Considered IVA but now having second thougths

AbundanceHereICome

This is my first post so please guide me in the right direction if in the wrong place. 
As my Credit card zero interest period is coming to an end I am starting to panic as to how am I going to meet ends. Having talked to a debt advisor I was advised to go for an IVA. However,m now that I can CLEARLY see what goes in and out of my account, I am feeling that I could probably do better if I was to cut down on living costs?

I am not sure if I want to be blacklisted for 5-6  years for the sake of 'getting rid of' some of my debt; but since I am just starting to take the financial reins of my life (18 months after separated from my husband) I would like you guys to help me have even more clarity with the pros and cons of an IVA - or possibly getting a better perspective in terms of knowing how easy/difficult would it be to really pay off my debts while working towards improving my credit score.
I am not a home owner, at 42yo  I don't own anything yet - so time is important since I would like at some point to be able to buy a property. 6 years is a long time at this age to START building up credit score dont you think?

Well, for now; I am a single mum living with 2 children 9 and 12yo

This is my statement of affairs - which by the way was worked out with the help of a debt advisor...

Budget / state of affairs

What I have acknowledged: I need reducing expenses and increase income...

Reduce by:

• Moving home necessary until financially free (that will be cutting down travel expenses and rent costs by £200-£400
• I am realising I can cut back on groceries
• Finding where else to cut down until back on track

Increase income:

• I can babysit on days I don’t have the children at mine - increasing by £120 a month

Income £2991

ChBenefit £140   (I feel bad this has to be used for expenses at the moment- would like to pass them on to their savings on CTF's)

Ch support £150  

---------------------------------------------------------

TOTAL income £3281

EXPENSES

Rent £1750

council tax £100

gas and electricity  £100

Water £34

Phone line and internet £13  (going up in March)

Mobile phones £43

Public transport £120

Food, cleaning and toiletries £465

Books £7

Clothing and footwear £80

Laundry / dry cleaning £10

Pet insurance £38

Emergencies / medicines £24

Dental £30

School meals £40

work meals £44

Pocket money £20

charities £26

School trips £30

Hairdressing £40

Children clubs £80

Outings £50

Children CTFs £20

Loan payment 1(frozen interest) £120

Loan payment 2(no interest) £50

Credit card min payment £32

__________________________________

TOTAL expenses £3312

DEBTS

Loan 1 £3600

Loan 2 £2000

Credit Card £2400

__________________________________

Total £8000

I have an emergency fund £450

Your perspective on my situation would be EXTREMELY APPRECIATED since I have to decide  if taking the IVA or not as soon as possible.

Best wishes to all

gizmo111

Who advised you to get an IVA for such a relatively small amount of debt and no property to protect?  Do not go down this route for just £8K  If you fill in the SOA recommend on here then people will be able to comment.  But as you say yourself there are immediate savings in rent, groceries, probably clothing and shoes, school clubs aren't really happening at the moment

Suseka97

Why do you have to decide whether to start an IVA 'as soon as possible'?  Is it because the debt adviser you have contacted works for the IVA company?   Have you taken independent advice from one of the free debt charities such as Stepchange or Payplan?  I ask these questions because its important to get impartial advice and not take the advice given from a fee charging company (whatever they promise).

There are many debt solutions out there to suit individual circumstances and so its worth a phone call so you can consider options before launching into anything.

RAS

Did you speak to a debt company or a debt charity. 
An IVA is good for someone with assets to preserve (a house?) and debts above £30k.

What an IVA does do is enable a debt company to charge you massive fees, so much so that on your minimal debts, you could well end up paying more than you currently owe even if your creditors only got 25p in the £1. Of course if you've respond to one of those 'Reduce your debt to one manageable payment'  the debt company will suggest an IVA because that's their income stream.

Put up a full SOA and speak to step change if you want more advice than we can offer you.

fatbelly

You've got an emergency fund and (almost) a balanced budget.

And there's room to trim that budget. For 3 of you, the groceries figure is quite high; likewise clothing.

For anything you have to sign up to, use the tools on this site to shop around - phones, gas, electricity, insurances and see if you can purchase them with cashback through Quidco or Topcashback

Pay council tax as slowly as possible - there is usually a 12-month option, coming out on the 20th of the month.

