Finally facing up to my situation

LadySher

I'm stuck at home isolating.  Around 9am someone banged on the door and the absolute terror that it was a bailiff was awful.  I can't live like this any longer.

I've completed my SOA but i'd like to give some context before you read it.

Single mother, 4 teenagers/children.  I work full time and pay childcare costs for my youngest.  No maintenance from their father (CMS have given up trying to get any money from him, currently sitting around 6k debt).  I was promoted around 12 months ago, before this I was eligible for housing benefit which I now don't qualify for.  I get 505 in child tax credit and 236 in child benefit total.  My salary is in my SOA is after my pension contribution and student loan is taken (pension £310, student loan £95).  I am wondering if it would be prudent to opt out of my pension whilst I am in this situation?

House is rented and water is included in the rent hence why it isnt included
TV licence, I don't have one we only watch netlfix/amazon prime
Phone bill is so high as it is 4 phones and a tablet & headphones

Debt.  I have no idea about APR for any of this.  If i'm honest with you i don't open any letters and have a pile of them in a drawer downstairs.  On top of these debts I also have 2 outstanding parking tickets which I haven't paid.

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

Household Information[/b]

Number of adults in household........... 1

Number of children in household......... 4

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 2231

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

Benefits................................ 761

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

Total monthly income.................... 2992[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 945

Management charge (leasehold property).. 0

Council tax............................. 105

Electricity............................. 65

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

Oil..................................... 55

Water rates............................. 0

Telephone (land line)................... 0

Mobile phone............................ 205

TV Licence.............................. 0

Satellite/Cable TV...................... 0

Internet Services....................... 32

Groceries etc. ......................... 600

Clothing................................ 50

Petrol/diesel........................... 200

Road tax................................ 0

Car Insurance........................... 77

Car maintenance (including MOT)......... 0

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

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

Childcare/nursery....................... 260

Other child related expenses............ 60

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 12

Life assurance ......................... 12

Other insurance......................... 0

Presents (birthday, christmas etc)...... 0

Haircuts................................ 0

Entertainment........................... 0

Holiday................................. 0

Emergency fund.......................... 0[b]

Total monthly expenses.................. 2678[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 0

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

Car(s).................................. 0

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

Total Assets............................ 0[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

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

Car Loan.......................2000......145.......0

Loan...........................1000......106.......0

Tesco CC.......................564.......65........0

Capital One....................1435......50........0

Aqua CC........................1925......100.......0[b]

Total unsecured debts..........6924......466.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,992

Expenses (including HP & secured debts). 2,678

Available for debt repayments........... 314

Monthly UNsecured debt repayments....... 466[b]

Amount short for making debt repayments. -152[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 0

Total HP & Secured debt................. -0

Total Unsecured debt.................... -6,924[b]

Net Assets.............................. -6,924[/b]

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

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

mcpitman

Hi, first step is the hardest, this looks problematic, but not impossible to solve.

A few quick thoughts;
In assets you list no car but have a car loan, is that correct?
Mobiles etc, how long are they in contract for?
Are there any arrears on the accounts, or have you spoken to any of your creditors?

LadySher

Assets yes I missed that off, car is probably 2.5k.  Mobiles I am converting to payg sims as soon as they become out of contract, first one in 2 months.  I'm not in arrears on any of the accounts, paying absolute minimum and then still using that up when it gets to the end of the month

mcpitman

OK, it would be good to know what he APR's are for each of those debts.

I know it's in the "pile of doom" right now, but you need to get the facts straight to get a plan together.

If you can find out how many repayments remaining on loans that would be good too. (or start dates and length of loans).

Sncjw

Sim. Only deals might be good instead of payg as it would probably be cheaper than having the phone in the contract. 

Can you reduce the shopping budget. Maybe plan meals and batch cook. 





I think as hard as its going to be you should open those letters so you have a true picture of your debts. 

Is any kids of working age that can help contribute to household? 

sourcrates

LadySher said:

I'm stuck at home isolating.  Around 9am someone banged on the door and the absolute terror that it was a bailiff was awful.  I can't live like this any longer.

Why would it be a bailiff ?

You have around 7k of unsecured debt, which will never warrant the services of any bailiff.

However the unpaid parking tickets may very well do so, I would suggest they were a priority that you need to deal with first, the rest are just common a garden credit debts, these can be paid at £1 per week if necessary.

There is a very long legal process involved with debt collection, if it happens at all, a bailiff will only be called upon once a CCJ has been granted, and you still fail to pay, and even then creditors don`t like using further enforcement action on consumer credit debts unless we are talking a lot of money, and none of your debts are particularly high.

