Too much debt, where do I start?

welshspendthrift

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

Story so far, have been in debt before and paid all off with the equity when I sold previous property. 

Embarrassed to say I didn’t learn from my mistakes and now as I move toward retirement I realise I again have a mountain of debt which needs to be paid before I can retire. My pension will be a good one when I get there but need to learn not to overspend. 

Started to tackle this by contacting companies to freeze interest and reduce payment for some breathing space. All but the Halifax were very understanding and I have frozen interest and have fixed payments for 6 months or 12 months. Halifax finally have written to me and will be sending a SOA having not paid any money for a few months for the CC. I have continued to pay the car HP loan as need the car for work and grandchildren childcare commitments for them. I have also continued to pay the Halifax loan every month too. 

I have little to show for it very embarrassed, learning not to be generous with gifts and helping my DD when they struggle ( young family bought house of horrors, more work needed than anticipated , lived with us for a few months while made habitable) But did contribute to bills. 

I realised at beginning of lockdown how bad it was, luckily working at home has helped With less fuel cost and cancelled events. 

How do people manage friends who want to do things with you that cost, have always had a lively social diary but realise I cannot carry on but telling friends will be more difficult when lockdown ends. One friend in particular has struggled with lockdown and can’t wait to get out again. In some ways wish lockdown continues so I can’t go! 

On a positive note over last few months have paid off overdraft of £500. 

I live with my partner who is aware I have debts but not how much. It is my responsibility not his. We do have separate account and a joint account for mortgage and bills. Which I have indicated by ** for the things included in The money paid into joint account by me. Apart from joint household bills our money is managed separately. 

According to this I should have money leftover but never seem to have😢 will keep a daily Spending diary and check my accounts regularly Going forward. My motivation is retirement so I can spend time with my grandchildren. 

Feel free to ask questions, any advice appreciated. Can’t feel any worse than I do now. 

Advice on what to pay first, worried some will start charging interest again so should I tackle ones that had higher interest before agreed 0%? 

Thank you 

Household Information[/b]

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

Number of children in household......... 0

Number of cars owned.................... 1 by me. 

Monthly Income Details[/b]

Monthly income after tax................ 2800

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

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

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

Total monthly income.................... 2800[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 650*

Secured/HP loan repayments.............. 250

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

Management charge (leasehold property).. 0

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

Electricity............................. 66 Both elec and gas dual fuel bill**

Gas..................................... 0

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

Water rates............................. 35**

Telephone (land line)................... 25**

Mobile phone............................ 32

TV Licence.............................. 6.5**

Satellite/Cable TV...................... 0 We cancelled sky tv about 3 months ago

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

Groceries etc. ......................... 200** we need to cut down on this

Clothing................................ 20

Petrol/diesel........................... 200 ( not this much currently as working from home mostly)

Road tax................................ 12.5

Car Insurance........................... 70.56

Car maintenance (including MOT)......... 35

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

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

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

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

Medical (prescriptions, dentist etc).... 50

Pet insurance/vet bills................. 13.3** 2 cats 

Buildings insurance..................... 55**

Contents insurance...................... 15**

Life assurance ......................... 15

Other insurance......................... 2.5** curry’s fridge insurance

Presents (birthday, christmas etc)...... 40

Haircuts................................ 30

Entertainment........................... 29.00 club to help me with emotional eating and diabetes, needed for health

Holiday................................. 

Emergency fund.......................... 50**

Prof registration ...................... 8

Settee jen.............................. 59

National trust ......................... 5.3**

Total monthly expenses.................. 2051.00

[b]

Assets[/b]

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

House value (Gross)..................... 250000

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

Car(s).................................. 8000

Other assets............................ 0[b]

Total Assets............................ 258000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 200000...(650)......0

Hire Purchase (HP) debt ...... 7480.....(250)......0[b]

Total secured & HP debts...... 207480....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Barclaycard....................7733.37...120.......Currently 0%Was 17.03%

Creation.......................6738.45...120.......0% prior 29.9%

Halifax loan...................8144.77.....217.10 .....11.5%

Next...........................1891.71...30........0% was 23.9%

New day........................1336.63...24........0% was 34.080%

Halifax mastercard.............11076.5...£0 ....Interest Stopped now 18.8% ( hopefully agreement made shortly) 

Total unsecured debts..........37081.43.. 511.11 current payments

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,800

Expenses (including HP & secured debts). 2,051.00

Available for debt repayments........... 749.00

Monthly UNsecured debt repayments....... 511.10 (will need to add payment to Halifax cc when agreed) 

Amount left after debt repayments....... 238.00

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 258,000

Total HP & Secured debt................. -207,480

Total Unsecured debt.................... -37,081.43[b]

Net Assets.............................. 13,438.57[/b]

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

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

tacpot12

Well done for having cleared the overdraft.

Have you shopped around for your Buildings Insurance: £50 pcm is really high. We pay something like £12 pcm for a five bedroom property. You should also be able to get a better deal on your landline.

