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£23.7K Debt - SOA - Plan Needed

Options
lixhul
lixhul Posts: 110 Forumite
Sixth Anniversary 10 Posts
edited 16 January 2023 at 4:36AM in Debt-free wannabe
It wouldn't let me remove old post. I wanted to start a new one with all the facts.

I'm 32, live alone with mortgage and have a child of 5, whom lives with their mum and I pay CSA. I have a full-time job as a data analyst and have a great opportunity next week to get a major promotion if it works out, and that suggests to be a substantial pay rise. My full energy is on making sure that works out and within 7 days I will know.

Very long and painful story short; I have always been a financially sensible person, saved up over £20,000 in 2019 and purchased a house, followed by a car without any finance. I got hit by the cryto bug, tried a short-cut, and lost over £50,000, £28,000 of borrowed cash within a matter of months. I have paid £0 towards any of these loans for 5 months now, and owe £23,700 overall.

My question is, what's next? I originally had a strong mindset of waiting til the loans are 1 year old to start an IVA (my previous IVA application failed from StepChange for this fact). However, having been on these forums, I have been advised to begin a DMP. Problem I have with a DMP right now is the length and scale of the task, I won't be able to pay much off per month at all and this will last over a decade. Bills are going up fast, and my outgoings will change by around £300 a month soon. My mortgage fixed-rate ends in September, 2025. There is no chance I will get a new fixed-rate with my shot credit rating, so I am looking at paying another £200 extra a month on this alone.

I have had no default notice for any of the loans as of yet. I think the best course of action is to wait til they all default, then start paying off something, somehow.

Please see below my SOA. I have tried to be as honest as possible. What are my options? Mentally I am okay, this is my problem and I plan to fix it, although it has been a huge burden. Even without these debts I'd be struggling with managing my finances.

Slight rant. I am using an income tax calculator, and essentially for every extra £10K I earn from where I am now, I pocket only £5,800. That's just ridiculous and annoying, but I know everyone goes through that.

[tt][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1[b]

Monthly Income Details[/b]
Monthly income after tax................ 1605.46
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 1605.46[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 350.4
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 86
Electricity............................. 50
Gas..................................... 50
Oil..................................... 0
Water rates............................. 18
Telephone (land line)................... 0
Mobile phone............................ 7
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 28
Groceries etc. ......................... 220
Clothing................................ 10
Petrol/diesel........................... 120
Road tax................................ 2
Car Insurance........................... 29
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 210
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 13
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 15
Haircuts................................ 15
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Gym..................................... 16[b]
Total monthly expenses.................. 1259.4[/b]
[b]

Assets[/b]
Cash.................................... 1400
House value (Gross)..................... 140000
Shares and bonds........................ 0
Car(s).................................. 7000
Other assets............................ 3000[b]
Total Assets............................ 151400[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 98361....(350.4)....0[b]
Total secured & HP debts...... 98361.....-.........-   [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Ratesetter 1...................7512......0.........0
Ratesetter 2...................4406......0.........0
Admiral Loan...................6590......0.........0
Nationwide 2...................636.......0.........0
Nationwide 1...................4657......0.........0[b]
Total unsecured debts..........23801.....0.........-  [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 1,605.46
Expenses (including HP & secured debts). 1,259.4
Available for debt repayments........... 346.06
Monthly UNsecured debt repayments....... 0[b]
Amount left after debt repayments....... 346.06[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 151,400
Total HP & Secured debt................. -98,361
Total Unsecured debt.................... -23,801[b]
Net Assets.............................. 29,238[/b]

[i][/i][/tt]


«1

Comments

  • kimwp
    kimwp Posts: 2,911 Forumite
    Fifth Anniversary 1,000 Posts Photogenic Name Dropper
    Until you are on roughly £50k, you'll gain £6,800 for every £10k. In theory, at least, the other £3,200 goes towards your healthcare, the roads you drive on, your state pension etc. As you are at the lower end of earnings, it would probably be a lot more expensive if you had to pay for those by yourself, without pooling your money with those who pay more tax and NI.

    In terms of your SOA, your food bill is high, have you tried the downshift challenge?
    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.
  • Grumpelstiltskin
    Grumpelstiltskin Posts: 5,418 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Right what is happening to the £300 plus surplus you are showing?

    My guess is it disappears.

