Help!

MisterBumble23

Hi Everyone, hope you are all well. I'm a newbie so apologies if this is not appropriate for the forum. 
I'm stuck and need help/advice! 
We have found ourselves in a difficult financial position and not sure how we are going to get out of it. Due to our credit card (x5) bills, interest applied at end of transfer offers and subsequent minimum payments, our outgoings are now almost the same as our current household income. Our credit card repayments currently amount to circa £700 p/m and transfer offers have dried up. I have been given some advice already to set up arrangements with each lender to repay the loan at what we can afford whilst freezing the interest. I am not sure if this exists and i assume this will have serious impact on our credit files. 
Any advice would be greatly appreciated. 

fatbelly

Things are obviously tight.

Can you post a statement of affairs, formatting for mse?

Fireflyaway

I was in a similar situation a few years back. I had payday loans, overdrafts and was behind with mortgage and car payment. I couldn't see a way out. I was terrified of falling behind with payments and damaging my credit score.  Now I know that was the wrong thing to be concerned about! It really is possible to live perfectly ok with the lowest of credit scores. The important thing is to keep a roof over your head, food in your tummy and lights and water. The creditors can wait. My approach was to contact each creditor, explain my situation and agree a reduced monthly repayment. I then set up standing orders and then the debt just decreases each month. The relief was amazing. All my creditors agreed to stop interest and all of them were willing to work with me. It's important to realise how this happened so you don't ever go back there. The day i promised myself to never borrow again was the best decision. 

[Deleted User]

Something I've mulled over but it really doesn't sit right, only because I know it's got me out of a couple of tight spots and the card was handy in emergency. (I've saved novel amounts reaching £20.00 a month into Scottish Friendly when I've always been less inclined to 'just take out' as I imagine it wouldn't so easy)
Bit basic (sorry it's not much hope) but here
https://www.citizensadvice.org.uk/debt-and-money/borrowing-money/credit-cards/if-youre-struggling-with-credit-card-debt/#:~:text=Work%20out%20what%20you%20can,if%20they%20haven't%20already.
My understanding is the freezing of interest could be limited, therefore I've always understood it to apply to almost someone who loses their job/income or declares a low income which isn't manageable against day to day living after priority bills.
I would love to say I don't get the impact of a trashed file but you never know what is round the corner.   
As I went toward paydown/persistent debt and whilst I think it a little sneaky of the credit card industry and hypocritical of their regulator, I found that once my limit on the offending card was reduced because of 'paydown', yet with history built up of repaying the offers opened up. How far away are you from persistent debt by only making minimum payments?

Galloglass

Fireflyaway said:

I was in a similar situation a few years back. I had payday loans, overdrafts and was behind with mortgage and car payment. I couldn't see a way out. I was terrified of falling behind with payments and damaging my credit score.  Now I know that was the wrong thing to be concerned about! It really is possible to live perfectly ok with the lowest of credit scores. The important thing is to keep a roof over your head, food in your tummy and lights and water. The creditors can wait. My approach was to contact each creditor, explain my situation and agree a reduced monthly repayment. I then set up standing orders and then the debt just decreases each month. The relief was amazing. All my creditors agreed to stop interest and all of them were willing to work with me. It's important to realise how this happened so you don't ever go back there. The day i promised myself to never borrow again was the best decision. 

Working back from this, you'll see that in many cases when you borrow £100 you end up paying 2x or 3x the money back through charges and interest. Creditors "freezing" the interest is just them getting back as much of the interest and charges as possible. The sooner you get the lightbulb moment, the better so you can get off the treadmill.

Credit and credit cards are a sensible idea as very short term credit, but their use has diverged into a form of very, very expensive long term credit.   

MisterBumble23

fatbelly said:

Things are obviously tight.

Can you post a statement of affairs, formatting for mse?

