Advice for dealing with debt

Lettingissues77

Hi,
I have been struggling with repaying my debt. After repayments I am struggling to have enough to live on. Whilst I used to move credit around onto 0% cards, as my debt has grown and credit rating has become ‘poor’ I cannot get better rates. For example I have an almost £5000 debt with Amex at 50% interest. I am only paying minimums on my cards and feel as though I  not reducing any debt. I don’t know if I would be best off just going into a DMP, or whether I am better off just continuing as I am. 

I have done a SOA. Would welcome any advice. We live in a rental property.

thank you,

[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.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 2250

Partners monthly income after tax....... 1000

Benefits................................ 305

Other income............................ 450[b]

Total monthly income.................... 4005[/b][b]

Monthly Expense Details[/b]

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

Secured/HP loan repayments.............. 280

Rent.................................... 550

Management charge (leasehold property).. 0

Council tax............................. 117

Electricity............................. 130

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

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

Water rates............................. 50

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

Mobile phone............................ 120

TV Licence.............................. 15

Satellite/Cable TV...................... 45

Internet Services....................... 30

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

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

Petrol/diesel........................... 80

Road tax................................ 20

Car Insurance........................... 60

Car maintenance (including MOT)......... 20

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

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

Childcare/nursery....................... 200

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

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

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 15

Life assurance ......................... 30

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

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

Haircuts................................ 25

Entertainment........................... 50

Holiday................................. 100

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

Total monthly expenses.................. 2887[/b]

[b]

Assets[/b]

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

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

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

Car(s).................................. 16000

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

Total Assets............................ 16000[/b]

[b]

Secured & HP Debts[/b]

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

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

Hire Purchase (HP) debt ...... 16500....(280)......10[b]

Total secured & HP debts...... 16500.....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Amex ..........................4700......200.......50

Tesco..........................4500......80........25

MBNA ..........................3200......75........0

Overdrafts ....................2300......0.........25

Very...........................500.......40........37

RBS ...........................13500.....500.......10

Capital 1......................150.......20........0

Tesco 2........................2500......80........20

Lloyds ........................220.......25........5

Paypal.........................450.......20........20

Virgin ........................900.......25........25

RBS ...........................1900......80........16

Barclaycard ...................2700......80........19[b]

Total unsecured debts..........37520.....1225......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,005

Expenses (including HP & secured debts). 2,887

Available for debt repayments........... 1,118

Monthly UNsecured debt repayments....... 1,225[b]

Amount short for making debt repayments. -107[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 16,000

Total HP & Secured debt................. -16,500

Total Unsecured debt.................... -37,520[b]

Net Assets.............................. -38,020[/b]

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

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

Grumpelstiltskin

You are showing Holiday at £100 a month yet no cash savings? Are you paying for it monthly?

How any mobile phones are you paying for?

Lettingissues77

I am paying for 4 mobile phones as two teenagers. Was paying sim only on two. Unfortunately needed new handsets. I spend about £1200 a year on flights as I moved to UK from another country at 18 and all my family live abroad so we visit them. I pay for the flights on a credit card. 

Brie

I'm not surprised you feel you're not making headway.  £4700 on Amex at 50% and monthly payments at £200 means you're clearing about £5 a month.  That's going to take you a very long time.  

Question for you - what's the asset that's £16k?  Is that a hire purchase car?

I'm wondering about the advisability of saving/spending £250 a month for holidays, entertainment & presents.  If that money was put against the Amex a big chunk of it would be gone in a year.  

And the numbers all seem very round so I wonder how accurate they might be.  So are you saving for holidays and presents or are you simply spending and then guessing at how much that spend might be?  And £800 for groceries seems both high & round but I'm wondering if you have ravenous teens that inhale anything edible as the child care costs seem minimal.  

Double check some of your debt numbers too please - seems you are accruing more per interest in a month than you are paying.

Good start though - more ideas will no doubt come flooding your way!!

Lettingissues77

The difficult thing is the £450 a month other income is student loan. This comes in three payments a year. And it basically pays off my overdraft which I end up dipping further and further into each month. So my monthly income seems £450 less, 

Grumpelstiltskin

So you are not saving the £100 a month for holidays?

Who is the student?

Are the teenagers  old enough to get a part time job?

Lettingissues77

Sorry, the figures are approximate as I am trying to just get an idea of whether I should just keep ploughing along making the payments or seriously think about the DMP. 

I think I have misunderstood as well as I thought I need to put what I would need to save to not be putting anything on a credit card. 4 children Xmas and Birthday £1200 a year would work out £150 each, which is about what I spend. This could be cut. 

Amex raised my interest rates, then slashed my credit limit, I went from using about 53% of my credit limit to 90%, my husband was not working for 6 months. So I accrued a lot of debt during that period. 

Two teenagers, so food costs are high. I try to meal plan but it’s harder to spend much less. 

Lettingissues77

I work full time but I also study so I get a part time student loan. 

Teenagers are 13/14 so not quite able to have part time jobs yet. 

Lettingissues77

And sorry, no I am not saving anything. I have no savings. 

fatbelly

You have 2 teenagers but spend 200 on childcare?

I can see from those figures that it looks a bit borderline. No surplus over the contractual payments and some high interest in there.

If that hp is on a car, how far into the agreement are you?

Do you think with a bit of work you could reduce the 800 grocery spend?

If you do move to a dmp, it does look as if your debt could be gone in around 3 years

sourcrates

You have a reasonable income, but with 14 creditors, some charging mega interest, and a debt total of £53,250, you have simply over extended yourself, your car is not an asset as long as its on finance.

There`s not a lot to cut from your budget, maybe £200 at a push, from your food/entertainment and holiday allowances, which won`t make an awful lot of difference to the overall picture.

Can the car be returned, buy something cheaper?

You are currently paying around £1200 a month for all your credit debts, minus the car, debt management could probably cut that to around £800 so just under 4 years to clear 37k, as long as all interest was stopped sooner rather than later, leaving you £400 a month better off.