will definitely be doing this   
Work out your minimum payments  and then you can see what you have to play with. 
It is possible tho. 

Thank you for all of your suggestions, I'm working out exactly what our direct debits are as we speak

daniellemaire

DAY 1
The electric bill is now paid off - YAY!! (thank you for the suggestions)
13 - £80 (electric bill that I cannot seem to pay, it's in the old owners name which we don't know and cannot get through ANY security without it but the company keep sending us letters chasing it - we've now switched providers)
I've also gotten the "5 - £930.68 (overdraft)" down to £789.43, however I've just worked out my direct debits due for the rest of the month and this overdraft will only JUST cover them.  So lets ignore this overdraft for now, and I'll work on paying it off on pay day (last Friday of the month). 
I've also cancelled my Spotify, Netflix, Amazon and Face Tune monthly subscriptions (face tune for my nail photos, but it's not going to be used until the salon is back open, but it's worth the saving in the mean time!) AND my yearly subscription for Ancestry.  Monthly saving of £36.96 and yearly saving of £99.99.
For day 1 I think it's a good start, but I still have a LONG way to go! 

Mrs_F_2017

Hello, 
I thought I'd come say hello on your diary too! Im with Buffy - your mortgage looks low (compared to us southerners) so its definitely a great opportunity to pay down your debts once this painful period is over.   In the short term, do what you need to do to get through this difficult time. Will your partner be back in work soon, once they are, you've got a great opportunity to throw money at the debts!

Have you looked at the interest rates in a snoozing calculator? I saw you said about overpayments to the mortgage in normal times, but it might be worth throwing every penny at clearing the other debts quicker first if the interest rates are higher?

Sounds like you've done a lot of work to your house, are you finished with it now or is there more to do? 

Good luck, I'll keep checking in x

daniellemaire

Mrs_F_2017 said:

Hello, 
I thought I'd come say hello on your diary too! Im with Buffy - your mortgage looks low (compared to us southerners) so its definitely a great opportunity to pay down your debts once this painful period is over.   In the short term, do what you need to do to get through this difficult time. Will your partner be back in work soon, once they are, you've got a great opportunity to throw money at the debts!  As soon as we're all back to work he will be back, unfortunately he went self employed recently which means he isn't covered by any schemes so we aren't able to claim any money back.  He's an electrician that 95% of his work is in care homes so as you can imagine unless it's an emergency he doesn't have much to do.  I'm hoping he will be back at work June / July   

Have you looked at the interest rates in a snoozing calculator? I saw you said about overpayments to the mortgage in normal times, but it might be worth throwing every penny at clearing the other debts quicker first if the interest rates are higher?  Excellent idea, something I hadn't thought of looking into - looking into it now, thank you   

Sounds like you've done a lot of work to your house, are you finished with it now or is there more to do? Luckily we've sorted most of it, but we need new windows before winter (£3k all of our are smashed and we've got rigid plastic glued to them holding them together for security   ), we're working on converting the garage into my nail salon so once we're back up and running I don't need to let clients into my house so it needs electrics, flooring and plastering etc(£1.5k), and after that we need a new roof (£15k) but I think that can wait for a couple of years  So only a few things left but it's all the big expensive jobs!!  

Good luck, I'll keep checking in x

Thank you so much x

daniellemaire

Long delayed update - ugh, what a nightmare it's been recently! 

So, since my partner has been out of work (he's newly self employed so can't claim anything off the government), we've been really struggling to make ends meet but I was desperate to make sure all bills went out on time so we didn't effect our credit scores.  I started selling press on nails online, and I've made £232 this month doing this, on top of my wages.  

I also managed to get my partner some hours at my work, so he is due £622 on Thursday (anything is better than nothing!!)
 
My wages however are VERY low this month.  Loan 3, which says credit card, is actually incorrect, not sure why it says credit card, but it's a loan that I owe to my work.  This month they've been lovely and given me a £1000 bonus for working through the pandemic, which I asked if they could take off my loan.  I've just been informed that with all the added taxes that I have to pay for that bonus, and for them taking the £1000, I'm left with a tiny £1287.55........ but think possitively, it's £1000 of a loan that I owe - YAY!! 

Moving on - unfortunately / fortunately I'm being furloughed on Monday!!!  I'm not really sure what this means, or when I will get paid, but I'm pleased that I will have some time off work as the last few weeks have been very stressful and if I'm honest, I've been struggling to cope with it all - I don't do very well being overwhelmed    I actually have liver failure, and I was starting to notice that whenever I am struggling with my health, is usually when I'm extremely stressed about work / money / loans etc, so I'm hoping some time off will help me out in this aspect and I can start to figure out what my body needs (no stress lol). 

