Where to begin/realistic expectations

chinaski11

Hi forumites! 

I’ve been in debt for as long as I can remember and have wanted to pluck up the courage to do something about it for quite some time. I believe I am in what constitutes as a ‘debt crisis’ (debt slowly increasing without being able to reduce it). I’m hoping for some advice on where to start and to manage my expectations of what I can expect from a DMP. 

I’ve created a budget online through Stepchange however the arrangement is seeing me pay more than what I’m currently paying now (though I know this will help me pay off sooner and is factoring in the interest being frozen). I’m finding it hard to create a budget that accurately reflects the way I live and being able to factor in some quality of life whilst paying off what I owe. 

I know it can be dependant on lots of factors, however I was hoping if I provide some figures someone might be able to advise whether my proposed plan is realistic. 

I earn 2,035 a month after tax (reducing back down to 1900 when my secondment finishes in March). I currently pay £600 in household bills + around £200 in travel/car expenses. 

Current payments on my loans/cards amounts to £680 and I’d say atleast £300 of that is in interest (though I don’t have my figures to hand at the moment). 

I owe £23000 (which includes interest on loans). Neither of the loans come under the bracket of a payday loans. 

I can post figures of which cards/loan companies I owe what to however I’m not sure if that is breaking any sort of confidentiality/anonymity rules in the forum. 

My question is, am I being realistic in thinking that I can make an arrangement to have the interest frozen on my debts and pay them off with a fixed payment over 5 years (60 months). That would amount to £380 a month. Based on experience and the relative figures, does this seem like something companies might agree to? 

I’d not be surprised if this isn’t enough context/info to give any sort of solid judgement on, but any advice from experienced forumites would be very much appreciated. 

Also any advice on next steps, things to research or information of the process of DMPs would be really appreciated. 

Here’s hoping I can get onto the road to debt freedom soon. 

Thankyou all! 

Grumpelstiltskin

OK next step, read this thread  In Debt and Wannabe Debt Free? first Steps to take are here, please read, then ask questions. — MoneySavingExpert Forum

Complete a honest SOA format for MSE and post on here.

When we can see your financial position we can advise you.

Do not rush into a DMP, you need the debts to default before you think about a DMP and they will only do this when you stop paying them.

chinaski11

Thanks Grumplestiltskin! I’ll take a look now and get back to the thread with the SOA. 

I keep reading about letting debts default and emergency funds but I cant find any sort of ‘guide’ on what this means/what the ramifications are. Are there any resources for information on this that you could share please? 

Thanks for getting back so quickly! 

RAS

Your SOA needs to be realistic. I'd suggest basing it on the household if possible. Stepchange would allocate shared costs in proportion to income.

Many first attempts ignore occasional/annual spends. Having nothing for clothing and holidays might be realistic if you actually have nothing to spend after food, shelter and utilities, otherwise you might hack it for a year, but not long-term.

So, add something towards element that you would have used if you weren't now struggling to pay the basics and minimum debt payments

ManyWays

Please include the real lender names, not CC1

chinaski11

[tt][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 3

Number of children in household......... 0

Number of cars owned.................... 0[b]

Monthly Income Details[/b]

Monthly income after tax................ 2035

Partners monthly income after tax....... 0

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

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

Total monthly income.................... 2035[/b][b]

Monthly Expense Details[/b]

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

Secured/HP loan repayments.............. 0

Rent.................................... 450

Management charge (leasehold property).. 0

Council tax............................. 55

Electricity............................. 25

Gas..................................... 25

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

Water rates............................. 20

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

Mobile phone............................ 13

TV Licence.............................. 0

Satellite/Cable TV...................... 0

Internet Services....................... 10

Groceries etc. ......................... 20

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

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

Road tax................................ 2

Car Insurance........................... 90

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

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

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

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

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

Medical (prescriptions, dentist etc).... 7

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

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

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

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

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

Presents (birthday, christmas etc)...... 30

Haircuts................................ 10

Entertainment........................... 0

Holiday................................. 0

Emergency fund.......................... 0

Council tax ............................ 55

Spotify ................................ 9

Xbox gamepass/online.................... 15

Bouldering ............................. 30

Gym..................................... 35[b]

Total monthly expenses.................. 1061[/b]

[b]

Assets[/b]

Cash.................................... 200

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

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

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

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

Total Assets............................ 1200[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

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

Barclaycard (CC)...............4500......90........0

Vanquis (CC)...................1200......60........0

Aqua (CC)......................1900......80........0

118 118 Money (Loan)...........1800......36........0

Abound (Loan)..................11000.....260.......0

LloydsOD main account..........500.......20........0

Monzo (overdraft)..............950.......30........0

Halifax (overdraft) ...........1000......30........0

Halifax (CC)...................950.......25........0

Capital one (CC)...............200.......10........0[b]

Total unsecured debts..........24000.....641.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,035

Expenses (including HP & secured debts). 1,061

Available for debt repayments........... 974

Monthly UNsecured debt repayments....... 641[b]

Amount left after debt repayments....... 333[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 1,200

Total HP & Secured debt................. -0

Total Unsecured debt.................... -24,000[b]

Net Assets.............................. -22,800[/b]

[i][/i][/tt]

chinaski11

For some extra context that I couldn’t add, I’m currently on secondment until March 2026 after which my pay will reduce back down to 1,900 (this was my first month on my new wage). Also, my car is currently off the road pending repair. If all goes well I’ll be keeping it. If not, I’ll probably have to scrap/sell (if I can) as the repairs probably won’t be worth what I paid. 

Thanks in advance. 

Grumpelstiltskin

You spend £20 a month on food and £30 a month on presents?

You need interest rates on all of the debts.

saajan_12

chinaski11 said:

Council tax............................. 55

Internet Services....................... 10

Groceries etc. ......................... 20

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

..
Entertainment........................... 0

Holiday................................. 0

Emergency fund.......................... 0

Council tax ............................ 55

Spotify ................................ 9

Xbox gamepass/online.................... 15

Bouldering ............................. 30

Gym..................................... 35[b]

[b]

]

Some of these look very low:
- £20 a month for food. As someone who naturally looks for yellow stickers and bottom shelf, even I think that's not enough. 
- £10 on internet - are you sure? No line rental on top? 
- Entertainment is essentially a combo of xbox, bouldering and gym totalling £80 which isn't terrible. If you wanted to reduce, maybe you could combine gym and bouldering in one facility, or payg for bouldering less frequently? 

chinaski11 said:

Council tax............................. 55

Assets[/b]

Cash.................................... 200

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,035

Expenses (including HP & secured debts). 1,061

Available for debt repayments........... 974

Monthly UNsecured debt repayments....... 641[b]

Amount left after debt repayments....... 333[/b]

Council tax is repeated, so based on this, you should have a surplus of £388 a month. This would be building up to some cash savings. If its not, then perhaps your expenses have actually been higher - I'd go back through and check. 

Smudgeismydog

You’ve put 3 adults, but only your income. So is this based on your share of the bills? Do you have an adult child living at home?

chinaski11

Ah yes, definitely some typos there! I’ll go back and redo now (and find interest rates). Internet is correct as it’s £30 split between 3 of us. Groceries is definitely not correct. I’ll combine gym, bouldering, Spotify and Xbox into ‘entertainment’, cheers. As for the ‘presents’ section, is that not the annual divided by 12? I.e what I’d spend on Christmas/birthdays throughout the year? Or am I misconstruing that? 

Thanks all!