SOA - Best way to tackle this?

Taiko

Hoping someone wouldn't mind having a look into this for me. Total CC debt is at £20k, and I've gone completely out of character it seems. Until a few years ago, I had plenty savings, used some of that to overpay the mortgage, but then a spell of unemployment hit, and I was out of work for 6 months. In recent months, I've not found myself in a great state of mental health, following the breakdown of a long term relationship, and the bereavement of a grandparent who pretty much raised me. There is some inheritance coming, but it is expected to be about £3000. 

This, coupled with some severe and sustained workplace issues severely impacted, eventually making impulsive purchases as a form of self medication. All debts were in my name, but a volume were ran up with my ex-girlfriend, and it seems there's minimal prospect of any money being repaid. I fully recognise though that the later points are my issues alone, and have taken steps to resolve this, such as closing down accounts, blocks being put on purchases etc. What didn't help me was that I had memorised my 16 digit card number for one of the cards, including security number and expiry, and as such searching for the card didn't act as a review mechanism.

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

Household Information[/b]

Number of adults in household........... 1

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

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 1585

Partners monthly income after tax....... 0

Benefits................................ 0

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

Total monthly income.................... 1585[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 300

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

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

Management charge (leasehold property).. 125

Council tax............................. 90

Electricity............................. 20

Gas..................................... 10

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

Water rates............................. 15

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

Mobile phone............................ 60

TV Licence.............................. 0

Satellite/Cable TV...................... 0

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

Groceries etc. ......................... 200

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

Petrol/diesel........................... 120

Road tax................................ 15

Car Insurance........................... 20

Car maintenance (including MOT)......... 20

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

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

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

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

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

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

Buildings insurance..................... 0

Contents insurance...................... 0

Life assurance ......................... 14

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

Presents (birthday, christmas etc)...... 0

Haircuts................................ 10

Entertainment........................... 40

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

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

Total monthly expenses.................. 1059[/b]

[b]

Assets[/b]

Cash.................................... 1000

House value (Gross)..................... 130000

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

Car(s).................................. 600

Other assets............................ 2500[b]

Total Assets............................ 134100[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 54000....(300)......2.07[b]

Total secured & HP debts...... 54000.....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Card1..........................968.34....0.........17.62

Card1B2........................5860......150.......0 Expires Feb 2021

Card2B1........................2410......100.......27.3

Card4..........................5200......100.......18.9

Card3..........................5124......60........0 Expires Feb 22

Card2B3........................453.......0.........4.94

Card2B2........................357.......0.........0[b]

Total unsecured debts..........20372.34..410.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 1,585

Expenses (including HP & secured debts). 1,059

Available for debt repayments........... 526

Monthly UNsecured debt repayments....... 410[b]

Amount left after debt repayments....... 116[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 134,100

Total HP & Secured debt................. -54,000

Total Unsecured debt.................... -20,372.34[b]

Net Assets.............................. 59,727.66[/b]

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

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

My theory for this is pretty much as follows:
- Pay down card 2B1 each month as much as possible. This is a balance transfer card. 
- Explore a remortgage to a new rate, add in additional £10k to mortgage and use to pay down highest credit balances. Currently looks possible to obtain a 10 year fixed mortgage with TSB with the additional amount, fee free at 2.19%. Monthly repayment would be £273/month. 
- This should leave just the 0% balances to pay, so then aim to pay as much as possible in order of expiry to clear the balances. 

Weimsrock

Taiko
firstly im no expert and I’m sure more expert opinions will follow shortly but for my 2 pennies worth....
1. Your outgoings look very low in some areas are you confident you have everything?? Motoring costs very low, entertainment very low, groceries not too much, no dental, opticians, medical costs at all? I’d double check your spending as the debts haven’t all been accrued with shiny things I’m guessing?
2. I would strongly advise against transferring unsecured debts to your home through remortgaging. Certainly don’t rush into that decision. If you have any 0% offers then try shifting some but don’t consolidate and don’t transfer it into secured borrowing

3. Consider DMP or contacting your creditors yourself and advising of hardship, they should be willing to freeze interest and charges to enable you to get things in order. If you genuinely can afford £500 per month to throw at it then you should be able to clear it 2-3 years. 

