Taking a deep breath and asking for advice...

Newleaf_3

Hi all,

I've been reading through the posts on this board and have been really impressed with the advice and, most importantly, the support you guys offer and so I've come on here to hopefully get a bit of both.

Basically, over the last few years I've got myself into a mess financially, and have committed the ultimate sin of burying my head in the sand. But, as we've now been turned down for a remortgage because of my poor credit rating (I am appalled at how it got to this), the time's come to get things back in control! So... deep breath... here we go:

I owe the following:

Halifax 0% c/c £4540
Marbles 6.9% c/c £489
Nationwide Loan 6% £12,000 (my hubby and I pay this between us) - 7 years left, paying £159 per month
Northern Rock Loan 6% £9,000 - 6 years left, paying £124 per month
Barclays overdraft £700

I work part-time (have a pre-school child) though have applied to return to full-time. If this is agreed, I will get, after tax etc, an extra £320ish a month for my extra day, making my disposable income in the region of £750, which means I can dedicate a chunk of it to working through my debts. This disposable income doesn't include the payments to the two loans - they're included in my outgoings.

I'm not unrealistic - I know it'll take time, and I don't necessarily want to clear every single debt, instead I'd prefer to get them more manageable and as though I'm in control rather than feeling overwhelmed by it all (and so, so cross with myself that I've got myself into this in the first place!).

My other outgoings are:
Joint account for bills/food etc £670
Mobile phone £26 (contract runs out in Oct, when I'll change to Pre-pay)
Pension £72
Loans £200
Bank charges £12 (Barclays charge for the Additions account which offers little - am changing to Alliance and Leicester later today where the overdraft is free, and free travel ins, etc. I already have an account with them that I've never used)

To raise extra money, I'm doing more freelance work (I'm a writer) and anything I make goes straight off the interest cards - it's not much, but better than nothing. Plus, I'm selling clothes, books, etc on Ebay - again, anything I make is straight off the cards.

I am really wanting to do this and so I've set out a budget - no more coffees at lunchtime, no more sandwiches from the shop. I'm back to packed lunches, drinks from the office, I'm going to walk more and drive less, we already camp as our holidays, we grow our own veggies. We do spend too much money in the supermarket, but I'm addressing that too, and my magazine addiction has to end.

When I looked at my credit score, it showed I have credit and have met repayments with only the odd slip up here and there - a few late payments - and that's it. However, when I looked at my score, it showed it was 'very poor' and I'm guessing that's because I have too much debt (the loans, plus c/c's) and it's not helped by not being on the electoral reg - now remedied.

Any more tips or advice on what I can do to help this horrid situation?

Thanks so much,
Newleaf x

debtbuster2K5

Hi Newleaf, and welcome to Mse

Dont beat yourself up too much, you have already taken some very positive action, and you are in the right frame of mind to deal with your debt as best as possible.

Obviously the easiest way to clear debts quickly is to 1. Earn more money and 2. Pay as little interest as possible. Now you are obviusly tackling point 1 with gusto and your interest rates are not that horrendous.

Try this snowball calculator to show the effect of paying off the most expensive debt the quickest https://www.whatsthecost.com/snowball.aspx .

Are you paying payment protection on any of your debts? If so it may be wise to cancel this as it rarely pays out when it should and is considered poor value for money. This will also give you more money to throw at your debts.

Finally, are you claiming all the benefits you are entitled to? Try https://www.entitledto.co.uk

Well done for your progress so far and keep posting

Regards

Malestrom

You seem to have realised where you need to tackle your debts and I think thats great. As you say, working more hours will give you the extra income to hit these debts harder, check out the Snowball Calculator to see which debts should have the extra thrown at them.

The best (IMO) pre-pay mobile deal around at the moment is the o2 online SIM, top-up with £10 per month and get 300 texts free. My daughter has one, my wife is changing to it next week when her contract ends and I'll be on it come November. I have some spare SIM's so if you want one then drop me a PM.

Reduce that shopping bill by reading the Moneysaving Old-style board, they'll help you reduce your monthly shopping costs and living expenses. Also try the Utilities board to see if you can cut your bills.

Sell books on Amazon, they tend to go for a bit more than Ebay or you can try Green Metropolis where every book sells for £3.75 (you get £3.00 plus postage on some larger books)

The Shop till you Drop board has a thread on how to keep that magazine addiction going for £1 a month with various trial offers, might be worth a look.

Good Luck!

EDIT: Crossed posts with debtbuster2k5....must type faster!

ffs

You should consider yourself very lucky that you have been turned down for a remortgage. If this had been successful you would have transfered your unsecured borrowing to your mortgage, making your home more vulnerable, and you would had given yourself access to more credit (the cards you cleared). Of course you would not intend to use this credit facility, but when the next financial crisis arrises, whether its a loss of income or a major repair, you would not be able to resist using the cards you kept for emergencies. The problem now is that you don't have any equity left in your house, and the you cannot make any impression of the total amount borrowed, as you can only just afford to service the interest payments.

