Help gratefully received!

cookiemonster10

Hi all, first time poster as have rather buried heads in sand up until this point. Due to a variety of circumstances we find ourselves with a pretty huge debt and wondered your collective thoughts on the best approach. Have considered a DMP but worried about the long term impacts this may have, although appreciate this might be our only course of action... We're currently able to make the minimum payments on things but don't see any affect from this as what we're paying off, we just end putting back on to cards each month, rough figures below. Thank you in advance. 

[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......... 4

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

Monthly Income Details[/b]

Monthly income after tax................ 3000

Partners monthly income after tax....... 500

Benefits................................ 200

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

Total monthly income.................... 3700[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 258

Rent.................................... 800

Management charge (leasehold property).. 0

Council tax............................. 300

Electricity............................. 0

Gas..................................... 0

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

Water rates............................. 0

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

Mobile phone............................ 50

TV Licence.............................. 28.25

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

Internet Services....................... 25

Groceries etc. ......................... 800

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

Petrol/diesel........................... 150

Road tax................................ 25

Car Insurance........................... 50

Car maintenance (including MOT)......... 25

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

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

Childcare/nursery....................... 400

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

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 75

Buildings insurance..................... 25

Contents insurance...................... 20

Life assurance ......................... 45

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

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

Haircuts................................ 0

Entertainment........................... 20

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

Emergency fund.......................... 25[b]

Total monthly expenses.................. 3270.25[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 0

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

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

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

Total Assets............................ 0[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 0........(0)........0

Hire Purchase (HP) debt ...... 21000....(258)......0[b]

Total secured & HP debts...... 21000.....-.........-   [/b]

[b]Unsecured Debts[/b]

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

NW CC..........................7150......150.......25

Halifax CC.....................5750......120.......27.45

MBNA CC........................1900......90........27.45

Updraft........................26552.....570.......17.9

Barclaycard....................2728......85........19.95[b]

Total unsecured debts..........44080.....1015......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,700

Expenses (including HP & secured debts). 3,270.25

Available for debt repayments........... 429.75

Monthly UNsecured debt repayments....... 1,015[b]

Amount short for making debt repayments. -585.25[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 0

Total HP & Secured debt................. -21,000

Total Unsecured debt.................... -44,080[b]

Net Assets.............................. -65,080[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

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

Robin9

Just doublechecking -- who is paying the electric/gas/ water ?

RAS

Do you need building insurance for a rental property?

cookiemonster10

Sorry, I should have added - we're currently in accomodation provided by my employer so they pay things like building insurance and electric etc. Sorry, not sure why I've addded building insurance on that quote above but can't seem to amend now.

RAS

You probably need to wait until you've got enough posts to edit on MSE, try again after 5 and 10 posts?

TheAble

There doesn't appear to be a great deal to trim on that SOA, and you're a fair way short of being able to meet your minimums.

Likely you're undershooting in a number of areas too e.g. Entertainment, Holiday, Clothing.

I'd imagine you are going to need some sort of debt management therefore.

MattMattMattUK

What is the secured HP debt for, as you list no assets?

cookiemonster10

Thanks all so far. The secured debt is a car finance agreement - I didn't list it as an asset as felt this wasn't as still owing? Should it be?

In terms of debt management that TheAble is suggesting, we've looked a little in to DMPs - is that most advisable? Assume this would have impacts on things like the car finance agreement, phone contracts etc or is there a better way we should be looking at to tackle this?  

ManyWays

Car finance is not included in any DMP (or payment arrangements) as it has to be paid in full.

The massive and very expensive updraft loan, how long ago did you get that and was it for consolidation? 

How old are your children, do they need nappies or pocket money and mobiles?  You arent getting CB for 4, so are some of them only with you for some of the week? 

cookiemonster10

Thanks manyways, I think our child benefit was capped at some point last year due to my earnings going above the threshold but will need to double check that figure then…

updraft was actually two separate loans taken out for consolidation, one about a year ago, the other just over two.

EssexHebridean

Hi Cookiemonster - welcome to the boards, and happy new year.

first up - I’m guessing you are one of those who have learned the hard way that consolidation doesn’t work. I really wish the message was out there more widely - it’s hardly someone’s fault if they believe the happy crappy advertising selling consolidation loans as a “way of getting out of debt” after all. As you’ve discovered, sadly it’s not, and it often ends up making the situation far worse, I’m sorry that you have been caught in that trap. 

Definitely check on any benefits you might be entitled to - there is never any harm in checking even if you think it’s unlikely that you qualify. 4 children is quite a household - and that in itself can put a strain on finances of course. 

You say that  you are currently able to make the minimum payments each month - but that SOA clearly shows that you can’t, that’s problem no 1,  fortunately it’s also an easy fix - any unsecured consumer debt, stop making the payments to. That immediately gets your finances back to a position where you have control and you aren’t making things worse by trying to do the right thing. For your household and family, the right thing, right now, is to concentrate on your priority bills first and foremost - so rent, council tax, in most cases heat light and water - although not in yours currently of course, any essential travel, food and any necessary clothing purchases I’d include in there too.  

Can your partner increase their income at all? Currently their earnings are being almost entirely wiped out by the childcare bill which is obviously not ideal, not least as it must feel entirely dispiriting to be going to work for  almost nothing (and looking at that cost for petrol, it may actually be less than nothing?) 

As already said, there isn’t a huge amount to trim on the SOA - however, I’m going to question whether this is actually accurate for the current time as the fact that you have managed to put the buildings insurance cost on there raises concerns on that front.  Obviously the saving on bills is helpful, although the flipside is of course that hefty council tax bill. Your grocery spending can almost certainly be cut down a bit - even for a family your size £800 is pricey, although if it includes nappies and/or formula that won’t be helping. The “downshift challenge” where you switch out branded goods for supermarket own brand, and own brand for discount line might be worth a look. If you currently shop at Sainsburys you could try Tesco, and if you are currently a Tesco household then Aldi or Lidl may well save you a bit. Meal planning and shopping with a list (and without children, ideally!) will help to cut costs too. In your shoes I would make my first step to overhauling that side of things to be  asking an inventory of everything in the fridge, freezer and cupboards, and then working out what meals can be made from what you already have. Make your first step towards planning meals for the following week always to be checking the fridge to see what needs using up too - food waste is the enemy of keeping to a tight budget! 

It looks like a DMP is definitely the right way forwards for you - but don’t be tempted to rush into this, it’s important that you wait for accounts to default first as this minimises the longer term effects to your credit file.