Our SOA

HappyMJ · 26 August 2015 at 9:00AM

cakeforbrains wrote: »

Martin's definition of a debt crisis is:

1) Are you struggling to pay all basic outgoings, eg, mortgage, rent, energy bills and credit card minimums?

or

2) Are your debts (excluding your mortgage) bigger than a year’s after-tax income?

Useful article here

I've heard the year of after tax income one before. Just wondered where 6 months comes from or is that personal opinion.

DandelionPatrol · 26 August 2015 at 9:10AM

HappyMJ wrote: »

I've heard the year of after tax income one before. Just wondered where 6 months comes from or is that personal opinion.

Martin calls 12 months a debt crisis, comparable to not being able to pay all basic outgoings

I called 6 months an alarm level. Now obviously, you need an alarm before you enter a crisis. At the alarm level, you probably would be able to clear it in a couple of years. But at the crisis level, it is not the case that you can clear it in twice as many years - it is more that you may struggle to even get a start on paying it down and therefore may never pay it down.

I think the levels are broadly consistent.

HappyMJ · 26 August 2015 at 9:26AM

DandelionPatrol wrote: »

Martin calls 12 months a debt crisis, comparable to not being able to pay all basic outgoings

I called 6 months an alarm level. Now obviously, you need an alarm before you enter a crisis. At the alarm level, you probably would be able to clear it in a couple of years. But at the crisis level, it is not the case that you can clear it in twice as many years - it is more that you may struggle to even get a start on paying it down and therefore may never pay it down.

I think the levels are broadly consistent.

Fair enough thanks for clarifying.

Pixie5740 · 26 August 2015 at 10:03AM

If you really have £748.86 left at the end of each month then according to the "What's the Cost" snowball calculator it would take you 45 months to clear your unsecured debt including the £16k you owe your brother. That's without cutting out any of the luxuries such as the ridiculously expensive mobile phone contracts, Sky or gym membership but does involve paying pack your brother last with only £5 token payments until August 2017 when you start throwing your money at that debt.

Your SIL's "rent" seems very low. What does she get for her £165 a month? Could this be increased?

ShiftThisDebt · 26 August 2015 at 10:53AM

Pixie5740 wrote: »

If you really have £748.86 left at the end of each month then according to the "What's the Cost" snowball calculator it would take you 45 months to clear your unsecured debt including the £16k you owe your brother. That's without cutting out any of the luxuries such as the ridiculously expensive mobile phone contracts, Sky or gym membership but does involve paying pack your brother last with only £5 token payments until August 2017 when you start throwing your money at that debt.

Your SIL's "rent" seems very low. What does she get for her £165 a month? Could this be increased?

Yes i have done some snowball calculations this morning and adding an extra £350 to the minimum payments will see us clear the credit cards in 28 months and the loan in 37 months and thats without the possibility of a 0% balance transfer on some or all of the credit cards.

SIL's rent - She is a student so she is living with us and has a minimal income. It's a bit more complicated than that due to family reasons which I won't go into here but it won't be increasing and we're happy with what she contributes. As we're in a position to help her out, that's what we're doing.

Dobbibill · 26 August 2015 at 11:03AM

ShiftThisDebt wrote: »

SIL's rent - She is a student so she is living with us and has a minimal income. It's a bit more complicated than that due to family reasons which I won't go into here but it won't be increasing and we're happy with what she contributes. As we're in a position to help her out, that's what we're doing.

Please share your life/debt lessons with her, that is helping too. (I don't mean discuss every penny with her)

Student debt is easily accrued and teaching her about this would do her a massive favour in the long term.

ShiftThisDebt · 29 December 2015 at 11:17PM

Hello! Been a little while since I have been on here, but with moving house, work and Christmas I don't know where the time goes!

Anyway.....great news!

Earlier in the year I always had the plan to sort these flippin credit cards out once we were settled in the new house and the money situation had settled downa and was clear.

So over the past few days I have managed to apply for 3 new credit cards (1 for me and 2 for my wife) which means 100% of our credit card debt is now 0% interest for the next 32 months (13 months in my case)

I know we haven't actually paid an extra penny off yet, but it is so good to know that from January all our payments will be paying off just the balance!! Feels like a really positive start to the new year!

Willowpop · 30 December 2015 at 10:27AM

ShiftThisDebt wrote: »

So over the past few days I have managed to apply for 3 new credit cards (1 for me and 2 for my wife) which means 100% of our credit card debt is now 0% interest for the next 32 months (13 months in my case)

I know we haven't actually paid an extra penny off yet, but it is so good to know that from January all our payments will be paying off just the balance!! Feels like a really positive start to the new year!

That's awesome!
Although you've not physically made a payment, you've saved all that interest. Such a good start.
Did you call sky or your mobile company yet? I called my mobile mid term a couple of years ago expecting a big fat no from them and they reduced the cost of my tariff. It's definitely worth a call, especially if you don't use all of the allowances you currently have. Just explain that your financial situation has changed and can they help. You have nothing to lose.

ShiftThisDebt · 31 December 2015 at 11:58AM

Willowpop wrote: »

That's awesome!
Although you've not physically made a payment, you've saved all that interest. Such a good start.
Did you call sky or your mobile company yet? I called my mobile mid term a couple of years ago expecting a big fat no from them and they reduced the cost of my tariff. It's definitely worth a call, especially if you don't use all of the allowances you currently have. Just explain that your financial situation has changed and can they help. You have nothing to lose.

Thanks! I'm really happy about the credit cards!

I have called Sky and managed to cut the bill by £10 a month.

I haven't rang mobile companies but it's on my to do list now, as you say if you don't ask you don't get!

getmore4less · 31 December 2015 at 12:44PM

Thats a good progress getting the rates down even with the BT fees you will save quickly. and once the holiday is paid you have more spare cash.

resurecting the "6 month rule of thumb"

I think a much better measure of where you are debt wise is the forcast DFD as this takes into account disposable income not actual income(which for some could be used 100% to just live*).

The longer the forcast DFD the more you are in dodo.

I think 5+-1 year is a sensible cutoff under that it is managable over consider other actions.

* someone who owes 10% of annual but needs 10years to pay it off is in a worse place than someone with 50% but can pay it off in 2.

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