First timer here - need advice please credit card debt

crm23

Sorry also forgot to add re haircuts etc these are estimates but don’t reckon I’m too far off actual figures.
the loans aren’t on 0%, I need to confirm the rates. I suppose I sort of put those to the side as they’re coming down each month and being paid and the interest rates were fairly competitive at the time. it’s when I look at credit cards and the amount just being eaten by interest there. I’ve done all balance transfers available to me currently but I reckon only half the debt if that is on 0%. Thanks

enthusiasticsaver

My vote would go for a DMP.  I am surprised it came out as low as £259 based on your soa but I would stick with it and save up to offer full and finals to clear it earlier.  The defaults will drop off your file after 6 years but in all honesty borrowing more should be the last thing on your mind.  You will still be able to remortgage to fixed rates etc  but you may have to stick with your current provider certainly for the forseeable future. As soon as you default focus on building up emergency savings as you will not have access to credit. 

kimwp

crm23 said:

Thank you, definitely a few things to look at there. We’ve both been working from home since March, but prior to then I’m wfh 3 days a week. We have a lot of showers/baths with there being 5 in the house and I do cook a lot. The water isn’t on a meter, I’ve been scared to swap given the amount I think we use but as you say, it’s worth trying because if we’re worse off then we’ll revert back. I do shop around for food and we never buy ready meals. Takeaway treat at the weekend may need to stop, but given we don’t go out to pubs or drink/smoke regularly I see this as our treat. Plus the one I night I don’t have to cook for 5 after a busy working week. Appreciate I can’t have it all ways at the minute though 😞 

It does seem unlikely that you'll get the energy bill lower with the house being occupied most of the time (assuming the wfh is during the week), unless you go full out with jumpers and gloves, but it's a bit of a miserable way to live.

Takeaways are my treat too, though I recently added up how much I spent on them (probably one every 2-3 weeks unless I'm feeling very indulgent) and realised how much normal food it would buy! Presuming your other half takes on other chores as you are doing all the cooking, could you make one night a picnic night and have things like bread and cheese, chopped veg and fruit, then you don't have to cook that night (you could chop the veg while the food is cooking the day before. (Now I'm pondering if prepping the next day's veg while the food is cooking might be a good time saver!)

Or could you get the 14 year old to take on one of the evenings meals - it would be good for his independence and potentially you could even challenge him to manage the budget for it. Appreciate that it wouldn't be on the Saturday, which is when you want to relax though, but it might take the burden off one night.

kimwp

enthusiasticsaver said:

My vote would go for a DMP.  I am surprised it came out as low as £259 based on your soa but I would stick with it and save up to offer full and finals to clear it earlier.  The defaults will drop off your file after 6 years but in all honesty borrowing more should be the last thing on your mind.  You will still be able to remortgage to fixed rates etc  but you may have to stick with your current provider certainly for the forseeable future. As soon as you default focus on building up emergency savings as you will not have access to credit. 

Some advice on defaulting might be needed - is it that they should default straight away, then do a DMP or the other way around? Which should they default on? Would the hire purchase be affected?

sourcrates

The reason why it’s good to be defaulted is because once that happens, all interest and all charges stop, permanently.
And, you also then have a clear six year window till those defaults drop off your credit file.

A non default account will incur arrangement to pay markers, (AP) instead, those stay on your file for six years after you finish repaying the debt, so potentially a very long time.
The OP has a lot to think about, each choice has its own variety of implications, and covering all the bases on an Internet forum in one go can be an overkill of information.
Best to get as much info as possible on your two options and picking the one most appropriate to you.

TheAble

kimwp said:

crm23 said:

Thank you, definitely a few things to look at there. We’ve both been working from home since March, but prior to then I’m wfh 3 days a week. We have a lot of showers/baths with there being 5 in the house and I do cook a lot. The water isn’t on a meter, I’ve been scared to swap given the amount I think we use but as you say, it’s worth trying because if we’re worse off then we’ll revert back. I do shop around for food and we never buy ready meals. Takeaway treat at the weekend may need to stop, but given we don’t go out to pubs or drink/smoke regularly I see this as our treat. Plus the one I night I don’t have to cook for 5 after a busy working week. Appreciate I can’t have it all ways at the minute though 😞 

It does seem unlikely that you'll get the energy bill lower with the house being occupied most of the time (assuming the wfh is during the week), unless you go full out with jumpers and gloves, but it's a bit of a miserable way to live.

