First Post - Huge Realisation (or LBM if you wish) Our life, our DMP and the light we can just see.

RWMJPMC86

I've only just found the Forum and so wish I had done sooner, 

Overview - Married couple, moved into our 'forever' home in Feb 2020, Lockdown began March 2020, Baby 2 born June 2020, and heads in the sand from then until around March 2022.

So turns out we have been spending and spending and spending, without stopping to think, I've always had a terrible relationship with money - from hiding in the kitchen when the Provident man came as a kid, to house move after house move due to evictions and debt collectors banging on the door, though i swore my kids would never live that life I'm feeling precariously close.

So - here goes - 

Mortgage £160k (up to date, Fixed rate until Jan 2025)
Help2Buy - £42k (still 0% until Feb 2025)
Car - £9800 (up to date and 0% finance deal)

Here's the problems - the interest on the credit cards and loans took us over our income each month and so, in March this year, we set up a DMP with Stepchange (I did not know to not jump into this - but it is done now and no point dwelling on it)

We have a total of £43,375 debt via loans and credit cards - 
£36,580 of which is on the DMP, currently being repaid at £250 a month. 
The remainder on a 0% card at £120/month.

Total Gross income £60,750.

Monthly Outgoings - 
Mortgage £698
Council Tax - £215
Groceries - £350
Nursery - £950
WrapAround Childminder - £160
Gas/Elec - £137 (fixed rate until Oct 2023)
Water - £42
BT (covers Internet and TV) - £40
TV Licence - £13.43
Insurances (Pet, home life and Car) £124
Vodafone - 2 x £15
Sainsburys Credit Card - £120
Car Repayment - £112
Daily savings (School Uniform, Xmas, Birthdays, Repairs etc) £50
Childrens Savings - £40 (2 x £20)
DMP - £258


After a few months now on the DMP I'm seeing balances reduce, and though it's going to be a long old slog (StepChange saying just over 10 years but we should be out of nursery fees this time next year) I am starting to imagine a life without this debt hanging over us. 

I guess I'm here for a sounding board, and having looked at everyone's progress some motivation to see that we WILL get there and we WILL change things moving forward, I just hate that we even got here in the first place.


So thankyou MSE Debt Free Wannabes, and hopefully, one day, I'll be able to be one of you too

EssexHebridean

It sounds like your lightbulb has indeed well and truly glowed into life - so well done. Others may know more about whether it's possible to push for defaults where you are already in a DMP - that's not my area.

One thing I will say (and without being able to see your actual monthly income, it's not easy to see what is "left" after your outgoings as above) that there's some holes in that budget at the moment it would appear. 
- You need to start budgeting NOW for the increase in utility bills from October next year - even if you just stash away an extra £20 a month ready for that, it'll help to build a cushion, prices may have started dropping back a little by then but a) we don't know for sure that will happen and b) regardless, after your fix it's going to still be a sharp increase.
- You're budgeting for car insurance, but what about depreciation? Servicing, MoT (as and when that becomes needed assuming your car is still inside 3 years old at present), replacement tyres, even stuff like wiper blades, screenwash...it all mounts up, and you don't want to be taken by surprise by any of it. If you have enough "slack" in the budget to begin to plan to pay the insurance upfront then add that to the amount you budget monthly too and be ready to pay upfront - which is cheaper - next time round. 
- Clothing, haircuts, medical expenses. Nothing in the outgoings listed to account for any of that? 
- Emergency fund - this could be lumped in under your "Daily savings" as I notice you include repairs in there - but if so be cautious - it's not usually considered a great idea to combine savings for stuff that should be planned and budgeted (christmas, school uniforms etc) alongside an "emergency" fund - for the simple reason that the while point of the EF is of course that it's there for the unforeseen stuff - and shouldn't be dipped into for things that really, you should have seen coming.
in terms of savings the groceries pot is an obvious win albeit possibly not for much in the way of a reduction - every little helps, though (yes, I know!) Also I guess is there any way that a small amount of juggling of working hours could reduce or remove the need for the wraparound childcare? 

The other elephant in the room here is why you're paying a single CC outside of the DMP? was this further debt that was accrued after the DMP but before the lightbulb had really come on? It's a good thing that it's on 0% - but just ensure you keep an eye on how long that deal is for, and also that the amount you're paying to it currently will definitely clear it once the 0% ends as you're unlikely to get another 0% deal at this stage I'd guess. 

I'd suggest you put together a proper SOA (Statement of Affairs) using the calculator linked to in my signature, and with factual informed figures for the things that are lumped together above - as that will enable you to really see whether the way things are panning out currently is sustainable. Make sure the figures you use are based on actual spending - not just you thinking you "probably" spend about X amount on this or that. I suspect you may find you have holes - the notable one for me being Uniforms, Xmas, Birthdays, repairs - as with 2 kids I suspect that £600 a year you're currently putting aside isn't anywhere near enough. 

You might also think about starting a DF Diary thread over on the diaries board - it's a great way of staying accountable to yourself and also of keeping information in one place, as well as getting support and input from others. Lots of long-haulers over there as well who might be able to offer good hints and tips on keeping focused too.