However private parking companies, and councils, will use bailiff enforcement if other options have been exhausted.

Having a drawer of unopened letters and your reluctance to read them suggests you may be behind on some or all of these accounts, so first off, you really need to ascertain your position in all of this, read the letters.

On the plus side, your income is high, but so is your grocery bill, your actual debts are all non essential payments, and as I said previously, debt management could see you paying a lot less than you are now, so there is no need to worry about any of this, but those parking tickets should be your priority.

You may benefit from some advice from stepchange on potential debt management, you also need to adjust your budget to include all the categories you appear to have missed from your SOA.

Affordability is everything these days, creditors understand that, if your budget says you can afford £20 to pay your debts, then £20 is what they get.

Prioritise the tickets though !!!!!

fatbelly

Should there be something for road tax and car maintenance in there?

When you say car loan, is that an unsecured standalone loan? Or an HP/PCP arrangement?

What sort of parking tickets? Private or council?

EssexHebridean

LadySher said:

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

Household Information[/b]

Number of adults in household........... 1

Number of children in household......... 4

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 2231

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

Benefits................................ 761

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

Total monthly income.................... 2992[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 945

Management charge (leasehold property).. 0

Council tax............................. 105 Assuming that none of the 4 young people are over 18 and working, do you get single person discount on this? Is it paid over 10 months or 12? If 10, convert it to 12 to make budgeting easier.

Electricity............................. 65 This is high allowing you don't use it for heating (and possibly not for hot water either?) and can probably be adjusted by watching use quite carefully. Having said that, guessing the teenagers spend a lot of time in their own rooms with lights on and gadgets running so that will complicate things. I'll list some small ideas for energy saving below though.

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

Oil..................................... 55

Water rates............................. 0

Telephone (land line)................... 0

Mobile phone............................ 205 You've already identified this as an issue. SIM only definitely the way to go - diarise a clear month before each contract ends to ring and tell them you're leaving unless they can match *x* deal - find a deal you're happy to settle on, ideally with a provider that uses the same network as the current one. To give you a starting point I am currently SIM only with EE - unlimited calls/texts and 10gb of 4g data = under £9 a month. the reason for calling a month before is that sometimes they will close out the contract early if you're going across to their SIM only deal rather than risk you changing your mind. 

TV Licence.............................. 0

Satellite/Cable TV...................... 0

Internet Services....................... 32 have a look at the main site for savings on this - there are lots of deals around for fast BB for around the £20 - £25 a month mark.

Groceries etc. ......................... 600 This can certainly be cut. If you're buying pre-made snacks then have a think about what you can home-make versions of cheaper. Do you have a breadmaker? If not keep an eye on freecycle etc - there are likely to be lots going at the moment as people who decided they were a good idea during the lockdowns now realise they're not using them at al! They are certainly cost effective when you are a household that goes through a lot of bread. Look at batch cooking and using your freezer (if you have one) more. Keep an eye on food waste - almost on a daily basis. make sure others in the house aren't throwing things away just because they've hit their "best before" date too - this is a common problem in houses with older children.

Clothing................................ 50

Petrol/diesel........................... 200 have a read through the "driving economically" guide on the main MSE site to see if there are savings you can make here. On the obvious end of the scale though is to watch how many "Mum's taxi" runs you are making and see where trips can be combined. 

Road tax................................ 0 Is this an oversight or is your car genuinely zero-rated for tax? 

Car Insurance........................... 77 why so high? Have you shopped around for this? 

Car maintenance (including MOT)......... 0 You HAVE to budget for this. It's a false economy not to, particularly with an older vehicle.

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

Other travel............................ 0 Nothing at all, ever? Nobody ever gets a bus, or hops on the train? No-one in the house has a bike that needs an annual service/safety check?

Childcare/nursery....................... 260

Other child related expenses............ 60

Medical (prescriptions, dentist etc).... 0 

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 12 Shop about for this to see if you can shave a little bit off but with lots of gadgets in the house be careful you don't leave yourself inadequately covered. 

Life assurance ......................... 12

Other insurance......................... 0

Presents (birthday, christmas etc)...... 0 Again, you need to set a budget for this - we're less than 2 months to Christmas - what is your plan for buying gifts for your children? 

Haircuts................................ 0 How so - friend/family member who is a hairdresser? 

Entertainment........................... 0 Agai - this isn't plasuible for a family your size - you ARE spending something here, but you're not budgeting for it.