Takeaways are my treat too, though I recently added up how much I spent on them (probably one every 2-3 weeks unless I'm feeling very indulgent) and realised how much normal food it would buy! Presuming your other half takes on other chores as you are doing all the cooking, could you make one night a picnic night and have things like bread and cheese, chopped veg and fruit, then you don't have to cook that night (you could chop the veg while the food is cooking the day before. (Now I'm pondering if prepping the next day's veg while the food is cooking might be a good time saver!)

Or could you get the 14 year old to take on one of the evenings meals - it would be good for his independence and potentially you could even challenge him to manage the budget for it. Appreciate that it wouldn't be on the Saturday, which is when you want to relax though, but it might take the burden off one night.

With all respect you're focussing on the wrong thing. Groceries at £280/month for 4, sometimes 5, is low if anything. Making changes here is not going to move the needle.

kimwp

TheAble said:

With all respect you're focussing on the wrong thing. Groceries at £280/month for 4, sometimes 5, is low if anything. Making changes here is not going to move the needle.

Fair point - there might be a bigger decision to be made first regarding the DMP. The OP asked if there was any way to keep going until expected reductions in outgoings happened, the only way to do that is to cut back on current spend or increase current income, hence why I'm looking at that and her SOA to see if it might be possible. It won't move the needle, but it might stop it dropping further. It does seem like it would be pretty hard work though, but I think valuable even for saving for full and final offers. (I take your point though)

@crm23 there are a number of blogs/articles about really low food budgets - it seems that there's a lot of articles about feeding a family for £10 or £20 a week which resort to not very nutritous and repetitive diets. One that seemed healthier allowed £35 a week for a family of four. Ratioing that to five and assuming a 4.5 week month would bring it to a bit under £200, including a little bit of treat money when the month is less than 4.5 weeks long.

https://inews.co.uk/inews-lifestyle/food-and-drink/home-economics-jane-ashley-budget-cooking-eating-118004

Another idea for the cooking burden would be to double up one night and have the same meal twice in a row (or freeze for another night).

Where are the takeaways in your SOA?

fatbelly

crm23 said:

I’ve put all my details into step change who have recommended a debt management plan. Is that what I should be looking at over an IVA  now? 

I think so.

I said i would take a look at your soa and then when you did post it there was a flood of posts before I saw it! I don't think an IVA has enough (any?) real advantage to you and as a formal insolvency solution, has more downside than upside to me.

I would go the dmp route. You may want stepchange's help at the start but you seem clued up enough to go the do-it-yourself route and that gives you the flexibility you are looking for.

The only things that stood out for me on the  soa were that the mobiles seemed too high and the groceries too low so they sort of balance out.

crm23

Thanks all for your input, with regards to the takeaways I’d factored that into grocery spend anyway. I do run a real tight ship when it comes to food and always shop around and hate food waste. I think it helps that we don’t drink or smoke so my ‘big shop’ consists pretty much purely of food and not wines and beers etc that do add up. 

With regards to a DMP, if I was to receive an inheritance for example, god forbid I don’t want this to happen obviously, but it’s inevitable at some point we will receive a considerable amount of inheritance, again hopefully not in the life time of the DMP, but if so, would I be penalised for that or would it just be a case of settling all debts in full at that point?. Also, again if we were to re-mortgage in 4 years when our deal is up could we look to release some equity to then settle that way, or do you think I’d struggle mortgage wise anyway in terms of deals we are offered?

Ultimately the only thing that concerns us is the house and I really don’t want anything to affect that which is why now I know more about IVA’s and how they work I am moving away from that option. 

kimwp

crm23 said:

Thanks all for your input, with regards to the takeaways I’d factored that into grocery spend anyway. I do run a real tight ship when it comes to food and always shop around and hate food waste. I think it helps that we don’t drink or smoke so my ‘big shop’ consists pretty much purely of food and not wines and beers etc that do add up. 

Maybe you should be the one writing a food budget blog! I don't think I can help much then, but I'll be cheering from the sidelines