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Worried but also feeling positive

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BRB881
BRB881 Posts: 18 Forumite
10 Posts
in Debt-free wannabe
Hi Everyone

So this is REALLY REALLY bad, however we are where we are and now is our time to sort this gigantic debt out. 

The debt has built up over many years due to house renovations, IVF and general overspending and lack of attention to the budget. We are now at a precipice where we either sort it out, or we end up in debt management which we really don't want.

We are now both back at work full time, and I have picked up some additional work ( the £400 per month) so I really hope we can sort this out. 

Do you think that this is something that we can sort without needing a DMP? SOA below


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................ 3750
Partners monthly income after tax....... 1405
Benefits................................ 0
Other income............................ 400[b]
Total monthly income.................... 5555[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 510
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 112
Electricity............................. 150
Gas..................................... 148
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 25
Mobile phone............................ 80
TV Licence.............................. 14
Satellite/Cable TV...................... 24
Internet Services....................... 0
Groceries etc. ......................... 400
Clothing................................ 30
Petrol/diesel........................... 150
Road tax................................ 5
Car Insurance........................... 68
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 36
Buildings insurance..................... 29
Contents insurance...................... 0
Life assurance ......................... 32
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 20
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 0[b]
Total monthly expenses.................. 2013[/b]
[b]

Assets[/b]
Cash.................................... 2000
House value (Gross)..................... 250000
Shares and bonds........................ 0
Car(s).................................. 8500
Other assets............................ 0[b]
Total Assets............................ 260500[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 49500....(510)......2.3[b]
Total secured & HP debts...... 49500.....-.........-   [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
updraft 1......................7500......160.......17
updraft 2......................13400.....310.......17
barclaycard 1..................12800.....230.......6.9
tesco..........................3800......80........14
creation.......................5000......50........0
mbna...........................8800......280.......24.9
aqua...........................5000......160.......35
Halifax loan...................4800......132.......6.8
Wife barclaycard...............8100......230.......16
barclaycard 2..................4700......90........6.9[b]
Total unsecured debts..........73900.....1722......-  [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 5,555
Expenses (including HP & secured debts). 2,013
Available for debt repayments........... 3,542
Monthly UNsecured debt repayments....... 1,722[b]
Amount left after debt repayments....... 1,820[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 260,500
Total HP & Secured debt................. -49,500
Total Unsecured debt.................... -73,900[b]
Net Assets.............................. 137,100[/b]

«1

Comments

  • enthusiasticsaver
    enthusiasticsaver Posts: 16,053 Ambassador
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Yes I think this is definitely something you can sort out without a debt management plan.  You have a decent income and disposable income, a relatively low mortgage and an emergency fund.  However where has your income been going as you have built up a fairly high debt so presumably that soa is wrong?  Have you actually gone through statements to see where you are overspending?  If the soa is aspirational rather than actual then this is what you need to address first.  That plus the fact you have some awful rates of interest.  Can you get any 0% balance transfers?

    You need to allow something for car maintenance given you have two cars and you need to be very disciplined with your spending but if you can budget accurately, save for emergencies and things like car expenses/vet bills etc as you have pets then my plan would be to throw as much towards the Aqua as possible and set all the other credit cards at slightly above minimums until the Aqua repaid. Then the MBNA and the others in order of the highest interest rates.  If you can get 0% deals either now or in 6 months when the debt figure has reduced that will help.  Good luck. 
    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 forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

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  • MovingForwards
    MovingForwards Posts: 17,149 Forumite
    10,000 Posts Seventh Anniversary Name Dropper Photogenic
    Two cars, but nothing for service, MOT and repairs?

    Mobiles can go to SIM only when outside the contract.

    On paper you've got a decent amount of money left each month after paying bills and debts, so start throwing it at the debt to begin clearing it OR is your SOA not quite right?
    Mortgage started 2020, aiming to clear 31/12/2029.
  • Martico
    Martico Posts: 1,169 Forumite
    1,000 Posts Third Anniversary Name Dropper
    Agree with both the above - given your disposable income it's definitely manageable, assuming the SOA is accurate. It will still take a long time and a lot of discipline given the scale. But you do appear to have the means.

    I would aim to hammer away at the super-high interest Aqua debt, and keep the other CCs on a tiny bit over the minimum amount.

