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  • FIRST POST
    Talheedin
    I can't quite believe it's got this bad
    • #1
    • 24th Jul 06, 1:36 PM
    I can't quite believe it's got this bad 24th Jul 06 at 1:36 PM
    Insert From Martin.

    This thread below really moved me (and i suspect will continue to do so as it grows). It shows that there still is community even in the virtual world, with people willing to give time and effort to help others, without any reward. Long may it continue and thanks to all those who contribute, both here and to the rest of the Forum. If you've just come from the tip and have serious debt problems yourself, please first read 'Where to start with problem debts' to get the lie of the land.

    On with the actual discussion

    __________________________________________________ ___

    Hi MoneySavers,

    Iím hoping for some advice about what we should be doing to sort out our debts. Iíve listed our outgoings followed by some history and explanation and a list of what we are currently doing to try and dig ourselves out of the financial black hole we find ourselves in.


    Total Owed
    LLoydsTSB Plat. Over Draft £3500 £40/month 11.2%APR
    Egg Credit Card £1000 £20/Month 15.9%APR
    Cahoot Flexible Loan £10400 £300/Month 8.9%APR
    Capital One Credit Card £9500 £300/Month 6.5%APR
    LloydsTSB Loan £17200 £292/Month ?%APR
    NatWest Mortgage £96000 £658/Month 4.85%APR

    Total £137600 £1610/Month

    The LLoydsTSB loan is unsecured with 5 years and 9 months to go and a redemption penalty of about £180.
    The mortgage was fixed for 5 years and has 2 years 3 months to go with redemption penalties of 5%4%3%2%1% so at the minute it would probably be around £3000.

    Bills
    TV/Phone/Internet £80/Month
    Gas/Electricity £100/Month
    Water £26/Month
    Life Assurance £18/Month
    Council Tax £113/Month
    Dog Insurance £15/Month
    Washing Machine rental £13/Month

    Total £365/Month

    Car
    Petrol £170/Month
    Car tax £175/Year
    Car service/MOT £800/Year
    Insurance £377/Year

    Total £170/Month + £1352/Year

    Other
    Childcare £44/Month
    Childrens Savings £40/Month
    House insurance £469/Year
    Magazine Subscrip. £30/Quarter
    Mobile Phones £15/Month
    Food £400/Month
    Clothes £60/Month

    Total £559/Month + £30/Quarter + £469/Year

    Savings
    Egg Savings £43/Month

    (Take Home) Income
    My Wage £1850/Month
    My Wifeís Wage £537/Month
    Child Benefit £169/Month
    My Wifeís CSA Payment £442/Month

    Total £2998/Month


    In vs Out
    Out £34929/Year
    In £35976/Year

    Balance £1047/Year To pay for everything else for a family of seven!

    OK, so there are people that I can blame for this (and I will in a minute) but most of the blame probably lies with me as Iím rubbish with money. Iíve just never learnt to budget until now when itís really too late. I donít even go out and buy everything I want at the drop of a hat (all though I do sometimes), I just pay for things as they come in thinking that Iíll pay the credit card later but thereís always something else so the card doesnít get paid. My lovely Wife on the other hand is really good with money and never buys anything she hasnít got the money for (she wonít even get a credit card). My other problem is that I like to splash out on loved ones when itís their birthday or Christmas and as weíve got five kids between us it gets kind of expensive.
    The rest of the blame goes to the CSA and my Wifeís ex (always good to blame him). As soon as we got married he stopped paying maintenance and the CSA took 18 months to do anything about it and have refused to give us any compensation towards the debts we incurred because of this (any advice about this would be useful). We also found out that we were expecting our second child together just before our wedding and so all the plans we had about her going back to work to pay for the wedding went out of the window leaving us spiralling into the red. On top of that we had bought two cars from an auction both of which died just over a year later (within a month of each other) leaving us needing to buy another car and having wasted thousands on the other two.

    Weíre really starting to get desperate now.

    To do something about this Iíve got an appointment with an advisor at NatWest this week to see if I can add the extra debt to my existing mortgage (and then cut up the credit cards). The 12 month contract with Sky is up in a couple of months so Iím going to drop down to the basic package and also get broadband with them which should save us £30 - £40 a month. Iíve even started jogging to work two or three times a week which Iíve worked out saves about £3 every time I do it and makes me feel much better. There are also small things here and there that we are trying to do to cut costs and raise a little cash but all of it seems fairly pitiful when compared to the nearly £1000 a month I pay out in unsecured debts alone.

    There are a couple of rays of light though. First of all our house is now worth approximately £175000 so we have plenty of equity. Secondly all the debts are in my name as is the house and we donít have any joint accounts so I believe that my wifeís financial record shouldnít be tarred by mine. Finally weíve realised what a mess weíre in and want to do something about it!

    If I canít get a good deal with my mortgage company then Iím going to go to the CCCS but Iím really worried about what will happen if we do that. The mortgage Iíve got at the minute is pretty good (4.85% fixed for five years) but runs out in just over two years time, will I be able to get another good mortgage while Iím doing the CCCS plan? What happens if I get made redundant or the CSA money stops coming in again or the car dies and we need a new one before the end of the plan? Presumably the creditors wonít be happy if I canít stick to the plan, will they get together and take the house?

    Just as an aside: all the debt management adverts say ďWe can even write off up to 70% of your debt!Ē, how can they claim this? Can they (or the CCCS as I wouldnít go to one of them after the posts on this forum) actually write this debt off or is it just a gimmick?

    Looking forward to some friendly advice and some sleep at night.