Good luck either way 

ryanm8655

Don’t remortgage to clear credit card debt, that’s a slippery slope to losing your house. Not to mention that the debt will cost you a lot more in the long run even if you didn’t run up
more debt (which is the likely outcome).

You need to address the issues that led you into debt in the first place.

Is your SOA definitely accurate?

No buildings or contents insurance? No prescriptions/dentist? No clothes? No internet? Electric and gas very low? No presents for Christmas/birthdays? No holidays?

I suspect you might be in DMP territory, which is much better than remortgaging and absorbing your debt into your house.

I should add, sorry to hear about the passing of your grandparent and about the stresses of the break up. Can relate to both of those, as well as the debt ringing up. A lot of my initial debt was a legacy of a failed relationship where I bought a lot of the furniture on credit and then took the hit (my choice, not theirs), plus then medicating by spending money.

Sorting your money worries will lift a big burden. Personally I’d be looking at a DMP as your SOA looks tight once the figures are made realistic.

TheAble

Before you do anything I'd recommend you seek some medical help/counseling re. your mental health. Sounds like you've been in a bad way - start to get better first and you'll be in a more positive frame of mind to tackle this debt issue. Make an appointment with your GP in the first instance and talk it through.
All the best 🙂

Taiko

Thanks for the comments all, I do appreciate it. Just to address some of the points made:
- Motoring costs relatively low as have a car that is only used for a commute to the office. I don't tend to drive a great deal elsewhere, in all honesty. 
- Groceries might actually be overstated on this, but entertainment is probably correct. I'm teetotal, and have been for several years, as well as a non-smoker. My only real nights out are playing snooker once a week, once things are open. This is usually splitting the cost of a table between 3/4 of us, which usually comes to around £4 each. Everyone gets their own drinks, and usually a pint or two of diet coke gets me through the session. 
- Not able to source an NHS dentist nearby, and haven't been to one for a while so did not include. I have no prescriptions at present.  
- I live in a flat, and the buildings insurance is contained within the service charge. My contents insurance was paid off in full, as was £50/year, and then I got cashback on this via Quidco. 
- I don't tend to buy new clothes often, in all honesty. Not really a fan of shopping, and I rarely go out. 
- Elec and gas figures are correct, based on annual kWh usages. Central heating flat has been around 1200 kWh a year for the last few years, as well insulated and have a flat above and below me, while south facing on the south coast. Electricity around 2000 kWh/year. Both accounts in credit. 
- Groups of friends have between us never really done christmas gift giving. I don't really have any dealings with my sister, and now the only family member surviving is my mother, and agreements have always been to cap this. 
- Internet costs are included within the mobile charge. My deal is with Vodafone, so I have the home broadband with them plus my usual mobile costs per month. 

On the mortgage site, adding £10k on to that, and with a remortgage to a fee free product at a 10 year fix worked out to a mortgage payment of £273/month for a 10 year fix, 25 year term. I currently pay £300 a month on this anyway, so my logic behind this was to eliminate the interest that I am currently paying there, while keeping the monthly parts in check. Interest alone on the CC stuff is running at £150/month right now. 

ryanm8655

Taiko said:

Thanks for the comments all, I do appreciate it. Just to address some of the points made:
- Motoring costs relatively low as have a car that is only used for a commute to the office. I don't tend to drive a great deal elsewhere, in all honesty. 
- Groceries might actually be overstated on this, but entertainment is probably correct. I'm teetotal, and have been for several years, as well as a non-smoker. My only real nights out are playing snooker once a week, once things are open. This is usually splitting the cost of a table between 3/4 of us, which usually comes to around £4 each. Everyone gets their own drinks, and usually a pint or two of diet coke gets me through the session. 
- Not able to source an NHS dentist nearby, and haven't been to one for a while so did not include. I have no prescriptions at present.  
- I live in a flat, and the buildings insurance is contained within the service charge. My contents insurance was paid off in full, as was £50/year, and then I got cashback on this via Quidco. 
- I don't tend to buy new clothes often, in all honesty. Not really a fan of shopping, and I rarely go out. 
- Elec and gas figures are correct, based on annual kWh usages. Central heating flat has been around 1200 kWh a year for the last few years, as well insulated and have a flat above and below me, while south facing on the south coast. Electricity around 2000 kWh/year. Both accounts in credit. 
- Groups of friends have between us never really done christmas gift giving. I don't really have any dealings with my sister, and now the only family member surviving is my mother, and agreements have always been to cap this. 
- Internet costs are included within the mobile charge. My deal is with Vodafone, so I have the home broadband with them plus my usual mobile costs per month. 

