In a mess! Advice needed

EssexHebridean

Martico said:

Good luck.
One other point that I don't think has been mentioned, and one to plan towards, is insurance payments. Monthly payments are basically an expensive form of credit. If you're able to save in advance (tricky at the moment, I realise) then paying for the year upfront is always much cheaper than spreading the payments over the year. 

This applies to car tax as well - far better to save up to pay upfront if at all possible to avoid the charge for credit. 

Martico

If more cost cutting isn't immediately possible, then see if you can try to get a few more quid in. Every pound will count with such high interest rates (I'm assuming you're not granted an interest rate break)

A few sales of unwanted goods on FB marketplace, Vinted, wherever, could start to make a dent.

Several of us do online surveys for extra funds (Prolific Academic is good for me for about - edit, I was optimistic before - £10-20 a week, depending on luck and when I find time and the right survey)

Starting to get over the hump of those very high rate debts will make a difference, especially the one that's got a tantalisingly "low" balance with an interest rate that leaves it stuck where it is at your minimum payments.

kimwp

Hiya, welcome to the DFW board. Just a note about asking some of the lenders to pause interest - I think somebody explained already that this could result in arrangement to pay markers on your credit file, which stay on there six years after the debt has been paid rather than a default which stays on your file six years after it is put on the file. 

If you do consider this, I would 1. ask (as a new thread on this board) whether lots of defaults are worse than some - if not, it may be worth trying to default them all to stop interest being charged and 2. It can take 3-6 months for a default to be applied, so if you are planning on paying off some quickly, it might be sensible to actually have an arrangement to pay marker instead of a default.

Echoing what someone said earlier, you do need to think about a fund for the other costs while you are at your daughter's wedding, it would be a bit miserable if you were stressing about the costs. 

enthusiasticsaver

Your credit rating must already be affected hence the high rates of interest so I would stop worrying about protecting that. Home ownership is a way off as you would need to save a deposit, clear the debt etc etc. just do what is right for now. Given the high rates of interest I would be tempted to go for a DMP so you could get the interest frozen. No provider will agree to the £350 holiday payment though so as that is non negotiable I suggest you cancel all those warranties, ring doorbell, hp ink etc etc and move to essential DDs only. Insurances are cheaper paid annually so getting used to saving for things like insurance premiums should start to become routine for you. You can cut back on groceries for now to save as much as possible. 

savergrant

I am not sure a DMP is the right move just now, can't see how the jet2 dd would get through. I really struggle to understand the £400 monthly groceries, where do you shop?

As jet2 will be paid in next ten months you will then be able to start paying down the higher interest rates. How old is your tumble drier? If it came to the worst and it broke down with no warranty does either set of parents have one you could use for bedding? We dry our bedding on an airer though.

SusieT

Well done for asking for help and starting to make some changes. From those interest rates lenders have seen you have a problem as they really are high and no surprise you are struggling to reduce the debt. 
Looking at that SOA it is going to be a while before you are able to buy a house, first you need to clear the debt, and then you need to save a deposit, legal fees and stamp duty, but it is doable for you thats for sure. It may take time, but it does NOT mean you are a failure at all. 
So, with the information you have given above, I would mentally allocate the exam money to an emergency fund, so that although you are renting you have enough to cover 6 months of salary, then if either of you are out of work you will not be reaching for a card.
Until then, I would completely stop paying the creditors other than for the car, possibly pay off a couple of the ones in the hundreds just to make the list a bit more manageable. Once the defaults roll in (this can take a few months), then set up a DMP or self manage a payment plan. Be aware though, that in your case with the number of creditors this will involve a LOT of scary looking letters telling you the world will stop turning if you do not pay, but by going down the default route your credit file will be cleared of all adverse markers 6 years from the date of the defaults and by the time you have cleared the debts and apply for the mortgage you will have a sparckly clean history showing. 
I would be stopping paying them now to get the process atarted as quickly as possible.
Open a new bank account (preferably with pots) that is not associated with any of your debts. Do NOT switch, but manually move across only the direct debits that you NEED, so gas, electric, rent, council tax etc. No creditors should have the new account.
Cancel the direct debits to them at the old bank, so that you can start the process for defaults.
Live off the budget that you set, and put what you will be paying the DMP into a different account to start the emergency fund. Allocate the monthly amounts you will be paying for annual bills to a saving account, so you will have enough in it to pay annually which saves money. 
Ignore letters, emails and phone calls from creditors, do not speak to them on the phone, email them, text them or contact them in any way at all until the defaults arrive. Keep the default notices safely until they are all paid off just in case any try to add a different date if the debt gets sold. 
As soon as a debt defaults interest will stop and you can start to pay a small amount to it by reducing what you are putting into the emergency fund from the DMP money, this will keep them off your back until you start the dmp with the others as well, and start to reduce the capital that you owe. 
When you get the exam money that will be a good chunk to put in the emergency fund, and to start a pot to offer reduced amounts in full and final settlements at a later date - with some of the ones you have got you could be looking at significant discounts. 
After your daughters wedding you put the £350 towards the debt. 
Once they have all defaulted, you can either self manage payments, or use a charity like Stepchange to do it for you, but Stepchange will want you to start immediately if you go with them, which may not stop all the interest and can result in arrangement to pay markers, hence we suggest getting defaults first. 
With defaults and the interest stopped you could get rid of these in a relatively short time, and be saving for your house deposit, so take another deep breath, and start on your road to a debt free future and a house of your own  

Rob5342

Debt management plans are useful if there is no realistic prospect of paying off the debts by other means, but it looks like there is an alternative here. With the £2000 from marking a few of the smaller debts could be paid off, and with the savings from those, cancelling the gym, changing the mobile contracts to payg, and the holiday stopping there would be an extra £700 a month. It might not be possbile to do that all that straight away, but it looks like its possible withhin a year. If that extra £700 is thrown at some of the smaller debts then within a few months there could be £1000 extra to throw at the debts and they could be cleared in a reasonable amount of time.

