Sense check please

Tryingtofly11

Hi all, thank you for the amazing advice and tips I have been reading over recent weeks. They have given me hope that we can get out of the hole we have been digging deeper and deeper for a few years now. We have two kids, one now adult and pretty much independent, and one living with us who has an extraordinarily expensive "hobby" which he hopes to make a career of. He competes internationally but there is no funding, and it has been really hard for us to fund it ourselves. We have sunk, financially, under the strain of it and find ourselves in considerable credit card debt with some overdraft debt too. 
I have completed an SOA. It has revealed why every month feels like such a battle, as we are hugely short every month on the amount needed to service the minimum payments. I can see why we are sinking. We get paid, we service the debts, we spend the rest of the month living hand to mouth pulling extra shifts to do a food shop. When a birthday, Christmas, MOT, small holiday (insert many other foreseeable but unplanned for events) rolls around we end up having to put it on CC and the situation becomes more dire.
Therefore, the SOA isn't really an accurate picture of what we currently do as, in it, I have allowed budget for planning for these events. I'm seeing the SOA as what it should be like when the money comes in, rather than the ramshackle arrangement it currently is. 
We have no choice but to not pay the payments this month. I realised this week, when I considered making a transfer to PayPal from one CC in order to pay the minimum on another, that this really is the end of the line. With the advice and ideas on here I feel that we need to set up a self-managed DMP in the following way:
- Stop all payments
- Stop all bills direct debits from Halifax overdraft
- Transfer those to another basic account we have with no debt
- Save £322 each month to emergency fund
- Wait for defaults from all creditors
- Once defaults come, consider CCA requests if debts get sold on
- Start payments at affordable rate
- Continue to save for F&F amounts
Please could you review the plan, and the SOA, and let me know your thoughts. 
Any help or wisdom much appreciated.

SOA

Household Information[/b]

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

Number of children in household......... 1

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

Monthly Income Details[/b]

Monthly income after tax................ 2200

Partners monthly income after tax....... 1950

Benefits................................ 0

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

Total monthly income.................... 4150[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 1244

Secured/HP loan repayments.............. 253

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

Management charge (leasehold property).. 0

Council tax............................. 135

Electricity............................. 100

Gas..................................... 70

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

Water rates............................. 42

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

Mobile phone............................ 44

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

Satellite/Cable TV...................... 13

Internet Services....................... 48

Groceries etc. ......................... 500

Clothing................................ 20

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

Road tax................................ 17

Car Insurance........................... 186

Car maintenance (including MOT)......... 100

Car parking............................. 5

Other travel............................ 20

Childcare/nursery....................... 0

Other child related expenses............ 250

Medical (prescriptions, dentist etc).... 65

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

Buildings insurance..................... 13

Contents insurance...................... 0

Life assurance ......................... 0

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

Presents (birthday, christmas etc)...... 70

Haircuts................................ 42

Entertainment........................... 125

Holiday................................. 150

Emergency fund.......................... 50

Vanguard fees for SIPP.................. 11

Professional fees / subs................ 20

Family music subscription............... 20

Charity................................. 10

Gym membership.......................... 70[b]

Total monthly expenses.................. 3828[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 380000

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

Car(s).................................. 1000

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

Total Assets............................ 381000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 172283...(1244).....4.36

Hire Purchase (HP) debt ...... 18000....(253)......0[b]

Total secured & HP debts...... 190283....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Halifax CC.....................5635.72...160.......25.25

Sainsburys CC..................9085.48...289.......26.49

Tesco CC.......................1219.18...34........16

Halifax Overdraft..............2500......0.........49.9

HSBC...........................2507.42...68........21.9

Capital One....................3510.56...138.......22.47

MBNA...........................4107.14...161.......26.28

Barclays 2.....................3497.4....147.......0

Barclays 1.....................7099.65...267.......0[b]

Total unsecured debts..........39162.55..1264......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,150

Expenses (including HP & secured debts). 3,828

Available for debt repayments........... 322

Monthly UNsecured debt repayments....... 1,264[b]

Amount short for making debt repayments. -942[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 381,000

Total HP & Secured debt................. -190,283

Total Unsecured debt.................... -39,162.55[b]

Net Assets.............................. 151,554.45[/b]

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

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

TheAble

Your plan sounds basically a good one. Your SOA also looks reasonable, debts notwithstanding. It amazes me how lenders extend so much credit to people who it must be obvious to them are struggling but you're definitely not alone in that regard.