On the mortgage site, adding £10k on to that, and with a remortgage to a fee free product at a 10 year fix worked out to a mortgage payment of £273/month for a 10 year fix, 25 year term. I currently pay £300 a month on this anyway, so my logic behind this was to eliminate the interest that I am currently paying there, while keeping the monthly parts in check. Interest alone on the CC stuff is running at £150/month right now. 

Things like the insurance that you buy yearly, how do you intend to buy that when it expires? If you haven’t included it in the SOA then you won’t have a savings pot for it and it’ll end up on credit card or 50% overdraft. Never go on holiday? If so where is that going to come from? No takeaways or meals out? Nothing in the EF each month? You say you don’t buy clothes often but presumably still need new clothes every now and then? Never buy anything for your flat? Don’t intend on dating post lockdown? 

Sorry to keep asking questions but your SOA needs to be accurate. Ideally you’d go through your last years bank statements and work it all out. And if you’re in this much debt then it can’t be reflective.

Impressed that you keep your electric and gas so low...

How long is left on your current mortgage? Given the interest rate is lower and payments higher I assume you’re increasing the term of the mortgage? This means it’s going to cost you a lot more. For example, if you’ve got 15 years of your current mortgage left then the remortgage is going to cost you a further £28800 to pay back. It’s a bad idea.

I still think a DMP is your best bet for getting rid of the debt and avoiding being in the same boat down the line only with a lot more to pay on your mortgage.

sharpe106

 Sorry to hear about the death of your grandparent. As others have said maybe working on your mental health will be good. But it is good that you have decided to work at the debts and have shut down accounts etc. As others have said make sure your SOA is accurate as if it is not people’s advice might not be as useful as it might be.

 

No point putting your credit card debt on to your mortgage, you may lose your house potentially. Setting up a DMP is probably your best bet at this time.

Taiko

ryanm8655 said:

Taiko said:

Thanks for the comments all, I do appreciate it. Just to address some of the points made:
- Motoring costs relatively low as have a car that is only used for a commute to the office. I don't tend to drive a great deal elsewhere, in all honesty. 
- Groceries might actually be overstated on this, but entertainment is probably correct. I'm teetotal, and have been for several years, as well as a non-smoker. My only real nights out are playing snooker once a week, once things are open. This is usually splitting the cost of a table between 3/4 of us, which usually comes to around £4 each. Everyone gets their own drinks, and usually a pint or two of diet coke gets me through the session. 
- Not able to source an NHS dentist nearby, and haven't been to one for a while so did not include. I have no prescriptions at present.  
- I live in a flat, and the buildings insurance is contained within the service charge. My contents insurance was paid off in full, as was £50/year, and then I got cashback on this via Quidco. 
- I don't tend to buy new clothes often, in all honesty. Not really a fan of shopping, and I rarely go out. 
- Elec and gas figures are correct, based on annual kWh usages. Central heating flat has been around 1200 kWh a year for the last few years, as well insulated and have a flat above and below me, while south facing on the south coast. Electricity around 2000 kWh/year. Both accounts in credit. 
- Groups of friends have between us never really done christmas gift giving. I don't really have any dealings with my sister, and now the only family member surviving is my mother, and agreements have always been to cap this. 
- Internet costs are included within the mobile charge. My deal is with Vodafone, so I have the home broadband with them plus my usual mobile costs per month. 

On the mortgage site, adding £10k on to that, and with a remortgage to a fee free product at a 10 year fix worked out to a mortgage payment of £273/month for a 10 year fix, 25 year term. I currently pay £300 a month on this anyway, so my logic behind this was to eliminate the interest that I am currently paying there, while keeping the monthly parts in check. Interest alone on the CC stuff is running at £150/month right now. 

Things like the insurance that you buy yearly, how do you intend to buy that when it expires? If you haven’t included it in the SOA then you won’t have a savings pot for it and it’ll end up on credit card or 50% overdraft. Never go on holiday? If so where is that going to come from? No takeaways or meals out? Nothing in the EF each month? You say you don’t buy clothes often but presumably still need new clothes every now and then? Never buy anything for your flat? Don’t intend on dating post lockdown? 