    Food you need to work on many people on here live on much less than that.
    Look on this board. Old style MoneySaving — MoneySavingExpert Forum

    I guess you buy food out, sandwiches, coffee etc. That has to stop, that is where money disappears.

    £23.000 is not a huge amount of debt, with careful budgeting and determination you will find you can clear it.

    Don't panic and get your head down and set yourself small goals, you will get there.
    If you go down to the woods today you better not go alone.
  • EssexHebridean
    EssexHebridean Posts: 24,421 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 16 January 2023 at 11:11AM


    [tt][b]Statement of Affairs and Personal Balance Sheet[/b][b]

    Household Information[/b]
    Number of adults in household........... 1
    Number of children in household......... 0
    Number of cars owned.................... 1[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 1605.46
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0[b]
    Total monthly income.................... 1605.46[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 350.4 Compared to your earnings this is at a really good level.
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 86 This allows for the single person's discount? Do you pay over 10 months, or 12?
    Electricity............................. 50 Check that this and the gas are correct - I assume you pay a straight £100 a month to a single provider? It appears a little low. Make sure you give regular meter readings if you're not on smart meter, and check what the SM is sending if you are. Also budget for an extra £20 per month from April, just in case. 
    Gas..................................... 50
    Oil..................................... 0
    Water rates............................. 18 clearly metered - so consider whether there are any savings to be had here.
    Telephone (land line)................... 0
    Mobile phone............................ 7 Great stuff - well done! 
    TV Licence.............................. 0 You never watch live TV, or record it? Or use iPlayer? 
    Satellite/Cable TV...................... 0
    Internet Services....................... 28 Depending on your area this is possibly a little high - might be worth shopping around
    Groceries etc. ......................... 220 Probably a little high for a single person, the Old Style board might be useful for ideas of how to bring this down. 
    Clothing................................ 10
    Petrol/diesel........................... 120
    Road tax................................ 2 Just to check - you're not paying this monthly are you? There is a premium for doing so, which is why I ask.
    Car Insurance........................... 29
    Car maintenance (including MOT)......... 20
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 210
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 13 Does this include contents too? If not then you need to sort that out fast. 
    Contents insurance...................... 0 See above - this is important.
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 15 Does this actually cover what you spend, for your child, close family, any friends you buy for? It seems on the low side.
    Haircuts................................ 15
    Entertainment........................... 0 Nope - not realistic. You never grab a coffee, buy a magazine, meet a friend for drinks or a meal? 
    Holiday................................. 0 No weekends away even, visits to family, that sort of thing?
    Emergency fund.......................... 0 You need to start budgeting for savings here. (And actually MAKE those savings!)
    Gym..................................... 16 Extract every last penny of value out of this - for example, always shower while there to save water and energy at home.[b]
    Total monthly expenses.................. 1259.4[/b]
    [b]

    Assets[/b]
    Cash.................................... 1400
    House value (Gross)..................... 140000
    Shares and bonds........................ 0
    Car(s).................................. 7000
    Other assets............................ 3000[b]
    Total Assets............................ 151400[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 98361....(350.4)....0[b]
    Total secured & HP debts...... 98361.....-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Ratesetter 1...................7512......0.........0
    Ratesetter 2...................4406......0.........0
    Admiral Loan...................6590......0.........0
    Nationwide 2...................636.......0.........0
    Nationwide 1...................4657......0.........0[b]
    Total unsecured debts..........23801.....0.........-  [/b] So to check, you're paying nothing to any of these at the moment, so they should default soon?

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 1,605.46
    Expenses (including HP & secured debts). 1,259.4
    Available for debt repayments........... 346.06
    Monthly UNsecured debt repayments....... 0[b]
    Amount left after debt repayments....... 346.06[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 151,400
    Total HP & Secured debt................. -98,361
    Total Unsecured debt.................... -23,801[b]
    Net Assets.............................. 29,238[/b]

    [i][/i][/tt]




    Right - let's take a look at the SOA then. Comments in bold as usual.

