Best Strategy for DMP start date

cheshbon

RAS said:

Does your employers offer any sort of pension? What are the terms of those? If either of you are in a union, most likely your have some sort of pension on death and possibly a lump sum?

Apologies I replied to Grumplestilskin above thank you for reviewing this.

cheshbon

Hi all,
Thank you for your guidance thus far. Can anyone help with some of the questions below:
Questions I have:
1) Is this strategy advisable?
2) I am due about £3600 in back pay after tax in the next 2 months. Should we pay off the Overdrafts (£3681.90) My thinking behind this is that from my research they take much longer to default and don't want to delay the healing of credit file further.
3) How much emergency fund do you recommend?
4)We have a mortgage with Halifax for £400k at 4.04. This is a fixed rate for 2 years until August 2027. Will we struggle to renew this mortgage if we default on the loans and credit cards we have with Halifax or will it not matter as staying with the same provider they wont do a credit check?

Grumpelstiltskin

I can answer 3 and 4 quickly.

3 As much as possible but at least 6 months to cover all vital expenses.

4 No, debts and mortgage are totally separate, no credit check if you stay with Halifax.

I will add one thing, don't rush into making payments.

RAS

Use your tax rebate as the basis of your emergency fund in the first instance. Once you've got bit more saved, you can look at the situation again. Not least as you have a property that needs maintenance and cars that could need repairs.

The account of concern is Amex. They often default quickly and you'd be wise to make a pro rate payment quickly once they do, quite possibly 3-4 months in. So you need to get you spending under control ASAP. Other creditors couple take 18 months to default.

That means reviewing the groceries, keeping clothing, presents and ents to a minimum and reviewing those insurance deals. Read the fine print so you know when they can be activated and for things like mortgage cover consider what I know as reducing term. It cover the life of the mortgage only and reduces over time.

Kids that age don't need expensive presents, and don't know if clothing is second hand and however tempting play dates are offer coffee at home and limit paid  activities.

You've got some slack coming with the reduction in childcare costs and the car payment. But you need to make sure you've enough for a car and a house repair or a period of sickness.

cheshbon

Thank you @RAS @Grumpelstiltskin. I really appreciate your input. I will review this all and update SAF as soon as I can improve it and reduce the cost further.