Help Please - Want to be Debt Free

Andrew_P
Andrew_P Posts: 44
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edited 15 January 2019 at 6:38PM in Debt-free wannabe
Hi Everyone,

I am just after some help and support as my wife and I are in dire straights and owe the best part of £20,000 on credit cards and overdraft. I suppose it's better late than never but we have had an honest conversation tonight and we both agree we need to start tackling this.

We both work and take home just below £3,000 a month at the moment but it's a wakeup call when you don't know how you have got into a mess.

My SOA is below:

I haven't included car insurance, maintenance, road tax, contents insurance, break down cover as rather foolishly I have been paying these annually. The main reason for this is I try and use Top Cashback to get money back whenever I renew insurance. Monthly shopping is an estimate as again could be more as we have not been monitoring it and sticking the odd shop on credit cards.

Statement of Affairs and Personal Balance Sheet

Household Information

Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details

Monthly income after tax................ 1500
Partners monthly income after tax....... 1432
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2932


Monthly Expense Details

Mortgage................................ 595
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 120
Council tax............................. 116
Electricity............................. 56
Gas..................................... 0
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 17
Mobile phone............................ 30
TV Licence.............................. 12.85
Satellite/Cable TV...................... 0
Internet Services....................... 13
Groceries etc. ......................... 320
Clothing................................ 10
Petrol/diesel........................... 80
Road tax................................ 10
Car Insurance........................... 30
Car maintenance (including MOT)......... 15
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 10
Life assurance ......................... 14
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 13
Entertainment........................... 240
Holiday................................. 0
Emergency fund.......................... 0
Grount Rent............................. 10
Total monthly expenses.................. 1766.85



Assets

Cash.................................... 0
House value (Gross)..................... 230000
Shares and bonds........................ 0
Car(s).................................. 2000
Other assets............................ 0
Total Assets............................ 232000



Secured & HP Debts

Description....................Debt......Monthly...APR
Mortgage...................... 150000...(595)......3
Total secured & HP debts...... 150000....-.........-


Unsecured Debts
Description....................Debt......Monthly...APR
Tesco Credit Card..............1085......40........18.9
Barclaycard....................11524.....259.......0
Virgin Credit Card.............3600......25........0
Wife's MBNA Card...............3449.11...60........22.9
Wife's Overdraft...............3000......0.........NaN
Total unsecured debts..........22658.11..384.......-



Monthly Budget Summary

Total monthly income.................... 2,932
Expenses (including HP & secured debts). 1,766.85
Available for debt repayments........... 1,165.15
Monthly UNsecured debt repayments....... 384
Amount left after debt repayments....... 781.15


Personal Balance Sheet Summary
Total assets (things you own)........... 232,000
Total HP & Secured debt................. -150,000
Total Unsecured debt.................... -22,658.11
Net Assets.............................. 59,341.89


Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.


On behalf of myself and my wife we would be grateful for peoples support and advice on where we should go from here and what to focus on first. I have recently been offered a new job and I just hope our current predicament doesn't stop them offering me it after they have completed the necessary vetting checks.

Thanks everyone :)

Andrew
«134567

Comments

  • I think you need to redo that soa as it obviously is not accurate as you presumably do not have £1376 spare after paying for everything. You should be including everything you spend on there including the annual bills which actually you have been doing the right thing in paying annually as they are usually cheaper that way.

    I really think you must be paying more than £100 for groceries each month and seriously doubt you spend nothing on entertainment, presents or holidays. The figures for car maintenance, breakdown cover and insurances should be included by estimating what it will cost (take last years figures and add a small premium) and divide by 12. Ideally you would be budgeting for these annual costs by saving up for them so the money is waiting to pay them as they fall due. Same goes for car maintenance.

    I suggest you look at the last three months bank statements and see where your money has been going and redo the soa with the actual figures of where you have been spending, not what you think or want to spend. You also need to start putting money aside for emergency savings so you are not tempted to turn to credit if you have an unexpected and unavoidable bill. The best way to turn this around is to go cold turkey and stop using credit altogether.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • I think you need to redo that soa as it obviously is not accurate as you presumably do not have £1376 spare after paying for everything. You should be including everything you spend on there including the annual bills which actually you have been doing the right thing in paying annually as they are usually cheaper that way.

