Help and Advice Needed.

lavajelly011

Hi

Ok so I finally had what you seem to call a light bulb moment after pretty much my life fell apart. I have always been in some sort of debt which has been easily manageable however I am now really facing the crunch. Problem is I can only account for half of it. The rest well….???

I really need help from those that have been there and have some experience. I need to get out of my debt situation. I have listed my affairs below in the posting.

I need to get out of my debt situation which is in the order of £90,000. This is all unsecured debt and nothing to do with my mortgage which is an additional £330 000.

I have been looking to consolidate my debt into a structured loan payment. I have had 2 scenarios which I can take up and would like some advise on whether these look ok and in your opinion which is preferable.

Offer1
Take a secured load for £40,000 and an unsecured loan of £8000.
Details of secured loan
Provider – Abbey (Also my mortgage supplier)
Amount - £40,000
APR – 7.14 fixed for 3 years (variable after this)
Term of loan – 15 years
Payment per month £366
Optional payment insurance of £86.20

Unsecured loan
Whoever Payment per month £106.

Offer 2
Provider - Firstplus
Amount £48 000
APR – 6.2% variable
Term of loan 10 years
Payment per month £560

My credit rating appears to be good. If the Experion service actually worked that I pay £50 a year for I could actually tell. But for 3 days they have not been able to provide a statement.

I am worried about using FirstPlus as they don’t seem to have a good reputation and the rate is variable. Trawling through the message boards it looks like they like to reel you in with a low rate then increase it as required.


Current Debts

Halifax Credit Card
Balance £10,044
Monthly Payment £200
Interest Rate 5.5%
Payoff with Consolidation No

Northern Rock Personal Loan
Balance £15,500
Monthly Paymen £145
Interest Rate 10%
Pay off with Consolidation No

Wife Barclay card
Bal £4100
Mnth Pay 82
Inter Rate 20%
Pay off Yes

Smile Credit Card
Balance £12,500
Mnth Pay £255
Int Rate 18%
Pay Off Yes

My Credit card
Bal £3485
Month Pay £78
Interest Rate 19.9%
Pay Off yes

Morgan Stanley
Bal £3500
Month Pay 75
Int Rate 0% 9int free till Sept 208)
Pay Off yes

Egg Card
Bal £6254
Mnth Pay £127
Int Rate 16.9%
Pay Off Yes

MBNA
Bal £15,826
Mnth Pay £282.63
Int Rate 17.5%
Pay Off Yes

Egg Loan
Bal £19,000
Month Pay £350
Int Rate 7.66%
Pay Off No

Total Loans 90,209


Balance will pay off on next higher card

Here is an analysis of my budget and spending

Expenses - Pre Consolidation
Life Insurance £49.4
Mobile Phone 1 £49.09
Halifax Credit Card £145.49
Unit Trust Purchase- Kids Saving Acc £110
life Insurance £35.57
Sky Digital £48
Water £34
TV licence £12
Electricity £138
Northern Rock – Loan £167.6
Council Tax £222
Abbey - Mortgage £1702
Wife Credit Card Barclays £82
My Barclay Card £78
Morgan Stanley Credit cared £73
Egg Card £125
Mobile phone 2 £50
MBNA - £282
Egg Loan £350
Smile Credit Card £228
Train Travel £120
Groceries, Clothing, Household Expenses £1300
Petrol £200
Child Minder/Carer £450
Cleaner £80
Telephone £75
Total Expenses £6206.15

Income
My Salary £4533
Wife Salary £1700
Child Benefit £102
Total Income £6335

Excess £128.85


Expenses - Post Consolidation
Life Insurance £49.4
Mobile Phone 1 £49.09
Halifax Credit Card £160
Unit Trust Purchase- Kids Saving Acc £110
Scottish Widows life Insurance £35.57
Sky Digital £48
Water £34
TV licence £12
Electricity £138
Northern Rock – Loan £167.6
Council Tax £222
Abbey - Mortgage 1702
Mobile phone 2 £50
Egg Loan £350
Consolidation Loan Abbey £366
Payment Protection on Abbey Loan £87
Unsecured Loan £106
Train Travel £120
Groceries, Clothing, Household Expenses £1300
Petrol £200
Child Minder/Carer £450
Cleaner £80
Telephone £75
Expenses £5911.66

As above

Excess £423.34

I have not included holidays, car insurance and home insurance in here As I get an annual bonus of about £20 000 (gross) which I use to pay in a lump sum once a year.

Any ideas and is there salvation?

[FONT=&quot]Thanks[/FONT]

angelflower_2

yeah, you can do this but by jove you will have to get serious about your debts. Someone a lot better than me will be a long shortly but the first things i can say is.....