    Things not to worry about right now -
    Your "shot credit rating" - just ignore it - the only person who sees the number is you, and the only thing it has any relevance for is a new mortgage. I'll come on to why that's less of an issue than you think. 
    Your mortgage deal ending in 2025. Park that one for now - that's two whole years away, and right now none of us know where rates will be then. You have our permission to start worrying about that again in a year :wink: ...however...
    Not being able to get a new fixed deal when your current mortgage deal ends. What on earth makes you think that? It just means your choice is limited to products offered by your existing lender - and presumably you chose them because they suited your profile, so hopefully they still will. You MIGHT have increased costs, sure, but then again a) you might not, and b) you might be earning more by then. 
    How long a DMP might take - sure, it might, but then again it might not. the main thing is that you are tackling your debts without making further huge impacts on your credit file, and without putting your home at risk in any way. 

    Things not to do:
    Gamble any more - at all. Not a lottery ticket, not a cheeky £5 each way on the grand national, nothing. You need to accept that you have the sort of mindset that means you will always be tempted to chase one more more chance - and the only way of avoiding that risk it to never put yourself in that position. It's easy to think that "Oh but I'm not like the poor fools who lose thousands on the horses, or in casinos" but actually there's not so much difference, when you think about it. Learn that lesson now, before things get worse.
    Be tempted to consolidate. You need to go through this process I think - as that is the only way you will come out of the other side most likely to never find yourself there again. You can't borrow your way out of debt.
    Rush into an insolvency "solution" like an IVA - it might seem easier, but it very likely won't be. 

    Next thing then - do you have that £346 a month surplus each month? If not then you need to find out why - and it will be because there is something - or things - not included on that SOA, or that you are overspending in one area or another. A spending diary might well help as it will let you track everything you really do spend. 

    If you do have that surplus, then target £50 of it to building your emergency fund - this is vital. The balance gets split between the debts. 

    I'm going to assume that there is a chance that you might have a bank account with Nationwide? If so - then you need to open a basic account with a different bank - one you have no debts with - although the SOA suggests that the only bank (building society) that you DO owe money to is Nationwide anyway. 

    That's some starting points - others will be able to offer more structured advice specifically in the area of the DMP, and may well spot things in the SOA that I've missed too.

    Hopefully starting to take some positive action on this will enable another "thing not to do" - namely being up at 3am worrying about your debts. :wink: 

    🎉 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
    she/her
  • easyeconomicmaster
    easyeconomicmaster Posts: 2 Newbie
    First Post Photogenic
    It sounds like you have been through a difficult financial situation. It's understandable that you want to start fresh with a new post and all the facts.

    Based on the information you provided, it seems like you are in a challenging financial situation. You have a significant amount of debt, and your expenses are about to increase. You also mention that your credit rating has been affected, which could make it difficult to secure a new fixed-rate mortgage.

    One option you have is to wait until the loans default, and then start paying off something, somehow. However, this strategy could result in a negative impact on your credit rating and legal action from the creditors.

    Another option is to consider a debt management plan (DMP). A DMP is a repayment plan where you make affordable monthly payments to your creditors, over a period of time, usually between 3 to 5 years. However, you mention that the length and scale of this task could be a burden, and that your income will change soon.

    You also mention an IVA(Individual Voluntary Arrangement) as an option, but it seems that your previous application failed. An IVA is a legally binding agreement between you and your creditors, which allows you to make reduced payments over a period of time, usually 5 to 6 years. However, it's important to note that an IVA can have a negative impact on your credit rating, and it may not be suitable for everyone.

    It's important that you seek professional advice from a qualified financial advisor or a debt charity like StepChange, National Debtline, or Citizens Advice, to help you understand your options and find a solution that works for you. They can help you to evaluate your current financial situation, and provide you with the guidance and support you need to move forward.

    It's important to remember that this is a difficult situation, but there are ways to move forward, and you have the determination to fix it. You have a great opportunity for a major promotion and substantial pay rise. It may be a good idea to focus on that and use that opportunity to improve your financial situation.
  • easyeconomicmaster
    easyeconomicmaster Posts: 2 Newbie
    First Post Photogenic
    EssexHebridean said:


    [tt][b]Statement of Affairs and Personal Balance Sheet[/b][b]

