Debt Fighter - needing advice!

Debt_Fighter

Hi guys, just registered. Well, just got my activation at least!

Like everyone else here, I have problems. I will try and outline them below.

Firstly though, I ought to say that I have a guy from Payplan calling me for my appointment/interview on Monday.

Myself and my wife (she is aware) have £43,000 on credit cards, a mortgage and a secured loan. We are very lucky in that our mortgage when compared to others our age (30) is very low (£50,000).

But the credit cards have gradually built up, and now we are at the point where we have no spare cash due to the minimum payments.

My income/outgoings are below.

Income (net):
Me - £1704
Wife - £730
Family Allowance - £120.80
Tax Credits - £41
Total: £2595.80

Outgoings:
Mortgage - £361
Secured loan - £239.54
Council Tax - £108.23
TV Licence - £11
Gym - £34.95
Childcare - £100
Gas/Electric - £110
Lotto - £8
Life Insurance - £16.57
Water - £21
Our savings - £50
Kids savings - £50
Kitchen - £60.49
Trade Union - £14.30
House Insurance - £21.67
Phone/Broadband - £46
Mobiles - £70
Car Insurance - £35.81
Total: £1358.56

Credit cards:

11 cards, balance total £44,668 Minimum payments £977

In - £2595.80
Out - £2335.56

Then there is food/petrol and the like, which is roughly £350 per month.

Without the credit cards we would have a disposable income of, realisticaly, £700 ish max.

The problem is, and what's prompted me to act, is that we have our third child due May 2008, and my wife's income will halve after her initial 90% maternity pay. So if I don't act now, we'll go under.

Does anyone have any idea what Payplan might advise?

I have some further questions, but will wait for a few replies if that's ok!

Thanks

Gemmzie

I think they'll probably suggest a debt management plan (DMP) because, you have a good chunk of disposable income to pay your debts and an IVA can sometimes risk your property if you have a lot of equity, which considering your low mortgage and the secured loan amount, it looks like you do.

If you could break down the credit card details a bit more it'd be really helpful. Call them card 1, card 2 if you like. The APRs, minimum payment and limits are the important bits.

Good luck

hooby_groovy

Hi, and welcome to the boards. You're part of the way with your realisation and also the fact that you're going to Payplan.

They will probably recommend a debt management plan, that will help resolve your problems, but the simple fact is that you're going to have to reduce your outgoings drastically. So you're doing the right thing coming here.

Taking a quick look:

Mortgage - £361
Secured loan - £239.54
Council Tax - £108.23
TV Licence - £11
Gym - £34.95 - probably going to have to go
Childcare - £100
Gas/Electric - £110 - have you switched supplier - you need to be more energy efficient switch-off appliances etc. I'm a similar size family and spend £30 a month (we've squeezed this really hard)
Lotto - £8 - don't do it
Life Insurance - £16.57- reduce
Water - £21
Our savings - £50- when you have credit card debt?
Kids savings - £50- cancel, save more when you're debt free
Kitchen - £60.49- ?
Trade Union - £14.30- cancel
House Insurance - £21.67- reduce
Phone/Broadband - £46- reduce drastically
Mobiles - £70- reduce
Car Insurance - £35.81- can this be reduced.
Total: £1358.56

A quick add-up shows you could save £200 a month easily

Payplan is the easy part, realising you're going to have to dramatically change your lives is harder.

Take advice from the board, reduce your outgoings, reduce your debt and you'll be fine. But you are going to need to change.

good luck!

CLAPTON

you need to complete your budget list so you need to say what do you spend on
so
food
car tax, maintenance,serriving, RAC/AA
clothes / shoes
kids .. activities / pocket money /school
birthdays/xmas
holidays
etc
etc

only after you do that can the actual totals be seen



Good to start a spending diary to help work out what you spend

Useful to say how the debts built

taxi73

You will be able to shave a lot off that budget..gym could go,childcare not needed when wife is on maternity leave,gas electric are very high,no need to do lotto, phone broadband very high, mobiles very high if you loook at cheaper providers for all these and use the old style boards and write out a menu plan each week...I'm sure you could save loads and put it towards debt repayments.
Well done on facing up to your situation it will get easier from now on

penguin83

Hi Debt Fighter - welcome to the DFW!