Get rid of the luxuries - mobiles need to come down, get rid of sky, groceries etc seems FAR to big. £20,000 bonus a year should go right to your debts rather than spending on any holidays.

saffronflowers

Hi there and welcome

Expenses - Pre Consolidation
Life Insurance £49.4
Mobile Phone 1 £49.09 This is extremely high and needs to come down
Halifax Credit Card £145.49
Unit Trust Purchase- Kids Saving Acc £110
life Insurance £35.57
Sky Digital £48
Water £34
TV licence £12
Electricity £138 THis is very very high - look at switching providors
Northern Rock – Loan £167.6
Council Tax £222
Abbey - Mortgage £1702
Wife Credit Card Barclays £82
My Barclay Card £78
Morgan Stanley Credit cared £73
Egg Card £125
Mobile phone 2 £50 again very high -
MBNA - £282
Egg Loan £350
Smile Credit Card £228
Train Travel £120
Groceries, Clothing, Household Expenses £1300 This is massive I feed 4 and 3 dogs for £200
Petrol £200 - very very high especially with train travel as well - maybe down size the car
Child Minder/Carer £450
Cleaner £80 - should go or less hours
Telephone £75
Total Expenses £6206.15

Income
My Salary £4533
Wife Salary £1700
Child Benefit £102
Total Income £6335

Be very very careful at taking out an unsecured loan because in the present climate this can easily be changed into a secured loan by way of a charging order.

It would be sensilbe for you to put each debt into a snowball calculator - www.whatsthecost.com and realsitically see when you can pay them off.

Sorry if I am wrong but I get the feeling because your income is high so is your lifestyle!!! However, your lifestyle is being funded by your ability to get credit, not your income, sorry not trying to be harsh.

I am sure others will have some great input and best of luck

SFx

PS I have just done a quick calculation but it seems that a quarter of your outgoings are going on credit repayment with another quarter on your mortgage.

floss2

lavajelly011 wrote: »

Current Debts

Halifax Credit Card, £10,044 Monthly Payment £200 Interest Rate 5.5%
Northern Rock Personal Loan £15,500 £145 Interest Rate 10%
Wife Barclay card Bal £4100 Mnth Pay 82 Inter Rate 20%
Smile Credit Card Balance £12,500 Mnth Pay £255 Int Rate 18%
My Credit card Bal £3485 Month Pay £78 Interest Rate 19.9%
Morgan Stanley Bal £3500 Month Pay 75 Int Rate 0% 9int free till Sept 208)
Egg Card Bal £6254 Mnth Pay £127 Int Rate 16.9%
MBNA Bal £15,826 Mnth Pay £282.63 Int Rate 17.5%
Egg Loan Bal £19,000 Month Pay £350 Int Rate 7.66%

Total Loans 90,209


Expenses - Pre Consolidation
Life Insurance £49.4
Mobile Phone 1 £49.09 Drop a tariff or cancel & go PAYG
Unit Trust Purchase- Kids Saving Acc £110 you cannot affiord this while in debt
life Insurance £35.57
Sky Digital £48 go freeeview
Water £34
TV licence £12
Electricity £138 No Gas? Change to cheaper provider
Council Tax £222 Is this 10m or 12m?
Abbey - Mortgage £1702
Train Travel £120
Groceries, Clothing, Household Expenses £1300 You need to cut this down - by at least half. You cannot afford new clothes or eating out
Petrol £200
Child Minder/Carer £450
Cleaner £80 Get rid of this
Telephone £75 Write letters!

Wife Credit Card Barclays £82
Northern Rock – Loan £167.6
Halifax Credit Card £145.49
My Barclay Card £78
Morgan Stanley Credit cared £73
Egg Card £125
Mobile phone 2 £50
MBNA - £282
Egg Loan £350
Smile Credit Card £228
Total Expenses £6206.15

Income
My Salary £4533
Wife Salary £1700
Child Benefit £102
Total Income £6335

Excess £128.85

I have not included holidays, car insurance and home insurance in here As I get an annual bonus of about £20 000 (gross) which I use to pay in a lump sum once a year.

Any ideas and is there salvation?

[FONT=&quot]Thanks[/FONT]

Don't consolidate - with cutting back as suggested, no holidays, shop around for the cheapest car insurance, pay £20k bonus off your debts each year and pay ALL spare money off your debts - yes, there will be salvation.

No road tax / servicing / MOT?

Cut out all takeaways, cook from scratch (better for the whole family & cheaper for you), menu plan, eat what's in the cupboards/ freezer / fridge.

Start a spending diary - Im intrigued as to where £1300 a month goes.......

BTW, well done for posting & welcome :hello:

Floss x

lavajelly011

Thanks for the replies so far.

Just to clarify:
No gas we only use electricity thats why the figure looks big
Mobiles are on contract. Still 6 months to go
Whole bonus cannot be put into debt as that pays the insurances on cars and house as well as tax ect. These expenses take about £2k

CLAPTON

Even with debts of 90k you are in the lucky situation being able to fund them due to your very high income.