    Household Information[/b]
    Number of adults in household........... 1
    Number of children in household......... 0
    Number of cars owned.................... 1[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 1605.46
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0[b]
    Total monthly income.................... 1605.46[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 350.4 Compared to your earnings this is at a really good level.
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 86 This allows for the single person's discount? Do you pay over 10 months, or 12?
    Electricity............................. 50 Check that this and the gas are correct - I assume you pay a straight £100 a month to a single provider? It appears a little low. Make sure you give regular meter readings if you're not on smart meter, and check what the SM is sending if you are. Also budget for an extra £20 per month from April, just in case. 
    Gas..................................... 50
    Oil..................................... 0
    Water rates............................. 18 clearly metered - so consider whether there are any savings to be had here.
    Telephone (land line)................... 0
    Mobile phone............................ 7 Great stuff - well done! 
    TV Licence.............................. 0 You never watch live TV, or record it? Or use iPlayer? 
    Satellite/Cable TV...................... 0
    Internet Services....................... 28 Depending on your area this is possibly a little high - might be worth shopping around
    Groceries etc. ......................... 220 Probably a little high for a single person, the Old Style board might be useful for ideas of how to bring this down. 
    Clothing................................ 10
    Petrol/diesel........................... 120
    Road tax................................ 2 Just to check - you're not paying this monthly are you? There is a premium for doing so, which is why I ask.
    Car Insurance........................... 29
    Car maintenance (including MOT)......... 20
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 210
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 13 Does this include contents too? If not then you need to sort that out fast. 
    Contents insurance...................... 0 See above - this is important.
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 15 Does this actually cover what you spend, for your child, close family, any friends you buy for? It seems on the low side.
    Haircuts................................ 15
    Entertainment........................... 0 Nope - not realistic. You never grab a coffee, buy a magazine, meet a friend for drinks or a meal? 
    Holiday................................. 0 No weekends away even, visits to family, that sort of thing?
    Emergency fund.......................... 0 You need to start budgeting for savings here. (And actually MAKE those savings!)
    Gym..................................... 16 Extract every last penny of value out of this - for example, always shower while there to save water and energy at home.[b]
    Total monthly expenses.................. 1259.4[/b]
    [b]

    Assets[/b]
    Cash.................................... 1400
    House value (Gross)..................... 140000
    Shares and bonds........................ 0
    Car(s).................................. 7000
    Other assets............................ 3000[b]
    Total Assets............................ 151400[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 98361....(350.4)....0[b]
    Total secured & HP debts...... 98361.....-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Ratesetter 1...................7512......0.........0
    Ratesetter 2...................4406......0.........0
    Admiral Loan...................6590......0.........0
    Nationwide 2...................636.......0.........0
    Nationwide 1...................4657......0.........0[b]
    Total unsecured debts..........23801.....0.........-  [/b] So to check, you're paying nothing to any of these at the moment, so they should default soon?

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 1,605.46
    Expenses (including HP & secured debts). 1,259.4
    Available for debt repayments........... 346.06
    Monthly UNsecured debt repayments....... 0[b]
    Amount left after debt repayments....... 346.06[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 151,400
    Total HP & Secured debt................. -98,361
    Total Unsecured debt.................... -23,801[b]
    Net Assets.............................. 29,238[/b]

    [i][/i][/tt]




    Right - let's take a look at the SOA then. Comments in bold as usual.

    Things not to worry about right now -
    Your "shot credit rating" - just ignore it - the only person who sees the number is you, and the only thing it has any relevance for is a new mortgage. I'll come on to why that's less of an issue than you think. 
    Your mortgage deal ending in 2025. Park that one for now - that's two whole years away, and right now none of us know where rates will be then. You have our permission to start worrying about that again in a year :wink: ...however...
    Not being able to get a new fixed deal when your current mortgage deal ends. What on earth makes you think that? It just means your choice is limited to products offered by your existing lender - and presumably you chose them because they suited your profile, so hopefully they still will. You MIGHT have increased costs, sure, but then again a) you might not, and b) you might be earning more by then. 
    How long a DMP might take - sure, it might, but then again it might not. the main thing is that you are tackling your debts without making further huge impacts on your credit file, and without putting your home at risk in any way. 

    Things not to do:
    Gamble any more - at all. Not a lottery ticket, not a cheeky £5 each way on the grand national, nothing. You need to accept that you have the sort of mindset that means you will always be tempted to chase one more more chance - and the only way of avoiding that risk it to never put yourself in that position. It's easy to think that "Oh but I'm not like the poor fools who lose thousands on the horses, or in casinos" but actually there's not so much difference, when you think about it. Learn that lesson now, before things get worse.
    Be tempted to consolidate. You need to go through this process I think - as that is the only way you will come out of the other side most likely to never find yourself there again. You can't borrow your way out of debt.
    Rush into an insolvency "solution" like an IVA - it might seem easier, but it very likely won't be. 

