Strange Truths

Strangey18

It is time to face the truth - my debts, mainly credit cards, are well out of control and I need to get it under control before I can no longer make the minimum payments which is terrifying  me! 
Times are tough and I have been putting food shops and other necessary spends on my credit cards and maxing them out and then getting another. 

I work hard long hours but am going to look at additional income by craft makes, surveys etc and use any income made to start decreasing the debt. 

I will record my journey to decrease my debts with the aim of eventually becoming debt free.

Little_bit_taller

Hi @Strangey18

Well done for taking your 1st step. It would be good if you could complete a Statement of Affairs so people can advise you accordingly.

The link is here https://www.stoozing.com/soa.php and if you format for MSE you can post it up.

You have done the right thing by coming here so hopefully see your SOA soon

Strangey18

Thanks @Little_bit_taller - I will do that tomorrow and post it up.

cymruchris

It might also be time to have a bit of a clear out of things you don't use anymore/haven't used for a few months - old phones - old tech - clothes - shoes - you may only get a fraction of what you paid -  but money off the debt is better than stuff you don't use in the cupboard. Once you post up your statement of affairs - it may be we can offer a bit more advice - but it's definitely worth looking at any subscriptions and contracts you have to see what you can cut back on/do without for a few months - if it helps you get the debt down quicker.

Are you on the cheapest broadband contract? Is there a way to cut your mobile phone spend? Are there subscription services that you can cut for a while like netflix/sky etc.? I'm sure you can work on getting the debt down - but you might have to be a bit more ruthless than you initially planned - to have more of an impact. Every £1 down will save you interest, and it's better to do this now as you say your balances are increasing, and you're using your credit to live, and that's not sustainable.

Are any of your balances on zero percent?

Strangey18

I have completed the SOA as per below 

[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......... 1

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

Monthly Income Details[/b]

Monthly income after tax................ 2653.89

Partners monthly income after tax....... 1100

Benefits................................ 96

Other income............................ 0[b]

Total monthly income.................... 3849.89[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 1016

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

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

Management charge (leasehold property).. 0

Council tax............................. 200

Electricity............................. 110

Gas..................................... 109

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

Water rates............................. 55.98

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

Mobile phone............................ 99

TV Licence.............................. 11

Satellite/Cable TV...................... 0

Internet Services....................... 78

Groceries etc. ......................... 450

Clothing................................ 50

Petrol/diesel........................... 200

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

Car Insurance........................... 24.25

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

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

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

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

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

Medical (prescriptions, dentist etc).... 55

Pet insurance/vet bills................. 115.45

Buildings insurance..................... 46.73

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

Life assurance ......................... 20.94

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

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

Haircuts................................ 88

Entertainment........................... 0

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

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

Total monthly expenses.................. 2883.78[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 340000

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

Car(s).................................. 6000

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

Total Assets............................ 346000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 80133....(1016).....5.64[b]

Total secured & HP debts...... 80133.....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Loan...........................921.9.....92.19.....10.59

Loan...........................2000......69.28.....31.4

Credit Card....................18838.3...505.......19.17

Credit Card....................3255......104.......32.6

Credit Card....................6231.68...179.......23.27[b]

Total unsecured debts..........31246.88..949.47....-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,849.89

Expenses (including HP & secured debts). 2,883.78

Available for debt repayments........... 966.11

Monthly UNsecured debt repayments....... 949.47[b]

Amount left after debt repayments....... 16.64[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 346,000

Total HP & Secured debt................. -80,133

Total Unsecured debt.................... -31,246.88[b]

Net Assets.............................. 234,620.12[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

cymruchris

A few initial thoughts now that you've put together your SOA - and this in itself is a good step forwards as it helps visualise where you are right now (and sometimes is pretty scary when you look at where all the money is going, and how much interest is being paid)

In terms of the credit cards - have you effectively stopped using them? No new spend being added month by month? So at least you stabilise where you are rather than growing the debt and interest repayable?