Whatever this hobby is that's absorbed so much funding I'd say you really need to rein it in to a manageable level from here on in.

Prioritise your mortgage above all other debts i.e. don't default on this one whatever else you do. Protect the roof over your head and your major asset.

Grumpelstiltskin

OK So the child living with you is an adult?

If so they have to find themselves an income even if a few hours working at a Fast Food restaurant, they have to accept they are adult and they can't rely on their parents keeping them.

ManyWays

this really is the end of the line. 
when you are in a deep hole, stop digging

Groceries etc. ......................... 500 low

Clothing................................ 20 very low

Car Insurance........................... 186 wow!

Other child related expenses............ 250 is that this expensive hobby? 

Medical (prescriptions, dentist etc).... 65 high

Presents (birthday, christmas etc)...... 70 highish

Entertainment........................... 125 high

Holiday................................. 150 very high

Gym membership.......................... 70 for you or your child? 

How old is the child at home?  no child benefit?

when does your mortgage fix end?

fatbelly

Yes, when in a hole stop digging.

I am not clear about the car situation. You have put a value of £1000 but you also have hp of 18000. Two cars? Is that why the insurance seems high?

Is this 'hobby' an athletic one? Someone is eating well with £500 of groceries.

Tryingtofly11

Youngest child has just turned 18. So yes, an adult - and no child benefit. His sport costs the household an average of £7,000 per year. He’s just got a job and will be paying over half of that going forward. Hence the “reduced” budget of £250pm.
Car-wise we have an old banger that we own, and a car on PCP. Because youngest son is a new driver, the insurance is disgustingly high.
With 3 adults in the house, I thought £125 a week was reasonable to budget - perhaps I need to look at this again??
We never buy any clothes or treats really at all, hence the low budget for that. 

Re the holiday amount - I was sort of hoping that we could still factor in a family holiday each year. We have been so skint for so long that a trip away feels like a break in the clouds. Do I need to dial that back as well? 

Gym membership is local council gym for me and husband, son pays his own. 

Thanks again for all insight.

chubsta

What are the realistic chances of your sons 'hobby' becoming an occupation that will allow him to survive financially on his own for the rest of his life? If it is not something with realistic prospects of this then it is just a 'hobby' and should not be financed to the detriment of his parents in my opinion. We all have dreams of what we would love to do, but most don't do them because that is not how the world works - of course, if you want to support his dreams then that is also perfectly fine, it is what parents should always try to do, but to end up in this situation as a result is unfair and perhaps more importantly as you have found, unsustainable.

Gym, holidays, entertainment and presents are all luxuries in a position like this, a reduction in stress and improvements in mental health are more important.

Grumpelstiltskin

I think  Gym is an easy one to lose, you can run for free, buy cheap weights, ( often on local social media sites cheap or even free ) you have to be realistic, you just can't carry on as you are.

ManyWays

IMO £500 for groceries for 3 adults, one with an athletic hobby, is very low, unless your son is buying a lot of his own food. If you think you spend £125 a week, that is actually £540 a month.

Now your son has a job, he needs to be paying all the cost of his hobby, not half. And his car insurance.

This may seem unkind, but you have to rescue your own finances. You have over 15 years to go on the mortgage.  You are still left paying all the debts you have racked up over the last few years. And letting him live at home without charging him rent or board, that is as much as you can do.

You also have a car on PCP. Whatever you do now is going to wreck your credit scores, there is no other way forward, even after a lot of cutbacks you are £500+ a month short of being able to make the minimum payments. You will not be able to get another car on finance at a good rate when this PCP ends so unless you can save up the balloon payment amount, you will be looking at buying an old banger.

A holiday would be lovely, but you have very large debts to clear. If you want a holiday, then you have to chop back the presents, entertainment and gym, it's time for a lot of choices.

fatbelly

I can understand you not mentioning details of the hobby as it may compromise your anonymity. 

I only recently learned that even top level experienced athletes are sometimes asked to contribute costs. E.g. 32-year old 2020 Olympic runner was asked for £1100 to represent his country at a single event!

https://www.bbc.co.uk/sport/athletics/articles/cly8lrlnxn4o

RAS

There was a bit of the response from the sport authority to the article above indicating that after assessing costs the actual cost to entrants was likely to be capped at £250 ish.

But funding for sports folk competing even at international level depends on the sport and whether there is enough depth and breadth to suggest success. It's not uncommon for Olympic successes to mention that parents re-mortgaged to fund their training! That's besides getting up at silly o'clock to transport juniors to training and spending weekends ferrying them to events.