Seriously need to take action before we lose everything

philleaf

Hi 

I am a long time lurker and no that I will get good advice here. Our finances are a CAR CRASH. For a couple who earn well, we have made a terrible hash of it all, and now we at the point where we sort it out, or we lose everything. 

We both entered the relationship with fairly high debts. Unfortunately we continued to spend without thinking and now we have monstrous debts. Our credit utilisation has impacted our ability to get any more 0% deals so we are no stuck with horrendous debts at some nasty rates. 

Our saving grace is that we do have a deent income and depiste the payments being very very high, we are able to meet these commitments. 

My wife thinks that we need to seek formal debt management advice but I am keen to avoid this as I think that we still have the means to pull this back into control. We have been disucssing this for the last 3 months and we have made significant spending changes. It's now time for us to DO something about. 

I have trawled lots of other SOA's and I am embarrassed that ours is probably the worst I have every seen. I need to use that fact to take action. 

Household Information[/b]

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

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

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 4355

Partners monthly income after tax....... 2511

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

Other income............................ 250[b]

Total monthly income.................... 7116[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 801

Secured/HP loan repayments.............. 386

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

Management charge (leasehold property).. 0

Council tax............................. 139

Electricity............................. 98

Gas..................................... 112

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

Water rates............................. 35

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

Mobile phone............................ 67

TV Licence.............................. 13

Satellite/Cable TV...................... 36

Internet Services....................... 21

Groceries etc. ......................... 600

Clothing................................ 30

Petrol/diesel........................... 220

Road tax................................ 22

Car Insurance........................... 64

Car maintenance (including MOT)......... 30

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

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

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

Other child related expenses............ 120

Medical (prescriptions, dentist etc).... 9

Pet insurance/vet bills................. 28

Buildings insurance..................... 22

Contents insurance...................... 17

Life assurance ......................... 49

Other insurance......................... 9

Presents (birthday, christmas etc)...... 100

Haircuts................................ 20

Entertainment........................... 150

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

Emergency fund.......................... 100[b]

Total monthly expenses.................. 3298[/b]

[b]

Assets[/b]

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

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

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

Car(s).................................. 14000

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

Total Assets............................ 334000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 140098...(801)......4.11

Hire Purchase (HP) debt ...... 17000....(386)......0[b]

Total secured & HP debts...... 157098....-.........-   [/b]

[b]Unsecured Debts[/b]

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

updraft loan...................21000.....360.......16.9

updraft loan 2.................8000......210.......18.9

Updraft loan 3.................6500......165.......18.9

overdraft......................2500......80........42

Creation Credit card...........7100......192.......21

very...........................700.......48........50

halifax cc.....................2400......24........0

fluid..........................3600......170.......39

LLoyds.........................3890......132.......8

HSBC loan......................7309......210.......7.9

Lloyds.........................10500.....269.......29

barclaycard platinum...........12600.....258.......4.9

barclaycard....................4960......109.......4.9

natwest........................2000......20........0[b]

Total unsecured debts..........93059.....2247......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 7,116

Expenses (including HP & secured debts). 3,298

Available for debt repayments........... 3,818

Monthly UNsecured debt repayments....... 2,247[b]

Amount left after debt repayments....... 1,571[/b]


So there it is. Years and years of financial mismanagement laid bare. I feel sick but also glad that we are finally here and ready to take action. 

Given the amount we owe, am I being unrealistic in thinking that we can actually deal with this ourselves. I am not adverse to debt manegement such as an IVA, but I kind of feel as though we should deal with it if we are able to. 

Please give me any advice but please be kind - this has shook me to the core. 

RAS

How much do you actually have at the end of the month? 

You could clear very and the overdraft in three months? That would make your other debts more manageable.

Tucosalamanca

You're taking home approx. 84k per year and have 93k of unsecured debts, so you owe just over a year's salary. Bad but not a complete disaster.
Aim to pay off at 3k per month, you could be in a very good position within three years. That's not terrible!

Don't take on new debts or spend unnecessarily and aim to overpay as much as possible.
Three years is not unrealistic and close enough to keep you motivated. You can both be in a good place.

Good luck with it, you can do this.....

londoner2019

Hi, welcome to the forum - you'll get plenty of great advice here.

As others have said, it's a lot but based on your household income it is possible to blitz this. But yes, main question is do you actually have that 1,571 left at the end of each month? It's worth checking your bank statements to see where this goes. That's where you can find ways to cut back on spending, stick to a realistic budget, and then look to attack the unsecured debts. Many will tell you to use the snowball method - i.e. hitting the highest interest debts first and then moving on to the next and so on.

It will take discipline (i.e. cutting back on some impulse/frivilous expenses, and perhaps a holiday), but it's possible! You'll get plenty of support here. Consider starting a diary on this forum too - it will help you keep on top of things and keep accountable.

In theory you can do this yourself, but you'll need to be honest about the accuracy of that SOA and be committed as a family to cut back in order to clear the debts.

Good luck!

DE_612183

If it was me.....

I'd kill the over-draft as soon as possible ( that gives you a bit of security should any thing change )
Then I'd go after the small fry so you get a feeling of getting somewhere:

Very first; then I'd go for Fluid & LLoyds - you should be able to knock those off in 3 to 4 months, but those increase your monthly disposable by 300

Then as you monthly disposal gets bigger move on through the list - hitting the unsecured stuff.

If you plan correctly you can work out when you'll get it all paid off.

Grumpelstiltskin

You need to agree that under no circumstances will you spend on credit cards.

Groceries at £600, even if you have 2 hefty teenagers this can be reduced right down.

Presents at £100, you can't afford that.

You need to concentrate on your overdraft  and Very, with hard work they can be gone quickly and then keep out of the overdraft. It may be suggested you change to a basic bank account which has no overdraft facility, then you can't go overdrawn.

If your children are old enough to understand you need to explain to them that everything financial is going to change.

philleaf

RAS said:

How much do you actually have at the end of the month? 

You could clear very and the overdraft in three months? That would make your other debts more manageable.

Our spending has been so bad that we have never really had spare money, although it's clear that we should!

kimwp

If your SOA is accurate, I don't think you need a dmp, just discipline to stick to your budget.

Singlespeeder

I agree with all above. £100 to EF but no Cash savings? Food at £600 is WAY too high, heaps of advice on getting that down. How accurate is the SOA? Guessing or good? Do you actually have that much spare at the end of the month, if so what do you do with it ??  Get rid of Very this month... 50% APR ! then the Overdraft asap. It's certainly manageable, but it's going to be uncomfortable for a bit, but you'll see improvements quickly

pdel61

philleaf said:

RAS said:

How much do you actually have at the end of the month? 

You could clear very and the overdraft in three months? That would make your other debts more manageable.

Our spending has been so bad that we have never really had spare money, although it's clear that we should!

In which case your SOA is not accurate. You need to go back over the last several months of statements to see where you are actually spending money then produce a new SOA.

TheAble

Agree with Grumpelstiltskin - no more credit of any kind. Cash and debit card only.

Maybe by the end of September you could aim to get 1-2k in cash savings socked away and clear the Very? Then by the end of October clear your overdraft. You can be more ambitious than that but it's not a bad starting point.