    Next thing then - do you have that £346 a month surplus each month? If not then you need to find out why - and it will be because there is something - or things - not included on that SOA, or that you are overspending in one area or another. A spending diary might well help as it will let you track everything you really do spend. 

    If you do have that surplus, then target £50 of it to building your emergency fund - this is vital. The balance gets split between the debts. 

    I'm going to assume that there is a chance that you might have a bank account with Nationwide? If so - then you need to open a basic account with a different bank - one you have no debts with - although the SOA suggests that the only bank (building society) that you DO owe money to is Nationwide anyway. 

    That's some starting points - others will be able to offer more structured advice specifically in the area of the DMP, and may well spot things in the SOA that I've missed too.

    Hopefully starting to take some positive action on this will enable another "thing not to do" - namely being up at 3am worrying about your debts. :wink: 

    While you have offered some useful suggestions, it's important to note that seeking professional advice from a qualified financial advisor or a debt charity is crucial in order to fully understand all options available and find a solution that is tailored to his specific financial situation.

    A financial advisor can provide a comprehensive analysis of his finances, including his income, expenses, assets and debts. They can help him understand the pros and cons of different debt solutions, such as a debt management plan (DMP) or an Individual Voluntary Arrangement (IVA), and provide guidance on which option is most suitable for him. They can also provide support and advice on budgeting, saving, and managing his money to help him avoid future financial difficulties.

    It's also important to keep in mind that the credit rating is not something to be taken lightly, as it can affect his ability to secure new credit or loans in the future. A financial advisor can help him understand how his credit rating is affected by different debt solutions and provide guidance on how to improve it over time.

    Additionally, consolidating debt can be a viable option for some individuals, and should be evaluated by a professional.

    In summary, while your suggestions are helpful, it's important to seek professional advice to fully understand all options available and find a solution that is tailored to his specific financial situation.
  • JCS1
    JCS1 Posts: 5,335 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    easyeconomicmaster said:
    EssexHebridean said:


    [tt][b]Statement of Affairs and Personal Balance Sheet[/b][b]

    Household Information[/b]
    Number of adults in household........... 1
    Number of children in household......... 0
    Number of cars owned.................... 1[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 1605.46
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0[b]
    Total monthly income.................... 1605.46[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 350.4 Compared to your earnings this is at a really good level.
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 86 This allows for the single person's discount? Do you pay over 10 months, or 12?
    Electricity............................. 50 Check that this and the gas are correct - I assume you pay a straight £100 a month to a single provider? It appears a little low. Make sure you give regular meter readings if you're not on smart meter, and check what the SM is sending if you are. Also budget for an extra £20 per month from April, just in case. 
    Gas..................................... 50
    Oil..................................... 0
    Water rates............................. 18 clearly metered - so consider whether there are any savings to be had here.
    Telephone (land line)................... 0
    Mobile phone............................ 7 Great stuff - well done! 
    TV Licence.............................. 0 You never watch live TV, or record it? Or use iPlayer? 
    Satellite/Cable TV...................... 0
    Internet Services....................... 28 Depending on your area this is possibly a little high - might be worth shopping around
    Groceries etc. ......................... 220 Probably a little high for a single person, the Old Style board might be useful for ideas of how to bring this down. 
    Clothing................................ 10
    Petrol/diesel........................... 120
    Road tax................................ 2 Just to check - you're not paying this monthly are you? There is a premium for doing so, which is why I ask.
    Car Insurance........................... 29
    Car maintenance (including MOT)......... 20
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 210
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 13 Does this include contents too? If not then you need to sort that out fast. 
    Contents insurance...................... 0 See above - this is important.
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 15 Does this actually cover what you spend, for your child, close family, any friends you buy for? It seems on the low side.
    Haircuts................................ 15
    Entertainment........................... 0 Nope - not realistic. You never grab a coffee, buy a magazine, meet a friend for drinks or a meal? 
    Holiday................................. 0 No weekends away even, visits to family, that sort of thing?
    Emergency fund.......................... 0 You need to start budgeting for savings here. (And actually MAKE those savings!)
    Gym..................................... 16 Extract every last penny of value out of this - for example, always shower while there to save water and energy at home.[b]
    Total monthly expenses.................. 1259.4[/b]
    [b]

