The Mental Debt Struggle...

Keedie

Thanks @savingholmes for looking at the budget, and your advice, it's really helpful. I realised from doing this, that it's crazy tight and something has to give. 

All of the repayments are minimum payments, aside from my mum, those amounts have been set by the creditor. With my mum, it's simply because I need to repay her ASAP out of guilt as she's a pensioner and it's just not fair to her. I did the Snowball Calculator on www.lemonfool.co.uk after I did the SOA calculator. And if disregard the £150 car repayment to my mum (which consists of £133 that I get as a care payment with a £17 top up from me), if I set aside £750 for debt repayments, I can clear all of the debt by February 2024.

The car will be repaid by August 2023 and from there, rather than snowballing that onto other debt, I can use it to free up my budget so that I can plan better. I figured it could go into the pot for car repairs and maintenance and some towards saving up for next year's car insurance. My car needed new brake discs, brake pads and a battery at this year's MOT, but as I serviced it with Halfords and had free brake pads for life, I just had to worry about the brake discs. I budgeted £700 a year for the MOT, service and repairs, based on what I spent on the discs, but then I just remembered that the battery still hasn't been replaced as I didn't have the money at the time and it was a small advisory but needs to be sorted before winter. So I think the car maintenance needs to increase to £1,000 a year, as one of my tyres also has a slow puncture... the car is from 2008, so as it ages, it'll get more expensive to run.

I have a small emergency fund which consists of £25 a month payment and round ups from my Monzo account. I realised that I wrote £50 on the SOA, but the other £25 goes into my son's savings account. I'm slowly inching towards £500, as I have about £325 in there at the moment, but should hit my target by December 2022. I do need to increase my income though, so I think I'll have to freelance more to see if I can make an extra £150 a month. It's a shame that I've got nothing really worth selling that's lying around the house, so I'll have to make money by trying to find another freelancing client whilst I finish my proofreading and copywriting courses (as I aim to expand the services I offer freelance beyond HR consultancy).

I've not brought clothes in so long for myself. But you're right about having a teenager and clothes, as I just I remembered that I've brought football socks, boots, new football etc for him the other day and that was about £175 and I didn't have any savings for it, and that has left me a bit lean this month. So you're spot on, in that £0 doesn't make sense. I don't buy any clothes for myself, but he does need the odd thing, so I need to create a pot for it.

I think I will cut back on presents and Christmas as it's a lot to spend, I just have so many nieces and nephews and I have one nephew turning 16 tomorrow, my son is in October and another nephew turning 16 in November. They're special birthdays, but I need to do some juggling for sure if I'm going to be able to treat them. I think I'll have to cancel NOW TV, Starz Play and the charities for the time being as well. We'll still have Netflix and Amazon Prime, so the others will have to go.

abaka

I get why you’re paying your mum so much and understand the urge to do so…but would your mum not rather see you be more comfortable than what you are…it almost sounds like you’re just scraping by at the moment.  

I’m also wondering…would a DMP through one of the debt charities also allow you to split your payments a little bit better?  Or do you don’t own your own home, would a DRO be a solution for you?? 

LittleMissDetermined

Keedie said:

Abaka I hear you! It's the impulse buying that really bites us isn't it? I'm always thinking of rewarding myself, and that's the mindset I need to try and get out of. I'm paying for a holiday I absolutely cannot afford, and althuough I'm looking forward to having that break in July 2023, I don't even know how I'll pay for the passports at the moment, or airport parking etc. So it's good that you shook yourself out of that mindset as it'll help you in the long run. Good luck with it all.

I ended up going the opposite way for a while, thinking that I should pay off as much as I could as ‘punishment’ for racking up the debt in the first instance. But now I have managed a bit of a balance. 

There doesn’t really seem to be anything standing out from your SOA that you can cut back on. I was thinking maybe a water meter may be beneficial as there’s only the 2 of you, but it depends on your landlord agreeing. 

I agree that maybe lowering your repayments to your mum could be viable to give you a bit of breathing space and a chance to set some aside for emergencies. Depends on her situation though. 

If you opt for a DMP, my understanding is that Stepchange will help to arrange for interest to be suspended on your debts and agree manageable payments on your behalf. (Someone more knowledgeable will correct me if I have this wrong). 

I know doing your SOA may have lead to things looking bleak, but I’ve been in situations where my outgoings were more than my income and I’ve managed to come through the other side. 

LMD x

abaka

I think she did say that she isn’t paying interest on these at the moment.  But the DMP would hopefully give a bit more flexibility with the payments.

I would contact Stepchange and do a financial breakdown and see what they can propose with a DMP.  I just worry that you are spread too thin at present!

I think at present my minimum payments are around 410 a month but I’m paying around 960 which means if I have an unplanned expense, I have flexibility to reduce my monthly debt payments…your SOA currently gives you no flexibility.

I also don’t know if it’s worth contacting Barclaycard and asking if they will accept a lower monthly payment for a small period as you are struggling to meet your payments.  The worst they can do is say no!!

savingholmes

You may shoot me but I'd be tempted to cancel the holiday even if you 'lose' what you paid so far... that would potentially give you the breathing room you need. Is that even an option with the cancellation terms?

I'd be tempted to talk to Step Change and see what they say but not rush into anything. As others have said - it can be done even close to the wire - but it takes a lot of sustained discipline and it sounds like MH issues may frustrate that.

The potential problem with going the DMP route is that it could follow you into the future in a negative way... Again Step Change could explain the potential repercussions of different options.

AntoMac

Great to see lots of good advice forthcoming. I also quite like the idea of seeing if you can slow the payments to your Mum down slightly. My Mum always says “Make sure you come to me first if you get money troubles” and maybe your Mum might think the same way? We are all different of course and I get it that you want to pay her back asap.

