Slowly giving up - advise needed

fatbelly

Default = stop paying and wait for the official default notice

https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps-to-take-are-here-please-read-then-ask-questions

Worm352

If I stop paying all of my debts from next month, and they all default - what's the next step ? Should I then ask a charity to arrange a DMP for me ? Do I need to let all accounts to default?

Thank you guys for your understanding and help. I can see a light in the tunnel that thinks can get better.

fatbelly

You can ask a Debt Management Company to act for you. There are two who do not charge a fee. Stepchange are a charity. Payplan are not

Increasingly we are recommending that posters do it themselves. All the resources you need are on

https://nedcab.cabmoney.org.uk/remedy_4.asp

RAS

Read the thread to which fatbelly linked.

Two queries, to which you don't need to respond here but need to think about.

Did you get any of those loans out to "pay off" cards? If so, you now understand why that didn't work?

To what extent have you got out old bank statements and gone through them with a fine toothcomb? How much did you spend on presents for Christmas and birthdays last year? Ditto car repairs and maintenance. Does the supermarket bill include clothes or toys picked up for the kids? 

You need a new basic bank account with a bank(ing group) to whom you owe nothing. That requires no credit check, although you could try an online account like Monzo. The pots in Monzo are useful.

You get all your income paid into the new account and transfer essential standing orders, Council Tax and utilities to the new account. Do not use the SWITCH service because that also transfers the DDs for your creditors and it's the devils own job sorting put the mess when you cancel, the creditor re-instates, you cancel etc.

Then stop paying all the other debts. Cancel the DDs, walk away from the old bank account. If it's not in overdraft close it.

Open an instant access accounts, possibly an ISA each. When your salaries go in, transfer what you would have been paying creditors into one account, which is your emergency savings fund. From month 2, put half into the other account which is your car fund, because you can pretty much guarantee that you are going to need a new car in the not distant future. When the car fund is sufficient, keep topping up the emergency fund.

Defaults should start being issued any time after month 3, but could take 18 months. By that time you'll know more about your income and budget. Work out what you now have available to pay creditors. Make sure you are still saving some emergency money but once defaults are registered, start paying the creditors who have issued defaults as they occur. Wait until they send you the payment details and set up SOs you can afford.

A debt charity would pay the creditors pro rata; Fluid is about 4.5% of your debt so you pay that percent of the money available for repayments. In your case, I'd be tempted to keep to do that with the larger debts, but you have a couple of small accounts, and if they default quickly you may want to pay them off over a few months rather than pay a pittance for ages. Bit of a morale boost as well, though it will slow the build of your emergency fund.

elsien

Another thought for you.
Your original post as you have about 20 quid left at the end of the month. Your SOA says you should have 146.
it’s those sorts of discrepancies that you need to track down (plus another vote for reducing that grocery spending and chucking the money into an emergency fund).
So things like your £20 for presents- is that actually being put aside somewhere until you need it because if not, where is it going?

No-one’s SOA is accurate at first time round. But if your budget says you have money for something but in reality you don’t then working out why not is a large part of getting things more on track. 

ManyWays

The groceries is a bit high but the clothes and other child costs look very low and you have to have something in for an emergency fund, 

Worm352

elsien said:

Another thought for you.
Your original post as you have about 20 quid left at the end of the month. Your SOA says you should have 146.
it’s those sorts of discrepancies that you need to track down (plus another vote for reducing that grocery spending and chucking the money into an emergency fund).
So things like your £20 for presents- is that actually being put aside somewhere until you need it because if not, where is it going?

No-one’s SOA is accurate at first time round. But if your budget says you have money for something but in reality you don’t then working out why not is a large part of getting things more on track. 

Thanks for your reply.

Later today I'll try to sit down with my other half and do a proper SOA.

The €20 for presents its what I spend a year divided by 12 months. It's not being put aside, we just buy presents when the time comes. 

The groceries are for whole family 2+2 which includes a formula and nappies for a little one. Should this be put as a separate expense rather than groceries ?

katsu

If you aren't putting money aside then you are spending that £20 each month on something else as you must be buying these with credit if you aren't saving up. 

It's really important to work out what's really going on with your money so that you can take control of your future.  Without a good understanding you'll  keep finding random things crop up. 

I think redoing the SOA will really help you. Good luck with it. 

Worm352

katsu said:

If you aren't putting money aside then you are spending that £20 each month on something else as you must be buying these with credit if you aren't saving up. 

It's really important to work out what's really going on with your money so that you can take control of your future.  Without a good understanding you'll  keep finding random things crop up. 

I think redoing the SOA will really help you. Good luck with it. 

I will definitely do a proper SOA tonight and will post it here, and I'm thinking about envelopes system to put in place so I can see where the money's going.

Hopefully by doing this I can get back on track with my finances. 

Debtfree2026

That's it @Worm352 - getting back on t5rack.  Every month we were in our overdraft within the first week or being paid and couldn't work out why - in December/January I started reviewing my spending properly. And I started putting aside money into Monzo saving pots, so I worked out what I needed for our fixed direct debit bills (council tax, mortgage, water, gas and electricity etc.) Then I worked out yearly one off costs - our garden waste, Sainsburys delivery pass, Nest doorbell and divided them by however many months I have until I need to pay them.  For example, I save £5 every month into my Nest Doorbell pot, and £8 into my Sainsbury's delivery pot etc etc.....it just sits there getting a little bit of interest and when it's due I can move it over.  Whatever is left I divide into other pots - holiday, extra curricular, Christmas, birthdays, family health.  I feel so much more in control.

If it's a tighter month (mortgage payment is ramping up from next month) then I'll add less/none to my more frivolous pots but I know I have settled the important stuff.

I feel I've gone off on a tangent, but basically I'm trying to say that I went from having my head buried in the financial sand to using this forum, seeing what others have done and have now got a plan that works for me.  But I did need to have that lightbulb moment in order to change things.