Drowning in debt now and it's only going to get worse.

in Debt-free wannabe
24 replies 3.5K views
jlb31jlb31 Forumite
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I hope I am in the right place as this is the first time I have done this. I am feeling completely out of my depth here with dealing with my money situation.

I currently owe roughly £30,000 to various companies and family members. I work as a teaching assistant earning around £17,000 and receive tax credit, berevement benefit and child benefit. However since my twins are due to leave college this June I will lose all my benefits. So although I am keeping up with at least the minimum payments once the benefits end I will not be able to and this is really worrying me.

My daughter regularly has to lend me money and I am currently overdrawn by £300 until my benefit goes in on Monday but then I then I am already short for next month.

I am currently looking to take up a second job to help boost my income.

My son is looking to move 3 hours away to continue his career which would mean him moving into a shared house. Although he is looking at an appreticeship I still fear that I may have to help him at the beginning. And it's not just that but I would also need to find money for petrol and accomodation when I visit him.

I find myself in tears more and more these days and unable to sleep. I woke this morning at 2.30 after just 3 hours sleep. My first thought was 'oh my god I don't have a savings for christmas' I used to save with a christmas savings company but decided against it this year as the shops you could spend the vouchers in became less and less. I was putting the money I would have used into my saving but had to use it when I was short for bills.

Sorry to ramble. Sometimes writing things down helps me.
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Replies

  • MovingForwardsMovingForwards Forumite
    16.1K Posts
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    Complete a statement of affairs
    https://www.lemonfool.co.uk/financecalculators/soa.php
    Format it for MSE and we can make suggestions.

    There's always options. Many of us have been in your shoes and came out the other side.
  • Rob5342Rob5342 Forumite
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    There are various solutions available. The important thing to remember is that you don't actually have to pay the minimum payment, it can be less depending on the option you take.
  • sourcratessourcrates Forumite
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    June is here, so a strategy needs to be worked out here, and quickly.

    If you complete the SOA, we can advise correctly.
    Ex MSE Board Guide.

    More than a third of IVA`s fail....fact.
    Could A Debt Relief Order help you ?
    Never pay a fee for a Debt Management Plan.
    For free non-judgemental debt advice, contact either : Stepchange, National Debtline, or CitizensAdviceBureaux.
  • jlb31jlb31 Forumite
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    Thank you for looking at my post. I hope I have completed this correctly

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

    Household Information[/b]
    Number of adults in household........... 4
    Number of children in household......... 
    Number of cars owned.................... 1[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 1117
    Partners monthly income after tax....... 0
    Benefits................................ 983
    Other income............................ 181.5[b]
    Total monthly income.................... 2281.5[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 0
    Secured/HP loan repayments.............. 14
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 160
    Electricity............................. 68
    Gas..................................... 68
    Oil..................................... 0
    Water rates............................. 30
    Telephone (land line)................... 8
    Mobile phone............................ 15
    TV Licence.............................. 14
    Satellite/Cable TV...................... 32
    Internet Services....................... 32
    Groceries etc. ......................... 450
    Clothing................................ 20
    Petrol/diesel........................... 40
    Road tax................................ 16
    Car Insurance........................... 26
    Car maintenance (including MOT)......... 10
    Car parking............................. 0
    Other travel............................ 161.4
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 12
    Buildings insurance..................... 10
    Contents insurance...................... 12
    Life assurance ......................... 15
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 53
    Haircuts................................ 0
    Entertainment........................... 50
    Holiday................................. 35
    Emergency fund.......................... 0[b]
    Total monthly expenses.................. 1351.4[/b]
    [b]

    Assets[/b]
    Cash.................................... 0
    House value (Gross)..................... 200000
    Shares and bonds........................ 0
    Car(s).................................. 500
    Other assets............................ 0[b]
    Total Assets............................ 200500[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 0........(0)........0
    Hire Purchase (HP) debt ...... 353......(14).......0[b]
    Total secured & HP debts...... 353.......-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Loan...........................10397.....452.......9.8
    Catalogue......................271.......30........0
    Credit card....................3500......103.......0
    Family.........................13400.....0.........0[b]
    Total unsecured debts..........27568.....585.......-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 2,281.5
    Expenses (including HP & secured debts). 1,351.4
    Available for debt repayments........... 930.1
    Monthly UNsecured debt repayments....... 585[b]
    Amount left after debt repayments....... 345.1[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 200,500
    Total HP & Secured debt................. -353
    Total Unsecured debt.................... -27,568[b]
    Net Assets.............................. 172,579[/b]

    [i]Created using the SOA calculator at www.LemonFool.co.uk.
    Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]
  • jlb31jlb31 Forumite
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    However this is the situation as of now. In September my benefits will stop, I have had a letter now to confirm this.

