In a mess and feel desperate. Looking for advice and help please.

ElleWoods

Hi everyone, 
I've had varying amounts of debt for most of my adult life and I've got to a point where I just can't go on like this. It's always been manageable until prices started rising over the last year or so, but now I'm really struggling. I'm in my early 50s and just want to be debt free once and for all.

I currently have a personal loan from First Direct (I bank with them) that I took out a year ago to consolidate two credit cards that were on 0% interest. The promo rates were about to end, so I panicked and took the loan out as I didn't want to start paying the 29.9% interest rate on them. However, I figured the loan was a good option as my debt would be paid off in four years (three years left), but in reality I'm struggling to fund the repayments and as a consequence I'm going overdrawn every month. 

I still have the two CCs I paid off a year ago, both have a zero balance but together there's £9500 worth of available credit on them. They've both offered me a 0% money transfer, one with a 0% rate for 12 months with a 5% fee, and the other with a 0% offer until Feb 2025 with a 4.99% fee. I was wondering whether to money transfer £7.5k from the CCs to pay off the loan and overdraft, then pay just over minimum repayments to the CCs as this would reduce the monthly repayment amount. but part of me thinks that's stupid as I'll never pay off the debt at that rate. 

For reference I'm a single parent with a teenager who turns 18 next summer, which means I'll be losing child benefit, the child element of tax credits (or UC, if I've been moved over by then), and child maintenance, plus my council tax will rise as I'll lose the single person's discount, so I'll be WAY worse off and quite frankly I'm terrified how I'll cope financially.

I've done my SOA and I'm open to any suggestions to help me navigate this mess. Please be kind as I'm autistic, ADHD, have mental health issues, and really struggle with financial admin. Thank you so much. 

Statement of Affairs and Personal Balance Sheet

Household Information

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

Number of children in household......... 1

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

Monthly Income Details

Monthly income after tax................ 1067 (I work four days per week)

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

Benefits................................ 622

Other income............................ 180

Total monthly income.................... 1869

Monthly Expense Details

Mortgage................................ 0

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

Rent.................................... 500 (private rental and very cheap for the area)

Management charge (leasehold property).. 0

Council tax............................. 90 (this is with the single person's disccount)

Electricity............................. 90

Gas..................................... 75

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

Water rates............................. 47.5

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

Mobile phone............................ 20 (Mine and my child's, both on Giff Gaff)

TV Licence.............................. 13.25

Satellite/Cable TV...................... 6.99 (Netflix)

Internet Services....................... 28.99 (Have another year on this contract)

Groceries etc. ......................... 355 (Teenager eats for England!)

Clothing................................ 55 (Mainly for teen, I hardly buy new clothes unless essential)

Petrol/diesel........................... 50

Road tax................................ 27

Car Insurance........................... 27

Car maintenance (including MOT)......... 40

Car parking............................. 10

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

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

Other child related expenses............ 20 

Medical (prescriptions, dentist etc).... 38 (Can't reduce this due to health/vision issues)

Pet insurance/vet bills................. 15

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

Contents insurance...................... 6

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

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

Presents (birthday, christmas etc)...... 40

Haircuts................................ 30 

Entertainment........................... 80 (Includes Amazon Prime, one takeaway per month, one cafe/coffee shop visit per month, plus a couple of cinema visits as teen is a film student)

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

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

Microsoft Office........................ 7.99 

Professional Course Repayment .......... 130 (Another year left on this)

Total monthly expenses.................. 1802.72

Assets

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

House value (Gross)..................... 0

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

Car(s).................................. 2500

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

Total Assets............................ 2500

No Secured nor Hire Purchase Debts

Unsecured Debts

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

First Direct Loan..............6973......183.5.....4.9

FD Overdraft...................250.......0.........0

Total unsecured debts..........7223......183.5.....

Monthly Budget Summary

Total monthly income.................... 1,869

Expenses (including HP & secured debts). 1,802.72

Available for debt repayments........... 66.28

Monthly UNsecured debt repayments....... 183.50

Amount short for making debt repayments. -117.22

Personal Balance Sheet Summary

Total assets (things you own)........... 2,500

Total HP & Secured debt................. -0

Total Unsecured debt.................... -7,223

Net Assets.............................. -4,723

Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.

tacpot12

Your SOA looks fine. I can't see any significant opportunities to reduce your expenditure, but would a Prescription Prepayment Certificate save you money?

You are 12 months away from clearing your Course repayment, and it sounds like this will more or less coincide with your child turning 18. is there any option to ask the child's other parent to continue to pay maintenance until October next year so that you get some help to get to this point?

I wouldn't switch the First Direct loan to your credits cards. Although "interest free" sounds great, you only have to miss one payment and you will be back paying the massive interest rates on the creidt cards. It is far too risky to contemplate. I think if you can make small savings here and there to reduce your dependence on the overdraft, it will be much better if you keep the loan going. 

