Help! How can I get myself out of this hole?

OvertheRainbow93

I'm almost 30 and one way or another I've got myself into a bit of hole of unsecured borrowing. It started off with my car and then I needed some very expensive dental work doing so financed half of it. Then my boiler needed replacing out of the blue and I had no way of paying for it, so took out a loan. I then replaced my kitchen and despite saving hard and budgeting carefully I ended up having to put some on 0% credit cards which have of course now finished their 0% period. I would really like some guidance on the best way to tackle this situation. SOA below.. it has been quite sobering seeing it set out like this as I'm afraid I've been burying my head in the sand for a while and taking an attitude of 'what you don't know won't hurt you'.

I've taken on a second job which earns me an average of £250 a month additional income. 

Statement of Affairs and Personal Balance Sheet

Household Information

Number of adults in household........... 1

Number of children in household......... 0

Number of cars owned.................... 1[b]

Monthly Income Details

Monthly income after tax................ 2563

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

Benefits................................ 0

Other income............................ 0[

Total monthly income.................... 2563

Monthly Expense Details

Mortgage................................ 665

Secured/HP loan repayments.............. 288

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

Management charge (leasehold property).. 0

Council tax............................. 111

Electricity............................. 35

Gas..................................... 35

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

Water rates............................. 21

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

Mobile phone............................ 57

TV Licence.............................. 41

Satellite/Cable TV...................... 10

Internet Services....................... 32.02

Groceries etc. ......................... 350

Clothing................................ 10

Petrol/diesel........................... 150

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

Car Insurance........................... 112.91

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

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

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

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

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 35

Buildings insurance..................... 0

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

Life assurance ......................... 0

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

Presents (birthday, christmas etc)...... 0

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

Entertainment........................... 200

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

Emergency fund.......................... 0[b]

Total monthly expenses.................. 2182.36

Assets

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

House value (Gross)..................... 280000

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

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

Other assets............................ 0[b]

Total Assets............................ 280000

Secured & HP Debts

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

Mortgage...................... 205755...(665)......2.1

Hire Purchase (HP) debt ...... 18905....(288)......0

Total secured & HP debts...... 224660....-.........-   

Unsecured Debts

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

Lloyds Credit Card.............1978.54...86.58.....32.74

Capital One Credit.............1340.82...0.........30.3

HSBC Credit Card...............3698.09...0.........0

HMRC...........................0.........92.97.....0

Mitsubishi (Teeth).............1944......64.8......0

Barclays (Kitchen).............2409......68.84.....0

Zopa Loan .....................3905.6....86.69.....13.4

Better Borrow Loan ............4130.62...130.......19.5


Summary of Monthly Income, expense and surplus

Total monthly income: £

2,563

Expenses (incl. HP & secured debts): £

2,182.36

Available for debt repayments: £

380.64

Unsecured debt repayments: £

529.88

Surplus (shortfall if negative) £

-149.24

Floss

With just a quick glance, a few questions:

Groceries seems high for 1 adult
£70 for gas & electricity seems low
£57 for mobile phone - when is this out of contract?
£112 for car insurance - is it really £1,300 a year?
Buildings & contents insurance are vital - you may be in breach of your mortgage with no buildings cover

kimwp

Hiya! On the face of it, there's a simple saving to be made by cutting back your entertainment and food budget, plus changing to a lower cost SIM only phone contract if you are out of contract so you don't have a shortfall, but there's a bit of tidying on your SOA to do as well - your TV license entry seems high? Also you don't have anything in for buildings insurance (will be required by your Mortgage provider) and contents insurance (just a really good idea).

It feels like you'll need to do some kind of debt solution like a dmp (and we'll help you with the steps) - this involves getting the interest stopped so you are only paying the capital, but be aware it will affect your credit record - however the effect is limited and is better than spiraling into more debt (which is a real risk judging by your SOA).

But for now, let's get your SOA tidied 👍

Martico

The extra 250pm, together with a few months of holding together a super tight budget might mean you can get out without a debt solution, but it'll take a while. As others have said, though, make sure your SOA is accurate and accounts for everything. 

Brie

Must admit I wondered about the tv license too.  It should be around £13 a month unless it's a brand new set up in which case you're paying for a full year in the first 6 months so £26.  And do you even need it at all??  Not if you do NOT watch live tv of any sort or ever use BBC iPlayer.  

What's with the HMRC debt which has not amount owed?  

And nothing for haircuts, presents or holidays but £200 a month for entertainment?  And the minimum amounts for the unsecured debts need to be listed too please!

Once you sort that and find the smallest bit of wiggle room I'd suggest you pop anything going spare on the Cap1 card with the 30+% interest.  Yes there's another card with a slightly higher interest but the Cap1 being a lower amount will be easier to clear and that will give you a good boost of achievement which I think is very important for continued success.  

