In a mess and confused

dchurch24

Hi,

At the moment, we seem to never have enough money just to pay the bills, let alone anything else.

We were fine for some time, but then our mortgage went up and (the main one) petrol increases have crippled us. Then just as my wife gave up work (she became pregnant which was a bit of a suprise to us!), my firm moved premises to over twice the distance as before.
This now leaves us in a bit of a state, with my having to borrow from credit cards for petrol, just to get to work to afford to pay off existing debts.
They are as follows:

3500 - Egg 0% (this will be around 3000 when the 0% period ends) - Limit 3500
1400 - O/D Abbey - limit 1400
25000 - Debt Busters (??) - around 6% secured loan - we overpay this one by £10 each month, as the mortgage won't accept overpayments, and the barclay card was empty until very recently.
460 - Barclaycard - limit 500
112000 - Mortgage 4.6% (interest only)

I did also have a loan with HFC bank, but after serious negotiations they agreed to drop the remaining debt, repay non-payment penalty charges and agreed to a one-off payment off 100 to close the loan account down. I have sent that cheque this morning.

My incoming (wage) is £1830 per month.
I also have an endowment policy with Barclays (I know, I know) that I haven't been able to pay into for over a year. It's surrender value is around 2.5k.

The problem is that we are living in a 1 bed bungalow, which was fine when it was just myself and my wife - there are now four of us, 2 adults, 2 children - and so space is a huge problem for us and with that coupled with the money worries, is causing arguments.
I don't want to go to someone like the CCCS for this reason. We need to remortgage soon so we can 'downgrade' from a detatched property to a semi or terraced place with (at least) one extra bedroom.

When things were good, we bought a holiday home in France. At the last bank-holiday weekend I used the barclaycard to travel to it, so that I could fix it up a bit and give it to a letting agent in the hope of getting a few quid in. Sadly, when I got there, the main bedroom was completely covered in rising damp - a problem I cannot fix myself and haven't the funds to pay someone else to do it for me.
I have often thought of just selling our house here and moving to France and sorting the problems out with the equity from the sale, but alas, my Wife does not agree.
The house, incidently was bought as our 'endowment' policy on our current mortgage. It is now sitting there uninsured as we cannot afford insurance premiums on it.

I tried to get the A&L bank account with the interest free o/d to cover the Abbey, but was refused, even on appeal.

Any advice would be very much appreciated, as I am at al loss for what to do next.

Thanks in advance,

Dave.

fatboyonadiet

Don't worry too much (easy for me to say) someone will be along soon and be able to offer you some help. I think you need to pay off your Barclaycard and overdraft first as thye may charge the most in interest. Think about getting another card for when your Egg 0% runs out, try either M&S or Virgin both 0% for 9 months with no fee.

dchurch24

Hi, thanks for the quick reply.

I was thinking of using the 2.5k endowment policy to pay off the barclaycard and o/d. It is a shame though, as if I had just shoved the monthly payments into an account with no interest at all, I would have 5k in there instead of the 2.5.

James240

is the barclays card at a high interest rate? as they normally are in my experience, so my advice would be to start paying that off first

dchurch24

I think it's around the 16% mark (the Barclaycard that is).

I intend to sell lots of baby clothes on ebay over the coming weeks and hopefully this will clear that card first.

I'm really after advice with the endowment. I can't decide whether to cut my losses and surrender the policy early and thus losing the money over the next ten years (when it supposedly matures) and pay these debts off.

My personal adage is "No point saving all the while you have debts." - as debts will generally cost more than savings will earn. But in this case, I have already 'wasted' half the cash I put into the endowment if I cash it early. Don't know what to do really.

Squiffy

I've never had an endowment policy myself, but I've heard that you should be able to sell your endowment on to a specialist company for more than the surrender value. That might be worth looking into.

dchurch24

A friend of mine just gave me the idea of moving it into a high interest account (perhaps the ING one) and then I could use some of it to clear the Barclaycard.
It's a start :-)

mountainofdebt

Wouldn't really like to say what to do about the endownment policy but I do agree that there's very little point in saving when you have debts.....I must admit I was confused when you said about the high rate savings account....surely you would be better paying off all your debts off IF you decided to surrender your endownment policy? To be honest a financial adviser is the only person I would recommend taking advice off about surrendering the policy.

Are you claiming all the benefits that you are entitled to? Have you thought about car sharing, always assuming of course that going by public transport is not viable.

Also can you post all your budget (outgoings and full details of interest rates on loans) so that people can suggest ways of reducing expeniture/increase income.

simonleblank

I had debts of £38,500. They are now in the mid teens. I sold everything I could, Including all of my hobies. I earn a similar amount to you. My debt is now manageable. I hope to be debt free May 2007. If I were in your shoes, I would sell the French house for what I could get, Sell the endowment on the market, get OH to childmind, cut up CC's, Stop spending and become a scrooge, asking the question "Can I do without it" Hope this helps

dchurch24

Thanks guys for the advice.

I have been in contact with a financial advisor, and he suggested re-mortgaging (fixed for the short term so we know exactly where we are each month), and including the 25k loan. Making my mortgage £550 pm - over 200 less than the loan and the mortgage combined.
I know, that overall this will mean that I am paying more, but I can use the 'spare' cash to get the other credit card debts down relatively quickly - and keep the house in France as an income earner once we get back on our feet.

I am also in the process of suing the Abbey, as indirectly, it is their fault that I am £1400 overdrawn. That's a long story, and for another time.
My case looks good, so hopefully, I should have that money returned to me soon and that is another debt cleared.