    In my experience, both MBNA and Barclaycard come up with balance transfer offers from time to time. So perhaps look to reduce those a bit more as well, in the hope that a deal comes up, allowing you to transfer some of that Aqua debt to 0%. 
  • EssexHebridean
    EssexHebridean Posts: 24,421 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    BRB881 said:

    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................ 3750
    Partners monthly income after tax....... 1405
    Benefits................................ 0
    Other income............................ 400[b]
    Total monthly income.................... 5555[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 510
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 112 is this paid over 12 months, or 10? If the standard 10 then remember to send the "free" months money to a debt rather than risk it getting frittered!
    Electricity............................. 150 Check this and the gas are correct with the price increases we've seen in recent times. Also allowing that you're unlikely to "need" the £400 government help offset against your bills, make sure the amount less that is taken in your DD each month is allocated against a debt too.
    Gas..................................... 148
    Oil..................................... 0
    Water rates............................. 30
    Telephone (land line)................... 25
    Mobile phone............................ 80 Yep - high - diarise when contracts are up and switch to SIM only deals
    TV Licence.............................. 14 This should read £13.xx (13.37 I think from memory?) I know that sounds picky but it really is helpful to be accurate on those payments where you can - rounding up/down across the board can lead to either a shortfall in a zero/zero budget, or money frittered because it was never IN the budget.
    Satellite/Cable TV...................... 24
    Internet Services....................... 0
    Groceries etc. ......................... 400 You could tweak this but allowing for your income, you probably don't necessarily need to. Do check that really is what you're spending though, not what you think you're spending!
    Clothing................................ 30
    Petrol/diesel........................... 150
    Road tax................................ 5 I hope you're not actually paying this monthly? Last time I looked there's a premium paid for monthly DD.
    Car Insurance........................... 68 Again, on your income you shouldn't be paying this monthly - when the insurances renew pay upfront then budget the relevant amount monthly through the year, plus 10% for increases in policy costs ready for the following renewal.
    Car maintenance (including MOT)......... 0 How come you get your servicing, MOT and consumables like tyres and wiper blades for nothing? I'm guessing you don't - in which case, that needs to go in the budget too! 
    Car parking............................. 0 Never anything spent here at all?
    Other travel............................ 0
    Childcare/nursery....................... 0 
    Other child related expenses............ 0 This is unusual - no clubs, activities, odd purchases of books or toys outside birthday and christmas?
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 36
    Buildings insurance..................... 29
    Contents insurance...................... 0 Hoping this is in with your contents cover?
    Life assurance ......................... 32
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 50 Is this accurate? 
    Haircuts................................ 20
    Entertainment........................... 100
    Holiday................................. 0 You never go away at all, not even to visit family, or for a weekend break? If you do, then it needs to be factored in...
    Emergency fund.......................... 0 And you definitely need to start building this! [b]
    Total monthly expenses.................. 2013[/b]
    [b]

    Assets[/b]
    Cash.................................... 2000
    House value (Gross)..................... 250000
    Shares and bonds........................ 0
    Car(s).................................. 8500
    Other assets............................ 0[b]
    Total Assets............................ 260500[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 49500....(510)......2.3[b]
    Total secured & HP debts...... 49500.....-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    updraft 1......................7500......160.......17
    updraft 2......................13400.....310.......17
    barclaycard 1..................12800.....230.......6.9
    tesco..........................3800......80........14
    creation.......................5000......50........0
    mbna...........................8800......280.......24.9
    aqua...........................5000......160.......35
    Halifax loan...................4800......132.......6.8
    Wife barclaycard...............8100......230.......16
    barclaycard 2..................4700......90........6.9[b]
    Total unsecured debts..........73900.....1722......-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 5,555
    Expenses (including HP & secured debts). 2,013
    Available for debt repayments........... 3,542
    Monthly UNsecured debt repayments....... 1,722[b]
    Amount left after debt repayments....... 1,820[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 260,500
    Total HP & Secured debt................. -49,500
    Total Unsecured debt.................... -73,900[b]
    Net Assets.............................. 137,100[/b]

    Comments on the SOA in bold above...

    The overall picture actually whilst not great, isn't terrible either. If the SOA were accurate then you'd have nearly £22k a year to clear off the debt, meaning that you'd be clear inside 4 years probably, if targeted well. Possibly less if you could get some 0% deals on cards... of course the issue is that the SOA isn't accurate I'm guessing, and so right now you don't have nearly £22k a year spare.
     