    I am not sure if I would still be entititled to any of the benefits if my Son attends college away from home, rather them doing an apprencticeship, if he is living on his own.
  • kimwpkimwp Forumite
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    Great start @jlb31. I take it the mortgage is paid off? Who is the fourth person in the house? (You've mentioned a son and a daughter)

    A key action you need to take is understanding why this debt has built up - you'll need to make sure this is addressed in order to prevent debt building up in the future.

    This situation is obviously causing you stress, but it is solvable, so try not to worry if you can.

    As a first step, is there any way you can increase your income?
    Statement of Affairs (SOA) link: https://www.lemonfool.co.uk/financecalculators/soa.php

    For free, non-judgemental debt advice, try: Stepchange or National Debtline. Beware fee charging companies with similar names.
  • fatbellyfatbelly Forumite
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    1. On the council tax I assume you are (will be?) the sole adult in the property. Have you got your 35% single adult discount and have you spread payments over 12 months?

    2. When you are just feeding yourself there is room to reduce that grocery spend. In fact you could probably halve it.

    3. What is 'other travel'? You are running a car. Can that not look after your travel needs?

    4. If you lose 983 benefits then that does change a +345 to a -638 and your debt payments are 585 so what you need to do is to check that you are indeed going to lose all benefits (inc UC and council tax support). Check here

    https://benefits-calculator.turn2us.org.uk/

    5. You may well be heading to a debt management plan and so as soon as possible you need a new bank account not connected to your present debts, for you to switch all income and essential (not the debts) direct debits to. The loan, catalogue, credit card and old overdraft will then just get pro-rata payments of whatever money you have left over.

    6. How are the family going to be when it's clear that you can't repay the 13k in the short term?
  • cod3cod3 Forumite
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    jlb31  I remember dreading the end of WTC and child benefit when my kids finished school, but it became a positive turning point.  They got p/t jobs (now f/t) and were able to pay their own living expenses as young adults.  Without their ad hoc expenses, I was able to plan a budget, stick to it and start clearing my debt.  It seems overwhelming now, change is scary, but you'll get there.  
  • ohdearhowdidthathappenohdearhowdidthathappen Forumite
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    Do you have 3 children or 2?  If you're the sole adult you can get discount on your council tax.  On your income, you may still get some universal credit, even without dependent children.
    As a TA there are ways to top up your income (apologies if you already are) - breakfast club, lunch cover, after school club, holiday club etc... a couple of my friends do this and they earn quite a bit extra.  Also babysitting as you have all the relevant training.
    On your SOA, the hire purchase is chunky, can you hand back the car and get something cheaper? Could you switch your personal loan to a cheaper product, the interest rate looks a it high.
    Debt - PP £1.5k, CC £3.3k, car loan £19k. Total = £23.8kNew savings goals: Emergency fund £0/£1000, FFEF £0/£10000
  • enthusiasticsaverenthusiasticsaver Forumite, Ambassador
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    You have had some good suggestions already. 

    A second job if you are able to get one will help and maybe getting rid of the car to save on maintenance, insurance etc especially as you presumably pay for a railcard or bus pass too assuming that is what the £161 is for? Unless that is for your children to get to college? 

    Nothing can be done about the family loan but if you are unable to meet the loan repayments and credit card/catalogue then defaulting on that will have to happen but unless you get another job you wont have enough to offer on a DMP.  I would still suggest you contact stepchange to see what they suggest though.  They are unsecured debts so very little can be done by them apart from your credit record being trashed but quite honestly more borrowing is the last thing you should be considering. 

    On the plus side you own your house with no mortgage. You do not mention who the 4th person in the house is but you may not be in a position to help your son so he needs to understand that. Any working adults should be contributing to household costs. Presumably your groceries bills will go down and make sure  you claim the single persons council tax discount. 
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected] All views are my own and not the official line of MoneySavingExpert.
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