Last chance saloon before insolvency.

fatbelly

IVAs nominally last 60 months. As a homeowner you could be asked to release equity or do a further year.

I missed that you actually have 3k available each month so it's going to have no real advantage to you

Harrysplan

Thanks for the posts. 

At the moment I think that I am airing towards cutting back and snowballing the debts. I would rather not default etc if I don't need to . I am not currently in any arrears etc and despite the debt being very high, I am making payments on time each month. 

I think that I could make significant cuts in the following areas  

Clothes - this just needs to stop for a while - £250
Groceries - £250
Holiday - £400 - we can't afford a holiday 
presents - £150

this alone would save £1150 which is insane

sourcrates

Ideally you want to avoid insolvency, as it can create more problems than it solves, on the plus side you have a very good income, so cutting back unnecessary spending and snow balling should work out well.

Food bill can defo be cut, and clothes, I know kids grow quickly, but that`s a lot every month.

It`s a good idea to do this now, I note consolidation has been tried and failed previously, so its good you`ve got past that stage.

Andyjflet

As Dave Ramsey says, "we earn too much money to be this broke" I think you can get this and clear it all by 50, think of that income when you don't have any debt, saving for your future, your children's future and also starting your family off as a new generation of non debtors. 

Use some of your cash, keep £1000 in a non related account and that's your emergency fund, the further £1700 use to clear a couple of those debts, quick wins and provides motivation. No more credit cards or loans, or consolidation loans. 

You then need to sell everything you can at home and lets see how intense you can be, or are, what's the cancellation cost of the cruise. When I cleared my debt, over the last 6 years I never had one holiday, I still haven't as yet. 

Harrysplan

fatbelly said:

IVAs nominally last 60 months. As a homeowner you could be asked to release equity or do a further year.

I missed that you actually have 3k available each month so it's going to have no real advantage to you

Thank you. 

If I sort out the ridiculous food bill, clothes and holidays then I could actually raise more to throw at the debt. 

£2200 - contractual payments
£500 -  from surplus money
£1000 -  saved from cutting back on food/clothes/holidays

Total - £3700 per month

I know that it's not as simple as diving 102k by £3700 as there is interest that is going to accruing, however I wonder if I could potentially do this in 4 years?

enthusiasticsaver

Harrysplan said:

Hi everyone,

I have been a very long time Lurker on this forum, and have used it for guidance and advice when I have had previous half-hearted attempts at sorting out our debt problems.

today, for the first time ever I have sat down and I’ve completed an SOA. It doesn’t make for pleasant reading but I keep reminding myself that this task wasn’t necessary evil if we have any chance whatsoever of sorting out the absolutely horrendous mess that we have created.

I have used our spending from last month to construct the SOA. I figured that there was no point in creating something aspirational, however when you look at it you will see very clearly the areas that we had massively messed up on.

why am I doing this now? Well, I feel that we are at a point where if we don’t do something drastic we are going to end up bankrupt, and losing our home. The amount of money that we owe is I watering and sickening. Our eldest child is just about to finish university, and this means that the money that we have been using to support her can be diverted towards the debts. We absolutely have to do this now.

my wife works full-time however due to some complex health problems she also receives a PIP. We are very aware that recent media coverage suggests that this could change at some point soon. We really need to get into a better position so that we could deal with this loss of income if necessary.

whilst we are both very aware that we are massively in debt, I haven’t shared the SOA with my wife yet. I fully intend to do this however I want to get the working plan in place before I show her the cold hard figures. The last time we spoke about the debt we discussed that it was around 85k. I am ashamed to say that today was the first time that I’ve ever really added it up as part of the SOA.

we are both very keen to change the way things are. We both turned 43 recently and we agreed that we cannot be in this debt at 50.

So, here it is. I have seen a lot of SOA is as part of my lurking on this forum, however I’m pretty ashamed that this one belongs to me.

Household Information[/b]

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

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

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 4180

Partners monthly income after tax....... 1550

Benefits................................ 549

Other income............................ 750[b]

Total monthly income.................... 7029[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 624

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

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

Management charge (leasehold property).. 0

Council tax............................. 142

Electricity............................. 94

Gas..................................... 45

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

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

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

Mobile phone............................ 46

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

Satellite/Cable TV...................... 49

Internet Services....................... 26

Groceries etc. ......................... 768

Clothing................................ 250

Petrol/diesel........................... 120

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

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

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

Childcare/nursery....................... 40

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

Medical (prescriptions, dentist etc).... 18

Pet insurance/vet bills................. 52

Buildings insurance..................... 21

Contents insurance...................... 18

Life assurance ......................... 33.29

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

Presents (birthday, christmas etc)...... 300

Haircuts................................ 50

Entertainment........................... 500

Holiday................................. 400

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

Total monthly expenses.................. 3644.54[/b]

[b]

Assets[/b]

Cash.................................... 2700

House value (Gross)..................... 315000

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

Car(s).................................. 0

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

Total Assets............................ 317700[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 74501....(624)......4.11[b]

Total secured & HP debts...... 74501.....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Barclaycard....................12800.....259.......6.9

Barclaycard....................5400......111.......6.9

MBNA...........................8752......287.......26

Mum loan 2.....................10000.....0.........0

Zopa...........................1200......75........29.9

Elfin Market...................1900......111.......38.8

JD Williams....................1800......85........49

Creation CC....................4500......101.......24

HSBC CC........................2874......86........16.9

Barclaycard 3..................8500......248.......24.2

Loan 3.........................8500......210.......19.5

Cosolidation loan 2............8000......132.......8.8

Consolidation loan.............14000.....361.......18.9

Loan from mum..................4500......90........0

Natwest........................9875......99........0[b]

Total unsecured debts..........102601....2255......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 7,029

Expenses (including HP & secured debts). 3,644.54

Available for debt repayments........... 3,384.46

Monthly UNsecured debt repayments....... 2,255[b]

Amount left after debt repayments....... 1,129.46[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 317,700

Total HP & Secured debt................. -74,501

Total Unsecured debt.................... -102,601[b]

Net Assets.............................. 140,598[/b]

I don't think you need to go insolvent or do an IVA or DMP.  You do need to become much more financially disciplined though and as your daughter has now finished Uni hopefully you can divert the surplus of £1000 towards the debt and cut back on holidays, presents, groceries, entertainment and clothing.  If you can claw back another £1500 from those categories which should be doable providing you are all on board with cutting your cloth to suit your budget you would have almost £5k to go towards those debts every month.  Even after a year that soa would look very different. 

