Here Goes...Starting Up on a Journey

Superhoopza

Thank you Essex for the comments, probably not built up enough there for emergency funds, holidays, presents etc. There again as you say I can probably get the entertainment one down. So swings and roundabouts. I'll basically be spending money where I don't need to and if I do, just as a small treat.

Superhoopza

Superhoop91 said:

fatbelly said:

Yes, that seems good to me

fatbelly said:

Superhoop91 said:

Can I set up a DMP myself or better to use stepchange etc? What would be the impact? Defaults? I presume that's better than arrangement to pay markers. Would like to get a mortgage with her in a couple of years but obviously need to tell her about all this as that will make it difficult, especially any impact on my credit history let alone having no money/being in debt.

What would be the best process to go about stopping paying the creditors, making offers and entering into DMPs with them. I've never missed a payment in my life, would this go in my favour for any negotiation?

Final point, should I look to get a new bank and get my income paid into there asap?

It's not difficult to set up your own dmp, and there are resources on

https://nedcab.cabmoney.org.uk/dmp.asp

Your past history won't make any difference

Your final point is correct unless you are currently banking where you have no debts to that banking group

So I told her, tough conversation, but supportive. I will only be contributing to variable living costs, i.e. groceries, petrol, bill increases etc, so we estimate that will save around £700 per month beyond the SOR above. As all monthly payments listed are above the interest charge, I am going to slowly eat into the balances. I feel it's better to pay an extra £15-£20k overall than to default on them all.

Hopefully with time I'll start to get some 0% balance transfer offers.

I'm also going to speak to each creditor about the possibility of short term interest rate freezes, every little helps to clear the balances quickly. If not, one or two of them on a payment plan, which if I understand correctly, as long as I make the monthly contractual payments, means I am not in breach and won't have an arrangement to pay market against them but the interest rate will be capped, like a loan? I will ask them each individually, not sure how correct that may be?

This all relies on disclipline, it's a challenge I've set myself now which I'm excited to undertake.
First port of call is to use all my remaining credit on MBNA and Cap One to fully pay off the 118 card, so in one or two months I should have no interest on that, which was my highest rate card. I can also make small purchases on that throughout the month and pay it off each month to essentially not be paying any interest on monthly spending from now on.

Thanks for all the advice given, especially around the not taking another loan to consolidate.

Superhoop91 said:

fatbelly said:

Yes, that seems good to me

fatbelly said:

Superhoop91 said:

Can I set up a DMP myself or better to use stepchange etc? What would be the impact? Defaults? I presume that's better than arrangement to pay markers. Would like to get a mortgage with her in a couple of years but obviously need to tell her about all this as that will make it difficult, especially any impact on my credit history let alone having no money/being in debt.

What would be the best process to go about stopping paying the creditors, making offers and entering into DMPs with them. I've never missed a payment in my life, would this go in my favour for any negotiation?

Final point, should I look to get a new bank and get my income paid into there asap?

It's not difficult to set up your own dmp, and there are resources on

https://nedcab.cabmoney.org.uk/dmp.asp

Your past history won't make any difference

Your final point is correct unless you are currently banking where you have no debts to that banking group

So I told her, tough conversation, but supportive. I will only be contributing to variable living costs, i.e. groceries, petrol, bill increases etc, so we estimate that will save around £700 per month beyond the SOR above. As all monthly payments listed are above the interest charge, I am going to slowly eat into the balances. I feel it's better to pay an extra £15-£20k overall than to default on them all.

Hopefully with time I'll start to get some 0% balance transfer offers.

I'm also going to speak to each creditor about the possibility of short term interest rate freezes, every little helps to clear the balances quickly. If not, one or two of them on a payment plan, which if I understand correctly, as long as I make the monthly contractual payments, means I am not in breach and won't have an arrangement to pay market against them but the interest rate will be capped, like a loan? I will ask them each individually, not sure how correct that may be?

This all relies on disclipline, it's a challenge I've set myself now which I'm excited to undertake.
First port of call is to use all my remaining credit on MBNA and Cap One to fully pay off the 118 card, so in one or two months I should have no interest on that, which was my highest rate card. I can also make small purchases on that throughout the month and pay it off each month to essentially not be paying any interest on monthly spending from now on.

Thanks for all the advice given, especially around the not taking another loan to consolidate.

Am I being incredibly naïve here?