You need to involve your child in your family budget. This will help you reduce any costs that they can help with, and you need to explain to them how your finances will change when they turn 18. It will make a difference whether they are staying in education or not. If they are, they should ask their other parent if they could continue to pay some child maintenance, to them, not to you. Parents paying maintenance are usually desperate for it to end, but accept that it may be necessary if the child is to take their education as far as they want to. If the parent has a date when maintenance will stop, it makes it easier for them to continue paying. The time to ask about this is now, and certainly six months before the maintenance is due to stop.

Your child needs to start learning how expensive it is to live and to raise a child, and needs to see why they either need to stay in education or get a job (or ideally do both), and contribute to the family. If your child could earn £200 a month and contribute half of this, it would make a big difference to you, and your loan wil continue to be paid off and gone in three years! This will be a great acheivement and will make life easier still.  Discussing it with them as an educational opportunity, and not with any pre-conceived idea of how they will react should help. 

I know your mental health problems make it seem very difficult, but you are doing really well, and I'm confident that your will be in a much better place in just three short years if you can get over the transition of your child turning 18. It is going to be hard, but you will find a way. 

enthusiasticsaver

How have you been meeting the shortfall as the deficit shows as over £100 per month?  Well done on resisting building credit card debt back up again though as that is usually the pitfall of debt consolidation.  

Presumably in a years time you will get £130 back as your course will be paid off? 

Your teenager will need to either cut back on food or be creative on filling up as £355 is quite a lot on groceries for 2 people.  Shielding them from your financial woes does him or her no good in the long run as learning to live within a budget is a lifeskill which is particularly important for young adults.  You do not want them to follow the same path.  Are you using budget supermarkets and batch cooking/menu planning?  Can you do away with the takeaway and clothes for teen? Some student accounts offer cinema vouchers so is it possible for your teen to take advantage of that? Can you  reduce the presents budget (although you have no savings so presumably you are not putting that aside?) Same goes for car maintenance which should be sitting in savings.  Do you really need the microsoft office, amazon prime and netflix or can you do away with some or even all of them.

Can you increase your working hours or can your teen take on evening or weekend work?  Both my daughters worked from 16 whilst still in education and things like clothes and phones was their responsibility to pay.  It really taught them the value of the work ethic and how to be careful with money and as a consequence as adults they are very good at managing their finances now. If you are losing income due to your child reaching maturity then encouraging them to start to achieve financial independence like making them pay for their own clothes or contributing to the food budget if they are big eaters is worth doing. 

Given you cannot meet monthly repayments on the loan but your situation is not dire enough to need a DMP I think I would be tempted to follow your plan of moving the loan to the 0% credit cards and set repayments to just above minimums to get your budget back on track. Assess again in a years time when you know your new income and the course loan is finished. Given you only earn just over £1000 a month it seems harsh to charge you over 10% of your salary on a course.  Why was that needed and will it lead to an increase in pay? 

kimwp

Hi there.

Some "easy" wins are presents, Microsoft office, Amazon prime and netflix and your food bill. Unless your teen is eating four times a "normal" person, then you can definitely cut your food bill down. Look at whether any food is thrown away, buy cheaper protein such as beans and lentils and cheaper (but just as healthy) veg such as carrots and peas.

th081

Most students get office 365 from their college/school. That's a bit of a saving plus Amazon prime might be something you can do without. 

Farmers-wife_2

If you are only using £50 worth of petrol each month, do you really need to be spending almost £100 each month keeping a car on the road? 
This could be a huge saving!

stu12345_2

I use that amount to and also spend the same running insurance mot repairs road tax.namely cos it still works out cheaper than taxis.cos I work hours where there are no buses.

ElleWoods

tacpot12 said:

Your SOA looks fine. I can't see any significant opportunities to reduce your expenditure, but would a Prescription Prepayment Certificate save you money?

You are 12 months away from clearing your Course repayment, and it sounds like this will more or less coincide with your child turning 18. is there any option to ask the child's other parent to continue to pay maintenance until October next year so that you get some help to get to this point?

I wouldn't switch the First Direct loan to your credits cards. Although "interest free" sounds great, you only have to miss one payment and you will be back paying the massive interest rates on the creidt cards. It is far too risky to contemplate. I think if you can make small savings here and there to reduce your dependence on the overdraft, it will be much better if you keep the loan going. 

You need to involve your child in your family budget. This will help you reduce any costs that they can help with, and you need to explain to them how your finances will change when they turn 18. It will make a difference whether they are staying in education or not. If they are, they should ask their other parent if they could continue to pay some child maintenance, to them, not to you. Parents paying maintenance are usually desperate for it to end, but accept that it may be necessary if the child is to take their education as far as they want to. If the parent has a date when maintenance will stop, it makes it easier for them to continue paying. The time to ask about this is now, and certainly six months before the maintenance is due to stop.

Your child needs to start learning how expensive it is to live and to raise a child, and needs to see why they either need to stay in education or get a job (or ideally do both), and contribute to the family. If your child could earn £200 a month and contribute half of this, it would make a big difference to you, and your loan wil continue to be paid off and gone in three years! This will be a great acheivement and will make life easier still.  Discussing it with them as an educational opportunity, and not with any pre-conceived idea of how they will react should help. 