    I'll be honest, I think your first job is to work out how much monthly surplus you really should have. 

    in month 1, stick £1000 into an emergency fund pot and anything else to the debt.
    In month 2, £200 gets added to the EF and everything else to debt - carry on like that until you hit £3000 in the EF, then divert all surplus to debt, and throughout, target the highest interest rate cards first
    🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
    Balance as at 01/09/23 = £115,000.00 Balance as at 31/12/23 = £112,000.00
    Balance as at 31/08/24 = £105,400.00 Balance as at 31/12/24 = £102,500.00
    £100k barrier broken 1/4/25
    SOA CALCULATOR (for DFW newbies): SOA Calculator
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  • kimwp
    kimwp Posts: 2,918 Forumite
    Fifth Anniversary 1,000 Posts Photogenic Name Dropper
    A dmp is for when you can't afford to pay the debt payments, but your SOA shows that you can not only pay them, but could overpay by the same again. If you feel like you don't have enough to pay them or you are getting more into debt, you need to go through your bank accounts and work out where the money is going.
    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.
  • madaboutspots
    madaboutspots Posts: 157 Forumite
    Fourth Anniversary 100 Posts Name Dropper
    Hi

    i realise energy prices have gone ballistic but yours both still seem quite high.

    We’re quite a high usage household but are still a lot lower. We run an electric car doing 16,000 miles/year and work from home so the office equipment, heating and so on get battered. 

    Is there a chance that you could find a better tariff if you’re running an EV? Are these amounts quoted in you SOA actual usage or an estimated/rough guide? 
    MFW date 2nd Jan 2024 - task complete YAY!

  • BRB881
    BRB881 Posts: 18 Forumite
    10 Posts
    enthusiasticsaver said:
    Yes I think this is definitely something you can sort out without a debt management plan.  You have a decent income and disposable income, a relatively low mortgage and an emergency fund.  However where has your income been going as you have built up a fairly high debt so presumably that soa is wrong?  Have you actually gone through statements to see where you are overspending?  If the soa is aspirational rather than actual then this is what you need to address first.  That plus the fact you have some awful rates of interest.  Can you get any 0% balance transfers?

    You need to allow something for car maintenance given you have two cars and you need to be very disciplined with your spending but if you can budget accurately, save for emergencies and things like car expenses/vet bills etc as you have pets then my plan would be to throw as much towards the Aqua as possible and set all the other credit cards at slightly above minimums until the Aqua repaid. Then the MBNA and the others in order of the highest interest rates.  If you can get 0% deals either now or in 6 months when the debt figure has reduced that will help.  Good luck. 
    Hi, we aren’t eligible for 0% offers right now, however I’m hoping this will change as the balances reduce! 
  • BRB881
    BRB881 Posts: 18 Forumite
    10 Posts
    Thanks for all of the posts guys. 

    I’ve had the dreaded covid hence my delay in posting.

    I’ve found the Soa quite challenging. We’ve only had this level of income since may as this was when we reverted to both of us working full time. We also had some additional, horrible pay day loan debt ( I know) which we have cleared entirely. 

    Given the scale of our debt we were convinced that we were going to lose everything, however I can now see a way out. 

    I’m determined to stay positive and not spend every minute thinking/worrying about money 
  • sourcrates
    sourcrates Posts: 31,510 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    What you must understand is this, during the last 4-5 years, a lot has been heard of unaffordable borrowing/lending, call it what you will.

    This led to new guidance being issued by the regulator, the FCA, it basically said that customers in unaffordable debt should be treated more fairly by their creditors, the downside of this, is there is now less willingness to default accounts, which leads to more arrangement to pay markers, but the upside is that affordability is now the number one consideration from a creditor, when dealing with bad debts.

    This means that if you can`t pay, they won`t force you too by taking further action, instead, in most cases, they put your accounts on hold, for around 3 months at a time, after which comes a review, this may go on a while, and if you still can`t afford it, write off`s are getting more common.

    Now in your situation, writes off`s are not going to happen, due to your income, but neither are you going to lose it all either, things have changed within the debt collection industry, for the most part anyway, arrangements can be made, it may take a while, but you will get there.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it 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 forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • BRB881
    BRB881 Posts: 18 Forumite
    10 Posts
    Thanks for all of the replies. I’ve been a bit unwell hence my lack of response! 
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