Working towards reducing credit card debt advice

MochiCat

I will prefix this with I am unsure if I should be posting here or CC forum - please could it be moved if deemed to be in the wrong place? :)

We have a bit of a stress-on as we are in a bit of a hole debt wise, not helped by my wife currently being on statutory maternity pay, us having welcomed a baby last summer (I also have two step-kids who live with us for part of the week)

Looking at it realistically, I don't think our situation is dire, but my MH sometimes spirals and it feels like it is.

We both have overdrafts which we use quite a bit (up to around £1k each - the amount increases the closer we get to next pay day) and a credit card each (on top of a few unsecured loans for things like our car, some dental work (though that is interest free and will be paid off next month) and some work we had done on the house last summer).

We have reduced our mortgage to interest only for 6 months to help get us through the worst of the statutory mat pay

My biggest headache is my credit card - around £8k maxed out. We have significantly cut back and I am barely using it for new spend, but the interest is around £80 a month, which is just dead money.

I looked at doing a balance transfer - did one application which approved about £1500, I got in a huff that it wasn't the full amount and closed the browser (yes, I'm an idiot!) so maybe have a hard search on my file for nothing.

I had a look again the other day via MSE, found what looked to be a reasonable deal and applied and was told I would hear in a few days - possibly one mistake here was choosing the same provider as our mortgage, but hey ho. I got a call whilst I was at work from said provider who asked a bunch of questions about affordability - a lot of which I had to hoof as I don't know the detail of every outgoing (particularly food costs, as it varies - we are using Olio quite a bit now too to help with outgoings), though would have struggled even when not at work, and was told I would get a text advising either way. Of course, it came back as a "no" and that was that.

Before I make any more moves and screwing my credit rating further, I am after some advice of the best approach to take (which may be suck it up and pay the interest).

Ultimately, the provider has decided they don't want me having more credit (fair I guess) but it is difficult to convey that I don't want more credit (would happily reduce credit limit on my card with the debt!) but to reduce interest so that I can pay off capital - this doesn't come up in conversations though :(

sourcrates

I think you`ve posted in the right place, the old saying "when in a hole, stop digging" might apply here.

Best advice, that applies to most situations is, if you can`t afford it, stop paying it.

That obviously only applies to non essential unsecured credit such as credit cards etc, and not your mortgage.

The overdrafts can be gotten rid of quite easily, you just stop using those accounts, but beforehand you open new, basic bank accounts with no lending facility, and start using them for your everyday banking instead, your old accounts then become just another unsecured debt to service as and when you can.

This move also learns you to live within your available budget, which is why most choose to enter debt management at the same time, so instead of paying contractual repayments to your debts, you just pay what is affordable, but usually over a longer period of time.

If you post a statement of affairs (click the stoozing link in my signature) we can tailor advise better.

enthusiasticsaver

When does your wife return to work?

Doing an soa (link in my signature) will help us advise further. I am going to caveat @sourcrates advice about stopping payment depending on what the soa says and when your income will increase due to your wife returning to work after maternity leave. Obviously if you stop payment that will affect your credit record but if this is to be a long term problem then going down that route and defaulting and sorting out an affordable monthly payment is one option. Let us see the soa first though.

EssexHebridean

I agree about the SOA (Statement of Affairs) as the first port of call. At the moment it sounds as though you're trying to tackle things a bit here and a bit there, and not really feeling you're making any progress anywhere along the line, unsurprisingly. I'll disagree about the credit card being the biggest issue though - the overdrafts are. we usually refer to ODs as "dangerous debt" on here - simply because they can be recalled by the bank at any time and with no warning, they're a sign that the books aren't balancing and the budget needs review more than anything else.

The SOA will enable you to fully compare the money coming in with what is going out - firstly this will tell you if you are currently "losing" money each month - due to frittering or simply spending more than you realise in some areas. Second it will let you see if the payments as they stand are essentially manageable with a bit more attention to spending in other areas.

Are you signed up to the MSE Credit Club (free of charge) at the moment? If so, that gives you an easy eligibility calculator to use if you get to the point of applying for 0% deals - meaning you avoid that hard-search on the file screwing you over for applications. Hold off on doing more for the moment while you establish what the overall picture is.

MochiCat

Thanks to you all for the advice so far. I will sort an SOA - it may be at the weekend as I am currently having a very busy week with work (on the plus side, there is some rare overtime in the offing, so can't grumble!)

https://forums.moneysavingexpert.com/discussion/comment/81879337#Comment_81879337

She returns to work in mid-May, but we will be stung with sizeable nursey fees for the first three months or so until we are finally eligible for funded hours (what a con, but that is another story!)

https://forums.moneysavingexpert.com/discussion/comment/81880240#Comment_81880240

I am and it was from there I got the suggestion for the credit card to pick

MochiCat

Apologies for the delay on getting the SOA done. Hopefully I have done it right :) Getting it done has taken a bit of doing both getting the numbers together and the mental block of getting it done. This whole thing is particularly uncomfortable for me as it is a situation I have never been in before and comes with a degree of a feeling of shame being here

A couple of notes:

Groceries are quite high partly because it will have included some sale clothes, mostly for the baby but also my stepkids - as we don't have it all itemised I have used a general statement (gift vouchers mainly, as my partner has discounted ones through work, which we make good use of). The clothes section is zero as a result

Groceries are also pushed up by my partner being both coeliac (so where a loaf of bread will cost 75p for me and the kids, we will pay about £4 for hers) but also currently other things free (dairy, soya, oats, to some extent egg) because the baby is reacting to them - hopefully this will gradually subside back to just GF. We are heavy users of Olio and obtain a number of items from Food Waste Heroes each week

[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......... 3
Number of cars owned.................... 2[b]