Sorry to keep asking questions but your SOA needs to be accurate. Ideally you’d go through your last years bank statements and work it all out. And if you’re in this much debt then it can’t be reflective.

Impressed that you keep your electric and gas so low...

How long is left on your current mortgage? Given the interest rate is lower and payments higher I assume you’re increasing the term of the mortgage? This means it’s going to cost you a lot more. For example, if you’ve got 15 years of your current mortgage left then the remortgage is going to cost you a further £28800 to pay back. It’s a bad idea.

I still think a DMP is your best bet for getting rid of the debt and avoiding being in the same boat down the line only with a lot more to pay on your mortgage.

Thanks for the reply here. Just to go over each point in turn. Usually on the insurance, I have enough to pay the contents outright. This year was £50, with cashback bringing it to £30 for the year. 

Before my last relationship, I never really did holidays. I'm not a great traveller, and a medical issue means I don't do well in an English summer, let alone a foreign one. Fear of flying doesn't really help, and the last time I took a ferry to Europe it crashed into Calais docks, the force of which left me with a night in a French hospital as I got thrown into a wall and injured my back. https://assets.publishing.service.gov.uk/media/547c714ae5274a429000011f/aquitaine.pdf

I avoid takeaways, as I prefer to cook things myself with fresh ingredients. I may occasionally go for a meal out, but my social circle is pretty small. A lot of hurt and mistrust over the years has meant I've basically kept a small group of close friends. 
Last clothes purchase was a pair of shoes about 8 months ago, which were £20. I basically alternate through a few t shirts and pairs of jeans, but take the point on needing to think about this. 

My flat has pretty much everything I need now, furniture wise. New carpets/flooring, blinds, solid wood furniture etc. I converted the spare bedroom into a home office, which is fully equipped. 

I don't really intend on dating for a long time, in perfect honesty. Again, trust issues mean I don't really let anyone close anymore. 

I've gone through my bank statements online, and believe that in the current state everything is now contained within the SOA. 
Utilities are kept low, despite large amount of tech. I work within energy consultancy, and know where the markets are heading. Quick retail comparison now on CEC suggests I am on the cheapest tariff for electricity. Due to my low gas usage, which is just winter and the gas hobs, I am on a zero standing charge tariff, and therefore only pay for the gas I use. This leaves a substantial build up over the summer. 

Current mortgage has 22 years left to run, and is a lifetime tracker at base+1.97%. Most recent sale of a flat on the same floor as myself, same layout etc is £130,000. Within the local area, two bedroom flats are about £120,000 if you're above a shop, and some built in the 60's, with short leases are going for around £110k, or £150k with a lease extension. My flat was built in 2005. Deal I found was with TSB, zero fees and a 10 year fix at 2.19%. LTV with additional £10k is 48%, and monthly payment would be £290, so would broadly be the same, without risk of interest rates shooting up which is currently within my lifetime tracker. 

Taiko

Just to add also, to prevent impulse purchases, I've just had one of my cards cancelled, and reissued. This was my main card, and I had memorised the 16 digit card number and all the other details, so found myself spending on things online that I didn't need just because I didn't have to go and get my wallet each time. For this new card, my aim is that it will never even leave the envelope. This is something that I need to be determined to do, and I think I can. 

ryanm8655

Good that you’re thinking about ways to prevent building the debt back up again. Things are still very tight on your SOA though...I still think your best bet is a DMP.

What were the impulse purchases that built this debt up? Do you have anything you can sell to pay off debts? (Every little helps). What are the £2500 “other assets”?

By putting the £10k onto your mortgage you’re turning unsecured debt into secured debt, which isn’t a good idea. Plus you’re spreading that £10k debt over 25 years, which is very expensive.

With a DMP your house is safe. All interest will be frozen and you won’t be killing yourself to make payments, with any unexpected spend leaving you having to borrow again.

kimwp

Forumites with more knowledge than me; what would the effect of entering a DMP have on remortgaging?

It sounds like remortgaging would be a sensible decision, but without adding the unsecured debt, it's not a good idea to increase the risk of losing your home.