MFWannabe

I’d suggest redoing your soa based on what you will actually be paying as this will give a clearer picture of how much you have for debt repayments 

EssexHebridean

I don't think you are being naive, as such, but I do think you may not quite have grasped that this is a process, and it needs to be followed in a particular way really. Right now, that shouldn't include using credit at all - whether you are paying interest on it or not. If you were using a CC for a purchase that you already had the money in the bank for, then just clearing it immediately - using the card for the S75 protection for example, then that would be slightly different, although probably still not advisable. Right now, you need a monthly budget that works, enables you to meet all your commitments and save an emergency fund. 

I'm also not sure why you'd think paying an extra £15-£20k would be a sensible thing to do, allowing that you seem to have accepted that you are going to get defaults anyway - why do you think that some of the debts need to not be allowed to default? What happens if (when, probably) your defaulting creditors realise that they're apparently being mugged off as you are still paying others in full, for example? 

Superhoopza

EssexHebridean said:

I don't think you are being naive, as such, but I do think you may not quite have grasped that this is a process, and it needs to be followed in a particular way really. Right now, that shouldn't include using credit at all - whether you are paying interest on it or not. If you were using a CC for a purchase that you already had the money in the bank for, then just clearing it immediately - using the card for the S75 protection for example, then that would be slightly different, although probably still not advisable. Right now, you need a monthly budget that works, enables you to meet all your commitments and save an emergency fund. 

I'm also not sure why you'd think paying an extra £15-£20k would be a sensible thing to do, allowing that you seem to have accepted that you are going to get defaults anyway - why do you think that some of the debts need to not be allowed to default? What happens if (when, probably) your defaulting creditors realise that they're apparently being mugged off as you are still paying others in full, for example? 

I don't plan if I can to have any defaults. The spend on the credit card id pay in full would be my actual monthly spending i.e. groceries. Money that would be spent anyway. Doesn't that make sense to pay via that method and not pay interest than to put it on my overdraft/other CCs than paying interest on them?

Andyjflet

I dont understand why you are considering continuing to spend on your credit card, like pouring water into a leaking bucket. here is how to tackle it.

Get together your £1000 emergency fund
Cut up all your credit cards
Start paying the lowest BALANCE first, this is the snowball method
Then take that payment when cleared and add into the next smallest balance and so on.

Then spend cash only, I'm guessing your actual budget looks nothing like your SOA and you have no control of your spending?

Andyjflet

Also...............to add, if youre moving out of your own property and youve spent a small fortune on goods using your cards then start selling everything off ASAP, its a good lesson to learn and will help build your emergency fund. 

Superhoopza

Andyjflet said:

I dont understand why you are considering continuing to spend on your credit card, like pouring water into a leaking bucket. here is how to tackle it.

Get together your £1000 emergency fund
Cut up all your credit cards
Start paying the lowest BALANCE first, this is the snowball method
Then take that payment when cleared and add into the next smallest balance and so on.

Then spend cash only, I'm guessing your actual budget looks nothing like your SOA and you have no control of your spending?

Did you read the notes I left?
How do I get an emergency fund together whilst paying my balances and not using credit when I am in my overdraft?

Pretty sweeping statement there because I simply said I'd be buying groceries.

I also said I don't have anything to sell.

Floss

So you're happy to pay 30% interest on your debts, just to avoid defaults? And to throw up to £15k down the drain in doing so? And that is in the vain hope that you will be able to get a 0% balance transfer sometime in the future?

Personally I would do the DMP - your credit rating is probably pretty trashed anyway.

If you start a self-managed DMP, you would stop all payments to your creditors, and instead save that money into an emergency fund until they have defaulted & interest is stopped. Then you set yourself a proper budget, and what is left can be paid off your debts. Meanwhile, if your washer dies, your car needs urgent repairs or your roof starts leaking you have the emergency fund to cover that expense.

Superhoopza

Floss said:

So you're happy to pay 30% interest on your debts, just to avoid defaults? And to throw up to £15k down the drain in doing so? And that is in the vain hope that you will be able to get a 0% balance transfer sometime in the future?

Personally I would do the DMP - your credit rating is probably pretty trashed anyway.

If you start a self-managed DMP, you would stop all payments to your creditors, and instead save that money into an emergency fund until they have defaulted & interest is stopped. Then you set yourself a proper budget, and what is left can be paid off your debts. Meanwhile, if your washer dies, your car needs urgent repairs or your roof starts leaking you have the emergency fund to cover that expense.

Isnt it going to be pretty impossible for us to get a mortgage for those 6 years if I have defaults from over 10 creditors? If so then £15k is worth that. If I've over estimated the importance of defaults then I'm happy to rereview this.