Newleaf_3

Thanks everyone for your replies, and I do feel better for getting it off my chest and actually on paper, well, on the web, but you know what i mean!

!!!!!!, thanks for your post, but I wasn't going to add a penny to our mortgage, it's just that our current deal has come to an end and we were shopping around for a better one. I refuse, totally, to let my stupidity with money have any bearing on my family's future, so I'd prefer to keep mortgage as one thing, and my debts as something different so that the debt doesn't put us at risk - if you know what I mean?

Debtbuster - thanks for the positive words, and for the advice re: payment protection. I do have it on one loan in particular and so I'll look at getting rid of it if I can, if it doesn't offer enough protection for what we're paying.

Maelstrom, thanks for the advice about books - I'll definitely check out Amazon to sell them. And thanks too for the info on mobiles. Once my contract is up, I'm def going to swap to the pre-pay and with the free texts too that's perfect for me. I'm already with O2, so is it complicated to change?

Thanks again - you don't know how much it means to me to have some support and some sensible advice. I feel less alone with this hideous worry now. I could just kick myself for getting into this situation in the first place!

Newleaf x

mountainofdebt

May not be much use but have you thought about changing your mortgage but stay with the same provider?

Hubby and I changed our mortgage but stayed with the same provider, and although I guess we MIGHT have got a better deal elsewhere, we secured a a better deal than the one we were on without needing a credit check or provided details of income/expenditure.

Newleaf_3

Thanks Mountain of Debt, that's what we're going to do. While our current provider can offer us a better deal than their standard variable rate, other providers are beating it, but we've now been refused due to my credit rating being poor. So, looks like we'll be sticking where we are - though we've been told to hold off for a month or so as it looks like the Bank of England are to drop their rates, and all being well, most mortgage providers will follow suit. This has come from one of the main banks' top dog employees, so we'll see if we can hold fire for a couple of weeks. Thanks though!

Malestrom

Newleaf wrote:

Once my contract is up, I'm def going to swap to the pre-pay and with the free texts too that's perfect for me. I'm already with O2, so is it complicated to change?

I have to admit that I'm not 100% sure if thats possible, changing from a contract to an o2 online PAYG tariff but retaining the same SIM. All I can tell you is that we originally bought the wrong SIM for our daughters phone. It was an o2 PAYG but not an o2 online PAYG. You only get the 300 free texts with the latter SIM. We phoned up and they could transfer us to the 'online' tariff for a administration fee of £10 plus we had to pay £10 top-up to activate the account. I suspect it would be the same for you, it depends how desperately you want to keep your number! Give customer services a ring on 150 and ask them.

roversbabe

You can keep your number when transferring to O2 Online from an offline tariff, dependant on your service provider you may need a PAC code. You will need a new SIM card when changing from contract to prepay - just ask your service provider.

If the SIM card you get is already an O2 Online prepay SIM card, there is no charge to do this.

Newleaf_3

Hi all,

An update...

Firstly, I just want to say a massive thank you to those that replied to me last week. For a few days, it really did feel my world was going to end as I was so worried about my money situation - I didn't sleep for four days! But, thanks to you guys, the various tips on here from Martin, and a long, hard look at how I live (and spend!), things are most definitely improving and more than that, I'm feeling as though I'm back in control of it all again.

I've spoken to O2 about my mobile and, rather than lose my business completely, they have offered me a fabulous deal with some freebie extras(like 100 free texts a month!), and this will halve my bill each month!

I'm in the midst of closing my Additions account with Barclays that they charge me £9.50 a month, plus interest on my overdraft, for, and changing to Alliance and Leicester who won't charge me a fee for the account.

I've been using cash to buy things and I'm accounting for every single penny. No more takeaway lattes or sandwiches, newspapers or magazines! I withdrew £30 on Mon to last me the week and, with two days to go, I've still got £16 (and I even put petrol in my car with that!) so I'm really feeling pleased with myself.

I've also swapped one c/c balance from one card to another, and reduced the debt from just under £500 to just under £400. The other c/c we're paying a chunk off by using some funds from our ISA (which we've never touched as this is to pay off the mortgage in a few years time), but we'd rather be sorted now instead. All being well, both c/c's will be cleared by December.

I've also swapped gas/electric companies, and am in the process of sorting who would be a better internet provider. We'll try and get freeview (lots of folk in the area have it, but apparently we can't... dunno) and we've made various other cost-cutting plans, so we're getting there.

I've also sold about £90 so far of Ebay stuff, so that can come straight off the debts as well.

Anyway, a massive thank you again to those who've really helped me out, it really is appreciated.

Newleaf xxx