Help, £35,000 in unsecured debt and drowning

Tipper9242

It's really scary posting on here, but I'm in a snowballing amount of debt and need to make significant changes. I've been spending on credit cards to cover day-to-day spending, and I know that some of my expenses are far too high (for example, spending a lot on entertainment and eating out that needs to be massively reduced), but I need some advice about where to start with the unsecured debt. I've never missed a payment, but as mentioned, I'm using CCs to cover daily spending. I've just opened a new bank account with Monzo, and have manually transferred over DDs for bills, and cancelled direct debits for cards (though they're paid up through to the end of the month). Any advice would be gratefully received, and it would be helpful to have some idea about where to start with a sensible budget to aim towards. Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household.........
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2836.5
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 500
Total monthly income.................... 3336.5

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 408.1
Rent.................................... 650
Management charge (leasehold property).. 0
Council tax............................. 104
Electricity............................. 63
Gas..................................... 63
Oil..................................... 0
Water rates............................. 33.14
Telephone (land line)................... 0
Mobile phone............................ 100.59
TV Licence.............................. 14.54
Satellite/Cable TV...................... 0
Internet Services....................... 80
Groceries etc. ......................... 360
Clothing................................ 85
Petrol/diesel........................... 150
Road tax................................ 17.06
Car Insurance........................... 42.5
Car maintenance (including MOT)......... 80
Car parking............................. 35
Other travel............................ 200
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 1
Pet insurance/vet bills................. 55
Buildings insurance..................... 0
Contents insurance...................... 42.5
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 15
Haircuts................................ 16
Entertainment........................... 447
Holiday................................. 0
Emergency fund.......................... 25
Eating / Drinking Out................... 190
(Unnamed monthly expense)............... 0
Total monthly expenses.................. 3277.43


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 10000
Other assets............................ 0
Total Assets............................ 10000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 20500....(408.1)....6.9
Total secured & HP debts...... 20500.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
American Express CC............10104.....500.......33.5
First Direct CC................1295......36.4......18.9
Virgin Money CC (0%)...........2717......0.........0
Barclaycard CC.................6473.28...67.33.....0
V12 Finance....................455.63....26.23.....0
EE.............................392.87....18.71.....0
Paypal.........................2008.39...87.15.....0
MBNA CC (Standard).............7795.01...248.4.....30.83
MBNA CC (6%)...................2277.56...0.........5.9
M&S CC.........................1168.31...29.67.....21.9
Virgin Money CC................457.41....42.68.....20.01
Total unsecured debts..........35144.46..1056.57...-


Monthly Budget Summary
Total monthly income.................... 3,336.5
Expenses (including HP & secured debts). 3,277.43
Available for debt repayments........... 59.07
Monthly UNsecured debt repayments....... 1,056.57
Amount short for making debt repayments. -997.5

Personal Balance Sheet Summary
Total assets (things you own)........... 10,000
Total HP & Secured debt................. -20,500
Total Unsecured debt.................... -35,144.46
Net Assets.............................. -45,644.46

Created using the SOA calculator at www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using Firefox browser.

Brie

Well done!  You're here and you're safe.  We're really quite friendly as many of us have been exactly where you are now.  

Have you talked to any of your creditors about your situation?  What do you think might be possible if you told them you couldn't pay anything for 3 months?  This will give you some time to set aside some money, think about what you want to do and see what you can do about sorting out some of your bad habits.  

And speaking of bad habits - over £600 a month on going out!!  Easy to do, hard to stop.  Ease back, cut back one outing a week and then try for 2.  You might find that you do have the money to cover the bills after all.

I'd suggest that as you're surviving on CCs that you pick 1 or 2 to keep making payments on to give you time to get life sorted and still have a way to pay for petrol etc.  The 2 at the bottom of your list, M&S & Virgin, have reasonable interest rates and not a lot on them.  If you stopped paying all the others you could aim to clear those and then set them up to pay in full every month.  

Confusion point - you have a car worth £10k but also hire purchase.  Does that mean you own one car outright?  If so can you sell it?

Expenses - you aren't paying any Sky or other subs for TV viewing so I guess you need to keep the TV licence.  But do you need to buy clothes every month, how about not buying anything for 6 months or look for alternatives like charity shops or Vinted?
Mobile at £100+ a month!!  When can you get out of that and on to a cheaper tariff??  There's no need to upgrade to the latest iphone or whatever.  

Meanwhile take a deep breath and relax a bit.  The hardest bit of admitting there's a problem is done so now we can all help and see what we can suggest for a solution.

Tipper9242

Thanks for your reply, yes you're right, setting a strict budget for entertainment / going out is going to be important. I still want to go out a bit, but I've actually got some tickets for stuff already paid for so I can just not buy any more and minimise eating / drinking out when I'm there.

I think I can cut back on clothing spend quite easily - I don't think I'll need anything new for the next 6 months at least anyway!

In terms of speaking to my creditors, I haven't done that, and I'm quite scared to - I've seen in other posts it's better to wait for them to default before speaking to them, as it would freeze interest and last less time on my credit file than, for example, an arrangement to pay.

That said, it might be that a proper budget and 3 months without paying may be enough to get me meeting the minimum payments?

Tipper9242

Oh, and mobile phone contract was just renewed so still got 22 months left on it, that said I think once that's done I can move to a SIM only pretty easily.

fatbelly

I think you know the plan.

Stop paying the nonpriority debts

Move banking to where you don't have debt.

Get your spending under control.

Once you are in a position to start a dmp, I think you can sort this in around 3 yesrs so no need to consider anothet strategy.

Why do you have 2 x MBNA cards? Consider a complaint

https://debtcamel.co.uk/affordability-complaints-2-cards-lender/

Tipper9242

It's one MBNA card and One Virgin card - just split them up to show the balance transfer rates!

Newbie_John

You spend about £1000 on extras - going out, clothes, groceries, entertainment - so that's the main area of focus.

Give yourself an easy February, take a break from spending - TV, books, running, cooking cheaper meals - see how much you can save. You're not in a bad place really, just need to learn how to live within your limits.

During that time review the list above and see where else you could save - TV license - do you need it? Electricity/Gas - are you on cheapest possible tariff?
Same with other items, are there any cheaper insurance providers etc.

You already have done two most difficult steps - accepted that there is a problem, and asked for help.

p00hsticks

What does the £80 for 'internet services' cover ? It seems quite high
And are you really not making any payment on the 0% Virgin Money and 6% MBNA CCs ? I thought that they required at least a minimum monthly payment..

RhiBi

p00hsticks said:

What does the £80 for 'internet services' cover ? It seems quite high
And are you really not making any payment on the 0% Virgin Money and 6% MBNA CCs ? I thought that they required at least a minimum monthly payment..

My understanding with the credit cards is that it’s one card but has different interest rates, so just one payment which is listed, I may be wrong though.

kimwp

Hiya, in addition to the steps above, you need to understand why you have such a big debt. You have very generous amounts in your SOA for the various aspects of your life, so how have you built this debt? (You don't need to share why, but you do need to understand why in order to not build the debt again)

katsu

The internet can be reduced for sure. Take a look at the main site MSE articles. 

Check the house and pet insurances too.  

Can you start to think about cheaper entertainments?