I'll be using the time wisely, to start getting our new house together, and start preparing my new salon/shed which we need to plasterboard and then get plastered.  The plastering is going to cost us £200, but it's essential that my salon is up and running ready for when we are allowed to go back to work as I'm desperately in need of the money that I can make by allowing customers to come to my home for gel and acrylic services.  Before lock down I was bringing in £1000 a month from running my salon, on top of my wages. 

I think that's it for now, once I've been paid and figured out my bills etc, I'll do another update, probably at the weekend

daniellemaire

WHAT A 3 WEEKS IT'S BEEN - furlough leave has been INTERESTING to say the least. 
You know that my main aims are to pay my bills and loans on time, to avoid affecting my credit score, so I can remortgage asap.  After getting a mortgage and loans at the start of the year my credit score went down to 574, and is now back up to 667 - which is great, although still plenty of work to do.
 
MAKING MONEY, SUPPORTING THE FAMILY
I've been really pleased with myself, as I decided I couldn't sit around doing nothing during my 3 weeks of furlough leave, so I decided to make the most of the supplies and the skills that I have and started selling Press On Nails - which was a great idea, as I have currently made over £3,000 in 3 weeks.  Like, what the hell.  That's amazing.  
I've obviously had to pay lots of postage, fees to sell and buy even more supplies so I haven't made a huge amount of profit (probably 50%), but this 50% has kept me and my family going.  I was able to pay all of my direct debits on time (which my wages wouldn't have covered due to the above comment), I was also able to pay a bit more off loans and overdrafts (not much lol), and I was able to buy FOOD.  
Our list of outstanding loans and bills is still very high, but I'm pleased that I haven't missed even one direct debit and I currently have £228.04 left on my overdraft, which I need to buy food with, and a new set of work trousers.  The £228.04 needs to last 9 days, which should be fine! 

OUTSTANDING LOANS & BILLS
1 - £36,500 £37,000 (loan in my parents name which was the deposit for this house) 
2 - £1399.80 (boiler & installation) 
3 - £3,000 £4000 (work loan) 
4 - £2758.19 £2837.82 (barclays loan) 
5 - £1071.96 £1273.18 (overdraft) 
6 - £1000.00 (overdraft) 
7 - £3592.11 £3757.11 (barclays loan) 
8 - £2815.37 (car finance that I've been paying off for 4 years!) 
9 - £124,333.30 (mortgage) 
10 - £2015.83 (credit card) 
11 - £291.12 (credit card) 
12 - £1352.74 (hmrc payment due in July) 
PAID IN FULL - 13 - £80 (electric bill that I cannot seem to pay, it's in the old owners name which we don't know and cannot get through ANY security without it but the company keep sending us letters chasing it - we've now switched providers)
14 - £300 (council tax)
DEBT TO START WITH £182,456.37 (4th April 2020 - think I counted wrong the first time, thinking it was 181?)
DEBT CURRENTLY £180,430.42 (19th May 2020)

SO WHAT'S NEXT?
Oook, not sure what our money situation is going to be this month/next month - I'm still on furlough leave, but I am currently on standby, meaning I have already done my original 3 weeks, and could be asked to come back in a couple days time, or even another 2/3 weeks - it all depends on our customer base.  So I know I'll be receiving around 80% of my wages, which won't be loads, but I'm sure I can make it work. 
Luckily my boyfriend returned to work on Thursday last week, so he has started to earn an income, but we have to understand that people don't have the money to pay invoices just yet, so he may not be paid from his customers for a few weeks, but as you can imagine, usually he wouldn't allow this, but businesses need to support businesses in this difficult time so we will just have to put up with it. 
My plan is to up my prices on my Etsy shop, so my sales start to decline, which sounds silly but if I return to work I need to make sure I can still cope with the orders I'm receiving - currently I have 79 outstanding orders, so I wouldn't be able to cope if I returned to work tomorrow.  
With regards to bills, I want to make sure after my pay day that I pay off the £300 council tax bill, £500 off my parents loan and I want to pay something (anything) off all of the loans and credit cards.  

HOUSE UPDATE
As we are wanting to remortgage, we are obviously trying to up the value of the house at the same time.  I have decided to paint all of the hall ways and staircase in our house so I am currently searching for the perfect grey (almost white) paint to do this with, I believe this will cost me around £100 for a large tin, roller and brushes. 
I am contacted a few mortgage brokers today to start the discussion of remortgaging so I know what I need to do in terms off, what my credit score needs to be, what the house needs to be like, what bills and loans need to be paid off in full etc.  
Hopefully we can remortgage by the end of the year?

Sorry it's a long post, not sure if anyone evens reads these things to be honest but I feel more organised when I type these things out, and I'm actually enjoying seeing the money I owe go down. 

OH AND ALSO, CREDIT CARDS HAVE BEEN CUT UP SO THEY CANNOT BE USED ANYMORE YAYYY!!

WhySeaEm

Hello, well done on cutting those credit cards up!