Monthly Income Details[/b]
Monthly income after tax................ 2363
Partners monthly income after tax....... 700
Benefits................................ 0
Other income............................ 392[b]
Total monthly income.................... 3455[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 635
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 181
Electricity............................. 80
Gas..................................... 130
Oil..................................... 0
Water rates............................. 92
Telephone (land line)................... 0
Mobile phone............................ 75
TV Licence.............................. 15
Satellite/Cable TV...................... 58
Internet Services....................... 25
Groceries etc. ......................... 700
Clothing................................ 0
Petrol/diesel........................... 140
Road tax................................ 57
Car Insurance........................... 110
Car maintenance (including MOT)......... 50
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 45
Pet insurance/vet bills................. 57.5
Buildings insurance..................... 30
Contents insurance...................... 60
Life assurance ......................... 0
Other insurance......................... 28
Presents (birthday, christmas etc)...... 50
Haircuts................................ 60
Entertainment........................... 120
Holiday................................. 0
Emergency fund.......................... 25
Pet Food................................ 214
Cat Litter.............................. 38[b]
Total monthly expenses.................. 3085.5[/b]
[b]

Assets[/b]
Cash.................................... 2000
House value (Gross)..................... 380000
Shares and bonds........................ 0
Car(s).................................. 30000
Other assets............................ 0[b]
Total Assets............................ 412000[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 188265...(635)......4.06[b]
Total secured & HP debts...... 188265....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
S CC...........................8000......180.......13.5
E CC...........................4400......80........23.42
S Car Loan.....................15648.....430.......8
E Overdraft....................500.......0.........29.9
S Overdraft....................650.......0.........29.9
S Dental Loan..................178.......170.......0
E Home Improve Loan............9500......180.......16.9[b]
Total unsecured debts..........38876.....1040......- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 3,455
Expenses (including HP & secured debts). 3,085.5
Available for debt repayments........... 369.5
Monthly UNsecured debt repayments....... 1,040[b]
Amount short for making debt repayments. -670.5[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 412,000
Total HP & Secured debt................. -188,265
Total Unsecured debt.................... -38,876[b]
Net Assets.............................. 184,859[/b]

[i]Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission.[/i][/font]

MochiCat

Formatted this time:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 2363
Partners monthly income after tax....... 700
Benefits................................ 0
Other income............................ 392
Total monthly income.................... 3455

Monthly Expense Details
Mortgage................................ 635
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 181
Electricity............................. 80
Gas..................................... 130
Oil..................................... 0
Water rates............................. 92
Telephone (land line)................... 0
Mobile phone............................ 75
TV Licence.............................. 15
Satellite/Cable TV...................... 58
Internet Services....................... 25
Groceries etc. ......................... 700
Clothing................................ 0
Petrol/diesel........................... 140
Road tax................................ 57
Car Insurance........................... 110
Car maintenance (including MOT)......... 50
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 45
Pet insurance/vet bills................. 57.5
Buildings insurance..................... 30
Contents insurance...................... 60
Life assurance ......................... 0
Other insurance......................... 28
Presents (birthday, christmas etc)...... 50
Haircuts................................ 60
Entertainment........................... 120
Holiday................................. 0
Emergency fund.......................... 25
Pet Food................................ 214
Cat Litter.............................. 38
Total monthly expenses.................. 3085.5


Assets
Cash.................................... 2000
House value (Gross)..................... 380000
Shares and bonds........................ 0
Car(s).................................. 30000
Other assets............................ 0
Total Assets............................ 412000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 188265...(635)......4.06
Total secured & HP debts...... 188265....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
S CC...........................8000......180.......13.5
E CC...........................4400......80........23.42
S Car Loan.....................15648.....430.......8
E Overdraft....................500.......0.........29.9
S Overdraft....................650.......0.........29.9
S Dental Loan..................178.......170.......0
E Home Improve Loan............9500......180.......16.9
Total unsecured debts..........38876.....1040......-


Monthly Budget Summary
Total monthly income.................... 3,455
Expenses (including HP & secured debts). 3,085.5
Available for debt repayments........... 369.5
Monthly UNsecured debt repayments....... 1,040
Amount short for making debt repayments. -670.5

Personal Balance Sheet Summary
Total assets (things you own)........... 412,000
Total HP & Secured debt................. -188,265
Total Unsecured debt.................... -38,876
Net Assets.............................. 184,859

Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission.

Grumpelstiltskin

A quick look, buildings and contents insurance £90 a month?

What are you insuring a castle?

RAS

Water is very high. Are you metered or in one of the very expensive areas?

Also £173 on comms and TV. Can you go SIM only, downgrade packages, cut out some things altogether?

ManyWays

S Car Loan.....................15648.....430.......8
Double checking that this is a normal bank loan, not HP or PCP

Clothing................................ 0
Other child related expenses............ 0
Neither looks likely. How old are the older 2 children?

MochiCat

https://forums.moneysavingexpert.com/discussion/comment/81918143#Comment_81918143

It turns out that was what it was but I got it reduced when we changed providers so it is around £65 now. But yes, fairly sizeable house (in a relatively cheap area)

https://forums.moneysavingexpert.com/discussion/comment/81918264#Comment_81918264

Metered water

Possibly some room for cuts. Two mobiles are with VOXI on SIM only and the other is still in contract

https://forums.moneysavingexpert.com/discussion/comment/81918289#Comment_81918289

Car is normal bank loan. Hard to say exactly what is owed as the provider dump all the interest on at the start and then just take the monthly payments from the increased sum

Clothing has recently been part of groceries as mentioned above

The stepkids are 11 and 9. I have probably missed off £32 a week in breakfast club for the youngest (2 mornings a week that I drop her on my way to work, other school mornings are with her dad) and possibly didn't add their pocket money (thought of but forgot) which is collectively about £30 a month.