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

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  • theoretica
    theoretica Posts: 12,685 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Cutting food and entertainment to maybe a combined 350 or 400 and throwing all your income from the second job at the debt would let you crawl slowly out of this. 
    Could you take a lodger?  Increased income would let you get out of this faster. 
    Is the 19k secured debt the car?  What is it worth?
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • 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 This seems quite low - have you checked that the DD for this and the gas actually cover your annual use?
    Gas..................................... 35
    Oil..................................... 0
    Water rates............................. 21 Metered? If so, start being really conscious about water use -  you may be able to shave a fraction more off.
    Telephone (land line)................... 0
    Mobile phone............................ 57 Extortionate - make a diary note for the contract end date and a month ahead of that start looking for alternatives on a SIM only basis. 
    TV Licence.............................. 41 Stop paying this quarterly - monthly is cheaper as it doesn't carry a surcharge where I believe quarterly does.
    Satellite/Cable TV...................... 10
    Internet Services....................... 32.02 have you checked whether you can do better on this?
    Groceries etc. ......................... 350 Very high for one person - start to think about cooking more from scratch, and do the downshift challenge to swap out brands for own brand items.
    Clothing................................ 10
    Petrol/diesel........................... 150
    Road tax................................ 14.43
    Car Insurance........................... 112.91
    Car maintenance (including MOT)......... 0 The fuel cost you've mentioned means fairly high mileage, which means you are likely to have above average costs for depreciative and maintenance items. How many miles do you do a year? And what are your service intervals, as a starting point? Then add in tyres, screenwash, keeping the car clear, and all those bits.
    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 Check whether your insurances are really cheaper all lumped together, or whether it's just easiest - right now you can't afford to pay for convenience. Also be aware that Admiral are an absolute nightmare if you ever have to claim from them - personally from prior experience I wouldn't touch them with someone else's bargepole these days! 
    Contents insurance...................... 0
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0 You never buy anything for anyone at all?
    Haircuts................................ 0 You never have a haircut?
    Entertainment........................... 200 This is quite high for someone who is also clearing debt.
    Holiday................................. 0 You never go anywhere at all? Not even a weekend visiting family or friends?
    Emergency fund.......................... 0 And this is why some of the debt has been accrued - an emergency fund means that when the brown smelly stuff hits the fan, you don't have to use credit to get yourself out of the hole. Start building this now - even if only £50 a month, it will mount up.[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

    Taking this line by line above...


    I think the first thing you need to tackle is learning to live to a budget - and an accurate budget at that. Your SOA isn't the worst we've seen on here by any means, but there are still a fair number of discrepancies - and your current shortfall can be covered easily simply by reducing the grocery budget to a sensible level (as an example I spend over £100 less than you per month feeding two people!) and cutting your entertainment budget to £100 a month - that would also then release some funds to start building an emergency fund (which is vital - had you had that in place you wouldn't have accrued the debt for the boiler, for example). Things break - whether that is the toaster or the boiler - so it makes sense to have a plan in place ready for when they do.  You say that you planned and budgeted carefully for the kitchen refurb - but either you got carried away while it was in progress (perfectly possible!) or you didn't quite plan sufficiently. It should have waited until you'd cleared other debt, regardless

    It sounds like you're in a place now where you want to tackle this, so time to start tightening your belt and accepting that there will need to be some compromises in various areas for a while. 
    🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
    Balance as at 01/09/23 = £115,000.00 Balance as at 31/12/23 = £112,000.00
    Balance as at 31/08/24 = £105,400.00 Balance as at 31/12/24 = £102,500.00
    SOA CALCULATOR (for DFW newbies): SOA Calculator
    she/her
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