Is there a way out of this?

fatbelly

What did you think a debt charity might be able to help with?

Familyofseven

@fatbelly - I suppose just advice. I know things need to change / can change on the budget but i’m worried about even meeting the minimum payments on the credit cards going forward. 

fatbelly

Familyofseven said:

@fatbelly - I suppose just advice. I know things need to change / can change on the budget but i’m worried about even meeting the minimum payments on the credit cards going forward. 

I work as a debt adviser for Citizens Advice and I would say that the regular posters here are better in giving advice than some of my colleagues!

As for meeting minimum payments, it seems you have only been able to do this by borrowing elsewhere - 16k in the past 10 months, according to your 1st post. Unless you can (a) stick to your budget and (b) find another £600 per month income I think you will have to default

horsewithnoname

Familyofseven said:

@fatbelly - I suppose just advice. I know things need to change / can change on the budget but i’m worried about even meeting the minimum payments on the credit cards going forward. 

If you don’t know where you debt has come from, keep a spending diary, just a simple spreadsheet or notebook. That will show you what you are spending on what and you need to be a bit ruthless about cutting out unnecessary spending. I mean some years back, I would have said a spent a few quid a week on coffees, but when I added it up and I was actually spending £50 a week I soon stopped it. Until you know where your money goes it’s hard to get a grip on it. 

You need to be realistic and not try and justify spending, just cut out what is unnecessary and start paying down your debt. 

And best of all is listen to what the fantastic people on this forum tell you; years ago this place really helped me get out of a hole. 

Familyofseven

@MFWannabe - sorry just looking through all your points. 

Council tax is already over 12 months. 

Energy bill is based on what we pay by direct debit, I got this down a little from what they wanted me to be paying monthly. 

We are on a water meter - this is the combined amount I don’t know there is much we can do apart from trying to cut down the usage - which proves difficult with the 7 of us and teenagers! 

Mobile phones is 5 phones. 3 are sim only. Husband is just waiting for his contract to end. Our eldest daughter works and offered to pay for her contract ( I just feel guilty taking the money when she doesn’t get as much as the others as doesn’t do clubs etc ) 
Car insurance doubled this renewal despite trying all the comparison sites I just couldn’t get it lower. Just on your point about selling one of the cars - my husband’s is only worth around £2k and he needs something fairly reliable due to the amount of travel. The second car is a large 7 seater which I just wouldn’t be able to get an equivalent cheaper version of. 
building insurance is covered by our landlord as we are in a shared ownership property. 

Other insurance is for white goods (fridge, dishwasher and washing machine) 

Agree with all the other points on clubs / extra tv bits - although a couple of the clubs are harder to cut out as we committed to the season. 

Presents probably not accurate, I just budgeted £100 each for the children for birthdays and Christmas.  

DFS has around £500 left so 14/15 months. 

Thank you for the time in going through it all. 

Familyofseven

@fatbelly - i’ve read through other posts about defaulting - but what actually happens? Would that mean not being able to remortgage in a year’s time? I’m looking for a full time job and might have to ask parents to do some childcare if needed - my husband is also looking for a second job so I don’t want to jump to defaulting but not sure of any other options as jobs etc take time. 

Thanks for replying! 

HampshireH

Entertainment........................... 100

Holiday................................. 85

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

DFS..................................... 35.87

Horse riding............................ 100

Cheerleading............................ 105

Swimming................................ 70

Amazon prime............................ 8.99

Apple storage........................... 6.95

Disney+................................. 7.99

Apple music............................. 16.99[b]

Prime offers music and storage and prime video. Could you not ditch Disney+ and Apple storage and keep Prime (if you need this) Also how long do you have on your TV package and what do you get for that?

Horseriding is an expensive nice to have as is swimming to a lesser extent.

That frees up £200 straight away and another £85 for the holiday as even at £85 a month the reality is a holiday will cost far more than that once you have paid for food/fuel/stuff to do and its not affordable.

Also less running around = less fuel

There are plenty of free things to do that don't require a £100 a month entertainment budget but you have to find them. Social media is a great place for picking up free stuff to do. I cannot imagine £100 goes far with 7 of you so this probably isn't accurate. Things like scavenger hunts or geocaching will get you all out and about and the kids can get interested in finding things. Some cities have free treaure hunts where you follow the clues. Many local authorises have events or school holiday clubs which are free to attend. Kids activity ideas can be pulled together by just a few hours online looking at content and writing a list of all the things you could try at home.  Definitely time well spent 

The kids will adjust. Apps like YouTube kids for the little ones have loads of content and there are plenty of free music stations on radio. CD players can be picked up cheap and CDs cheaper especially on ebay etc.

