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

kimwp

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.

enthusiasticsaver

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. 

enthusiasticsaver

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. 

EssexHebridean

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. 

jondebtz

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

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.

EssexHebridean

It's such an easy win.

True story - when we first landed here, it was mainly because a friend had signposted us here as a good place for information on overpaying the mortgage. If you'd asked me at the time I'd have said that we weren't in debt - but in fact there were rolling CC balances, a bank loan for a car which had just been taken, and we were generally in our overdraft facility by the end of each month. when we went through things we realised that we'd slipped into the trap of frittering - and there was just no need for most of it. Late back from work on a mid week day? Well it wasn't like we had any meals planned, so a quick stop at the takeaway was easier than stopping at the shop, buying something and cooking it back at home. Fridays were ALWAYS takeaway days because we "deserved it" after a long week at work. At a loose end on a Saturday? One of the big shopping centres hereabouts was a natural option - a bit of a browse, buy some stuff we didn't really need, have lunch or at least a coffee and a cake... 

Our income at that stage was nothing like where you're at - but then costs were also a fair bit lower then - this was pre the 2008 financial crisis, albeit only just. Fast forward to the time of that crisis and the loan was pretty much gone and we were beginning to turn our attention to the mortgage. We were no longer using overdrafts and the CCs were down to being cleared (enter the Martin-voice) IN FULL each month, we were budgeting properly, having a takeaway once a month and not frittering, and we'd tackled haggling down bills that had crept up to silly levels too (I can clearly recall a £70+ monthly TV/Phone/BB bill - a large amount 15 years ago!) - each time we made a saving on a monthly expenditure we added the money to a standing order which went into our "mortgage OP pot" and got paid off the mortgage in chunks each time we hit a few hundred pounds in there. And each time we made a conscious decision not to spend on a "fritter" we stuck the cash in a piggy bank at home - and that then got added to that pot periodically, too. 

The loan was cleared in 13 months, not the 30 it was taken out for, and the mortgage was cleared early too, in 2016 - we'd still be paying it off now if we hadn't decided to take things in hand. Ironically the work we had done by the time Northern Rock went pop was enough to ensure that we were also one of a tiny number of mortgage accounts that was hived off to the "good bank" side - so we escaped ending up with NRAM - and we all now know what a stroke of good fortune that was! 

The reason for this ramble? To show you that it can be done - and that you can get yourself into a position inside a few years where rather than having debt, you have savings. Look at it this way - if you can get yourself to a debt free position, you will have (on your current budget figures) around £3500 a month "spare" - or, for context - forty two thousand pounds a year - and that is quite realistically in reach for you. It's something that most people could never even dream of - so take the focus you currently have, run with it, and create that reality for yourself and your family. 

jondebtz

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

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

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