29 and in £38,900k debt. Should I take out secured loan please?!

Grumpelstiltskin · 15 August 2023 at 11:59AM

£380 food for 2 adults and a toddler at nursery is too much. This can be reduced

£240 petrol and parking, any way of reducing this?

You need to do something drastic to be able to pay the debts.

Oh and clothes, Vinted, E Bay and charity shops and presents, don't buy for all and sundry.

Until you stop using credit you won't get anywhere.

EssexHebridean · 15 August 2023 at 12:59PM

Thewannabedebtfree said:

Hi, My wife may not be getting any money now. Please could my SOA be reviewed and advised on any cut backs I can do?

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................ 2150
Partners monthly income after tax....... 0 So do the food and the childcare account for all your wife's income?
Benefits................................ 0 No child benefit? have you checked if you are entitled to anything else as well - it's always worth checking just in case.
Other income............................ 0[b]
Total monthly income.................... 2150[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 777
Secured/HP loan repayments.............. 295
Rent.................................... 0
Management charge (leasehold property).. 5
Council tax............................. 142
Electricity............................. 60 Does (combined with the gas payment) this definitely cover your use? It seems a little low for a household your size.
Gas..................................... 60
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 0
Mobile phone............................ 40 How many phones is this for? If just 1 or two it's high - diarise a month ahead of your contract end date and switch to SIM only.
TV Licence.............................. 12 Try again - £13.25 I think you'll find!
Satellite/Cable TV...................... 35
Internet Services....................... 29
Groceries etc. ......................... 0
Clothing................................ 0 You need to budget something here, children grow and you will be spending in this category even if you and your wife are find for clothes at the moment.
Petrol/diesel........................... 120
Road tax................................ 15 If possible avoid paying this monthly as it costs extra to do that.
Car Insurance........................... 51.22
Car maintenance (including MOT)......... 0 How come nothing here? Are both cars leased with an arrangements that cover all maintenance costs?
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 50
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 12
Buildings insurance..................... 12
Contents insurance...................... 0 I hope you have this and have just missed it out?
Life assurance ......................... 40
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 This needs budgeting for - I struggle to believe you spend nothing on presents when there is a child in the household!
Haircuts................................ 40 This is higher than you can afford right now - time to find lower maintenance hairstyles.
Entertainment........................... 0 This probably isn't realistic - do you never go out for a day, grab a coffee while out, or have a meal out?
Holiday................................. 0 You never go anywhere? Not even a weekend visiting family or friends?
Emergency fund.......................... 0 You need to work on building this - it makes all the difference when it comes to being able to replace the fridge when it breaks without needing to reach for credit. [b]
Total monthly expenses.................. 1845.22[/b]
[b]

Assets[/b]
Cash.................................... 2700
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0[b]
Total Assets............................ 2700[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 192000...(777)......3.75
Hire Purchase (HP) debt ...... 12000....(295)......13.9[b]
Total secured & HP debts...... 204000....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Sainsbury’s CC.................5063......135.1.....26.48
Halifax .......................5045......121.8.....29.89
Admiral........................13665.....212.......10.5
Zopa...........................2600......47........8.86[b]
Total unsecured debts..........26373.....515.9.....- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 2,150
Expenses (including HP & secured debts). 1,845.22
Available for debt repayments........... 304.78
Monthly UNsecured debt repayments....... 515.9[b]
Amount short for making debt repayments. -211.12[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 2,700
Total HP & Secured debt................. -204,000
Total Unsecured debt.................... -26,373[b]
Net Assets.............................. -227,673[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

First up, the decision not to convert current unsecured debt into debt that can lead to you losing your home is unquestionably the right one. Glad to hear you've abandoned that. For the record, your wife clearing your debts with effectively a "windfall" is also not a good way through it - the best way of getting out of debt and then staying out of debt is to go through the process of paying it off - one debt at a time. It's slow, and will at times be painful, but it will teach you lessons that you will never look back from.

See above for comments in bold on the SOA.

It looks to me like a DMP is likely your best option, combined with more realistic budgeting and actually putting in place a budget and sticking to it. Your priority right now is to start paying for the your regular monthly expenditure without using credit, and the first step towards that is to stop paying the unsecured debts. Although there are tweaks to the spending levels, there is also a lot not currently being accounted for so that is likely to wipe the savings that can be made in odd areas. You also need to prioritise building an emergency fund - this is essential if you're entering into a DMP as you won't have the ability to just reach for credit if something goes wrong.

Have you checked whether either of you could manage without a car of your own? It would be an easy win on cutting costs, and sometimes people find that public transport actually works out better value for them!

enthusiasticsaver · 15 August 2023 at 6:08PM

Without seeing your partners income it is difficult to advise. You need to stop using credit to live as you are digging yourself into a bigger hole. I think you need to default on the debts and do a DMP unless your partner can contribute more.

Stateofart · 16 August 2023 at 11:29AM

You said you have cancelled the secured debt, but you have 12k on secured already on top of unsecured - what's this for?

29 and in £38,900k debt. Should I take out secured loan please?!

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