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Help for a newbie

TKDPhil
TKDPhil Posts: 10 Forumite
Sixth Anniversary First Post Combo Breaker
in Debt-free wannabe
Hi all.  I imagine I have a fairly typical aim of clearing my credit card debt, its currently around the 28K level and along with a personal loan I'm in a downward spiral of just paying the minimum and having to keep paying for things on a credit card.  I feel ashamed that I've let this level of debt mount up and I dont know what to do about it.  I'm completely new to this so would really appriciate some advice about how I go about getting on top of this.  I imagine I'll need to provide much more information on my cirumstances but some advice on what I need to provide would be great.  Thanks in advance.
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Comments

  • pukkamum
    pukkamum Posts: 3,944 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    There is no need for any shame, everyone here has been there to some extent and there will be someone along with great advice for you. Release those negative feelings and give yourself a pat in the back for facing it head on and working towards resolving it.
    I don't get nearly enough credit for not being a violent psychopath.
  • theoretica
    theoretica Posts: 12,691 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    One of the places you need to start is being sure yourself of your exact situation - what money do you have coming in, where is it all going to.  this is a great thing to work through, comparing with your bank/card statements for the last few months. https://www.stoozing.com/soa.php   Be honest with yourself, not optimistic!

    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • anjyeah
    anjyeah Posts: 240 Forumite
    Third Anniversary 100 Posts Photogenic Name Dropper
    I learned more by engaging on here. Checking out the challenges, reading advice that it's similar to my tale - anything that would motivate me to spend sensibly, pay off debt and save more. You will find something eventually that works for you. 

    But @theoretica is right, you need start by finding out where your money goes. You can put your SOA and the advice can go from there as well. 
    My Debt Free Diary: Virgo In Pursuit
    Debt-Busting Progress: 2020: £13,200 | 2020: £9,200 | 2021: £4,900 
    2022: ongoing 
  • TKDPhil
    TKDPhil Posts: 10 Forumite
    Sixth Anniversary First Post Combo Breaker
    Thanks to everyone for your quick replies. I’ve never heard of an SoA but that makes perfect sense. I’ll put one together and post it. Thanks again, it’s nice just to know there are like minded people out there to talk to. 
  • TKDPhil
    TKDPhil Posts: 10 Forumite
    Sixth Anniversary First Post Combo Breaker
    Hi all.
    Here's a start on my SoA and I can see obvious places where savings can be made (streaming services, sky TV bill, potentially utilities and I'm going to take a really close look at the food shopping and takeaway bills as these two really shocked me!) but I'm not sure if I can save enough to halt the debt spiral I'm stuck in.

    I can see that alot of people on the forum speak to their credit card companies and get an interest rate reduction or freeze, so I may be able to look into that for my Halifax card, or I could potentially apply for another interest free card.  Can I approach my loan provider and ask them if their rate can be looked at as well?  And do either of these things affect my credit rating?

    Then I suppose its speaking to my mortgage provider and seeing if they can help.  Should I consider moving to an interest only mortgage for a few years?

    The income I've stated is the absolute minimum and most months will include some overtime.  Also we have an annual bonus of 5% of your total wage but that wont be confirmed until September so I wont even factor that in to any future finances.

    I know that we've got alot of sacrifice and hard work ahead but any advice an guidance would be greatly appriciated.  If I can just get to a point where I can stop the debt from increasing each month then I'd see that as a massive step in the right direction.

    Thanks very much in advance!
    SoA
    [tt][b]Statement of Affairs and Personal Balance Sheet[/b][b]

    Monthly Income Details[/b]
    Monthly income after tax................ 2330.69
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0[b]
    Total monthly income.................... 2330.69[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 905.6
    Secured/HP loan repayments.............. 69.45
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 0
    Electricity............................. 90
    Gas..................................... 0
    Oil..................................... 0
    Water rates............................. 63.33
    Telephone (land line)................... 0
    Mobile phone (SKY)............................ 30
    TV Licence.............................. 13.37
    Satellite/Cable TV (SKY)...................... 80.8
    Internet Services (SKY)....................... 35.99
    Groceries etc. ......................... 400
    Clothing................................ 0
    Petrol/diesel........................... 60
    Road tax................................ 0
    Car Insurance........................... 0
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    House insurance (combined)..................... 18.39
    Life assurance ......................... 18.51
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0
    Haircuts................................ 11
    Entertainment........................... 0
    Holiday................................. 0
    Emergency fund.......................... 0
    gym..................................... 22.99
    Amazon Prime............................ 7.99
    Spotify................................. 14.99
    Halifax Reward Account.................. 17
    Takeaways............................... 90[b]
    Total monthly expenses.................. 1949.41[/b]
    [b]