You haven't defaulted on your debts - see if you can get a 0% balance transfer to a new card. There's a pre-eligibility checker here

https://www.moneysavingexpert.com/eligibility/credit-cards/search/

Oh, and consider whether you shouldn't  be contributing to charity at the moment - there'll be time for that later

AbundanceHereICome

thanks to all!

gizmo111 it was the nationaldebtline yes! rent, groceries, clothing are going to be cut down - clubs are online at the moment and it is the minimum but will see if can cut this year too.

 Suseka97 - once I was assessed by the first advisor I was asked for lots of paperwork and then referred to another person from creditfix who will call tonight to make it all official  - so you think I still should call Stepchange or Payplan for a second opinion?
RAS - I didn't know that - thanks! I don't have any assets really - first time I am asking for advice, going through my finances and so this information is gold for me. Thanks

fatbelly - thank you so much, I see my budget could be even within the next 2 weeks - Groceries going down... clothing was merele estimated when talking to the advisor but can do with charity shops and pass me downs for the timebeing. "tools on this site" and quickco topcashback - great resources still to be used- THANKS GOD FOR THIS WEBSITE!
I did think of the zero interest balance transfer, just wanted to double check on your thoughts on IVAs but I can say now after reading your thoughts, it is a nobrainer.
Will also reduce my charity contributions, at least in the meantiime.

I am starting to feel excited now!  Let's do this!  step one- (unless someone else has a good reason to give me to keep this offer up):
... REJECT IVA offer! thanks guys!

Suseka97

Yes, definitely reject the IVA recommendation - especially coming from an IVA company.  

Follow FB's advice re cost savings etc and a possible balance transfer, then see where that gets you.  If you can get on top of this without some sort of formal debt solution, that's always best.  But it has to be achievable so you can see light at the end of the tunnel and not be in persistent debt for years and years.

If you ever do find yourself in that situation - do speak with one of the debt charities first and never be drawn into the marketing strategies from fee charging companies.

fatbelly

OP - glad you can read my thoughts. I think the regulars here can do that too.

I'm surprised that National Debtline (a) suggested an IVA  and (b) referred to creditfix. You know there are a lot of organisations that have names that mimic National Debtline. I wonder if you stumbled on one of them,

You may want to start a thread on the debt-free diaries board - lots of support there.

Naomim

I think as has been said, if you could post a full SOA on here it would be helpful.  

I agree the payments to charities could be cut for now.  The way I see it is, I donate lots of bits to charity shops and buy in my preferred ones so I am donating just not a regular amount.

Also work meals.  Could you possibly take food to work? Is there a microwave you can take leftovers or make yourself a packed lunch.  Last year when I was in the office full time, I almost always brought in homemade sandwiches and saved a small fortune.  That could be a £70 a month saving with the charity and lunches. 

Start a diary on here, it really does help to keep you focused on your goals and lots of people offer support, hints and tips on all sorts of MSE ways. I use Quidco and Topcashback too and have just cashed out £130.  - I build up over the year and cash out at the end of the year.  This is all on bits I would have bought anyway and with many places only being online at the moment, it soon adds up!  Also start looking at apps and surveys. I also use Shoppix app to upload receipts to earn Amazon vouchers and Prolific for surveys. Usually average about £20 a month from them.  Every little helps!

Good luck

Naomim

AbundanceHereICome

fatbelly said:

OP - glad you can read my thoughts. I think the regulars here can do that too.

I'm surprised that National Debtline (a) suggested an IVA  and (b) referred to creditfix. You know there are a lot of organisations that have names that mimic National Debtline. I wonder if you stumbled on one of them,

You may want to start a thread on the debt-free diaries board - lots of support there.

deb-free diaries! sounds like I've found my new community! Thanks!

AbundanceHereICome

Thanks Naomim - Thanks for the change of perception: charity-shop buying is indeed giving! I don't feel bad now for not supporting my chosen online charity as much. But it's time to do this!

re: work meals - I don't actually buy meals at work; as mentioned before, this was part of what I was given as 'allowance' when stating expenses along with that advisor before I was passed on to credit fix. So just by looking at that, I am actually £44 better off in reality. Well, as you said £74!  So in fact, I am even already! hehe, I'm feeling so powerful right now-  as opposed to the powerlessness I felt 2 weeks ago on my "wake up day"!

Quidco... Topcashback...  Shoppix... Prolific...  taking notes like crazy here!  

THANK YOU -  THANK YOU -  THANK YOU !!!!!