One thing that strikes me is the savings - do you have much saved - if so use this towards your highest interest debt - you will be paying more on interest on your card than you will be earning even in a high interest account.

I have had to stop the savings for my kids for the time being. I am keeping track of how much I 'owe' them and once debt free will pay the monies into their account.

Keep posting and hope all goes well x x

Teacher2301

Gym membership - should go - put this onto highest cc %
Phone - (if out of contract) - switch to a cheaper provider (£16 with sky at the moment +£10.50 BT line rental) - saving (if no mobile costs or 0845 no's) about £15 - again put onto highest cc%. How many mobiles do you need? - get a PAYG - sell the handsets - get a cheapy PAYG from carphone wharehouse or similar (if do it online - try to go via a cashback site - I got £15 cash back via quidco).

Debt_Fighter

Firstly, thanks to all who have replied so quickly!

To answer your questions:

Gemmzie wrote: »

If you could break down the credit card details a bit more it'd be really helpful. Call them card 1, card 2 if you like. The APRs, minimum payment and limits are the important bits.

Good luck

Card 1
Balance - 2241.87
Limit - 2500
Minimum payment - 49.71
APR - 0% ending October 08

Card 2
1284.40
2000
38.00
0% ending August 08

Card 3
4830.37
5500
108.00
21.6%

Card 4
4333.38
4900
109.00
5.7% - Life

Card 5
3945.46
6800
79.00
5.9% - Life

Card 6
7630.73
8250
152.58
5.9% - Life

Card 7
2777.16
8350
55.54
5.9% - Life

Card 8
3093.54
7810
92.81
16.6%

Card 9
10795.20
11000
216.00
19.2%

Card 10
1817.19
5200
33.72
19.9%

Card 11
1939.02
2300
43.00
17.5%

hooby_groovy wrote: »

Hi, and welcome to the boards. You're part of the way with your realisation and also the fact that you're going to Payplan.

They will probably recommend a debt management plan, that will help resolve your problems, but the simple fact is that you're going to have to reduce your outgoings drastically. So you're doing the right thing coming here.

Taking a quick look:

Mortgage - £361
Secured loan - £239.54
Council Tax - £108.23
TV Licence - £11
Gym - £34.95 - probably going to have to go - it is going soon!
Childcare - £100
Gas/Electric - £110 - have you switched supplier - you need to be more energy efficient switch-off appliances etc. I'm a similar size family and spend £30 a month (we've squeezed this really hard)
It was at £110 because we didn't increase the payments when prices started rising. We are now in credit, and I will decrease it soon. It will be around £60. No point switching yet until all the suppliers have raised their prices, there is no level playing field at present.

Lotto - £8 - don't do it - I know I shouldn't. But there is always what if. But yes it will have to go.
Life Insurance - £16.57- reduce
Really? This was the cheapest I could find based on a £50,000 mortgage and £25,000 secured loan.
Water - £21
Our savings - £50- when you have credit card debt?
Well, we have always saved £50 a month, and although I will be stopping, it will be useful if we happen to need anything. We have £800 now
Kids savings - £50- cancel, save more when you're debt free
Yes, will do.

Kitchen - £60.49- ? - We bought a kitchen, November 2006 (fitted by myself though) and this is for 3 years.
Trade Union - £14.30- cancel - Yes, will do.
House Insurance - £21.67- reduce - cheapest I could find in November last year at confused.com.
Phone/Broadband - £46- reduce drastically - this I can look at.
Mobiles - £70- reduce - just into an 18 month contract, and I need mine for work.
Car Insurance - £35.81- can this be reduced - no. This is the cheapest I could find for my car. We have a people carrier.
Total: £1358.56

A quick add-up shows you could save £200 a month easily

Payplan is the easy part, realising you're going to have to dramatically change your lives is harder.