Thank you, I am going to look at an SOA and post up today. First time I have come across it 

MisterBumble23

Statement of Affairs and Personal Balance Sheet

Household Information

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

Number of children in household......... 1

Number of cars owned.................... 1

Monthly Income Details

Monthly income after tax................ 1312.39

Partners monthly income after tax....... 1444.24

Benefits................................ 84.2

Other income............................ 0

Total monthly income.................... 2840.83

Monthly Expense Details

Mortgage................................ 411.9

Secured/HP loan repayments.............. 249.89999999999998

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

Management charge (leasehold property).. 0

Council tax............................. 119

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

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

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

Water rates............................. 33

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

Mobile phone............................ 87

TV Licence.............................. 14

Satellite/Cable TV...................... 72

Internet Services....................... 0

Groceries etc. ......................... 390

Clothing................................ 50

Petrol/diesel........................... 90

Road tax................................ 3

Car Insurance........................... 30

Car maintenance (including MOT)......... 10

Car parking............................. 3

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

Childcare/nursery....................... 0

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

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 23

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

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

Life assurance ......................... 0

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

Presents (birthday, christmas etc)...... 100

Haircuts................................ 0

Entertainment........................... 215

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

Emergency fund.......................... 0

Breakdown Cover......................... 15

Furniture Payment....................... 25

Total monthly expenses.................. 2060.8

Assets

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

House value (Gross)..................... 110000

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

Car(s).................................. 3500

Other assets............................ 0

Total Assets............................ 113500

Secured & HP Debts

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

Mortgage...................... 0........(411.9)....0

Secured Debt.................. 0........(249.9)....0

Total secured & HP debts...... 0.........-.........-   

Unsecured Debts

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

Credit Card....................3867.18...38.67.....19.3

Credit Card....................5372.85...149.6.....25.55

Credit Card....................8814.57...155.......20.93

Store Card.....................341.31....18........23.9

Credit Card....................4229.95...134.8.....26.03

Credit Card....................8291.17...193.9.....25.25

Total unsecured debts..........30917.03..689.97....-  

Monthly Budget Summary

Total monthly income.................... 2,840.83

Expenses (including HP & secured debts). 2,060.8

Available for debt repayments........... 780.03

Monthly UNsecured debt repayments....... 689.97

Amount left after debt repayments....... 90.06

Personal Balance Sheet Summary

Total assets (things you own)........... 113,500

Total HP & Secured debt................. -0

Total Unsecured debt.................... -30,917.03

Net Assets.............................. 82,582.97

[i]Created using the SOA calculator at www.LemonFool.co.uk.

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

sharpe106

Before getting on to the debt part, Sky and mobile phone can you reduce them? Do you have no holidays throughout the year?  could you cut back on presents £1200 a year a lot when you are in debt.  Could you do some overtime at work to earn a bit extra?

MisterBumble23

sharpe106 said:

Before getting on to the debt part, Sky and mobile phone can you reduce them? Do you have no holidays throughout the year?  could you cut back on presents £1200 a year a lot when you are in debt.  Could you do some overtime at work to earn a bit extra?

Hi, thank you for your reply. 
We've not had a holiday for about 4 years, feels like what goes in goes out. Our Christmas budget is £500 which we put away a certain amount each week to pay for with extra for birthdays and anything else which comes up (totaling £1200 a year). There is no options for extra work at present. The mobile phone bills are calculated from all three which are in the house, mine is due for renewal/upgrade in November which I can get reduced (I took a mobile offer 18 months ago which included a gift for my son's birthday). I have had my own balance sheet for a while and I know that we have circa £80 per week after all bills, that £80 per week is left for my son's bits, the car, entertainment and any unexpected expenses.   

[Deleted User]

4k a year on presents and entertainment, plus another 2k on phones and TV seems a lot.

With other savings to be made on food and clothes, you could make a serious dent in your debt with a bit of tighter budgeting.

ryanm8655

Deleted_User said:

4k a year on presents and entertainment, plus another 2k on phones and TV seems a lot.

With other savings to be made on food and clothes, you could make a serious dent in your debt with a bit of tighter budgeting.

Exactly my thoughts...there’s the answer to the debt issue right there. 

It’s good your SOA is a reflection of reality but there is plenty of space for cutbacks.