Close to running out of

Mattay43

I'm £35,000k in the hole with 6 credit cards, have used up all the interest-free terms so now paying full amount on each. I'm self-employed and have a Business BBL to start paying back in Feb which is £7,000.

I co-own a home with my dad, the mortgage is only £36,000 and it is my sole responsibility to pay -  £380 a month.

I'm a musician and work is picking up but more goes out each month than comes in. Some promising opportunities are on the horizon but I'm close to zero in the bank which means in a couple of months I may be faced with not being able to make payments to all my creditors. I do have a £3,000 Overdraft available

Any advice is welcome on my next moves / options!

Someone suggested a secured loan on the house but as my dad is co-owner he'd have to co-sign (I assume anyway)

He hasn't been well and freaks out at the thought of anyone being £1,000 in debt so I'd rather he didn't know about my situation unless absolutely necessary as I fear it would be too much stress for him.

I believe I can get myself out of this but as I'm close to £0 in the bank account I thought I'd better ask sooner rather than later!

Thanks in advance!

EssexHebridean

Absolutely NOT anything secured on the house - that is certainly not a good plan.

First step is to complete your SOA (Statement of Affairs) - the link to one of the calculators we suggest is in my signature below. Complete it - it needs to be honest and open, and it must reflect where thigs are at right now - NOT how you would like your finances to be, or what you think we "expect" to see. Get it filled in, and post it into here, and we can take a look at it. 

I suspect the first step realistically is going to be to get a job that gives a more reliable income level than your music currently does - this can even be a temporary option (and this is a great time of year to pick up seasonal work) in the first instance, but will give you a chance to catch up with yourself a bit. 

theoretica

Could you rearrange your home and take a lodger in?

kiss_me_now9

I would second looking at getting a temporary job if you can - there's some really good opportunities out there at the moment. How much time does your work as a musician take daily? Can you offer music lessons to kids/adults in the evenings? 

Opportunities on the horizon are great but you can't do anything with money you haven't made yet.

pjcox2005

SOA is the route, and realistically you should speak to someone like Stepchange to help manage your way out of debt.

I think guidance will be very helpful, a) to ensure you don't go down the route of a secured loan but b) to speak early about plans such as contacting creditors so you go down to lower payments, hopefully freeze interest etc.

Second job sounds good to help over Xmas although I expect it may also be a busier time for musicians. I assume it's just impact of Covid and an unsecure income, but try to think carefully on how you've got into debt and why you've kept going to £30k+ so that you can try to put a plan in place that it doesn't get worst.

Best of luck.

Mattay43

Thanks all - here is the SOA

Household Information[/b]

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

Number of children in household......... 1

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 1500

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

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

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

Total monthly income.................... 1500[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 382

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

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

Management charge (leasehold property).. 0

Council tax............................. 100

Electricity............................. 70

Gas..................................... 70

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

Water rates............................. 50

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

Mobile phone............................ 70

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

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

Internet Services....................... 15

Groceries etc. ......................... 200

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

Petrol/diesel........................... 70

Road tax................................ 26

Car Insurance........................... 30

Car maintenance (including MOT)......... 15

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

Other travel............................ 40

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

Other child related expenses............ 50

Medical (prescriptions, dentist etc).... 18

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

Buildings insurance..................... 10

Contents insurance...................... 10

Life assurance ......................... 20

Other insurance......................... 10

Presents (birthday, christmas etc)...... 30

Haircuts................................ 3

Entertainment........................... 50

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

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

Total monthly expenses.................. 1389[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 300000

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

Car(s).................................. 4000

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

Total Assets............................ 304000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 32600....(382)......0[b]

Total secured & HP debts...... 32600.....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Marbles Card...................782.......50........0

MBNA Card......................8264......222.......22.93

Santander......................3600......55........17.4

VIRGIN MONEY...................4520......115.......20.84

PAYPAL.........................1813......60........21.9

NATWEST CARD...................4389......60........18.27

AMEX...........................4866......181.......22

Barclay Card...................8511......178.......15.82[b]

Total unsecured debts..........36745.....921.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 1,500

Expenses (including HP & secured debts). 1,389

Available for debt repayments........... 111

Monthly UNsecured debt repayments....... 921[b]

Amount short for making debt repayments. -810[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 304,000

Total HP & Secured debt................. -32,600

Total Unsecured debt.................... -36,745[b]

Net Assets.............................. 234,655[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

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

Pixie5740

Does your father contribute financially to the household? Utilities, food, etc or do you need to buy it all?

theoretica

A few thoughts:

Should your household be eligible for benefits?  Run through https://benefits-calculator-2.turn2us.org.uk/

You have a one income family and neither any income nor benefits from the other adult?  Anything they could do to bring money in would be really valuable.

On the face of those numbers you have enough coming in to live on - but need to stop paying all the unsecured debts for the moment.

Being honest with yourself, how did the debts build up to such a level if your monthly expenses are correct?  Do the debts show up any flaws in your budget.

flipflopflo

Are the two adults you and your father or you and a partner?

Is the child yours that lives with you full time or part time?

mcpitman

Hi, as above as initial query.

Secondly, what lead to the amount of debt, has that issue been resolved?

After that, we need to work out ways you can either spend less, or earn more.

Or look into DMP's/Arrangement with your creditors etc, honestly, at those interest rates, getting some frozen will definitely help.

Is your road tax really £26 a month (£300+ per year), what are you driving?

Mobile phone - seems high, near the end of a contract? Looked at SIM only deals?

Mattay43

Thanks for the quick responses!

So my dad lives with his partner. I live with my girlfriend and our 2 year old.

She is working but has her own debts to pay, so currently I'm paying for quite most of the utilities etc, although I can't continue that much longer. We share food, petrol and baby cost, and I'd say she gets more stuff for the baby than I do.

The mobile bill is high because I pay for hers and car tax cost is for our 2 cars.

Debt is that high due to some business investments that didn't quite pan out and COVID meaning I couldn't pay back as much as I'd like on CC bills. I did a lot of balance transfers which ran out so now making little headway on actually clearing the debt.