Take advice from the board, reduce your outgoings, reduce your debt and you'll be fine. But you are going to need to change.

good luck!

I hope that is readable! I've added comment where I could.

We are both very determined to change, and have started already by shopping cheaper.

CLAPTON wrote: »

you need to complete your budget list so you need to say what do you spend on
so
food
car tax, maintenance,serriving, RAC/AA
clothes / shoes
kids .. activities / pocket money /school
birthdays/xmas
holidays
etc
etc

only after you do that can the actual totals be seen
Good to start a spending diary to help work out what you spend

Useful to say how the debts built

Car tax - £160 per year
Fuel - £150 per month
Food - £200 per month
Clothes/shoes - we really don't buy many clothes, and have enough at the moment.
Kids I suppose is negligable, since we always take them to parks etc where it doesn't cost.
Birthdays/xmas - well, we can cut down, but probably £150 per year.
Holidays - Mum owns a big caravan by the sea, so no cost there, just spending money of about £300 for 2 weeks.

The debts have gradually built since we moved into our own home in 2000.

We have bought things we shouldn't have in the past (football season ticket (£560) holidays abroad (£2000 inc spending money in 2002, 2003 and 2004). Also new washing machine, oven, fridge freezer on CC's.

Hard to explain i guess - just built up ove time, and eventually we have ended up living on them to buy the basic things like groceries etc.

Debt_Fighter

To update - income/outgoings once revised (as mentioned above):

Income: £2265.80
(once wife is on maternaty pay, which is an eventuality I need to allow for. Until then of course we have more money available to pay towards debts)

Outgoings:
Mortgage - £361
Secured loan - £239.54
Council Tax - £108.23
TV Licence - £11
Gas/Electric - £60
Life Insurance - £16.57
Water - £21
Kitchen - £60.49
House Insurance - £21.67
Phone/Broadband - £28
Mobiles - £70
Car Insurance - £35.81
Total: £1033.31

Food £200
Petrol £150
Other* £100

Disposable Income
£782.49


*To save for car tax, servicing, kids stuff, kids clothes/shoes etc

Debt_Fighter

Having had another look through everything, I think a realistic amount we can pay to our creditors is £650 per month, meaning we'll be debt free in about 5 years.

Having read a lot about them, I'm so against IVAs it's not true - so the fact we can do a DMP for roughly the same amount of time is comforting.

I had no idea that at the end of an IVA the creditors can basically make you sell your house, and take the equity - unless I'm reading it wrong. They may wipe out the debt for you, but as far as I can see, IVAs are definitely not for home owners.

The important thing for us is we are now determined to sort ourselves out before it got too bad. By that, I mean so far we haven't missed a single credit card payment - our credit history is unblemished.

Whilst some might wonder why we now need a DMP, the fact is if we kept going as we were, the minimum payments would have got too high, and then we would have started missing payments. So hopefully, the creditors will see how good we've been up to now, and help us by accepting lower payments.


hooby groovy - I'm dying to know how on earth you can have an energy bill of £30 per month! Please enlighten me!

nomoneynomoney

I was in a similar situation a few years ago, I managed all the minimum payments but I was living off credit. It was really hard to make the decision to default on everything but the stress of juggling it all was killing me. What should have been a nice time of life with my 3 young children wasn't - it was a nightmare.
I contacted Consumer credit counselling and they helped me to set up a DMP.
Payplan will help you to do your budget and will advise you how much you should allow for food clothing etc etc. and I think they have recommended allowances. I know that for a family of 5 I can allow £70 for clothing and footwear each month and food is nearly £500. When I started my plan I wasn't sure how much I spent on food etc so it was much easier for them to advise me of a realistic amount.When I saw your budget I did think £200 is much too low - where do you shop!

If you do not allow enough for the essentials then you won't be able to make the monthly payment into the plan. If you find that you are manageing then you can always increase the amount you pay when your reveiw is due.
I try to increase my payments each year so that everything is paid off quicker.

I started at 90k debt and now I'm at 70k