    Assets[/b]
    Cash.................................... 1400
    House value (Gross)..................... 140000
    Shares and bonds........................ 0
    Car(s).................................. 7000
    Other assets............................ 3000[b]
    Total Assets............................ 151400[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 98361....(350.4)....0[b]
    Total secured & HP debts...... 98361.....-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Ratesetter 1...................7512......0.........0
    Ratesetter 2...................4406......0.........0
    Admiral Loan...................6590......0.........0
    Nationwide 2...................636.......0.........0
    Nationwide 1...................4657......0.........0[b]
    Total unsecured debts..........23801.....0.........-  [/b] So to check, you're paying nothing to any of these at the moment, so they should default soon?

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 1,605.46
    Expenses (including HP & secured debts). 1,259.4
    Available for debt repayments........... 346.06
    Monthly UNsecured debt repayments....... 0[b]
    Amount left after debt repayments....... 346.06[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 151,400
    Total HP & Secured debt................. -98,361
    Total Unsecured debt.................... -23,801[b]
    Net Assets.............................. 29,238[/b]

    [i][/i][/tt]




    Right - let's take a look at the SOA then. Comments in bold as usual.

    Things not to worry about right now -
    Your "shot credit rating" - just ignore it - the only person who sees the number is you, and the only thing it has any relevance for is a new mortgage. I'll come on to why that's less of an issue than you think. 
    Your mortgage deal ending in 2025. Park that one for now - that's two whole years away, and right now none of us know where rates will be then. You have our permission to start worrying about that again in a year :wink: ...however...
    Not being able to get a new fixed deal when your current mortgage deal ends. What on earth makes you think that? It just means your choice is limited to products offered by your existing lender - and presumably you chose them because they suited your profile, so hopefully they still will. You MIGHT have increased costs, sure, but then again a) you might not, and b) you might be earning more by then. 
    How long a DMP might take - sure, it might, but then again it might not. the main thing is that you are tackling your debts without making further huge impacts on your credit file, and without putting your home at risk in any way. 

    Things not to do:
    Gamble any more - at all. Not a lottery ticket, not a cheeky £5 each way on the grand national, nothing. You need to accept that you have the sort of mindset that means you will always be tempted to chase one more more chance - and the only way of avoiding that risk it to never put yourself in that position. It's easy to think that "Oh but I'm not like the poor fools who lose thousands on the horses, or in casinos" but actually there's not so much difference, when you think about it. Learn that lesson now, before things get worse.
    Be tempted to consolidate. You need to go through this process I think - as that is the only way you will come out of the other side most likely to never find yourself there again. You can't borrow your way out of debt.
    Rush into an insolvency "solution" like an IVA - it might seem easier, but it very likely won't be. 

    Next thing then - do you have that £346 a month surplus each month? If not then you need to find out why - and it will be because there is something - or things - not included on that SOA, or that you are overspending in one area or another. A spending diary might well help as it will let you track everything you really do spend. 

    If you do have that surplus, then target £50 of it to building your emergency fund - this is vital. The balance gets split between the debts. 

    I'm going to assume that there is a chance that you might have a bank account with Nationwide? If so - then you need to open a basic account with a different bank - one you have no debts with - although the SOA suggests that the only bank (building society) that you DO owe money to is Nationwide anyway. 

    That's some starting points - others will be able to offer more structured advice specifically in the area of the DMP, and may well spot things in the SOA that I've missed too.

    Hopefully starting to take some positive action on this will enable another "thing not to do" - namely being up at 3am worrying about your debts. :wink: 

    While you have offered some useful suggestions, it's important to note that seeking professional advice from a qualified financial advisor or a debt charity is crucial in order to fully understand all options available and find a solution that is tailored to his specific financial situation.

    A financial advisor can provide a comprehensive analysis of his finances, including his income, expenses, assets and debts. They can help him understand the pros and cons of different debt solutions, such as a debt management plan (DMP) or an Individual Voluntary Arrangement (IVA), and provide guidance on which option is most suitable for him. They can also provide support and advice on budgeting, saving, and managing his money to help him avoid future financial difficulties.

    It's also important to keep in mind that the credit rating is not something to be taken lightly, as it can affect his ability to secure new credit or loans in the future. A financial advisor can help him understand how his credit rating is affected by different debt solutions and provide guidance on how to improve it over time.

    Additionally, consolidating debt can be a viable option for some individuals, and should be evaluated by a professional.