I know your mental health problems make it seem very difficult, but you are doing really well, and I'm confident that your will be in a much better place in just three short years if you can get over the transition of your child turning 18. It is going to be hard, but you will find a way. 

Thank you @tacpot12, I'm really trying to see it as three short years of tough times but it's hard to see the wood for the trees when things are tough. 

My child knows the score about what happens when he turns 18 as we've discussed it a lot recently, and he knows he needs to get a better job or an apprenticeship (he doesn't want to go to uni). He already has a part time job in retail around his college course, and although he doesn't earn much he sometimes pays for things like a drink/snack when we're out, but I'm trying to encourage him to save his wages for driving lessons/a house/his future while he has no responsibilities. That said, he knows he'll need to contribute more once he leaves college/turns 18, and the household finances drop. 

The other parent is a full-on deadbeat dad who can't wait to stop paying maintenance, so that will end the minute he's legally allowed to stop paying. He chose not to have anything to do with my son and only pays because he was taken to court and forced to, so I expect once he stops paying maintenance I'll never hear from him again. No big loss there tbh. 

Thanks for your support re. my mental health, I really appreciate your comments. 

ElleWoods

enthusiasticsaver said:

How have you been meeting the shortfall as the deficit shows as over £100 per month?  Well done on resisting building credit card debt back up again though as that is usually the pitfall of debt consolidation.  

Presumably in a years time you will get £130 back as your course will be paid off? 

Your teenager will need to either cut back on food or be creative on filling up as £355 is quite a lot on groceries for 2 people.  Shielding them from your financial woes does him or her no good in the long run as learning to live within a budget is a lifeskill which is particularly important for young adults.  You do not want them to follow the same path.  Are you using budget supermarkets and batch cooking/menu planning?  Can you do away with the takeaway and clothes for teen? Some student accounts offer cinema vouchers so is it possible for your teen to take advantage of that? Can you  reduce the presents budget (although you have no savings so presumably you are not putting that aside?) Same goes for car maintenance which should be sitting in savings.  Do you really need the microsoft office, amazon prime and netflix or can you do away with some or even all of them.

Can you increase your working hours or can your teen take on evening or weekend work?  Both my daughters worked from 16 whilst still in education and things like clothes and phones was their responsibility to pay.  It really taught them the value of the work ethic and how to be careful with money and as a consequence as adults they are very good at managing their finances now. If you are losing income due to your child reaching maturity then encouraging them to start to achieve financial independence like making them pay for their own clothes or contributing to the food budget if they are big eaters is worth doing. 

Given you cannot meet monthly repayments on the loan but your situation is not dire enough to need a DMP I think I would be tempted to follow your plan of moving the loan to the 0% credit cards and set repayments to just above minimums to get your budget back on track. Assess again in a years time when you know your new income and the course loan is finished. Given you only earn just over £1000 a month it seems harsh to charge you over 10% of your salary on a course.  Why was that needed and will it lead to an increase in pay? 

Hi @enthusiasticsaver, thanks for commenting. I've been meeting the shortfall with the overdraft, although I get that the figures don't quite add up but that's why I'm overdrawn each month. Yes, the course will be paid off in just under a year and I'll be £130 better off each month. To answer your last question first, the course isn't connected with my current role. I wanted to train to get a better job and I did the course a year ago but haven't yet secured a better role although I keep applying. I've already increased my hours at my current job but there are no more available. 

The groceries cost includes food, cleaning stuff, cat food/litter, and the cost of an annual delivery pass divided by 12. I shop online as I struggle to do a big shop in a supermarket as I experience autistic sensory overwhelm from the lights, sounds and people. Meal planning is a great idea, thanks. I've done it before and it worked but didn't keep it up as I also struggle with executive dysfunction. I know it sounds like I'm making excuses but these conditions are real and have a huge impact on me (and lots of other people). I'll start to meal plan again though, and also get my son involved. He's also neurodivergent and has some food issues which increase the cost of our shop but I'm going to look at ways to get it down. 

My son has a part time job in retail and contributes a bit but I want him to save his money for his own future, although he's aware of the situation and knows he'll need to contribute more once he turns 18/leaves college. 

ElleWoods

kimwp said:

Hi there.

Some "easy" wins are presents, Microsoft office, Amazon prime and netflix and your food bill. Unless your teen is eating four times a "normal" person, then you can definitely cut your food bill down. Look at whether any food is thrown away, buy cheaper protein such as beans and lentils and cheaper (but just as healthy) veg such as carrots and peas.

Thanks @kimwp, I pay the Amazon Prime annually but I'm going to check when it renews and cancel it. We watch Netflix a lot as we don't go out much but I'm definitely going to re-look at the food bill as I'm sure savings can be made there. 

ElleWoods

th081 said:

Most students get office 365 from their college/school. That's a bit of a saving plus Amazon prime might be something you can do without. 

That's a good idea @th081, he used to get it from school but that ended. He already gets student support for bus fares and lunches, so I've just text him and asked him to check.