Credit card debt has spiralled

kimwp

I agree with telling your partner the exact amount, it's really not going to work if you are trying to cut back and she isn't or doesn't know why. 

I think you've made a great start with your SOA, now you need to do some work making sure it's accurate (unless you've already gone through the last six months, ideally a year of accounts. It sounds like a massive task, but you get into the swing of it and it's a good way to learn and reflect what you spend on) and keeping a track of your spend against each line until you have things under control.

I think you need to stay under your budget and make whatever over payments you can to the debt (starting with the 44% interest one), until the end of your partner's mat leave, maybe by selling things you don't need, etc, then when she goes back to work, you'll have a decent chunk of extra income to throw at the debt every month. With all the busy-ness of having two children, the time to being debt-free will disappear in no time

There's a board on here about fairly easy ways to bring extra money in - a good way is switching current accounts if you haven't done that recently.

flipflopflo

BlueManc10 said:

Statement of Affairs and Personal Balance Sheet

Household Information

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

Number of children in household......... 2

Number of cars owned.................... 1 *This is on finance

Monthly Income Details

Monthly income after tax................ 2514

Partners monthly income after tax....... 750 * This will increase to £1600

Benefits................................ 142

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

Total monthly income.................... 3406

Monthly Expense Details

Mortgage................................ 736

Secured/HP loan repayments.............. 200

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

Management charge (leasehold property).. 0

Council tax............................. 166

Electricity............................. 90

Gas..................................... 70

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

Water rates............................. 52.67

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

Mobile phone............................ 60 I’m assuming 2 phones, are they still in contract? As soon as they are not look to the likes of Smarty, Giff Gaff etc. for a sim only deal. I only pay £8 a month. 

TV Licence.............................. 13.25

Satellite/Cable TV...................... 100 still in contract? If not you need to shop around I’m paying half that for land line, broadband and satellite tv. 

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

Groceries etc. ......................... 300

Clothing................................ 50

Petrol/diesel........................... 80

Road tax................................ 14.43

Car Insurance........................... 87.58 understand that you are a new driver but as soon as you can shop around. 

Car maintenance (including MOT)......... 50

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 500 *this will increase to £1000

Other child related expenses............ 100 what does this include?

Medical (prescriptions, dentist etc).... 0 nothing?? Do you not go to the optician, prescriptions etc. 

Pet insurance/vet bills................. 0

Buildings insurance..................... 19 does these include contents? If not then you need to get contents insurance with accidental damage as a matter of priority. 

Contents insurance...................... 0 see above 

Life assurance ......................... 19

Other insurance......................... 0

Presents (birthday, christmas etc)...... 30

Haircuts................................ 30

Entertainment........................... 100 what does this cover?

Holiday................................. 0

Emergency fund.......................... 0[b]you need an emergency fund what will you do if a washing machine breaks down? Your car needs a lot of work?

Total monthly expenses.................. 2867.93

Assets

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

House value (Gross)..................... 250000

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

Car(s).................................. 12000

Other assets............................ 0

Total Assets............................ 262000

Secured & HP Debts

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

Mortgage...................... 196000...(736)......2.6[b]

Total secured & HP debts...... 196000....-.........-   [/b]

[b]Unsecured Debts

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

Credit Card....................6718......258.......26.6

Credit Card....................6584......112.......26.49

Credit Card....................3729......89........24.9

Store Card.....................1200......79........44.9

Store Card.....................767.......44........24.9

Credit Card....................620.......25........24.6[b]

Total unsecured debts..........19618.....607.......-  

Monthly Budget Summary

Total monthly income.................... 3,406

Expenses (including HP & secured debts). 2,667.93

Available for debt repayments........... 738.07

Monthly UNsecured debt repayments....... 607

Amount left after debt repayments....... 131.07

Do you really have this left at the end of the month??

Personal Balance Sheet Summary

Total assets (things you own)........... 262,000

Total HP & Secured debt................. -196,000

Total Unsecured debt.................... -19,618

Net Assets.............................. 46,382

Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.

My comments are by the categories on your SOA. 

Have a look at Martins guides on each category to see where you can save money. 

Also look at the Debtfree Challenges thread on this page and the Boost Your Income thread for little ways to get some extra pennies to throw at the debt or save for the emergency fund. 

I’m assuming that you are shopping around for food. Aldi, Lidl, Tesco etc. Check out the Old Style board for tips. 

BlueManc10

This may sound silly but is it worth taking out a 0% purchase/balance transfer card and then paying off the store card with this? As then the interest rate will be lower and I could pay off less? 