    In summary, while your suggestions are helpful, it's important to seek professional advice to fully understand all options available and find a solution that is tailored to his specific financial situation.
    From the top of the forum....We're a friendly community of MoneySavers sharing our experiences and tips to help each other out

    Also, we advise people to only seek free debt advice.
  • RAS
    RAS Posts: 35,543 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    lixhul said:
    It wouldn't let me remove old post. I wanted to start a new one with all the facts.

    I'm 32, live alone with mortgage and have a child of 5, whom lives with their mum and I pay CSA. 

    [b]Statement of Affairs and Personal Balance Sheet[/b][b]

    Household Information[/b]
    Number of adults in household........... 1
    Number of children in household......... 0
    Number of cars owned.................... 1[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 1605.46
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0[b]
    Total monthly income.................... 1605.46[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 350.4
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 86
    Electricity............................. 50
    Gas..................................... 50
    Oil..................................... 0
    Water rates............................. 18
    Telephone (land line)................... 0
    Mobile phone............................ 7
    TV Licence.............................. 0
    Satellite/Cable TV...................... 0 
    Internet Services....................... 28
    Groceries etc. ......................... 220 you could cut this. Even if you don't want to regularly, learning how to have a really cheap month might be worth it, so you can ride the rough times.
    Clothing................................ 10 - not viable longer term. By all means hit the chazzers but you also need some decent work clothes
    Petrol/diesel........................... 120
    Road tax................................ 2
    Car Insurance........................... 29
    Car maintenance (including MOT).... 20 might be OK now but longer term needs to be higher
    Car parking............................. 0 never?
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 210
    Medical (prescriptions, dentist etc).... 0 you need to budget for at least one dental visit a year and a minor procedure, even if you don't need it every year
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 13
    Contents insurance...................... 0 you really need this
    Life assurance ......................... 0 Try declining term insurance to cover the mortgage at least, and write a will.
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 15
    Haircuts................................ 15
    Entertainment........................... 0 do you never take your daughter out anywhere, have a pint or a coffee with friends
    Holiday................................. 0
    Emergency fund.......................... 0 you need at least £30 in here and as a house owner probably more. Enough to cover one replacement of white goods and basic house maintenance. Even if you've become good at DIY. 
    Gym..................................... 16[b]
    Total monthly expenses.................. 1259.4[/b]
    [b]

    Assets[/b]
    Cash.................................... 1400
    House value (Gross)..................... 140000
    Shares and bonds........................ 0
    Car(s).................................. 7000
    Other assets............................ 3000[b]
    Total Assets............................ 151400[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 98361....(350.4)....0[b]
    Total secured & HP debts...... 98361.....-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Ratesetter 1...................7512......0.........0
    Ratesetter 2...................4406......0.........0
    Admiral Loan...................6590......0.........0
    Nationwide 2...................636.......0.........0
    Nationwide 1...................4657......0.........0[b]
    Total unsecured debts..........23801.....0.........-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 1,605.46
    Expenses (including HP & secured debts). 1,259.4
    Available for debt repayments........... 346.06
    Monthly UNsecured debt repayments....... 0[b]
    Amount left after debt repayments....... 346.06[/b] Where is this going? You need a spending diary to identify the leaks in your budget

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 151,400
    Total HP & Secured debt................. -98,361
    Total Unsecured debt.................... -23,801[b]
    Net Assets.............................. 29,238[/b]



    Starter for ten. If you take out an IVA expect the majority of the £5,800 pa to be taken in enhanced payments towards your debt. With a DMP, you will at least have the flexibility to stop your payments for a month or two if you need a new car, for example.

    Although, ideally you'd be budgeting for a new car.

    In addition to the notes above, do you have one bedroom or two? Or could you reconfigure your house/flat to provide a spare bedroom? 

    Taking a lodger you can "earn" £7k tax free using the rent a room scheme. Possibly Monday-Friday if you need the room for access visits? Obviously there will be costs but it might be worth it. Maybe talk to FreeBear on the Housing forum?


    If you've have not made a mistake, you've made nothing
  • DCFC79
    DCFC79 Posts: 40,641 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 17 January 2023 at 3:13PM
    Christians against Poverty is another one to speak to, they apparently run free budgeting courses, they were just on Stephs packed lunch on Channel 4, thry mentioned debts.
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