As much as you'll be focusing on reducing spend - what's your eligibility look like for 0% balance transfer cards? Do you see any offers available? (Even if it's only for 6 months and only a small limit - it could help)

Some of those APR's are high - I know I mentioned previously about having a bit of a sell off of 'stuff' - do you have much in the cupboards/drawers etc. that would raise a little chunk of money to put towards these higher APR debts first (and quickly!) - as I said - money off the debt is so much better than stuff sitting in the cupboards. If you want to 'buy it again' in the future when you're more stable - fair enough - but for now you've got a bit of a challenge that needs addressing now - so be ruthless. Ebay is the easiest route - fb marketplace is possible - but a lot of timewasters there. Don't be emotional over getting rid of things - what's more important? 'things' or a better debt free life? (And even if you only raise a few hundred pounds from a mass clear out - it's still a dent in the debt)

Some will mention the snowball effect of attacking the debts - whereby any spare money is put towards the debts with the highest APR's first. This is a very good piece of advice. Every month your credit providers are piling on the interest - so do whatever you can to reduce and eliminate the balances on the worst offenders first. (That credit card at 32 percent and that loan at 31 percent!)

Can also see that you're a couple - how long to go before your £99 a month mobile contract can be reduced to sim-only? I guess you're paying for a new contract phone or two that you've taken out at some point? A pair of sim-only deals with a very generous data allowance can be had for £20 a month each - - so that would bring you back £60 a month to throw into the debt pot - equating to £720 a year (Again - depending on how long you have left at your higher contract price - but it's one to watch that you change as soon as you can contractually do so).

£78 a month sounds on the high side for an internet connection - what are you getting for that? Again - when's the contract up? When can you cut it back to a more cost-effective package? You might be stuck for a while - but once you can cut back if you aim for £25-30 a month on internet - the difference could be put towards the debt. It's nice to have super-fast broadband with all the extras - but if for a year you could survive on a broadband basic package - you could save £50 a month - £600 in a year.

You can't change contractual commitments - so all that you've signed up for like phone, broadband etc. may not allow instant savings - but look very carefully at the expiration dates of contracts so you can swap-out at the earliest possible chance.

Part of facing up to the debt is mindset. If you look at the problem and think 'I can't do that - we can't change that - I'm not cutting that' then the process to reduce the burden will take longer. A lot of your expenses appear fair for a family of your size - but as you say the debt is really dragging with the interest you're paying. Short term pain (likely a year or more) will help you get back towards a manageable position. I'm certainly not saying you can live on bread and water for the next twelve months for things to get better (far from it!) but I'm confident that there's money to be saved.

Have you asked yourselves how you got to where you are? (This can be a painful question to answer honestly). Was it house improvements? genuine emergencies? holidays? buying new tv's gadgets etc? or general overspend not really thinking how you might pay it back? You're (thankfully) trying to work out the best approach to get yourself back on an even keel - but what steps will you take to prevent you getting back to this stage in the future? (Again can be a painful discussion).

It's a tough journey - but it's still do-able. The world around us doesn't help at the moment with the fact that everything has become silly expensive. Some of my thoughts might not help depending on where you are with contracts - but it gets the discussion going, the thought process in motion, and the wheels begin to turn on improving your situation. Nothing will be an overnight fix - but it'd be good to see what others think - and for you to let us know how you're doing over the coming months as you try and improve your current levels of debt. You've made a start by acknowledging where you are - and I hope that between you, you'll be able to make a bit of positive progress.

Strangey18

Thanks @cymruchris your comments are really helpful. The £99 mobile is for 3 mobile phone contracts which all have over 1.5 years to go (mine, husband & teenager). The £78 per month for internet also includes landline and cable tv - this is a new contract reduced from old contract of £122.  

I have listed some things on vinted this week and so far made £2.04 which I have paid against biggest credit card debt today and going to spend next few weeks listing other items for sale and all profit will go to reduce debts.

Also made payment today of £105 just over minimum payment due on one of my other credit cards as this was due in next few days and want to make sure I am not late with payments.