Let your daughter pay her phone bill. If she is working she is old enough to be responsible for it. It's a good life lesson to take accountability for her expenses. Don't be proud over it. Its another ££ towards paying down the debt. 

For presents think out the box. Vinted is a great place to pick up gifts as is Ebay etc. (I got a relative a brand new coat for their birthday with tags on for £3 plus postage. Cost just under £6 in total and would have been £30+ in the shops) Charity shops and marketplace as well. Who would know that their birthday present isn't brand new? Kids don't care they are just happy to get a new toy or whatever. They don't care where it came from. Also tell extended family you aren't doing presents this year. You don't need to justify that but you can if you choose to.

tealady

Personally I never pay to insure my white goods.
The 1st fridge I ever had was still going strong 18 years later (well the light stopped working but I consider that a minor thing)
White goods can be replaced cheaply (shops occasionally sell off ones with minor dents and scratches, also 2nd hand ones can be picked up from charity shops).

Floss

Familyofseven said:

... Our eldest daughter works and offered to pay for her contract ( I just feel guilty taking the money when she doesn’t get as much as the others as doesn’t do clubs etc ).... 

If she's old enough to be working, she's old enough to pay her own mobile bill - you can't afford to feel guilty about this.

I would suggest that you sit down with the older children and be honest with them: "we can't afford all of the riding/ swimming/ Disney+/Apple music/ Prime costs so what is most important?" 

It looks like that £16k has been built up by mindless spending & using cards to pay for day-to-day shopping because your bank account is maxed paying all those minimum payments.

You are in a position lots of us have been in, it's not the easiest position to get yourselves out of as it will take honesty, sacrifice and patience, but it is do-able. As fatbelly says, defaulting is likely to be the best route and it shouldn't impact on your remortgage (I presume your fix will expire?) as you should be able to slide onto another deal with your existing lender. You do need to do some research on what your new rate will be & build it into your new budget, also your rent increase (if housing association it could go up by up to 8.2%).

EssexHebridean

Familyofseven said:

font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 5
Number of cars owned.................... 2[b]

Monthly Income Details[/b]
Monthly income after tax................ 856.1
Partners monthly income after tax....... 2312.2
Benefits................................ 901.21 Have you checked this is all you are entitled to?
Other income............................ 0[b]
Total monthly income.................... 4069.51[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 508.5
Secured/HP loan repayments.............. 0
Rent.................................... 532.69
Management charge (leasehold property).. 0
Council tax............................. 179
Electricity............................. 214 I realise others are saying that this is high, but I suspect many of them don’t realise the added expensive of running a larger all electric home. Is your heating via storage heaters or something else? Are you thoroughly up to speed with how to use the heating to its best advantage - ie settings all correct and checking the weather regularly to ensure you’re not caught out if on economy 7?
Gas..................................... 0
Oil..................................... 0
Water rates............................. 59.68 A shower timer might be a way of achieving a bit of a saving here, and also get the kids thoroughly on board with the environmental aspects - no taps running while teeth are being brushed etc. . 
Telephone (land line)................... 0
Mobile phone............................ 96.98 Already identified as crazily high - you know what you need to do here - more on this one below. 
TV Licence.............................. 13.25
Satellite/Cable TV...................... 51 This needs to have a family discussion about it. 
Internet Services....................... 40.14 Shop around at renewal time - you may be able to shave a little off.
Groceries etc. ......................... 600 I suspect savings can be made here - meal planning, shopping to a list, and keeping control,of top-up shops would be my first suggestions. 
Clothing................................ 50
Petrol/diesel........................... 300 Have you checked that this is accurate? It suggests high mileage if so - which in turn means your car maintenance figure is probably too low. 
Road tax................................ 27.55 
Car Insurance........................... 150.16 Reasons for this can’t be helped now, but do keep an eye at renewal time to see when things start to improve and shop around properly. 
Car maintenance (including MOT)......... 40 As above, I suspect this is too low - think MOT, servicing, replacement tyres, cleaning, wiper blades etc. 
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 380.25 You are getting all the assistance with this you are entitled to, and are also making use of any tax-free childcare schemes that you may be eligible for, I hope? 
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 29.41
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 19.77 This feels a little high - is that because it also includes the buildings insurance or do your HA pay that aspect as you are ShO? 
Life assurance ......................... 17.54
Other insurance......................... 20.05 I’d consider losing the white goods insurances and just ensuring that you have a robust emergency fund. 
Presents (birthday, christmas etc)...... 85
Haircuts................................ 24
Entertainment........................... 100
Holiday................................. 85 I suspect you aren’t saving this currently - but it is definitely one you need to start! 
Emergency fund.......................... 0
DFS..................................... 35.87
Horse riding............................ 100
Cheerleading............................ 105
Swimming................................ 70
Amazon prime............................ 8.99 Family discussion needed
Apple storage........................... 6.95 Family discussion needed
Disney+................................. 7.99 Family discussion needed
Apple music............................. 16.99[b] Family discussion needed
Total monthly expenses.................. 3975.76[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 177750
Shares and bonds........................ 0
Car(s).................................. 15000
Other assets............................ 0[b]
Total Assets............................ 192750[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 127240...(508.5)....2.84[b]
Total secured & HP debts...... 127240....-.........-   [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Loan ratesetter................11665.....293.7.....3.9
Credit card virgin.............3987.74...39.88.....0
Credit card barclays...........2898.81...86.96.....0
Credit card Tesco..............3075......31........0
Credit card MBNA...............6531.1....163.2.....0
Credit card halifax............4142.73...70........32.04[b]
Total unsecured debts..........32300.38..684.74....-  [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,069.51
Expenses (including HP & secured debts). 3,975.76
Available for debt repayments........... 93.75
Monthly UNsecured debt repayments....... 684.74[b]
Amount short for making debt repayments. -590.99[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 192,750
Total HP & Secured debt................. -127,240
Total Unsecured debt.................... -32,300.38[b]
Net Assets.............................. 33,209.62[/b]

