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Debt getting out of hand £57k, looking for advice.
Challenger47
Posts: 6 Forumite
Hi All,
I have been in debt of some form for the last 9 years and its time to get it sorted. As a brief overview I initially got into a large debt of around £45,000 for training for my dream job, which I now have, fortunately! This was back in 2018, since then I have slowly repaid, moved around on 0% credit cards etc. However, neither myself or my wife have any budgeting prowess and somehow the debt seemed to remain around £30-£35k no matter what.
Unfortunately, one of our dogs was recently involved in a serious accident and along came a £24k vet bill, she is worth every penny to us. The insurance only covered £7000. I managed to pay £3000 out of savings and the rest went on to 0% credit cards. My concerns are that some of my older debts on virgin and MBNA cards are soon to come out of the 0% deal and I am now not eligible for any more 0% cards so will end up paying extortionate interest rates.
Things to note, both me and my wife are in this together, some of the cards in her name some in mine, it is our debt to tackle, mobile phones are for 2 people including handsets and sims. I work away from home, 4 days on 4 days off so when im working i spend 10 quid a night at a campsite to park my caravan, this is as cheap as I can get it! The 260mile round trip commute obviously adds to the diesel bills.
My wife is soon to go back to full time work to help the situation, this will increase her salary to £3100 per month, a huge help. Additionally, by this time next year there is an 80% chance my salary will increase to around £6400 per month potentially with a £10,000 bonus which would go straight off the debt.
SOA below.
I suppose my question is what is the best way to tackle this, as soon as the wife is back working full time we can afford to meet all debt repayments. My goal is to pay down the higher interest credit cards first, followed by early repayments on the loans, is that a good idea? In terms of things like affordability complaints, there is an argument that when i first got into this debt natwest gave me a £30,000 loan over 5 years while i was earning around £35k, this was an instant decision. Would this give me grounds for an affordability complaint even though that loan is now paid?
I think there is lots to consider here and neither of us are financially savvy which needs to change!
I have been in debt of some form for the last 9 years and its time to get it sorted. As a brief overview I initially got into a large debt of around £45,000 for training for my dream job, which I now have, fortunately! This was back in 2018, since then I have slowly repaid, moved around on 0% credit cards etc. However, neither myself or my wife have any budgeting prowess and somehow the debt seemed to remain around £30-£35k no matter what.
Unfortunately, one of our dogs was recently involved in a serious accident and along came a £24k vet bill, she is worth every penny to us. The insurance only covered £7000. I managed to pay £3000 out of savings and the rest went on to 0% credit cards. My concerns are that some of my older debts on virgin and MBNA cards are soon to come out of the 0% deal and I am now not eligible for any more 0% cards so will end up paying extortionate interest rates.
Things to note, both me and my wife are in this together, some of the cards in her name some in mine, it is our debt to tackle, mobile phones are for 2 people including handsets and sims. I work away from home, 4 days on 4 days off so when im working i spend 10 quid a night at a campsite to park my caravan, this is as cheap as I can get it! The 260mile round trip commute obviously adds to the diesel bills.
My wife is soon to go back to full time work to help the situation, this will increase her salary to £3100 per month, a huge help. Additionally, by this time next year there is an 80% chance my salary will increase to around £6400 per month potentially with a £10,000 bonus which would go straight off the debt.
SOA below.
I suppose my question is what is the best way to tackle this, as soon as the wife is back working full time we can afford to meet all debt repayments. My goal is to pay down the higher interest credit cards first, followed by early repayments on the loans, is that a good idea? In terms of things like affordability complaints, there is an argument that when i first got into this debt natwest gave me a £30,000 loan over 5 years while i was earning around £35k, this was an instant decision. Would this give me grounds for an affordability complaint even though that loan is now paid?
I think there is lots to consider here and neither of us are financially savvy which needs to change!