RWMJPMC86

Thankyou so much for your comments @EssexHebridean - they really are helpful in that we are still quite new to this and though things are slowly improving it's great to have an insight form someone in the know.

The increased bills from October 23 fall at the exact moment the nursery fees will reduce from Over £900 a month to around £300 a month, so I'm hoping that the shift will allow for energy to move into those savings.
The car has 3 years of servicing and next years MOT included in the purchase price (I haggled - also got 3 years free tax and a full tank of diesel) so haven't included those in current budget but yes You're right, maybe saving towards those future costs now would be a good idea.
The insurance company I am with doesn't charge more for monthly repayments so spread it out rather than pay in one made sense at the time when we struggled to have any chunks of money in the bank.

Anything under the £350 a month grocery pot, on the last day of the month I'm transferring into the 0% card but food for thought now is that I should maybe pop that into an emergency fund account, I've just wanted to reduce everything as soon as possible.

The 0% card was a small loan, budgeted for when we bought the house for a conversion of the garage - transferred using a 0% money transfer on a 38 month 0% deal - there's around £2500 left on it and the account has been frozen (at our request) but we figured as it'll be cleared within the 0% time we would just leave that to run.

I've never looked at the diaries board before today, it's great thank you!

RWMJPMC86

Just reduced Vodafone to £10 * 2 - that's £10 a month into a pot for discretionary spends yay!

KayB85

May I ask about the DMP and why it’s ‘come to light about defaults’?? I’ve today been offered a DMP over 8 years to clear my debts but wondering why I keep saying it might be the wrong option so just looking for others experience? 

RAS

KayB85 said:

May I ask about the DMP and why it’s ‘come to light about defaults’?? I’ve today been offered a DMP over 8 years to clear my debts but wondering why I keep saying it might be the wrong option so just looking for others experience? 

It really would be best to start your own thread.

And to clarify who has "offered" you a DMP? A debt charity or a fee charging company?

Value of debts? Home owner or not? Income?

And what you mean by "come to light about defaults"?

RWMJPMC86

@RAS I think what @KayB85 means is when I've said I should have waited for the defaults before starting the DMP

This is because I hadn't read up on it Kay, and did not realise that some of the debts would now show as arrangement to pay, so will take longer to default meaning they'll take longer to drop off my credit file, I have absolutely 0 regrets about setting up the DMP and mostly regret trying myself to dig my way out of debt while simultaneously getting deeper into it. I should have stopped paying, Set up the Emergency fund and waited before diving in with StepChange, but what's done is done and seeing that capital reduce (all be it slowly) really is such a relief.

TwinMummy

RWMJPMC86 said:

@RAS I think what @KayB85 means is when I've said I should have waited for the defaults before starting the DMP

This is because I hadn't read up on it Kay, and did not realise that some of the debts would now show as arrangement to pay, so will take longer to default meaning they'll take longer to drop off my credit file, I have absolutely 0 regrets about setting up the DMP and mostly regret trying myself to dig my way out of debt while simultaneously getting deeper into it. I should have stopped paying, Set up the Emergency fund and waited before diving in with StepChange, but what's done is done and seeing that capital reduce (all be it slowly) really is such a relief.

This is so interesting to know. We owe roughly the same amount as you and are drowning. I've begun looking at ways to try and dig ourselves out of the hole we have made and have filled out the budget sheet etc with stepchange. They have recommended a dmp to us. We haven't defaulted on anything at the moment as we are paying minimum payments but then spending on cards again to buy food and petrol. Its a vicious circle. I will do some reading into letting the accounts default (scary!). Thank you for mentioning this and good luck on your journey.

RWMJPMC86

you too @TwinMummy

I have 1 default out of 7 debt so far, and we are 6 months in, I kinda want them all to default so we can start clawing our way out - as It feels like at the minute, 1 will start to get old and another will be added - I'd rather them all on there at once and the time since they happened start to pass if that makes sense,

My min payments were over £800 a month, it was insane, we too were using credit cards for fuel and food and it just wasn't sustainable. It took getting so deep to realise it and now I feel like my whole life is changing in just 6 short months.

kimwp

RWMJPMC86 said:

you too @TwinMummy

I have 1 default out of 7 debt so far, and we are 6 months in, I kinda want them all to default so we can start clawing our way out - as It feels like at the minute, 1 will start to get old and another will be added - I'd rather them all on there at once and the time since they happened start to pass if that makes sense,

My min payments were over £800 a month, it was insane, we too were using credit cards for fuel and food and it just wasn't sustainable. It took getting so deep to realise it and now I feel like my whole life is changing in just 6 short months.

@RWMJPMC86

If you have enough funds built up, could you self-dmp with the one that has defaulted to start getting that paid off? (Just a thought, don't know if possible)

RWMJPMC86

Thanks @kimwp, I wasn't sure if it goes against me somehow to stop the StepChange and do it all differently. Self managed scares me a little I think