So here goes - this is bad but I need to so something about it

24

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  • kimwp
    kimwp Posts: 2,692 Forumite
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    Hiya! If your SOA is correct, then it's simple - pay the excess towards the debt with the highest Apr. Once that's paid off, pay the excess towards the next highest Apr debt. Making savings on your expenses as suggested by posters above will speed up this process.


    If any of the benefits are child support then I think you will have to pay this back, given your income, so it's best not to include it in your SOA.
    Statement of Affairs (SOA) link: https://www.lemonfool.co.uk/financecalculators/soa.php

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  • enthusiasticsaver
    enthusiasticsaver Posts: 16,018 Ambassador
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    jondebtz said:
    Hello,.

    Bit nervous about this but it's time to sort it out. We have big debts and have been getting our heads around our current situation.The debt built up over many years. We funded several rounds of IVF, our wedding, house renovations etc and now we are at the stage where we have to deal with it. Thankfully we have a good enough income to get out of the hole we are in.....I think!


    Here is our current SOA. 

    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................ 4093
    Partners monthly income after tax....... 1460
    Benefits................................ 515
    Other income............................ 400[b]
    Total monthly income.................... 6468[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 520
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 106
    Electricity............................. 100
    Gas..................................... 186
    Oil..................................... 0
    Water rates............................. 32
    Telephone (land line)................... 12
    Mobile phone............................ 80
    TV Licence.............................. 12
    Satellite/Cable TV...................... 59
    Internet Services....................... 0
    Groceries etc. ......................... 500
    Clothing................................ 50
    Petrol/diesel........................... 300
    Road tax................................ 5
    Car Insurance........................... 58
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 100
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 10
    Pet insurance/vet bills................. 36
    Buildings insurance..................... 10
    Contents insurance...................... 9
    Life assurance ......................... 33
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 100
    Haircuts................................ 20
    Entertainment........................... 200
    Holiday................................. 0
    Emergency fund.......................... 100[b]
    Total monthly expenses.................. 2638[/b]
    [b]

    Assets[/b]
    Cash.................................... 2000
    House value (Gross)..................... 250000
    Shares and bonds........................ 0
    Car(s).................................. 8000
    Other assets............................ 0[b]
    Total Assets............................ 260000[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 47000....(520)......1.8[b]
    Total secured & HP debts...... 47000.....-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Updraft consolidation..........28000.....630.......0
    Barclayard 1...................12800.....234.......6.9
    Barclaycard 2..................4800......108.......6.9
    Parents........................5000......0.........0 - no pressure on this one
    Drafty.........................1300......167.......0 - horrendous - something like 188%apr
    Tesco CC.......................3500......35........0
    Creation card..................4000......40........0
    MBNA...........................10400.....325.......19.9
    Halifax loan...................6800......132.......6.9[b]
    Total unsecured debts..........76600.....1671......-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 6,468
    Expenses (including HP & secured debts). 2,638
    Available for debt repayments........... 3,830
    Monthly UNsecured debt repayments....... 1,671[b]
    Amount left after debt repayments....... 2,159[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 260,000
    Total HP & Secured debt................. -47,000
    Total Unsecured debt.................... -76,600[b]
    Net Assets.............................. 136,400[/b]


    Please be gentle. I am deeply ashamed. We have more debt than anyone I have ever known :(


    You know how the debt occurred and you have a large income so that helps. Others have pointed out that the budget can’t be right or you would have a surplus. If you are still spending on cards I would stop that immediately. The groceries bill is large for a family of 3 and I would cut right back on spending over the next year to really hammer the debt down. Is your income secure? 

    That consolidation loan from Updraft indicates this debt has occurred over a number of years. For future reference never consolidate debt. It kicks the can down the road so you would be dealing with in your case over £76k  of debt rather than £20k. As you have a decent income no doubt you have continued to spend rather than rein in a few years back. Dealing with it now is priority. 

    Are you sure your parents are not wanting their £5k back soon? 