In essense you need to decide what your objectives are and how to make a balance between continueing to live a high expense lifestyle or to clear the debts at a faster rate.

Simply by cutting groceries etc to 500pm and stop 110 for UTs and using say 8k of your bonus, you could put an extra 19,000 per year towards your debts and still have a lifestyle that many would envy.

angelflower_2

Still, £18,000 is a huge sum to throw at your debts. Doing this alone will mean you are debt free in under 5 years.

I think someone else said about your lifestyle. How much is the whole family involved in making some major changes as that is where you will start to feel the difficulty. Its taken me 6 months to have the courage to turn off the Sky and actually am really glad i have now.

I appreciate the mobiles are on contract but I would give them a phone anyway, explain the situation and see what they can do.

Also, phone insurance companies (whether contract up or not) to say you are having problems and can they reduce, you have nothing to lose. I did it yesterday with my home insurance and got them down from £47 a month to £19!!!! (if you have paid the year then prob not but worth a try for negotiating next years)

With all the loans.....do you have an insurance policy which covers your salary if you became ill. Investigate whether you have adequate cover somewhere and you may be able to cancel some of the PPI on your loans which you can then use to repay things quicker.

can you transfer balance from one of the high interest cc's ie smile to your morgan stanley taking advantage of the 0%?

Def try uswitch to reduce your electricity although i know electric heating costs a bomb and especially at this time of year!

lavajelly011

Thanks for all the advice so far.
My bonus is £20k gross therefore only about £12k after the tax man takes his cut
Also do I take PPI. I don't have on any of the debts?

saffronflowers

Hi LJ - I have taken the liberty of snowballing your debts for you - to illustrate that if you carry on as you are the bottom line is It will take you 104 months . During that time, you'll pay £41,071.00 in interest. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I am positive that you would not willing give away that sum of money for nothing!!

SFx

angelflower_2

saffronflowers wrote: »

Hi LJ - I have taken the liberty of snowballing your debts for you - to illustrate that if you carry on as you are the bottom line is It will take you 104 months . During that time, you'll pay £41,071.00 in interest. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I am positive that you would not willing give away that sum of money for nothing!!

SFx

Provided you change your lifestyle and dont take any more debts which will clearly be a problem unless you address why and where you have spend all the debts you have accumulated that is other wise it will take even longer and cost you a whole lot more!!!!!!!

What happens if you were to lose your job or you have another emergency which meant you no longer got your income.

So we are down to 12k then minus the £2k you said is for insurance. So what happens with the 10k - clear off a card!!!!!!

You are in the enviable position of being able to really clear a huge sum in a relatively quick period of time if you are clever and get on with it. A lot of us can only through about £4 or £5 at our debts to reduce sums. You may want to contact one of the free agencies which will help advise you and work out a payment plan which will best suit you. They are CCCS, payplan, CAP. If you want more details, PM me.

Whatever the debt or your circumstances, unless you are willing to change and then take action.....things will not improve.

So I would say, dont consolidate anything. Just put your head down, cut down on spending and start throwing money at the highest interest debts first.

dudleyboy

Hi and welcome!

lavajelly011 wrote: »

I have always been in some sort of debt which has been easily manageable however I am now really facing the crunch.

By easily manageable I take it you mean "I paid the minimum payments each month and when the credit limit was reached, and they wouldn't increase it, I took out another card, which I did time and again". The crunch now being that no one, any where, is giving you more credit. If this is the case then your options will be very limited since you won't be able to benefit from 0% balance transfers and the like.

The first question is, do you have any savings or own shares or anything like that? If so, I'd cash those in and use them to pay off some of those high interest credit cards. With interest rates creeping up the situation is only going to get worse so the sooner you tackle those the better.

As many others have said, the key problem you have is an expensive lifestyle that you simply cannot afford. You may think you can but £90k says otherwise. So first thing first is to read this article:

http://www.moneysavingexpert.com/protect/money-help

I think the key word here is "downsize". The house, the car(s), the holidays, the groceries, the SKY, the general spending, in fact you need to downsize everything and permanently because it's not enough to just clear the debt, you need to be able to live within your means so that it never happens again... and to be honest, I think a lifestyle within your means is still what most here would consider a very comfortable lifestyle.

Even if your annual bonus is "only" £12,000 net, that's more than some people earn each year GROSS as their basic salary... and somehow they manage. And even if that full bonus amount was thrown at your credit card debt each year, it may still take you until 2018 to clear it and you will have paid a lot in interest in the meantime.

I don't mean to sound harsh but I hope that stating the facts this bluntly will give you the motivation needed to tackle this debt problem. As you say, it really is time to take charge of the situation. You will have to make sacrifices to achieve your goal but I'm 100% certain it can be accomplished by just cutting back and without taking out yet more debt - especially from the likes of FirstPlus!

This place is a goldmine of information and advice so you've certainly come to the right place! Best of luck.