Looking to get debt free

FishingForPounds

Hello everyone,

I'm looking for some advice on becoming debt free. My family's had a little bit more to contend with due to my partner being from another country and me making knee-jerk decisions on how to try and pay off the debts by borrowing.

Is the best way to start by producing my SOA?

I've also been looking at homeowner loans due to having a large amount of equity in our property and had a quote already that I'm considering and would like some advice on.

Thanks in advance,

FishingForPounds

Grumpelstiltskin

Do not even think about a Homeowner loan never turn unsecured debt into a debt secured on your home.

You are correct an honest SOA is the first thing we want to see, make sure you have all details of the debts Name of creditor, monthly payments, interest rate etc.

jubei_kibagami

Map it out, where the expenses are going, how much, how often etc You might need to cut back of a few things once you have done the money in and money out audit but know it does not have to be forever. Any possible chances of increasing the 'ins' I would take seriously.

MEM62

You do not want to turn unsecured debt into secured debt. Besides, as you have already discovered, you cannot borrow your way out of debt.

Get over to the FDW board where you will receive some proper guidance.

FishingForPounds

@Grumpelstiltskin - I'll put together an SOA this week; I'd like to wait until I've got all my July credit card statements so that the information for those is up to date.

@jubei_kibagami - I'd like to get a part time (weekends and maybe evening) job to supplement my income, so I need to get back to looking at that again.

@MEM62 - I realise about not borrowing to get out out of debt, there's just some family-related circumstances that made me panic and go by rushed instinct rather than being more sensible.

FishingForPounds

Hello everyone, I thought I'd give a quick update while I'm still compiling my SOA - I'm nearly there, just need a couple more statements to be ready so I have the latest data. I'm still a little anxious about sharing it though,

I happened to ask the advisor at the homeowner loan company I'd been speaking to (no, I didn't proceed with the quote) and they included the following in response to me mentioning posting on here because of the supportive people who've also been through a debt journey along with advisors from StepChange and National Debtline:

Quote from advisor's reply:

"One point to bear in mind when comparing this option with a Debt Management Plan is that a DMP is an informal arrangement and does not guarantee that creditors will freeze interest or charges. It can also remain in place for a number of years depending on your circumstances, may have an ongoing impact on your credit profile, and some creditors may still pursue collection activity if they choose to. By contrast, consolidating your debts into one loan provides a structured repayment over an agreed term with a fixed monthly payment, giving greater certainty over when the borrowing will be repaid."

Is this just salesperson speak or is there some truth to it? I was wondering what your thoughts were.

foxgloves

Well, they could be on a nice little bonus for selling these loans? Back in the Spendy Years, we took out 3 consolidation loans, one after the other, my husband was just suggesting we take out a 4th when my big lightbulb moment struck re debt & learning to budget for the 1st time in my life. The thing with consolidation loans is that they just shift the debt. It's still there. And if things haven't changed, it usually continues to grow because cards start to be used again. It really does take tremendous discipline & that's something we certainly didn't have back then. I've never been in a DMP, but unlike moving the debt sideways, you would actually be paying it off without recourse to further borrowing, which is what consolidation loans are.

MEM62

@FishingForPounds

"One point to bear in mind when comparing this option with a Debt Management Plan is that a DMP is an informal arrangement and does not guarantee that creditors will freeze interest or charges. It can also remain in place for a number of years depending on your circumstances, may have an ongoing impact on your credit profile, and some creditors may still pursue collection activity if they choose to. By contrast, consolidating your debts into one loan provides a structured repayment over an agreed term with a fixed monthly payment, giving greater certainty over when the borrowing will be repaid."

This is misleading. Once a debt is defaulted all interest and charges stop. This is absolutely worded to persuade you to take the loan.

I realise about not borrowing to get out out of debt, there's just some family-related circumstances that made me panic and go by rushed instinct rather than being more sensible.

Don't beat yourself up about it. We have all made decisions under pressure that perhaps we should not have. The decisions you make going forward are much more important that any that you have made in the past ☺️

FishingForPounds

Sorry for the radio silence everyone. my mum was taken into hospital in June after a fall - nothing broken thankfully, and she's now undergoing physio that should help her get back home soon.

@foxgloves Yes, they refer to themselves as a "broker", but they've called me several times a week since I first spoke to them, so I've blocked their numbers.

My SOA is ready to share, but I've built in Excel in a format that may not be the same as the suggested tool's format - I've listed things in the following order:

1. Credit cards
2. Unsecured personal loans
3. Assets (house value at time of purchase and most recent from Nationwide HPI)
4. Mortgage
5. Income
6. Outgoings

Will this be okay to copy & paste as is, or will I need to feed it all through the Lemon Fool SOA Calculator?

Grumpelstiltskin

Please use the Lemon Fool one if you can.

FishingForPounds

@Grumpelstiltskin OK, I'll try the Lemon Fool one again, although some of their monthly expenditure categories list some things separately - for example, electricity and gas are separate, so since I pay dual fuel on direct debit, do I have to look at my supplier statements and do more maths to calculate the breakdown?