    Assets[/b]
    Cash.................................... 0
    House value (Gross)..................... 230000
    Shares and bonds........................ 0
    Car(s).................................. 2000
    Other assets............................ 0[b]
    Total Assets............................ 232000[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 160000...(905.6)....3.8<
    Bike Loan......................0........(69.45)....0[b]
    Total secured & HP debts...... 160000....-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Home improvement loan..........17500.....454.8.....11.9
    Halifax Credit Card............9103.62...261.4.....28.55
    MBNA 1.........................13153.....131.6.....0
    MBNA 2.........................5476.18...60........0[b]
  • Ebe_Scrooge
    Ebe_Scrooge Posts: 7,320 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    edited 2 June 2021 at 4:10PM
    TKDPhil said:

    SoA
    [tt][b]Statement of Affairs and Personal Balance Sheet[/b][b]

    Monthly Income Details[/b]
    Monthly income after tax................ 2330.69
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0[b]
    Total monthly income.................... 2330.69[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 905.6
    Secured/HP loan repayments.............. 69.45
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 0 Is this correct - assuming you get a single-person discount, you surely still pay some council tax?
    Electricity............................. 90
    Gas..................................... 0
    Oil..................................... 0
    Water rates............................. 63.33
    Telephone (land line)................... 0
    Mobile phone (SKY)............................ 30
    TV Licence.............................. 13.37
    Satellite/Cable TV (SKY)...................... 80.8 Ouch.  This is unnecessary
    Internet Services (SKY)....................... 35.99
    Groceries etc. ......................... 400 This is a lot for (I'm assuming) a single person.  Start shopping at Aldi/Lidl and halve this straight away.
    Clothing................................ 0
    Petrol/diesel........................... 60
    Road tax................................ 0 Zero tax for your car?  This may be correct depending on your car
    Car Insurance........................... 0 You must pay for insurance?
    Car maintenance (including MOT)......... 0 You need to factor something in for this
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    House insurance (combined)..................... 18.39
    Life assurance ......................... 18.51 It's not a huge amount, but is it really necessary if you have no dependants?
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0
    Haircuts................................ 11
    Entertainment........................... 0
    Holiday................................. 0
    Emergency fund.......................... 0 You really should have something in here
    gym..................................... 22.99 This is unnecessary
    Amazon Prime............................ 7.99
    Spotify................................. 14.99 This is unnecessary
    Halifax Reward Account.................. 17
    Takeaways............................... 90[b] Ouch, get rid of this
    Total monthly expenses.................. 1949.41[/b]
    [b]

    Assets[/b]
    Cash.................................... 0
    House value (Gross)..................... 230000
    Shares and bonds........................ 0
    Car(s).................................. 2000
    Other assets............................ 0[b]
    Total Assets............................ 232000[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 160000...(905.6)....3.8<
    Bike Loan......................0........(69.45)....0[b]
    Total secured & HP debts...... 160000....-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Home improvement loan..........17500.....454.8.....11.9
    Halifax Credit Card............9103.62...261.4.....28.55
    MBNA 1.........................13153.....131.6.....0
    MBNA 2.........................5476.18...60........0[b]
    My thoughts in bold above.  Apologies if I've made incorrect assumptions about your circumstances, but hopefully this will be a bit of a starting point.
    In terms of freezing interest on cards, loans etc. - this is an option, but usually only after you've already demonstrated an inability to pay.  And doing this will severely impact your credit file, making it extremely hard to obtain further credit for the next 6 years.

  • fatbelly
    fatbelly Posts: 23,616 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    That soa has some bits missing like family composition and 'bottom line' figures.

    The groceries spend is what I would expect for a family of four and the car looks like a Motability job, as you just put fuel in it (no insurance, tax or maintenance). I suspect I'm wrong on both those areas.

    The bottom line would show that there is about 380 available for creditors but your min payments are around £900 on 45k of debt. There's good equity in the house.

    Have a look at the figures again once you've sorted your budget out but it looks completely suited to a debt management plan to me


  • TKDPhil
    TKDPhil Posts: 10 Forumite
    Sixth Anniversary First Post Combo Breaker
    Thanks for the reply Fatbelly. I have a company car so that’s why there’s no maintenance etc. The other car is a runaround that is my wife’s and she pays for the general running of that. 

    You’re right, we’re a family of 4. I’ll take a look at my SoA again because I completely forgot about my overdraft and it’s fee. 

    I’ve not heard of a debt management plan. It sound rather scary!
  • TKDPhil
    TKDPhil Posts: 10 Forumite
    Sixth Anniversary First Post Combo Breaker
    Thanks also to eve_scrooge as well. Apologies but I’ve not fully filled in the SoA (I really am new to all of this) so I didn’t even think to add my family information. I’m married with two children. I have a company car so I pay for it through income tax hence no road tax, insurance, maintenance etc. 

    The car mentioned in my SoA is my wife’s runaround and she pays for that along with the council tax. 

    Am I better showing all of our finances. My wife earns a lot less than I do but just gets by month to month as well. I thought as the debts were mostly mine that I’d just put my details. 

    Apologies again if I’m not explaining myself properly. 
  • TheAble
    TheAble Posts: 1,676 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    With two children are you not entitled to any child benefit? Or is your overall income too high?
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