Holiday................................. 0

Emergency fund.......................... 0 You need to get something set aside here.[b]

Total monthly expenses.................. 2678[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 0

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

Car(s).................................. 0

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

Total Assets............................ 0[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

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

Car Loan.......................2000......145.......0 How come this is 0%?

Loan...........................1000......106.......0 How come this is 0%?

Tesco CC.......................564.......65........0 when does the 0% end?

Capital One....................1435......50........0 when does the 0% end?

Aqua CC........................1925......100.......0 when does the 0% end?[b]

Total unsecured debts..........6924......466.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,992

Expenses (including HP & secured debts). 2,678

Available for debt repayments........... 314

Monthly UNsecured debt repayments....... 466[b]

Amount short for making debt repayments. -152[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 0

Total HP & Secured debt................. -0

Total Unsecured debt.................... -6,924[b]

Net Assets.............................. -6,924[/b]

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

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

OK - the usual line-by-line done on this above - comments in bold. 

Energy saving ideas:
- make sure all lightbulbs that can be are low energy ones.
- pop a sign on the inside of EVERY bedroom door reminding people to turn lights off if they are going out of it! 
-  Laundry will be a huge cost for a household your size. Think about how people are wearing clothes. Underwear needs a daily change (or a couple of days for bras). Tops can often go a second day is nothing particularly strenuous has been done. Jeans/trousers will do several days - particularly if they are not worn on consecutive ones. Mid-layers (fleeces, hoodies/sweatshirts etc) will do several days unless they are dirty, food spills etc. Bedding possibly needs changing less often than you are - similarly towels. You know your own limits on that but have a think about it. Towels will go longer if they are hung up to air dry between uses too - often something that isn't done in a household with teenagers! A lot of this stuff can be "sold" to kids on the basis of helping the environment, too, rather than cost-saving. 
- If you have thermostatic radiator valves make sure everyone understands how to use them (this is more for your oil than electricity obviously) and that people aren't running radiators on full and opening windows because it's hot. 
- be mindful of devices that automatically default to standby rather than fully off. 
- Again a heating saving - line your curtains, doesn't need to be proper linings, even cheap fleeces tacked in can do the trick really well. Make sure curtains are pulled as soon as it gets dark, and opened again to allow the benefit of sunshine streaming in during any bright days. If radiators are below windows sit the curtains on the sills or even rolled up on top of the radiators if sills aren't big enough - otherwise all the heat goes behind the curtain and out of the window.
There are loads of great energy saving tips on the main MSE sit and also across the forum so have a browse around and see what else you can come up with!

There are certainly savings you can make there but there are also a lot of things you're not currently budgeting for, and that is where your problems lie I think, combined with not having really adjusted to the loss of the housing benefit. It can be really difficult when money is tight to be able to put money aside for things like presents, car maintenance etc, because it always feels like there is a more pressing "right now" need - but this then comes back and bites you when those expenses become due. If you have no money set aside now to pay for Christmas for example you're going to go into January with several hundred pounds more deficit, at a guess. 

You say that you have no TV license as you watch Netflix & Amazon prime but there is no cost for these on your SOA? 

I have a feeling that you may need to look at the DMP route here - but that is likely to be a good thing for you as it will give you a far more manageable way of getting rid of the debt. The first thing though is to get a budget in line and learn to live to it - your income definitely does allow you to do this. 

enthusiasticsaver

I think you need to  consider a DMP if you are having to resort to credit to live after paying just minimums.  Knowing the interest rates will help to decide whether or not that is the best route for you but the advantage of a DMP is that the repayment will be affordable for you, you  can build in amounts for emergency savings, entertainment, presents, haircuts, car maintenance etc all of which no doubt you do pay for but the soa shows no money spare so you are presumably still using cards to live off.  That is a situation which cannot continue particularly if you are paying high interest on the debts.  The other advantage of a DMP is the interest rate is frozen after defaulting so any payments you make come off the debt rather than barely covering interest.   The disadvantage is your credit record will be affected for 6 years minimum after defaulting but many people feel a sense of relief when not having to juggle cards and payments. 

On the soa the items which are high are groceries and mobiles which you have explained.  Do you get any help with childcare costs by way of free hours or tax free childcare vouchers.  Have you explored the tax free scheme? 

You need to prioritise the parking tickets over the unsecured debt in case they do take legal action.  Are they private parking companies or council run?  These are more likely to go down the court and legal route than your credit card companies.  

enthusiasticsaver

I do  not recommend cancelling or suspending your pension contributions btw.