Tackle the most expensive debts first and close them down as you pay them off.  Do not consolidate or borrow more from family.  It hasn't worked and indeed has made things worse.  You have a decent income but have obviously got used to spending without keeping track. What is that £9875 debt with Nat West? 

Harrysplan

Hi everyone, 

I have redrafted my SOA and have taken out the ridiculous amounts of overspend and replaced them with what I think it more appropriate. I know that this is aspirational, but it does show what an impact this could make on our debt repayment power. 

Household Information[/b]

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

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

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 4180

Partners monthly income after tax....... 1550

Benefits................................ 549

Other income............................ 750[b]

Total monthly income.................... 7029[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 624

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

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

Management charge (leasehold property).. 0

Council tax............................. 142

Electricity............................. 94

Gas..................................... 45

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

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

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

Mobile phone............................ 46

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

Satellite/Cable TV...................... 49

Internet Services....................... 26

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

Clothing................................ 0

Petrol/diesel........................... 0

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

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

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

Childcare/nursery....................... 40

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

Medical (prescriptions, dentist etc).... 18

Pet insurance/vet bills................. 52

Buildings insurance..................... 21

Contents insurance...................... 18

Life assurance ......................... 33.29

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

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

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

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

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

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

Total monthly expenses.................. 1986.54[/b]

[b]

Assets[/b]

Cash.................................... 2700

House value (Gross)..................... 315000

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

Car(s).................................. 0

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

Total Assets............................ 317700[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 74501....(624)......4.11[b]

Total secured & HP debts...... 74501.....-.........-   [/b]

[b]Unsecured Debts[/b]

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

barclaycard....................12800.....259.......6.9

barclaycard....................5400......111.......6.9

MBNA...........................8752......287.......26

Natwest........................9875......99........0

Loan from mum..................4500......90........0

Consolidation loan ............14000.....361.......18.9

Consolidation loan 2...........8000......132.......8.8

Loan 3.........................8500......210.......19.5

Barclaycard 3..................8500......248.......24.2

HSBC CC........................2874......86........16.9

Creation CC....................4500......101.......24

JD williams....................1800......85........49

Elfin market...................1900......111.......38.8

ZOPA...........................1200......75........29.9

Mum loan 2.....................10000.....0.........0[b]

Total unsecured debts..........102601....2255......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 7,029

Expenses (including HP & secured debts). 1,986.54

Available for debt repayments........... 5,042.46

Monthly UNsecured debt repayments....... 2,255[b]

Amount left after debt repayments....... 2,787.46[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 317,700

Total HP & Secured debt................. -74,501

Total Unsecured debt.................... -102,601[b]

Net Assets.............................. 140,598[/b]

Grumpelstiltskin

Presents are still high. no need to spend anywhere near that much.

Same for entertainment.

Nothing for clothing? No one ever needs pants, socks etc. Only £25 monthly would cover that.

Buildings and contents insurance could perhaps come down when due for renewal.

Harrysplan

Grumpelstiltskin said:

Presents are still high. no need to spend anywhere near that much.

Same for entertainment.

Nothing for clothing? No one ever needs pants, socks etc. Only £25 monthly would cover that.

Buildings and contents insurance could perhaps come down when due for renewal.

Thank you. I think that I was trying not to be totally cold turkey as I need this to be a sustainable plan that we can adopt for a while. I agree with the comments about clothes. Us two can manage without new stuff and out eldest can buy her own however we will need to replace stuff for our youngest one. 

NeverendingDMP

Harrysplan said:

NeverendingDMP said:

Have you got a car..you've put petrol costs but not insurance, maintenance etc.
Also what sticks out to me is that it must be hard to keep track of all the payments and that in turn is making budgeting harder. Lots of payments to organise to different people. 
Lastly when is the holiday and after you have saved if you miss the next holiday loan from mum or creation for example  could be paid of in 12 months.
Od say double check your soa and then list your debts in the order you want to try and payment them off. Low to high, high interest to low, mix and match on what's important to you. Debt payoff planner app or the website what's the cost.com are both very useful for this 

Hi, 

Thank you for posting. We have a car through a salary sacrifice scheme at my work. Its not something I would do again, however I am tied in for a while and I can't afford the exit fees. All maintenance and MOT's are included. It's also electric so no petrol or diesel costs 

I am ashamed to say that we are going on a cruise this summer to celebrate a big birthday of a family member. This was booked well before we came to our senses and it will the last expensive holiday that we go on for a very long time! The balance is paid now so we will lost a lot of money if we cancel. It's all inclusive so we are just not going to spend any other money 

Everything if direct debit so I don't have to physically make the payments, however I agree that there is a lot to manage! 

Sorry I wasn't necessarily meaning to miss this one- if it's mostly paid you may as well enjoy it- my wording wasn't that good. If it's this summer the plus side is that it isn't that many more times of having having to put aside the 400 a month is it. If you then miss what would then have been planned as your next holiday (as you can't afford it) you will have 400 a month to chuck at the debt.