    I really think you must be paying more than £100 for groceries each month and seriously doubt you spend nothing on entertainment, presents or holidays. The figures for car maintenance, breakdown cover and insurances should be included by estimating what it will cost (take last years figures and add a small premium) and divide by 12. Ideally you would be budgeting for these annual costs by saving up for them so the money is waiting to pay them as they fall due. Same goes for car maintenance.

    I suggest you look at the last three months bank statements and see where your money has been going and redo the soa with the actual figures of where you have been spending, not what you think or want to spend. You also need to start putting money aside for emergency savings so you are not tempted to turn to credit if you have an unexpected and unavoidable bill. The best way to turn this around is to go cold turkey and stop using credit altogether.

    Thanks so much for your reply :)

    I just realised before I had a chance to update the post. I have added in the monthly costs for things like entertainment, presents or holidays.

    Look forward to your reply :)

    Thanks

    Andrew
  • That looks a bit better but there is still a spare £1100 not accounted for. Have you been paying higher repayments to the debt?
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • A spending diary might be a good idea where you and your wife write down or record on a phone app (spending tracker) where you are spending. I would prioritise saving an emergency fund and your wifes overdraft. How much is that costing you each month in bank charges?
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • That looks a bit better but there is still a spare £1100 not accounted for. Have you been paying higher repayments to the debt?

    Where possible I have always been trying to pay extra towards the debt, so for example I may be 500 towards the Tesco card as that's my current spending card at the moment and the outstanding balance is not on 0%.

    Thanks

    Andrew
  • As there are costs not entered its difficult to tell what you have remaining each month but it seems you have a good level of disposable income remaining after minimum payments are made.

    Generally you will be wanting to pay as much as you can off the debt with the highest interest rate (whilst paying at least the minimum on the others.)
    So from what I can tell Tesco and MBNA have the highest interest rates..so live frugally for the next while and throw as much as you can at them.
    Once clear move to the next debt with the highest interest rate (or if the 0% period is ending) over pay on it and so on.

    Hide or dispose of the cards and only use the money you have in your current account for any purchases (if possible.) As you well know credit is so easy to use when its available.

    It will take a while to get to the end but once you start making a dent in it you'll feel more in control :)
  • I think you should stop spending on the credit cards as that will not be helping you stick within budget which should be your first priority. Paying £500 to a credit card then spending on it again particularly if it is not interest free is self defeating and is not helping you keep within your income.

    The best way to get debt free is

    Know where your money is going and make sure you keep in budget
    Save an emergency fund so you are not tempted to put stuff on credit when you have an unexpected unavoidable bill.
    Keep debt interest free if possible and if not target the most expensive debt first.
    Pay more than minimums especially if you are paying interest
    Save for annual bills and costs.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • A spending diary might be a good idea where you and your wife write down or record on a phone app (spending tracker) where you are spending. I would prioritise saving an emergency fund and your wifes overdraft. How much is that costing you each month in bank charges?

    My wife has just checked her bank statement and seems its around £27 a month in overdraft charges.
  • Ok so that is around 11% on a £3000 overdraft. I would target your Tesco credit card or your wife's MBNA card first then the overdraft. Close the cards down as you clear them. When does the 0% deals run out for Barclaycard and Virgin?
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • Ok so that is around 11% on a £3000 overdraft. I would target your Tesco credit card or your wife's MBNA card first then the overdraft. Close the cards down as you clear them. When does the 0% deals run out for Barclaycard and Virgin?

    Thank you for your reply :)

    I did a few Balance transfers on the Barclaycard so have different expiry dates for the 0%, these are below:

    Interest On Your Balance Transfer £0.00 Balance £7880.47 Interest 0.0000%
    To 17 Mar 2021
    Interest On Your Balance Transfer £0.00 Balance £1024.00 Interest 0.0000%
    To 01 Jun 2020
    Interest On Your Transfer To Bank £0.00 Balance £1134.99 Interest 0.0000%
    To 01 Feb 2020
    Interest On Your Transfer To Bank £0.00 Balance £1484.80 Interest 0.0000%
    To 01 Apr 2020

    The Virgin dates are below:

    Transfer Balance / Fees
    0.00% £3000.00 30/09/2019
    Transfer Balance / Fees
    0.00% £1000.00 31/07/2019

    Is it worth trying to get my wife a balance transfer to pay off her MBNA card do you think?
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