[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......... 0
Number of cars owned.................... 2[b]
Monthly Income Details[/b]
Monthly income after tax................ 4200
Partners monthly income after tax....... 2000
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 6200[/b][b]
Monthly Expense Details[/b]
Mortgage................................ 1318
Secured/HP loan repayments.............. 223
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 169.54
Electricity............................. 25
Gas..................................... 25
Oil..................................... 0
Water rates............................. 50.62
Telephone (land line)................... 0
Mobile phone............................ 112
TV Licence.............................. 0
Satellite/Cable TV...................... 15
Internet Services....................... 23.97
Groceries etc. ......................... 450
Clothing................................ 100
Petrol/diesel........................... 240
Road tax................................ 30
Car Insurance........................... 150
Car maintenance (including MOT)......... 41.66
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 53
Pet insurance/vet bills................. 130
Buildings insurance..................... 7.5
Contents insurance...................... 7.55
Life assurance ......................... 36.45
Other insurance......................... 140
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 1000
Pet vaccines etc........................ 45
Pet food................................ 250
Work accomodation....................... 160[b]
Total monthly expenses.................. 4863.29[/b]
[b]
Assets[/b]
Cash.................................... 1000
House value (Gross)..................... 330000
Shares and bonds........................ 0
Car(s).................................. 5000
Other assets............................ 12000[b]
Total Assets............................ 348000[/b]
[b]
Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 270000...(1318).....4.2
Hire Purchase (HP) debt ...... 21200....(223)......0[b]
Total secured & HP debts...... 291200....-.........- [/b]
[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
MBNA credit card...............5215......130.......0
Virgin Credit card.............6438......160.......0
lloyds credit card.............11369.....277.......0
M & S Credit card..............6000......200.......0
HSBC Credit card...............7000......200.......0
Solar panels...................4300......65........12
Creation Sofa..................1800......78........0
MBNA loan......................4407......205.......10.66
Natwest loan...................3800......106.......9.9
Tesco credit card..............2340......27........0
Natwest credit card............4685......123.......21[b]
Total unsecured debts..........57354.....1571......- [/b]
[b]
Monthly Budget Summary[/b]
Total monthly income.................... 6,200
Expenses (including HP & secured debts). 4,863.29
Available for debt repayments........... 1,336.71
Monthly UNsecured debt repayments....... 1,571[b]
Amount short for making debt repayments. -234.29[/b]
[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 348,000
Total HP & Secured debt................. -291,200
Total Unsecured debt.................... -57,354[b]
Net Assets.............................. -554[/b]
[i]Created using the SOA calculator at www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]
0
Comments
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OK A few questions
. Water rates are you on a meter?
Mobile phones, horrendous amount for 2 when do contracts end?
Groceries why so high?
Other insurances what are they for?
Pet food how many animals?
You can't afford at the moment an emergency fund and debt repayments, are you going to stop paying debts and save for emergencies and settlements?
If you go down to the woods today you better not go alone.0 -
Thanks for the quick reply. Yes we are on a water meter. That is the current DD.
Yes mobile phones are an issue, it's currently 66 for 2 handsets with a year left to pay. Mine is about 30 a month for the sim as it includes roaming in lots of countries due to my job. Although I am sure I Can Get this cheaper. Wife's also includes a smart watch I think. I know this can all be done cheaper but currently locked in to contracts for about another year.
Groceries, not sure to be honest. We cook every meal from scratch. This is one I know we can save on moving forwards.
The other insurance is £140 for health insurance for both of us.
3 large animals. Food bill will be coming down this month as its not sustainable as it is.
My wife will be full time by the end of the month so an additional 1k. Should give us more breathing space in terms of emergency fund.
I am nervous about stopping paying the debts, I guess like everyone is at first. I assume I will have to pay back the full amounts any way along with any charges ? And also lose all my 0% benefits due to not paying? Then what, even more debt?
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We really need to know when those 0% deals end and what rates they revert too. Also are they his, hers or joint?
If your wife is going to get an increased salary next month, you jointly have a fairly hard decision to make, short term anyway.
If you want to preserve your credit rating(s) you need to go cold turkey this month. Scrap the emergency savings, clothing and entertainment and cut back massively on the groceries. Head over to the Money Saving Oldstyle forum, check out the store cupboard challenges, and batch cooking.
That'll see you over until the full-time salary comes in. And give you time to plan more effectively. Do you both stop paying and do DMPs, or would you be able split your finances and one of you preserve their credit record (only possible if you don't have joint debt other than the mortgage?
If you've have not made a mistake, you've made nothing1 -
In terms of things like affordability complaints, there is an argument that when i first got into this debt natwest gave me a £30,000 loan over 5 years while i was earning around £35k, this was an instant decision. Would this give me grounds for an affordability complaint even though that loan is now paid?
How long ago did the loan start and when was it settled?
You may find it easier to make complaints about the subsequent lenders after that large loan, as they should have seen the large loan amount you were paying each month.
Emergency fund.......................... 1000
This is the only reason your SOA is "in the red"; if you reduce this to £100 a month, you can afford all the debt payments you have listed.
So when do the 0%s end, and will the extra income from your wife allow you to make real inroads into the debts before they are all charging interest?1 -
Thanks Ras.
I know that 3 of the 0% details across MBNA and virgin end in July, equating to around £10,000 total i need to look up the interest rate but i know it is in the 22-25% range.
Most of the debt is currently in my name, we dont share anything financially apart from the mortgage. So you raise a good point. We just managed to get some good 0% credit cards in my wifes name to put some of mine onto when the deals run out. But then we will impact her very good credit score. My credit score is ok at the moment but like you said if I go into a DMP without having an impact on my wifes credit score then that could be an option. We have just re mortgaged on a 5 year fixed deal so that wont be an issue for a while.
I suppose the big question in my head is, do we knuckle down and keep up with it all and then when i get my promotion next year (nothing is guaranteed) things will be much more comfortable or do i go into a DMP and hopefully pay back less over a longer period but have a serious impact on my credit.0 -
ManyWays said:Emergency fund.......................... 1000
This is the only reason your SOA is "in the red"; if you reduce this to £100 a month, you can afford all the debt payments you have listed.Agreed that seems a lot, in the context of everything else.OP how much do you already have in your emergency fund? How big an emergency are you planning for? Could you cut your fund top-ups back to £100 or £200 a month and reallocate the reduction to debt repayment?