That will rely entirely on changing spending habits and sticking with it to get everything cleared. If that can be achieved then it should be possible to sort things without a dmp. If it can't be then a debt management plan would be a better choice, that would get things paid off more quickly but there would be defaults or payment arrangement markers for at least 6 years.

kimwp

Rob5342 said:

Debt management plans are useful if there is no realistic prospect of paying off the debts by other means, but it looks like there is an alternative here. With the £2000 from marking a few of the smaller debts could be paid off, and with the savings from those, cancelling the gym, changing the mobile contracts to payg, and the holiday stopping there would be an extra £700 a month. It might not be possbile to do that all that straight away, but it looks like its possible withhin a year. If that extra £700 is thrown at some of the smaller debts then within a few months there could be £1000 extra to throw at the debts and they could be cleared in a reasonable amount of time.

That will rely entirely on changing spending habits and sticking with it to get everything cleared. If that can be achieved then it should be possible to sort things without a dmp. If it can't be then a debt management plan would be a better choice, that would get things paid off more quickly but there would be defaults or payment arrangement markers for at least 6 years.

I agree with this, but it is a close one to call. This route relies on future income (the exam payment), no increases in cost of living that exceed cost savings (utilities will be increasing) and no unexpected expenses. It basically means cutting back and hoping nothing financially negative will happen to stay in the same financial position until the summer to avoid doing a dmp. It will mean keeping a close eye on finances (rarely a bad thing) and hitting that dmp "button" if you can't afford to pay the debt.

NB, just a thought, are you going to board your dogs while you are away, that can be expensive?

13thlegion

Based on a couple of things I don't think a DMP is strictly necessary or desirable.

Firstly the DD for the holiday wouldn't be accepted, so no wedding. Which is a hard no option.
There is a small amount of wiggle room, increasing with further sacrifices to lifestyle.

I'm not considering credit score. I know you've said you'd like to buy a house and protect it for that. However I think with confidence we can say your credit rating is shot to pieces. The APR on these debts is high and you can't get a 0% at the moment. Paying off debts often lowers your credit counter intuitively. By the time you are in a position to buy a house it will have recovered. 

The Good News.
I've been through the SOA and if I may suggest these areas of slimming down. 
Daughters Mobile - already sorted so excellent start
Amazon & Netflix - you have a TV package in contract. Use that.
Oven, jewellery, tumble dryer warranties - Not absolutely necessary for life.
Ring - Keep the doorbell on the front of the house a deterrent, it's free to use as a live feed. Can reactivate later.

I have not touched Union fees (they may be able to help however, as was mentioned before) Printer ink (this is probably vital considering your job!) or gym (yet - see below)

This saves you £94.50 a month. You are now covering the minimum payments and have an additional £58.17 to either overpay or use towards an emergency fund. As an example of this in 4 months you'd have the cash to buy a tumble dryer if anything goes wrong.

You have said that the gym is your only social life. I do understand so the next bit is a little tongue in cheek. The go hard route is to do sit ups and burpees in front of the tv, making sure you get maximum value out of that contract package! This would give you an £113.17 a month total to over pay debts / EF and get ahead. 

I have two questions.
1. You're not saving for any additional spending money on the wedding holiday? Pets boarding? Drinks from the father of the bride?
2. Is £30 for presents realistic? How much do you have saved? Is £300 enough to cover all birthdays AND Xmas this year?

To conclude. Please don't panic and rush into anything. You've done the absolute right thing by asking for information. Many here have been in worse straights than you and come out the other side. With some adjustments you can start chipping away at the debts. Snowballing with the smallest total may be a good start to overpay as it will free up extra cash and feel like progress as the list gets shorter. In 2 months time New Look, or 3 Jacamo could be gone. The next months will be very tough, and the journey will take years. But if you grind at it you will make it.

When you have your plan share it with your daughters so they know what's going on. Their support will be vital. And please stick around as I'm sure all of us want to cheer you on too. I know I do. 

Rob5342

kimwp said:

Rob5342 said:

Debt management plans are useful if there is no realistic prospect of paying off the debts by other means, but it looks like there is an alternative here. With the £2000 from marking a few of the smaller debts could be paid off, and with the savings from those, cancelling the gym, changing the mobile contracts to payg, and the holiday stopping there would be an extra £700 a month. It might not be possbile to do that all that straight away, but it looks like its possible withhin a year. If that extra £700 is thrown at some of the smaller debts then within a few months there could be £1000 extra to throw at the debts and they could be cleared in a reasonable amount of time.

That will rely entirely on changing spending habits and sticking with it to get everything cleared. If that can be achieved then it should be possible to sort things without a dmp. If it can't be then a debt management plan would be a better choice, that would get things paid off more quickly but there would be defaults or payment arrangement markers for at least 6 years.

  It will mean keeping a close eye on finances (rarely a bad thing) and hitting that dmp "button" if you can't afford to pay the debt.

That's a very good point. Having been in a similar position I know it's easy to convince yourself that it was a bad month and that next month you'll do better, but that can perpetuate for years and things just get worse.