Also I could then pay this off interest free in the time required and just pay minimum on other debts and then do the same again etc? 

kimwp

BlueManc10 said:

This may sound silly but is it worth taking out a 0% purchase/balance transfer card and then paying off the store card with this? As then the interest rate will be lower and I could pay off less? 

Also I could then pay this off interest free in the time required and just pay minimum on other debts and then do the same again etc? 

It's not silly, but you need to do the maths to make sure it's definitely financially better eg a 4% transfer charge for a debt that is at 45% that you pay off within a month doesn't make any sense.
You'd then consider whether it's better to pay the 0% card at a rate that pays it off by the end of the 0% offer or pay the minimums on that card and over pay on a card that's charging you interest. 

For example, if the 0% offer card charges 25% at the end of the offer period and you also have a card that is currently charging 25%, it makes sense to over pay the one that is charging now, because you may get another 0% offer.

Basically you need to think: what reduces the overall amount I pay on the debt. This could be transferring to lower interest cards/loans and using the freed up money to overpay, or just mean paying the debt with the highest interest first. Note, that it doesn't mean transfering to a lower rate that you pay over a longer time - that is a mistake a lot of people make (usually as a consolidation loan), but that actually overall costs more.

If you use 0% offers, you have to make sure you're actually reducing the debt and not just kicking the can down the road until there are no more 0% offers and you're back paying interest on debt.

comeandgo

Have you missed out any income?  You state in your opening post income of 75k but your figures show a lot less.  

NeverendingDMP

Apologies if you have already checked but have you been on all the benefit calculators to see if you are entitled to a tiny bit of u credit, tax free childcare etc. It's soo soo hard paying that much childcare and very de motivating I know. Every little bit you manage to pay off will make it easier. Try and work together on it otherwise everything you try and do  and every tiny saving you manage could be undone in five minutes because your partner is unaware. Pennies make pounds eventually it will.come.down it you keep trying. And maybe you will be better when free childcare starts when eldest is 3. Good luck

flipflopflo

comeandgo said:

Have you missed out any income?  You state in your opening post income of 75k but your figures show a lot less.  

I read it that he meant that when his OH goes back to work they will have a combined salary of £75k

BlueManc10

flipflopflo said:

comeandgo said:

Have you missed out any income?  You state in your opening post income of 75k but your figures show a lot less.  

I read it that he meant that when his OH goes back to work they will have a combined salary of £75k

This is correct as I'm due a pay rise imminently but my SOA shows my current salary and my partner's maternity 

BlueManc10

kimwp said:

BlueManc10 said:

This may sound silly but is it worth taking out a 0% purchase/balance transfer card and then paying off the store card with this? As then the interest rate will be lower and I could pay off less? 

Also I could then pay this off interest free in the time required and just pay minimum on other debts and then do the same again etc? 

It's not silly, but you need to do the maths to make sure it's definitely financially better eg a 4% transfer charge for a debt that is at 45% that you pay off within a month doesn't make any sense.
You'd then consider whether it's better to pay the 0% card at a rate that pays it off by the end of the 0% offer or pay the minimums on that card and over pay on a card that's charging you interest. 

For example, if the 0% offer card charges 25% at the end of the offer period and you also have a card that is currently charging 25%, it makes sense to over pay the one that is charging now, because you may get another 0% offer.

Basically you need to think: what reduces the overall amount I pay on the debt. This could be transferring to lower interest cards/loans and using the freed up money to overpay, or just mean paying the debt with the highest interest first. Note, that it doesn't mean transfering to a lower rate that you pay over a longer time - that is a mistake a lot of people make (usually as a consolidation loan), but that actually overall costs more.

If you use 0% offers, you have to make sure you're actually reducing the debt and not just kicking the can down the road until there are no more 0% offers and you're back paying interest on debt.

Thank you for this makes sense and will take note. 

Smashingitnow

Couple of points.

If you can for just two consecutive months make some decent repayments...ie payments of £1k plus for 2 to 3 months then in my experience you will get 0% balance transfer offers from your existing cards. This will save you thousands over the course of the year.

Secondly, this could very very quickly spiral totally out of control. Interest rates could rise again...you're closer than you think to being in a real mess.

In the next 2 to 3 months how can you make a dent in this...then you turn the tide...the interest free offers come and the debt goes down.

If you don't then you're going to be spending 600 a month every month to the banks in interest alone that would make a huge difference to your kids lives.

Not trying to scare you but you're at that sort of tipping point where it can become unmanageable quite quickly.