    Do you have an overdraft? 

    If you are actually now in a position to address it get that Drafty loan paid off. It is sub prime debt so is damaging your credit record. Check out that Updraft consolidation loan too as I am sure that is not 0%. I would actually use that £2k cash to pay off Drafty today. 

    Have you defaults or late payments affecting your ability to get 0% deals? 

    You should have £3800 available monthly to repay the debt. If that is accurate I would tackle the Drafty loan first  then Updraft and MBNA and double check the expiry date of any 0% deals on the cards. Repay the debt by tackling the highest interest rate debts first. 
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  • enthusiasticsaver
    enthusiasticsaver Posts: 16,018 Ambassador
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    I would definitely check the rate on that Updraft consolidation loan as there is some debate as to whether it is a payday loan lender. The representative rate on the website shows as 17.9% but a quick Google indicates that most are paying way above that. 
    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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  • EssexHebridean
    EssexHebridean Posts: 24,236 Forumite
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    Good info on the Updraft loan - definitely one to check out OP as it may be that it's one to target ahead of where you think it might sit. 

    I'll echo the calls not to consolidate further - it doesn't work, you already know that, and you are in too good a position to risk blowing things now by kicking the can down the road. Right now I sense a proper sense of urgency from you to tackle things - so make the most of that and get the plan in place. 

    Once you've started making headway and got some stability in the budget, it "might" be that you can consider exchanging some of the debts for lower interest rates - either by balance transfers, or perhaps by taking a lower rate loan as suggested earlier in the thread. Right now though that would be poor advice in your circumstances - as you don't yet have an "actual, factual and functional" budget in place, nor have you had a taste of the work the decision making process in clearing down debt - both those things are vital before you look at any potential short cutting of the process. 
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  • Thanks for everyones replies - much appreciated. I do appreciate that we in a position to sort this without a DMP etc, however we need to do it now. 

    Our income has increased quite a bit in the last 3 months so we are still getting to grips with it. The reality is that we have been so wasteful with money. Last night I downloaded my HSBC transactions from January - I deleted all of the essential spends and then calculated the sum of the things that were unnecessary - £1222. Totally disgusted by that, however that is something that I can fix easily. 
  • kimwp
    kimwp Posts: 2,692 Forumite
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    jondebtz said:
    Thanks for everyones replies - much appreciated. I do appreciate that we in a position to sort this without a DMP etc, however we need to do it now. 

    Our income has increased quite a bit in the last 3 months so we are still getting to grips with it. The reality is that we have been so wasteful with money. Last night I downloaded my HSBC transactions from January - I deleted all of the essential spends and then calculated the sum of the things that were unnecessary - £1222. Totally disgusted by that, however that is something that I can fix easily. 
    Don't beat yourself up, it's really easy to fritter money if you aren't keeping an eye on it. The good thing is that cutting back on the unnecessary things will give you a really good chunk of money every month to throw at the debt. You'll make mistakes along the way, but you will just need to forgive yourself, put in place things to try to stop it happening again and get back on track.

    You may find opening a diary in the diary section will help both in keeping you accountable and providing support and tips from others going through the same journey.
    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.
  • jondebtz
    jondebtz Posts: 7 Forumite
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    It's definitely the frittering that has destroyed our ability to budget properly @EssexHebridean - so many of the things that you have mentioned are things that we do/have done - take aways, days out shopping with lunch etc - all without any real regard as to whether we could actually afford it or not!

    I have just turned 42 and I so wish that I had sorted this out earlier. 
  • 13thlegion
    13thlegion Posts: 111 Forumite
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    jondebtz said:

    I have just turned 42 and I so wish that I had sorted this out earlier. 
    You're sorting this out now which is the next best thing so plenty to feel positive about. 
  • x_raphael_xx
    x_raphael_xx Posts: 4,401 Forumite
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    jondebtz said:
    I have just turned 42 and I so wish that I had sorted this out earlier. 
    We all wish that. But all we can do it take control now and look forward
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