Other spends today were £50 fuel needed for the car so can get to work next week and in shop I got washing up liquid which was on special and gravy granules, both of which were needed today. I normally buy bistro granules but noticed today that it was £3 and so instead got CoOp own make which was only £1.10

I also have a beef stew cooking in the slow cooker for dinner tonight and am generally good with food shopping as I do an online shop planning meals for the week and making sure I don’t spend too much.

katsu

Strangey18 said:

I have completed the SOA as per below 

[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......... 1

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

Monthly Income Details[/b]

Monthly income after tax................ 2653.89

Partners monthly income after tax....... 1100

Benefits................................ 96

Other income............................ 0[b]

Total monthly income.................... 3849.89[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 1016

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

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

Management charge (leasehold property).. 0

Council tax............................. 200

Electricity............................. 110

Gas..................................... 109

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

Water rates............................. 55.98

Maybe look into a meter as this seems a lot for 2 adults and a child. 

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

Mobile phone............................ 99

TV Licence.............................. 11

Satellite/Cable TV...................... 0

Internet Services....................... 78

Can you get this down further?I know you've just reduced from 130ish but do you still need the extra TV channels? 

Groceries etc. ......................... 450

Clothing................................ 50

Petrol/diesel........................... 200

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

Car Insurance........................... 24.25

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

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

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

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

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

Medical (prescriptions, dentist etc).... 55

Ouch. Can you take out annual plans eg annual prescription certificate? 

Pet insurance/vet bills................. 115.45

This seems really expensive. Can you reduce it? 

Buildings insurance..................... 46.73

This seems like a lot of money. Have you checked if you are insured for the right value? Check if you can save money as that's about 550 a year which seems loads. 

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

Life assurance ......................... 20.94

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

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

I would reduce this a lot. Maybe don't buy for each other and cut the child spending. 

Haircuts................................ 88

Can you go longer between appointments or change the service you have? Eg not dying your hair?

Entertainment........................... 0

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

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

Total monthly expenses.................. 2883.78[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 340000

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

Car(s).................................. 6000

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

Total Assets............................ 346000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 80133....(1016).....5.64[b]

Total secured & HP debts...... 80133.....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Loan...........................921.9.....92.19.....10.59

Loan...........................2000......69.28.....31.4

Credit Card....................18838.3...505.......19.17

Credit Card....................3255......104.......32.6

Credit Card....................6231.68...179.......23.27[b]

Total unsecured debts..........31246.88..949.47....-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,849.89

Expenses (including HP & secured debts). 2,883.78

Available for debt repayments........... 966.11

Monthly UNsecured debt repayments....... 949.47[b]

Amount left after debt repayments....... 16.64[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 346,000

Total HP & Secured debt................. -80,133

Total Unsecured debt.................... -31,246.88[b]

Net Assets.............................. 234,620.12[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

Here are a few ideas for you
I hope they help. 

Little_bit_taller

I think for now any extra you make should be going into an emergency fun until you can plan a way forward with this issue.

There are some large debts with large APRs so you may need a more nuanced approach to beating this debt

I think we need the big guns on this one @fatbelly @elsien @EssexHebridean @sourcrates ???

enthusiasticsaver

Looking at your soa, internet costs, mobile phones, groceries, pet insurance, presents, buildings insurance and haircuts all look high as others have commented.  However you have allowed nothing for entertainment which seems a tad unrealistic with a teenager. You also have no emergency fund which you really need to get away from the spending on credit cards mentality.  

The interest rates on the debts are high as well so I assume you can no longer get balance transfers?  

Does your husband work full time as the wage looks very low? 

Strangey18

Thank you for all your comments, it really helps.

@enthusiasticsaver - I will look at what I can bring the cost down on. My husband is self employed and works for himself and so has to deduct his tax etc. What I included in the soa is the amount he contributes each month to the mortgage and bills.

I spent the afternoon listing clothes for sale on Vinted and other items for sale on Facebook. My car insurance renewal came in today as will be an increase of £10 a month so tonight I will look at getting other quotes to see if I can get cheaper.