It’s time to tackle this mountain

Woodsey10

13thlegion said:

Well done on taking the first steps.

I'll echo updating the SOA with interest rates. I'm also going to question the accuracy of the SOA as you are showing saving 100 a month each for emergency and holiday, and 40 a month presents. And yet have zero cash assets. So unless you've recently emptied those savings for an emergency, a holiday, and a birthday (and only plan on spending £240 for Christmas assuming no birthdays before then) I don't think things add up.

Consolidation loans are often a terrible idea as they do not solve the root cause of the debts.

I only started budgeting for emergency, car maintenance etc a week ago. I get paid weekly at the moment so have set weekly standing orders. All currently sit at a quarter of what I have put monthly. All savings I had prior to this have just gone on paying my final accountant bill from being self employed. 

Woodsey10

Floss said:

Could I ask what the £2k of other assets is? And no contents insurance?

Approx 2k in jewellery. Our wedding rings make up the majority. 

It’s combined buildings and contents of £12 per month

RAS

There are 4.3 weeks to every month, except February. So you need to put away £23.26 per week, not £25.

That will achieve you target and release about £7.50 per month towards your debt. Every little helps. 

13thlegion

Woodsey10 said:

13thlegion said:

Well done on taking the first steps.

I'll echo updating the SOA with interest rates. I'm also going to question the accuracy of the SOA as you are showing saving 100 a month each for emergency and holiday, and 40 a month presents. And yet have zero cash assets. So unless you've recently emptied those savings for an emergency, a holiday, and a birthday (and only plan on spending £240 for Christmas assuming no birthdays before then) I don't think things add up.

Consolidation loans are often a terrible idea as they do not solve the root cause of the debts.

I only started budgeting for emergency, car maintenance etc a week ago. I get paid weekly at the moment so have set weekly standing orders. All currently sit at a quarter of what I have put monthly. All savings I had prior to this have just gone on paying my final accountant bill from being self employed. 

That makes a lot of sense, thanks for explaining.

As you have some surplus you can now start prioritising an order to clear up the debts.

Personally I would put everything (because I have on my own journey) extra into the emergency fund until it sits at a target figure (up to you what that is, 1000 is common, as is a month's expenses) then start churning through the debts. Lemonfool has a tool that will take your SOA and calculate an efficient order (does rely on having the APR figures though).

And well done on stepping away from gambling. Not an easy thing to do and your achievement should be recognised.

kimwp

First of all, stop beating yourself up. We all make mistakes of one kind or other. You haven't gambled in over a year, which is great - have you put anything in place to make sure you won't go back to it?

This is manageable without a dmp - they are for when you can't afford your debts. Your approach should be to pay the minimum plus £1 on all of the debts except the one with the highest Apr - to which you put all spare money until it is paid off. Then you focus on the one with the next highest Apr.

There are areas where you can cut back to increase the amount that you are putting towards the debt. I don't think it's reasonable to put money into a holiday fund and probably not sensible to put money into your daughter's savings for the moment, while you have this debt. Different people have different views on whether to save an emergency fund when you have debt. In my opinion, it only makes sense to be saving if you get a higher interest rate on the savings than the debt or if you are going to be unable to access any credit for emergencies.

fatbelly

Actually on that soa I would consider a debt management plan. there are 16 creditors and none (apart from the family loan) seem to be low interest. Snowballing is going to take a hell of a time and you will pay a lot of interest in the process.

Take the hit and talk to a free provider of dmps - there are two main ones - stepchange and payplan. If you are so inclined you could talk to Christians Against Poverty.

With 65k, a monthly payment of £1000 clears this in a little over 5 years, interest should be knocked on the head and anything defaulted disappears from your file entirely in 6 years.

So it's a six-year plan to get debt-free. Could be worse.

fatbelly

Woodsey10 said:

.

Can anyone explain what situation I’d be looking at if I was on a DMP and it’s time to renew mortgage deal? Would I just allow it to switch to their standard variable rate? 

Thanks for reading. 
 

Have a look at this

https://debtcamel.co.uk/new-mortgage-fixed-rate-poor-credit/

kimwp

fatbelly said:

Actually on that soa I would consider a debt management plan. there are 16 creditors and none (apart from the family loan) seem to be low interest. Snowballing is going to take a hell of a time and you will pay a lot of interest in the process.

Take the hit and talk to a free provider of dmps - there are two main ones - stepchange and payplan. If you are so inclined you could talk to Christians Against Poverty.

With 65k, a monthly payment of £1000 clears this in a little over 5 years, interest should be knocked on the head and anything defaulted disappears from your file entirely in 6 years.

So it's a six-year plan to get debt-free. Could be worse.

Go with fatbelly's advice over mine, he has a lot more knowledge than me.

A dmp will affect your ability to get credit for a bit, but as time goes on, that effect will reduce. There are some basic steps to follow for a dmp - change to a bank that you don't have any debts with and manually (IE not using the switching service) move across your income and bills that you will keep paying. Then stop paying your other (unsecured and non-essential) bills until they default and save the money you would have paid to build up an emergency fund. Ask questions about anything you aren't sure about 🙂

EssexHebridean

Woodsey10 said:

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 1

Number of cars owned.................... 2 But you’re reducing this to one, correct?[b]

Monthly Income Details[/b]

Monthly income after tax................ 2560

Partners monthly income after tax....... 1850

Benefits................................ 87.2

Other income............................ 0[b]

Total monthly income.................... 4497.2[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 980

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 202 Are you paying this over 10 months or 12? Paying over 12 months can help with budgeting.

