SOA - Best way to tackle this?

Taiko

Thank you all. Think I'm in full agreement with you now on probably being the best way forward. 
For peace of mind, I did speak to my existing mortgage provider this afternoon regarding the additional 10k. Borrowing 10k and using that to pay off the interest charging cards, leaving the 0% cards left to do, failed the affordability checks, because it assumes those cards to be charging interest. But at 20k on the mortgage it would sail through. I had no idea my own theory would behave that way, so what you've all said has really opened my eyes, and I appreciate it. 

kimwp

Good luck with it all Taiko and don't hesitate if you have more questions  

ryanm8655

Taiko said:

Thank you all. Think I'm in full agreement with you now on probably being the best way forward. 
For peace of mind, I did speak to my existing mortgage provider this afternoon regarding the additional 10k. Borrowing 10k and using that to pay off the interest charging cards, leaving the 0% cards left to do, failed the affordability checks, because it assumes those cards to be charging interest. But at 20k on the mortgage it would sail through. I had no idea my own theory would behave that way, so what you've all said has really opened my eyes, and I appreciate it. 

I think you’ll be thankful in the long run!

Enthusiasticsaver had some good advice on how to tackle the debt while avoiding a DMP.

If that is the route you want to take then I’d set all your DD’s to the current minimum on the cards. It’ll make it easier to budget having a fixed payment but also it ensures the amount you’re clearing on debt increases every month, which is a good morale boost.

BabyStepper

I agree with enthusiasticsaver, I think you can sort this out yourself. 

Keep a close eye on your budget, get your food spending down to £150 (batch cooking, yellow labels, there's loads of info about that on here).You seem to live alone and with no pets, perfect for a frugal budget. I'm loving the £30 insurance and the tiny utilities bills, reminds me of my single days, you also seem to have the single persons council tax discount, great. Get your mobile to £10 once your contract ends saving £50, save your petrol money if you're working from home and put it to the debt, take the inheritance when it comes and pay that towards debt too. If you have any old tat that you could sell then do it, while you're paying interest every single penny counts.  

Stop using the cards and test your budget to see if it is true and works. If it doesn't, come back and tell us what happened and we can help you from there. In the meantime, good luck, we're rooting for you. 

Taiko

First steps today, in that I've cleared the high interest balances on Halifax, and now onto HSBC. I spoke to Stepchange, and will use their mortgage advisor to explore that option as a potential still. I will aim to avoid it if I can though.
I also spoke to HSBC this afternoon about the card, and explained the situation with mental health, and that I've obtained treatments, turning the corner and explained my plan for snowballing. They have offered to freeze the interest on the card, although didn't specify how long for. I'm putting my focus into clearing that.

Thank you all for the help thus far. Some days are easier than others, but I think I'll get there in the end. 

RAS

Taiko
Well done so far. It will become easier over time even if you have the odd off day.
Keep us in the loop and come back if you want support any time.

Taiko

Bit of a progress update. With offices shutdown, I've been able to push a lot more of my income towards clearing balances, so it has flagged up to me that I was overspending most likely in areas that I hadn't realised/budgeted. Balances are down by a few thousand, and more 0% deals are opening up with fees, or longer terms at lower percentages without fees. I've played around with this to reduce the amount of interest, and HSBC continue to honour the 0% which is helping. 

Inheritance hasn't come through yet, but something that has came in that seems a possible no-brainer for me is through work, and a Save as you earn scheme. The requirements of this are that you nominate a set amount to pay direct from net pay each month for 36 months, and at the end period you can either withdraw as cash, or convert into shares at an option price, which was at a 20% discount. This option price is currently 27.28p/share, and today's share price closed at 39.50p. Price was impacted by COVID, but also lowered due to a rights issue to fund the purchase of a rival which was accepted by the shareholders. Pre-COVID prices were about 75p/share.

I worked out that if I put away £40 a month into this, at the end of the period I would have £1440 to use, which would buy 5,278 shares. The current share price is now increasing and performing well, and the deal itself means that I'd not be committed to buying the shares at the end of the 36 months anyway, so would get the £1440 back. If I purchased though and sold at today's price, it'd give me a 45% return though, being worth an extra £645. If it returned to pre-COVID levels in 3 years, then the return would be £2,518, so a 174% gain. 

Does this sound like a good idea, given the funds are protected? 

kimwp

I have something similar at my work and while your money is in theory not at risk, you need to balance the uncertainty of the share price making you profit with possible cost of your debts if you don't pay those down. Shares can go down (as they have both times I have entered a company share related saving scheme!) Can you take the money out of the scheme at any point if you need it?

enthusiasticsaver

Shares can be very volatile especially in the short term and if only in one company that is a bit like putting all your eggs in one basket.  I would avoid like the plague especially when you have debt and are trying to get the debt down.  Investing in a diversified portfolio for the long term is one thing but locking that money away when you could use it to reduce interest charging debts or avoid going further into debt does not sound sensible to me.  Sound finances are built on no or little debt, emergency savings fund, good budgeting and long term diversified, tax efficient investing either in a pension or stocks and shares ISAs. I have nothing against SAYE schemes and as you say you are not committed to buy the shares but it just seems like you are moving your focus away from clearing the debt and on to share speculation.  

TheAble

Agreed - get your debts cleared before exploring this avenue. Otherwise you're effectively borrowing to invest which is something you should never do.