You might also look at whether a Prescription Prepayment Certificate might cut down your prescription costs. See here: https://www.nhs.uk/using-the-nhs/help-with-health-costs/save-money-with-a-prescription-prepayment-certificate-ppc/

You say you are saving £50pcm to an emergency fund, yet your assets don't include this fund. This might be an oversight, but I would suggest that once you have £500 in your emergency fund, stop saving and use the extra money that this frees up to pay down the Barclaycard. I know this goes against the logic of paying down the most expensive debt first, but with a very limited emergency fund it would be as well to have one credit card that you are making payments on and that has a lowish interest, just in case you have an emergency and need to pay for something like getting the boiler fixed. You should keep the Barclaycard locked away somewhere. Give the key to your partner! 

As for friends that want you to come out with them, it would as well to say that money is a bit tight at the moment - they will have all been in that situation in the past, although they might not admit it. Try to cut down on the food shopping, and put the money saved into a savings pot so that you are able to accept 50% of all invites out - you need to have to have a break from scrimping and saving. 

BabyStepper

I get your debt total to be £36,921.43 so there's £160 paid off straight away.

With your current payments and all extra cash going to debt it will take you 4 years and 2 months to pay this off. How long does your car loan have to run? And what is settee jen? If these things are due to finish then the process could speed up. Does this fit with your retirement timescale?

The first challenge will be trying to live on a budget, and getting the one you've just shared with us to work. Look back at old bank and CC statements and see what you've spent the cash on. Was the loan an attempt at consolidation? It takes a while to learn to budget, it's not easy, and that means acknowledging you can't help your daughter any more, you just can't afford it. You'll need to work out how to socialise much more cheaply, chase good deals for things, shop around.  

I wouldn't be worrying too much, you have the resources to pay your debt off, your home seems secure, your pension arrangements are in place and soon you'll have a guaranteed income from it. Maybe you don't need to pay interest on the debt after the year is up, would it matter if you did a dmp? This is essentially the arrangement you have now but over the full term of the repayment. It will impact on your ability to get credit in a serious way, but so what? Were you planning any big purchases? 

If your partner has savings you could ask them to pay all/some of it off. Your family income belongs to you both, so no reason why not. I don't understand why couples don't merge their finances, but each to their own. Ask for help if you think you can. 

As long as you can get this paid off before you retire, and you learn to budget along the way, then I think you'll be fine. Keep us posted how you get on.  



  

Narola1976

Can I just check - as a diabetic, do you not have a medical exemption card? This makes ALL prescription medication free, whether diabetes related or not. The card is valid for 5 years and all you have to do is get the GP to sign the form. I am diabetic and I have this card. 

Grumpelstiltskin

Car Insurance £70 per month? Why so high?
As Tacpot says why is buildings and contents insurance so high?
Am I correct to work out Water Rates are £70 per month?

welshspendthrift

Hi thanks everyone , the prescriptions are free but having essential dental work and new glasses were needed this month too 😢 car insurance includes breakdown cover amount of £16.40 as well.the form I used combined)  Will check water rates and the buildings insurance ( think it may include other insurance too as it’s £110 in total. 

welshspendthrift

I will also double check car insurance figure , did this in a bit of a rush and copied from form done previously for credit cards 

bamgbost

I agree with all above.

What about your Council tax, is it over 12 months, rather than default 10?

Otherwise its just a long slog to reduce it all slowly. First budget, stick to it, and target 1 debt to get rid of before the rest! Good luck

fatbelly

If I read that correctly you are paying £250 per month for a depreciating asset (car).

Actually - check what you've got as you describe it as a car HP loan and it is either HP or a loan (different critters entirely)

The long slog (and I agree that's preferable to an IVA) would be a lot shorter if you didn't have an HP agreement, but I suspect it is. How much longer left? Is it over halfway?

Here's a factsheet - if it's HP you should consider voluntary termination

https://www.nationaldebtline.org/EW/factsheets/Pages/hire-purchase-debt/hire-purchase-and-conditional-sale.aspx

and run something cheaper till the debts are gone.

TheR3ader

You've done a great job on clearing your overdraft, it's an excellent milestone to achieve! There's a lot of practical advice given above so I won't re-iterate on that.

I found with my debt it didn't start going down until I addressed my emotional relationship with money. For a lot of people, making a budget is enough for them to stick to getting out of debt, for others, it's not so easy. My advice would be to spend a bit of time with yourself and exploring your relationship with money. What does spending money give you? How do you feel about it? What does having it/not having it mean to you? It will take time but you can get there! Work on both the practical aspects as well the emotional triggers, it's hard but worth it in the long run.

vixx_123

welshspendthrift said:

 car insurance includes breakdown cover amount of £16.40 as well.the form I used combined) 

It does seem a lot. Mine and DH car insurance for our car is just over £30 a month and this includes RAC breakdown cover (in our 30s, fully comp, leisure commute, 6yrs no claims, quite high mileage as I know all these things impact price)