Electricity............................. 137 Have you checked that this is sufficient - it seems a little low for an all-electric household. 

Gas..................................... 0

Oil..................................... 0

Water rates............................. 29.9

Telephone (land line)................... 0

Mobile phone............................ 35 Is this for two phones? If so it’s a little high but not massively so - it will be worth looking for sim only deals once contracts are up though. 

TV Licence.............................. 12.47 Check this - I think it should be 13.25

Satellite/Cable TV...................... 45

Internet Services....................... 0

Groceries etc. ......................... 300 I’d suggest keeping a spending tally on this for a few months to see if it’s accurate - it’s reasonably low for a family of 3 and that can sometimes be an indicator that not all spends are being accounted for

Clothing................................ 25

Petrol/diesel........................... 360

Road tax................................ 39.8

Car Insurance........................... 55.62

Car maintenance (including MOT)......... 40 Not a chance this will cover your expenses with the mileage you are doing looking at that fuel spend. Allowing that when you lose the second vehicle your associated expenses will drop, I’d suggest incorporating the money saved into contributions to your car maintenance fund. If you run into a surplus it will pay for road tax up front next time round for the remaining vehicle which is more cost effective. 

Car parking............................. 5

Other travel............................ 15 Will this increase at all when you are down to a single vehicle?

Childcare/nursery....................... 156

Other child related expenses............ 10

Medical (prescriptions, dentist etc).... 25 Can this be reduced at all by way of a prepaid certificate for prescriptions? 

Pet insurance/vet bills................. 55

Buildings insurance..................... 12

Contents insurance...................... 0

Life assurance ......................... 34.41

Other insurance......................... 4.5

Presents (birthday, christmas etc)...... 40

Haircuts................................ 0 sure you don’t need to budget anything here? 

Entertainment........................... 15

Holiday................................. 100

Emergency fund.......................... 100

Child Savings account .................. 60 I understand that you wouldn’t want to stop,p this entirely but right now your focus needs to be on clearing the debts which will then free up income along the line for savings as well as experiences etc. Maybe drop  to £10 a month right now though.

Wage switch weekly to monthly .......... 120[b]

Total monthly expenses.................. 3013.7[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 470000

Shares and bonds........................ 0

Car(s).................................. 21000

Other assets............................ 2000[b]

Total Assets............................ 493000[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 223765...(980)......1.64[b]

Total secured & HP debts...... 223765....-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Mbna c/card (wife).............2612.8....46........0

H/fax c/card (wife)............4590.72...67........0

Family loan int. free..........10000.....0.........0

Virgin Phone...................324.......18........0

Lendable loan..................1030......35.4......0

Betterborrow loan..............4439......114.3.....0

Novuna Loan....................4632......136.......0

Novuna Loan....................4900......114.......0

Novuna loan....................5010......99........0

Novuna loan....................7185......122.......0

Zopa loan......................9604......210.......0

Mbna c/card....................2704.28...60........0

Barclaycard....................563.......80........0

Newday int.free................1014......27........0

Mbna c/card....................2243.63...64.52.....0

NatWest c/card.................4342......43........0[b]

Total unsecured debts..........65194.43..1236.22...-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,497.2

Expenses (including HP & secured debts). 3,013.7

Available for debt repayments........... 1,483.5

Monthly UNsecured debt repayments....... 1,236.22[b]

Amount left after debt repayments....... 247.28 So - do you have this? If so that is an immediate amount you can start hitting one of the debts with…if you don’t have it, then your budget needs work![/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 493,000

Total HP & Secured debt................. -223,765

Total Unsecured debt.................... -65,194.43[b]

Net Assets.............................. 204,040.57[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

Well done for putting together the SOA - I’ve made some comments within it in bold as you will see.

I’m inclined to agree with fatbelly about a DMP being the best way forwards for you here - I assume that the interest rates on some of those debts are going to be high as there are a number that look like short term/payday loan type lenders, getting those to default so the interest stops accruing might not be the easiest, but it will be worthwhile if you can do it.  Alternatively, you set the payments to everything for a little over the current minimum - rounding up to the nearest £5 or £10 above often works - then let everything tick over on those payments while refining your budget and throwing anything spare at the highest interest rate debt first - but my concern is with interest still going on this is going to be an unceasingly long slog, and very difficult to sustain. 

Well done on getting yourself clean of gambling for the past year - I assume you are already in contact with one of the organisations that are supporting you with this? If not then it’s well worth looking into as there are some valuable resources there. 

Woodsey10

A big thanks to all of you for your time to reply and great advice and tips. 

I’ve taken some time to decide which way to go and agree that a self managed DMP is the right way for me. 

I have a new Monzo account ready to go, and wages now going into this account. 

Direct debits cancelled yesterday. 

I will revisit the soa and tweak it with the suggestions you have made. 

Now the clock starts waiting for the defaults. 

Question: We have a joint account with NatWest. Do I need to switch this as I have a credit card in my name only,  with NatWest? Can they access this account? 

We both have (had for me) our main accounts with first direct which our respective wages are paid into. We transfer an amount each, into joint account to cover all household related bills: food, fuel, insurance etc etc