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Good spot guys.
I thought that was asking for my overall emergency fund. I will reduce that to say 200 and re post the SOA. That makes things look a lot better.
The original large loan was taken out around 2018 and settled around 2022. As you said a lot of the lenders since then have given me huge credit limits etc however I have been earning between 50-80k during that time so I suppose they can argue that I could afford it.
I think once the wife is back full time we can commit that extra 1k to paying down debt along with the 1k or so I am already paying. As long as we can keep most of it at 0% which may be the struggle.1 -
New SOA below. My current emergency fund is £1000 and i have allowed adding £200 a month to that[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]Household Information[/b]Number of adults in household........... 2Number of children in household......... 0Number of cars owned.................... 2[b]Monthly Income Details[/b]Monthly income after tax................ 4200Partners monthly income after tax....... 2000Benefits................................ 0Other income............................ 0[b]Total monthly income.................... 6200[/b][b]Monthly Expense Details[/b]Mortgage................................ 1318Secured/HP loan repayments.............. 223Rent.................................... 0Management charge (leasehold property).. 0Council tax............................. 169.54Electricity............................. 25Gas..................................... 25Oil..................................... 0Water rates............................. 50.62Telephone (land line)................... 0Mobile phone............................ 112TV Licence.............................. 0Satellite/Cable TV...................... 15Internet Services....................... 23.97Groceries etc. ......................... 450Clothing................................ 100Petrol/diesel........................... 240Road tax................................ 30Car Insurance........................... 150Car maintenance (including MOT)......... 41.66Car parking............................. 0Other travel............................ 0Childcare/nursery....................... 0Other child related expenses............ 0Medical (prescriptions, dentist etc).... 53Pet insurance/vet bills................. 130Buildings insurance..................... 7.5Contents insurance...................... 7.55Life assurance ......................... 36.45Other insurance......................... 140Presents (birthday, christmas etc)...... 0Haircuts................................ 10Entertainment........................... 50Holiday................................. 0Emergency fund.......................... 200Pet vaccines etc........................ 45Pet food................................ 250Work accomodation....................... 160[b]Total monthly expenses.................. 4063.29[/b][b]Assets[/b]Cash.................................... 1000House value (Gross)..................... 330000Shares and bonds........................ 0Car(s).................................. 5000Other assets............................ 12000[b]Total Assets............................ 348000[/b][b]Secured & HP Debts[/b]Description....................Debt......Monthly...APRMortgage...................... 270000...(1318).....4.2Hire Purchase (HP) debt ...... 21200....(223)......0[b]Total secured & HP debts...... 291200....-.........- [/b][b]Unsecured Debts[/b]Description....................Debt......Monthly...APRMBNA credit card...............5215......130.......0Virgin Credit card.............6438......160.......0lloyds credit card.............11369.....277.......0M & S Credit card..............6000......200.......0HSBC Credit card...............7000......200.......0Solar panels...................4300......65........12Creation Sofa..................1800......78........0MBNA loan......................4407......205.......10.66Natwest loan...................3800......106.......9.9Tesco credit card..............2340......27........0Natwest credit card............4685......123.......21[b]Total unsecured debts..........57354.....1571......- [/b][b]Monthly Budget Summary[/b]Total monthly income.................... 6,200Expenses (including HP & secured debts). 4,063.29Available for debt repayments........... 2,136.71Monthly UNsecured debt repayments....... 1,571[b]Amount left after debt repayments....... 565.71[/b][b]Personal Balance Sheet Summary[/b]Total assets (things you own)........... 348,000Total HP & Secured debt................. -291,200Total Unsecured debt.................... -57,354[b]Net Assets.............................. -554[/b][i]Created using the SOA calculator at www.LemonFool.co.uk.Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]0
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OK So go through everything you spend and try and reduce it. eg. clothes £100 a month, only buy underwear, socks etc and manage with what you have got,
Check everything you spend on your pets and see if you can get it cheaper. Groceries, check what you have in cupboards, freezer, fridge and use them up. Look at the other boards on here, pets and old style will give you ideas.If you go down to the woods today you better not go alone.1 -
I do not think it is worth the time to make an affordability complaint if you were earning between £50k and £80k when the more recent cards raised the limits. Giving a £30k loan on a £35k annual salary is not unheard of if you did not have all this other debt at the time. The very fact it is paid off now will not help your claim. I think you would do better to focus on budgeting as it sounds like you have not prioritised repaying the debt for a very long time if you had £35k outstanding for 9 years and had a large salary but did not make a plan to clear the debt. The vet bill is obviously the final straw after living with high unsecured debt for a while.
Your soa shows you can afford your debts but obviously the commuting and accommodation for work and your pet costs are straining your budget. The mobile phone bills are high so once they expire go to sim only. What is the other insurance? If the soa is correct though it shows you have £565 spare to throw at the debts to get your budget under control. Once your wife is back working full time I would tackle the debts costing the most then the deals due to expire first. So the Nat West credit card then MBNA and Virgin.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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