Out of My Depth

miniandme20

Hi everyone,

I know there are a lot of these threads and this is so long but I've really appreciated reading all the advice and would just like a second opinion on my current position.

Long story short, fiancé left when I was pregnant and now I'm a single mum to a 4yo with £20kish worth of debt. He has never met her and provides no financial support. My mum is a benefit advisor so I have had a review of situation and claiming what I can. 

Half of my debt has missed payments & was on a DMP (I cancelled that this month after reading the advice re defaulting on here). The other half is up to date with payments but last month my emergency funds were wiped out and now I've got myself into a panic. Was hoping I could get some advice on 2 points:

1. Any expenses that seem off to you? My household budget (food, gas, etc) has been in place for about 18 months and I've never exceeded it so I'm content none of that is understated.

2. Any sinking funds I've missed?

3. What order would you pay off? Has anyone any experience with Halifax, Plata or Virgin Money and how quickly they will default me?

Not quite a statement of affairs but I did have this already prepared so hoping it might be some help. I'm an accountant and track every penny I spend but I also spent the first years of my daughter's life feeling like I needed to compensate for being her only parent & I've only just recently snapped out of it and stopped the impulse spends. 

Monthly income (inc benefits): £2,381.60

Direct debits (£743.46)

Home broadband: £31.23 (contract locked until Mar 25)

Daughter's dance class: £26

Mobile phone: £4.95

Car insurance: £93.11

Childcare: £341

Life insurance: £14.73

Health insurance: £31.65 (daughter very ill in first year of life - I am nervous to cancel this)

Rent: £189.79

Professional subscriptions: £11

Household expenses (£530)

Food: £230

Petrol: £100

Gas: £70

Cleaning supplies, toiletries, etc: £20

Electric: £110

Sinking funds (£198)

Gifts (inc all bdays, Christmases & seasonal days out): £58

Clothes (me): £10

Clothes (daughter): £20

Emergency fund: £60

Home maintenance: £20

Car: £30

Debt: £800

Spare: £110.14

The spare £110.14 listed above usually covers things like car parking, days out with my daughter, a dance costume, etc. After all this I have £800 per month left to put towards debts. 

Overdraft: £750

Vanquis CC: £1,826.11

Sainsburys CC: £511.64

Paypal: £1,687.67

Very: £170.75

Argos: £451.17

Family car loan: £1,600

***Halifax CC: £1,471.92

***Virgin CC: £1,632.23

***Plata loan: £8,182.53

***Halifax loan: £1,703.44

***These are the ones previously under a DMP so I have temporarily stopped payments to them until they default. Vanquis CC is 0% interest until Jan 2025 with no minimum payment so that has taken a backburner. 

Does this sound sensible for the next few months: 

End of Aug: Clear Argos & Very. £25 to paypal to make minimum payment. Remaining £153.08 to Sainsburys CC.

End of Sep: £358.56 to clear Sainsburys CC. Remaining £441.44 to Paypal

End of Oct: Full amount to Paypal. 

I've tried to provide as much detail as possible so thank you if you've made it this far!! 

Floss

I'm intrigued as to why you feel health insurance is necessary for a child?

Also, you have no contents insurance.

And only £360/y for car maintenance on a vehicle you pay £1,110/y to insure & spend £1,200/y on fuel?

miniandme20

Floss said:

I'm intrigued as to why you feel health insurance is necessary for a child?

Also, you have no contents insurance.

And only £360/y for car maintenance on a vehicle you pay £1,110/y to insure & spend £1,200/y on fuel?

She was really unwell as a child and an MRI through a private consultant got her access to an operation & treatment on the NHS which she would have waited over 6 months for her initial consultation - it has made me lose all confidence in the system and I'm terrified of cancelling it! Definitely have anxiety as a result and likely unneccesary. 

Re the no contents, we are extremely minimalist, don't own any electronics, floor cushions in place of sofa, no bed, etc. My oven and fridge is probably the only items worth replacing

Tiny car - insurance is normal for my area, doesn't get serviced so just annual MOT fee & unexpected repairs. 

Thanks for replying!! 

2021rdsunshine

Any expenses that seem off to you? My household budget (food, gas, etc) has been in place for about 18 months and I've never exceeded it so I'm content none of that is understated. 

It looks like you live quite frugally to be fair. I would be tempted to allocate a bit more money into the emergency fund . 

What order would you pay off? Has anyone any experience with Halifax, Plata or Virgin Money and how quickly they will default me?

No experience with these creditors. Creditors might take quite a few months until they default you. I’ve waited about 8 months for defaults from mine. 

Also I can see your point in getting rid of the small debts. Will be less creditors to deal with and if you self manage your DMP that’s ideal. 

kimwp

Might be worth asking on the motoring board whether not servicing your car is a false economy.

May I ask - what do you sleep on if no bed?

miniandme20

2021rdsunshine said:

Any expenses that seem off to you? My household budget (food, gas, etc) has been in place for about 18 months and I've never exceeded it so I'm content none of that is understated. 

It looks like you live quite frugally to be fair. I would be tempted to allocate a bit more money into the emergency fund . 

What order would you pay off? Has anyone any experience with Halifax, Plata or Virgin Money and how quickly they will default me?

No experience with these creditors. Creditors might take quite a few months until they default you. I’ve waited about 8 months for defaults from mine. 

Also I can see your point in getting rid of the small debts. Will be less creditors to deal with and if you self manage your DMP that’s ideal. 

Creditors taking a while longer to default would be ideal atm to give me time to clear the ones that are up to date! 

miniandme20

@kimwp we have been using a Japanese-style floor mattress since my daughter was born. Still co-sleeping so just the 1 for now but will be interesting to see whether she chooses bed frame & mattress or something similar to what we’re currently using 

Bluebell1000

Contents insurance would cover you to replace your clothes too.

Given your clothing spend on your SOA I guess you are buying new? You would be able to reduce this a bit by going onto Facebook marketplace and buying childrens clothes bundles, but overall your costs look pretty reasonable. I'd suggest trying to get out of your overdraft asap if it's one that you have to pay for. They normally have quite high interest.

stu12345_2

you want your creditors to default fast not slow as then interest must legally then stop and that's the date your credit file will repair from( 6 yrs)

Rob5342

Virgin were terrible defaulting me and took about a year of not paying, it felt like they were being vindictive towards me.

Personally I'd stop paying everything and concentrate on getting the emergency fund to a suitable level. Once that was built back up I would set myself a budget that included a reduced payment to each creditor and a payment into a settlement offer fund. I would then start making payments to the debts as they default, and put the payments for the ones that haven't into the settlement fund along with my regular payment. I would then keep an eye on my settlement fund, and perdodically make offers to the defaulted debts.

The danger in doing it piecemeal is that things might not go to plan and you end up defaulting on loans later which just drags everything out, It's safer to default on everything now so you have a fixed date when your credit report will be clear, and then try and clear things with reduce settlemt offers to save money in the long run.

zcrat41

Your expenses look well under control. What about the other end of things - as an accountant is there room for earning more? More hours? Set up as a bookkeeper for small businesses in the evenings? Go for a job with more money?