Good morning Familyof7 - as usual initial comments in bold above. 

Ok - you have already correctly identified that you need to learn to budget, and I’d agree - in many cases of debt that is indeed the keystone to the whole situation improving, so that is your first goal. The SOA gives you a good starting point to work from, but it will,p undoubtedly need tweaking. I don’t think there is anyone who would be truthful if they claimed to have got their budget accurate on the first attempt! (I had to redo mine when we took a new mortgage in September, and it’s been tweaked at least 3 or 4 times since, and I have been playing this game for years!) 

I’ve marked some bits for a family discussion - sit round the table with the older children, and explain to them that things are fine, nothing dramatic is going to happen, but that money is a bit tight - they should already understand about the cost of living crisis etc-  and that you need to make some changes. Thank your older daughter for the offer to pay her phone bill, tell her that is a lovely contribution and you are very grateful to her for being so grown up as to suggest it. Timed showers should be discussed - as a starting point for this one time yourselves in a “normal” length shower, and then again if hair washing is happening, then time again when you actively try to do those things faster. That should help to inform what is achievable. Then remind people they need to set the timer and when the timer is up, they should be ready to turn off the water. Electric showers are horribly expensive to run - my relatively low powered one at our old flat cost me around 50p a time for a shower and hair wash - by contrast I can do precisely the same thing in our new house using gas at around a 5th of that cost! Also beware of the little things like people running hot water through when they are washing their hands - save your expensive hot water for the things it is needed for! (Mostly the hot won’t even have reached the tap by the time the hands are washed!) 

The next discussion on the agenda for the family needs to be the entertainment side. I do understand that it isn’t terribly practical for child a to continue cheerleading while you strip child b of their horse riding - indeed, I was once a horse addicted child myself, and losing my riding lessons would have felt like the end of the world - or worse! Is that child old enough to be able to work at the riding school in holidays to get riding for free? That might free up some slack in the budget some months, at least.  Also, you need to agree on ONE entertainment package to keep - Prime certainly seems to have the most advantages as it also covers your storage needs, although ai also realise it’s not as simple as stuff just backing up straight to iCloud. Put it to the vote though, and whichever gets the most votes wins, and the others get cancelled for the foreseeable. Set a reminder to review in 6 months so if people want a change at that stage you can switch to someone different. 

I am not sure if you’ve realised yet, but as lovely as the family help is, it has facilitated your debt cycle, as you’ve been sheltered from having to sort things out by the bailing out. I think you do need to be honest with your parents - currently they are giving you money under false pretences really - and as much for your sake as anything else, you need to be truthful with them. Explain that you are ashamed that you’d not been straight with them until now and if they no longer feel they want to contribute, you totally accept that. If they offer to contribute more, be grateful, but decline. You need to take responsibility for sorting this yourselves now. 

I’d say that a DMP is probably going to be the right way forwards for you - and in the first place, I’d be inclined to stop paying to the debts to let them default. That will give you time to get your budget straight, find out where the tweaks are needed, and start to build an EF. Once everything is defaulted you can begin making payments to a DMP. The defaults will trash your credit file for a while which is a good thing - it will place a hard stop on you being able to easily take more credit, and in itself will mean a reset should happen. On the mortgage side, you will just take a new deal with your existing lender in 2025 so don’t worry about that aspect too much. 

If you tackle this now, I think it’s achievable and you and your children will come out of it with a far more responsible grasp of money and spending - indeed, involving the children at this stage means that THEY will grow up with knowledge of budgeting that you didn’t have - which is a win.