Worried things are going to get very tricky!

wildstyle2019

Hi everyone!

Having read through these forums for a long time, I know one of you may be able to help give some guidance. 

Firstly, for context, the SOA breakdown is solely my income and expenditure. I am married and my partner and I split the bills including groceries. The IOU to my partner is for a loan he took out to pay off some of our previous outstanding debt. I do have a car but it is a lease car with work so all payments related to that come off my monthly salary before tax. I do have a phone but my partner pays for it. 

My situation is that throughout Covid and shortly after, I have slowly built up a large amount of unsecured debt. Currently all the credit cards I owe on are at 0% interest but the interest period on 3 of them is January 2024. These payments are affordable at present whilst not paying interest, but having checked my credit score I don't think i'll be able to get another balance transfer credit card to shift some some of the debt which is what I have normally done in the past. The last credit card I got was in April this year so maybe if I don't apply for more credit for a while my credit score may improve and I may be able to get one? 

In addition to this, our mortgage payments are going to increase in December by an additional £100 each. 

I know my situation isn't dire but I am worried about being hit with interest when the 0% periods end and also the increase in our mortgage payments. I try hard not to spend too much. We've stopped eating out except for special occasions. I have stopped drinking and buying takeaways. My clothing budget I have put is actually generous. 

If I have 3 cards where the 0% interest ends is January, which one do I tackle first. Any advice one of you can give me would be very much appreciated. 

Household Information

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

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

Number of cars owned.................... 1

Monthly Income Details

Monthly income after tax................ 1964

Partners monthly income after tax....... 0

Benefits................................ 92

Other income............................ 230

Total monthly income.................... 2286

Monthly Expense Details[/b]

Mortgage................................ 489

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

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

Management charge (leasehold property).. 0

Council tax............................. 88

Electricity............................. 60

Gas..................................... 60

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

Water rates............................. 13

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

Mobile phone............................ 0

TV Licence.............................. 6

Satellite/Cable TV...................... 0

Internet Services....................... 20

Groceries etc. ......................... 150

Clothing................................ 60

Petrol/diesel........................... 100

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

Car parking............................. 15

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

Childcare/nursery....................... 0

Other child related expenses............ 30

Medical (prescriptions, dentist etc).... 21

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

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

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

Life assurance ......................... 14

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

Presents (birthday, christmas etc)...... 20

Haircuts................................ 0

Entertainment........................... 45

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

Emergency fund.......................... 0

IOU to partner.......................... 468

Window Cleaner ......................... 9

Amazon Prime ........................... 8

Savings................................. 30

Total monthly expenses.................. 1718

[b]

Assets[/b]

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

House value (Gross)..................... 320000

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

Car(s).................................. 0

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

Total Assets............................ 320000

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 191000...(489)......2.25

Total secured & HP debts...... 191000....-.........-  

[b]Unsecured Debts[/b]

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

Virgin Credit Card ............4192......50........0

Virgin Credit Card ............4928......50........0

Virgin Credit Card ............7924......85........0

Santander......................5602......56........0

Tesco..........................6043......60........0[b]

Total unsecured debts..........28689.....301.......-  

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,286

Expenses (including HP & secured debts). 1,718

Available for debt repayments........... 568

Monthly UNsecured debt repayments....... 301

Amount left after debt repayments....... 267

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 320,000

Total HP & Secured debt................. -191,000

Total Unsecured debt.................... -28,689

Net Assets.............................. 100,311

bluelad1927

Apologies if I missed this but how long is left on the IOU. That is a very significant sum of your outgoings that can be put to good use once paid off

RAS

I'd add, what is the value of the IOU. What is your partner's income? 

fatbelly

Things will obviously get tighter when the mortgage goes up (but the good news is that your minimum payments won't increase on the credit cards). The key will be to get the lowest possible fix, using a broker if necessary. Then look to see if you need a strategy on the credit cards.

You don't want to be getting markers on your credit file ahead of the fix.

I think I'd be scrapping the Amazon Prime and the window cleaner.

Martico

The budget is already tight, but from my experience with Virgin, they do offer 0% balance transfer deals to existing customers (and - for me at least - demand the low level of the highest of 1% of the remaining balance or £25 as minimum payment), so I'd aim to hammer one of the Virgin cards to zero with the hope that you'll get an offer once that one is cleared. You have a long road ahead, but it's manageable. As mentioned above, I'm curious about the remaining IOU

TheAble

fatbelly said:

(but the good news is that your minimum payments won't increase on the credit cards)

Surely the minimum goes up when interest becomes payable? Op doesn't mention which 3 cards start attracting interest in Jan but even choosing the smallest 3 you're talking 13k @ 20%-25% (ish) a year so call it £3k/year or an extra £250/month.

sourcrates

Food shopping for 4 people only £150 a month ????

I`m a single man and I spend more than that a week.

No car tax/insurance or maintenance, I`m thinking you don`t have £267 left after debt repayments, and once the mortgage goes up, you will be left with a potential deficit.

I think you will definitely need some kind of strategy on the credit debts, otherwise the books will not balance going forward.

fatbelly

They share the grocery spens so I assumed that was 300 for the four of them. Still seems a bit on the low side, but do-able.

wildstyle2019

The value of the IOU is about 25k and I think there's another 6 years left on that so I don't expect that to be gone any time soon. The 3 credit cards due to expire in Jan are Santander, Tesco and one Virgin. 
I split the groceries with my partner but tends to spend more on groceries than me. We're both vegetarian and pretty good at economising when it comes to meal planning and cooking. 
As I said in my first post, all my car expenses come off my wages before tax which includes tax, insurance ad servicing. 
My partners income is £2366 pcm. 

wildstyle2019

I should probably add that I have an MBNA card with a credit limit of 10k which hasn't been used. They've offered me a 0% balance transfer for 12 months but the minimum payment is 2.5% rather than the usual 1% I pay on all my other cards. I guess that's better than nothing as a back up plan. 

Martico

That's handy to have, for sure. You'll have to start paying more than 1% anyway if you want to clear them before 2030. 12 months interest free isn't the best offer, but it's better than no offer. How much is the balance transfer fee? MBNA is a bit tighter than many cards on fees, it's probably around 5%