Debt spiralling!

Lankylocky · 15 July 2019 at 9:16PM

Hi, I'm reeling from the realisation that my spending/debt/ half assed budgeting is out of control. I need to cut my costs but not sure where . I work full time days but am thinking of getting something additional I can work at from home for couple of hours in the evening ( don't know what ???). So far I've been adamant not to add to my mortgage but now thinking of m consolidating debt to my mortgage . I'll do an soa

Plumjam · 15 July 2019 at 11:06PM

Hardly ever reply to posts but it's obvious that you need to complete a statement of your affairs (someone else here cleverer than me will post the link). No one on this site can help you until they know your incomings and outgoings. The one thing I do know is that you should not be adding unsecured debt to secured debit - do not add your unsecured debt to your mortgage however tempting reducing your monthly outgoings may be.

mark55man · 15 July 2019 at 11:26PM

hey there - its late and a lot of us diary-ers are not night owls

plemty of advice soon, but every long journey starts at the beginning so don't fret if it takes a while to get some traction. but what's important now is you start taking an inventory - all the debts - to who, how much, what interest. then the spending - on what. then the income - and how you can increase it

I think you are well on the way to having this stuff, but you need to share for accountability and to keep yourself honest. all long termers on here will have seen worse do don't be shy

http://www.stoozing.com/calculator/soa.php

Lankylocky · 15 July 2019 at 11:44PM

Can't seem to cut & paste soa so writing long hand : income 1760, maintenance 200, child benefit 82, mortgage 400, council tax 116, water 32, gas & elec 80, building & contents insurance 26, life insurance 15, critical illness 56, disability & unemployment insurance 30, mobile 28, internet & landline 28, shopping 180, clubs 65,clothes 35,hair 25, car loan 130 (7000 @ 8 percent) car insurance 32, car service contract 25, petrol 110, entertainment 100, British gas home care 27, house maintenance 20, credit card 25 (£250 is), credit card 47 (3200, 8 percent), credit card 4700 ( 0 percent until may 2020). 1 adult, 1 child. Mortgage 48000 Vs value of 250000. Last year I got fed up with spending do much to fix my old car (2000 over 2 years) that I took out cat loan on 4 year old car that drives a dream but isn't the most economical!

Lankylocky · 15 July 2019 at 11:56PM

... getting it all out there now. Plus 2000 bank overdraft!.this year after 3 years without a holiday I splashed 1500 on one holiday & 500 on another. Dual the click back 10 years & I was a saver not a spender. I really need to get this under control . I've just started a spending diary to make sure I list my income & outgoing s every month. Tbh I thought consolidating debt to my mortgage to reduce my 250 monthly debt payments ( credit cards & loan) was a good idea but interested ( actually horrified) to hear you say not to do that. I've got appointment booked for remortgage on Thursday. Now thinking if should cancel it?

WhenIam64 · 16 July 2019 at 5:45AM

Rather than remortgage which is just another loan with even more onerous terms than a credit card (you could lose your home), have you any thoughts about where you could cut back? For example, you have a lot of insurances which is very sensible if you have the money.

See if your car loan allows for early surrender. The finance company can give you an estimate. Search for Consumer Credit Act (Early Settlement) Regulations 2004 on the finance company's website.

theoretica · 16 July 2019 at 9:01AM

life insurance 15,

critical illness 56,

disability & unemployment insurance 30

Have a look at those three - especially the second two. Are you double insured? Would both pay out or only one? Could you get the cover you need cheaper?

aimeemum · 16 July 2019 at 9:14AM

My instant thought was £65 a month on clubs, £100 on entertainment, £60 a month on clothes and haircuts - these can be cut down drastically in the short term.....just stop all the 'extras' like going out, takeaways etc, and see what you actually need. Do you need haircuts as frequently, can you shop more frugally, make clothes last longer etc. Little things add up!

3 x insurance products costing over £100 a month, all covering similar themes (is there a way to get some of the products bundled, or could you sacrifice one if an overlap is there?) - just a suggestion.

The bills, without your debts but with your car loan, come to £1560 (by my maths) which leaves you £300+ each month to cover debts. If you were to cut down your other outgoings and maybe try to up your income in short term (sell whatever you can, work hard to make your money go further etc) you could make some quick headway with your debts without adding to your mortgage. You have a small mortgage in comparison to a lot of people I know....In you position I would be seeing this as the start of your debt free journey, and eventually aiming to be mortgage free too, not adding to it!

I wouldn't cancel though - maybe you could work out how much your CC's and debts are going to cost you if you were to do a realistic payment scheme, and then look at how much extra it would cost you to add to the mortgage but then try to over-pay your mortgage. Maybe this would make it more manageable and you would feel better and more enthusiastic if you were working towards being mortgage free only?

trailingspouse · 16 July 2019 at 9:33AM

You've been a saver in the past - so this current situation is just a blip, and there's no reason why you can't get back there again. In fact, by posting on here, you've taken a big step in the right direction.

£100 a month on entertainment is high - look at things you can do with your kid for free. Depending on the age of your child, involve them in thinking about what they'd like to do that doesn't cost a bean - it doesn't do them any harm to know that money doesn't grow on trees!!

And start a spending diary to really get a feel for where the money is going. £2.50 on a coffee on the way to work doesn't sound much - but if you work 5 days a week, that's £25 a fortnight, or £50 every 4 weeks. It's often the little things that really mount up. Rather than trying to remember to write every spend down, put as much as you can on your debit card, that way your bank statement becomes your spending diary.

All the best with it all.

katsu · 16 July 2019 at 6:15PM

Buildings and contents insurance seems high. I did about £40k contents and a 50s semi for about £150

SIM only deals from £5 might help on the mobile costs. £28 is a lot these days.

British Gas Homecare. You are giving them nearly £330 a year. Is it worth it? I have my boiler serviced for under £70 so I need a lot of parts to spend as much as you are spending. My boiler is about 20 years old and doesn't always cost over £300 a year. Roughly every other year it needs some cash above the service but not £600.

Hope these ideas help. I agree with other posters about reviewing your insurances. I would rather have less insurances than increase the mortgage.

enthusiasticsaver · 17 July 2019 at 1:52PM

I would not increase the mortgage and would cancel some of the insurances before going down that route. Insuring against every eventuality is fine for some people if they want to (personally we self insured by saving a lot instead) but if it is taking you into debt do you really want to do that? Same with British Gas homecare which is really expensive and an annual service with a corgi registered plumber is much cheaper. We pay £57 for ours. Yes if your boiler is old and goes wrong a lot then it is a way of tiding you over until you can build up some savings but there are cheaper boiler cover providers than British Gas. You do not earn a massive amount so that is one of the ways I would cut down. The cheapest way of paying for car and home insurance is one premium annually so aiming for that is a good way of making savings.

One thing I would never advise is to turn unsecured into secured which is what you are considering by consolidation loans especially if secured. It also does not address the fact you are spending more than you earn although not everything is covered in that soa and if you had put that into an MSE format it would show income of £2042 and without the credit card debts, just the loan outgoings of £1560. If you got rid of some of the insurances or reduced the cost you would have around £500 towards your cards if you got a grip on your spending. You need to save for emergencies and annual insurances which are essential and be a bit more selective about what is essential and what is unnecessary.

Debt spiralling!

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free