Well done too btw for looking into this and knowing you've got to get yourself sorted.  

OvertheRainbow93

Floss said:

With just a quick glance, a few questions:

Groceries seems high for 1 adult
£70 for gas & electricity seems low
£57 for mobile phone - when is this out of contract?
£112 for car insurance - is it really £1,300 a year?
Buildings & contents insurance are vital - you may be in breach of your mortgage with no buildings cover

Thank you, mobile isn't out of contract until 2025 and would be over £1000 to pay off so not an option unfortunately. 

I do actually have buildings and contents insurance, all my insurance (car, house, contents) is with Admiral under one policy as this was the most cost effective option so my total monthly insurance bill is £112. 

I think I could do better with cutting back on groceries, I have two Gousto boxes per month at £33 each then the rest I buy. 

OvertheRainbow93

Brie said:

Must admit I wondered about the tv license too.  It should be around £13 a month unless it's a brand new set up in which case you're paying for a full year in the first 6 months so £26.  And do you even need it at all??  Not if you do NOT watch live tv of any sort or ever use BBC iPlayer.  

What's with the HMRC debt which has not amount owed?  

And nothing for haircuts, presents or holidays but £200 a month for entertainment?  And the minimum amounts for the unsecured debts need to be listed too please!

Once you sort that and find the smallest bit of wiggle room I'd suggest you pop anything going spare on the Cap1 card with the 30+% interest.  Yes there's another card with a slightly higher interest but the Cap1 being a lower amount will be easier to clear and that will give you a good boost of achievement which I think is very important for continued success.  

Well done too btw for looking into this and knowing you've got to get yourself sorted.  

Thanks, I realise now having looking that my TV licence is about £13 a month, I pay £41 quarterly. 

The HMRC money is money that I owe in tax from being previously self employed, I was partially self employed for the 2021 tax year but believed I had paid the full amount owed. Unfortunately I hadn't and owed £2620.93 which I was unable to pull out of a hat in March hence setting up a payment plan with HMRC. 

SaverRate

What deal did you sign up to at £57 per month which lasts until 2025! 

Edit - can you reduce the monthly allowances (data,calls, texts) with the provider therefore lowering the monthly cost? 

enthusiasticsaver

You need to address the shortfall first. Is the second job income already included in monthly income? If not then that will help. Your groceries is way too high for just one person. We spend less than that for two of us. Ditch the Gusto boxes and use budget supermarkets and ranges and meal plan, batch cook etc. Cut out alcohol. Also you have not put in monthly payments for two of the credit cards or interest rates for all the debts so the shortfall will be higher than the £150 shown on the soa. Have you defaulted on anything? 

The car insurance looks high. Is that really every month? I assume the HP is for the car? Why is that not showing as an asset? You look like you have overstretched with that on top of the other debt you have. £200 for entertainment is too high given you are sat on around £40k of debt on top of your mortgage. The TV Licence should be £13.25 a month. 

You have two choices. Strict budgeting, cutting back, increasing income and paying it down starting with the expensive debts first.

or a DMP which freezes interest and sets an affordable monthly payment but trashes your credit rating. That is no bad thing though given more borrowing is the last thing you should consider. Do not be tempted to apply for debt consolidation loans. They make things worse. 

Floss

enthusiasticsaver said:

The car insurance looks high. Is that really every month?  

The OP has said that £112 is for a combined policy covering car, buildings & contents. Does feel high though.

Abbafan1972

enthusiasticsaver said:

You need to address the shortfall first. Is the second job income already included in monthly income? If not then that will help. Your groceries is way too high for just one person. We spend less than that for two of us. Ditch the Gusto boxes and use budget supermarkets and ranges and meal plan, batch cook etc. Cut out alcohol. Also you have not put in monthly payments for two of the credit cards or interest rates for all the debts so the shortfall will be higher than the £150 shown on the soa. Have you defaulted on anything? 

The car insurance looks high. Is that really every month? I assume the HP is for the car? Why is that not showing as an asset? You look like you have overstretched with that on top of the other debt you have. £200 for entertainment is too high given you are sat on around £40k of debt on top of your mortgage. The TV Licence should be £13.25 a month. 

You have two choices. Strict budgeting, cutting back, increasing income and paying it down starting with the expensive debts first.

or a DMP which freezes interest and sets an affordable monthly payment but trashes your credit rating. That is no bad thing though given more borrowing is the last thing you should consider. Do not be tempted to apply for debt consolidation loans. They make things worse. 

The OP has already said that he pays the tv licence quarterly, and that’s the cost he’s put in.