Keedie

Thank you @abaka@LittleMissDetermined, @savingholmes and @AntoMac for all for helping me and advising me, I really do appreciate it. 

I'll contact Stepchange on Friday as I've got meetings because of my son's school situation for the next two days and I won't be able to concentrate on the finance situation and that as well, as it's too stressful. But something does have to give as things are super tight. As I'm not paying any interest on anything, I don't know if a DMP or DRO would work? But I will speak to them and see what they advise. 

I think I've always been surviving month to month as I've been moving money around between my accounts and my pots on Monzo. I think I've also fallen into bad habits, as I get paid 4 times a month (employed wages, self employment, PIP and Universal Credit) plus weekly child benefit, and so I'm never far from a source of income and that has led to a false sense of security. 

With my mum, she can afford for me to repay her slowly, but I've just wanted it to be gone. But I've had a think about what you're all saying and I've just got off the phone with my mum and made a different arrangement with her. I will still repay her as a priority reduce my contribution from £67 to £17 a month if I cancel the £50 standing order for the family holiday. As the bulk of my payment to my mum is from the care payment that I receive for being one of my autistic sister's carers. My mum manages my sister's finances and the benefits she receives for direct payments and to pay for her care. So when I've had her for one weekend a month to give my mum some respite, I forgo receiving the actual £133 payment as I offset it against what I owe my mum and top it up with £17 to make £150 a month. So I will continue to do that, but she's agreed that I could freeze the holiday repayments until car is cleared in August, then follow the same principle and clear the remaining £300 for the holiday by paying £150 a month for September and October. I'll actually pay it off quicker that way in terms of time, as the remaining £300 wouldn't end until November at £50 a month, and I'll have more breathing space.

This way, I'll be £50 a month better off, but both debts will still be repaid as they are my priority psychologically even if they don't affect my credit rating etc. My mum has always told us to come to her instead of paying the banks interest, and it took many years of me taking advantage of that and not taking financial accountability, that I could tell she felt like we were all taking advantage of her. One of my sisters owes her over £13k, the other owes about £2k/£3k and I don't know what my brother owes. So although my debt is tiny in comparison, I know that she appreciates that I am making the effort, and I can see the strain that it has caused her when so much of the savings she accumulated through years of sacrifices and smart planning, to be financially comfortable as a pensioner is on loan to her children. 

One of my sisters owes me £258.75 and my brother owes me £552, so when I get that back, I'll put it straight on my Barclaycard. As I've been chasing them for the money and haven't had the remainder of what they owe me, I've not included it in my SOA, as I'll just see it as a bonus when it does come and I'll be able to chuck it at the debts. The Barclaycard is on a minimum payment, but I'll see if they will accept a lower amount even if it's for a short period of time. 

My water rates used to be included in my rent as a council tenant but this changed last year, and now I have to pay it directly to Thames Water. I'm not sure how a water meter works, but we don't use a lot of water between the two of us, so that could save some money. I'll contact them on Friday when I'm doing the rounds with sorting out my finances. I've managed to clear the arrears I had on my Octopus Energy account and as my heating is off, last month my bill was £23.49 for the gas and £28.12 for the electricity, but my direct debit is £162.86 and they won't let me change it. So that's really frustrating, but I'm hoping that now I'm out of arrears, after a few months of monthly meter readings and bills, they'll be able to see that the credit I'm building up is excessive, even if it's good to have some credit before the price rises and it's winter again. The actual payment is too much, as it went from £50 to £162.86 within a 5 month period.

I know the holiday is unnecessary, and it's stressful paying for it, but I feel like I don't actually have anything in life to look forward to, so the thought of being able to get away next year, knowing that I will have paid off a chunk off my debt by then has been like having a halfway point to focus on. But I'll see if I can change the holiday to a different location or a cheaper hotel and see if I can bring the costs down that way. I've passed the point of free cancellation, but I'll definitely see if I can make some changes. As I know it's an extravagant luxury, and I regretted it soon after I booked it, but with the crap few months I've been having, I'm actually grateful I have something to look forward to. I might also see if I can change the time of year if anything, as going in July is expensive, but if I push it back a bit, then the flights and hotel will be cheaper which should bring down the overall cost but I'll still have an all inclusive break. Hopefully, they'll let me have that as an option. 

LittleMissDetermined

These all seem like really sensible options, and I’m glad you’ve spoken to your mum to get some breathing space. 

If you go to the Thames Water website, there should be a smart meter calculator so you can estimate how much a meter would cost vs rates. I’m sure the council would support such a move but it’s best to check. 

Just be aware that if you move/amend your holiday there will be charges. And these stack, so if you move the date, there’s a charge and also a charge for location… we got stung last year so please double check before you do. 

LMD x

Keedie

Yes I’m so glad I spoke to my mum as well. She said she has no problem pausing it as she knows that I always consistently pay and she doesn’t have to worry with me about whether or not she’ll see her money. So that’s reassuring and made me feel better about it all. 

I’ll check out Thames Water for the water meter and the comparison on Friday. Not sure how the meters work or what’s involved to install one, but once I find out more I’ll speak to the council. 

Thanks for the tip/reminder about the fees and charges to change the holiday. Hopefully it won’t be too much of a hassle. I’m have a look on the TUI website to see what the options for alternatives are before I contact them. 

abaka

I think speaking to your mum is a great help.  And it gives you the breathing space to get a hold of your other debts!!

I would still go through the step change process.  The minimum payments you’re making are very high and a DMP might help you reduce these, but there will be consequences to your credit rating…but perhaps this would be a good thing to allow you to not fall back on credit card dependency!!