    Thanks

    Talheedin
    Last edited by MSE Martin; 02-08-2006 at 1:35 PM.
Page 1
  • bikerqueen
    • #2
    • 24th Jul 06, 1:44 PM
    • #2
    • 24th Jul 06, 1:44 PM
    they can set you up on an IVA which will be an agreement between you and your creditors to wipe out a large proportion of your debt. however, you will have an unpleasant credit record for a a fair while, there are many threads and articles on this site about DMP, IVA, or bankruptcy, have a good read
    • Bestthingsinlifearefree
    • By Bestthingsinlifearefree 24th Jul 06, 1:59 PM
    • 1,474 Posts
    • 1,280 Thanks
    Bestthingsinlifearefree
    • #3
    • 24th Jul 06, 1:59 PM
    • #3
    • 24th Jul 06, 1:59 PM
    Hi Talheedin,

    Welcome to MSE. You have options.

    e.g if you remortgaged all your debt onto your mortgage you would have (over 25 years) about £830 pound per month on a new 137K or so mortgage

    (instead of paying £1600 per month at the moment on mortgage + loans).

    However the DANGERS of consolidation onto the mortgage are

    1) You could well pay more interest overall because the debt is on a longer term.
    2)You are converting unsecured debt onto your house and if you default you increase the risk of losing your house.
    3)If you consolidate you may not change your spending habits and run up a fresh load of debt on credit cards etc

    First I would try to minimise spending / maximise income.

    Could you transfer some of the debt onto lower levels of interest rates / zero % interest rate cards ?

    Your house insurance looks high to me.

    Magazine subscription cancel.

    Childrens savings cancel and throw at debt.

    Anyway I wish you well keep posting.

    Best,
    Last edited by Bestthingsinlifearefree; 24-07-2006 at 2:06 PM.
  • newmoneysaver
    • #4
    • 24th Jul 06, 2:18 PM
    • #4
    • 24th Jul 06, 2:18 PM
    Hi Talheedin,

    Just my thoughts below...


    Hi MoneySavers,

    Total Owed
    LLoydsTSB Plat. Over Draft £3500 £40/month 11.2%APR
    Egg Credit Card £1000 £20/Month 15.9%APR
    Cahoot Flexible Loan £10400 £300/Month 8.9%APR
    Capital One Credit Card £9500 £300/Month 6.5%APR
    LloydsTSB Loan £17200 £292/Month ?%APR
    NatWest Mortgage £96000 £658/Month 4.85%APR

    Total £137600 £1610/Month

    The LLoydsTSB loan is unsecured with 5 years and 9 months to go and a redemption penalty of about £180.
    The mortgage was fixed for 5 years and has 2 years 3 months to go with redemption penalties of 5%4%3%2%1% so at the minute it would probably be around £3000.

    Bills
    TV/Phone/Internet £80/Month
    Gas/Electricity £100/Month (this is very high - try uswitch to see if can be reduced)
    Water £26/Month
    Life Assurance £18/Month
    Council Tax £113/Month
    Dog Insurance £15/Month
    Washing Machine rental £13/Month (Any chance you can have a look for a cheap one to but - would cost in the sort term by save in the long term!)

    Total £365/Month

    Car
    Petrol £170/Month
    Car tax £175/Year
    Car service/MOT £800/Year (£800 per year? What for?)
    Insurance £377/Year

    Total £170/Month + £1352/Year

    Other
    Childcare £44/Month
    Childrens Savings £40/Month (This be stopped until you're back on your feet!)
    House insurance £469/Year (Wow seems high)
    Magazine Subscrip. £30/Quarter (Cancel these)
    Mobile Phones £15/Month
    Food £400/Month (Have a look at OS board - lots of savings to be made)
    Clothes £60/Month

    Total £559/Month + £30/Quarter + £469/Year

    Savings
    Egg Savings £43/Month (Throw at debts - saves you more in the interest saved on those high apr cards!)

    (Take Home) Income
    My Wage £1850/Month
    My Wifeís Wage £537/Month
    Child Benefit £169/Month
    My Wifeís CSA Payment £442/Month

    Total £2998/Month


    In vs Out
    Out £34929/Year
    In £35976/Year

    Balance £1047/Year To pay for everything else for a family of seven!
    by Talheedin
    • KatrinaC
    • By KatrinaC 24th Jul 06, 3:32 PM
    • 528 Posts
    • 387 Thanks
    KatrinaC
    • #5
    • 24th Jul 06, 3:32 PM
    • #5
    • 24th Jul 06, 3:32 PM
    Just to be a complete pain in the ***e I'm going to re-order everything as it makes the sums easier




    Income
    (Take Home) Income
    My Wage £1850/Month
    My Wifeís Wage £537/Month
    Child Benefit £169/Month
    My Wifeís CSA Payment £442/Month

    Total £2998/Month

    This is a very good income level, but is there anyway you can supplement it? What about selling old DVDs etc on e-bay, selling the kids old clothing by the bin-bag full in the Admag (or your local equivalent) and so on?

    Outgoings


    Bills
    TV/Phone/Internet £80/MonthWhat do each of these break down to? Assuming £12 for a TV license, that leaves £68 for the other two. Unless there is some reason why you have to have a really expensive line rental or your work requires ultra-high speed broadband these can be reduced by shopping around for broadband and looking for a cheap call carrier service like One-Tel. The telephones board should be able to help with both of those
    Gas/Electricity £100/Month Again, is there a reason why these are so high, especially in the summer? As a guideline, we can heat a very large, very old, very damp house in midwinter for less than £50 per month for both gas and electric. Check that everything you aren't using is turned off, not just put on standby and look for energy saving options for the things you can't turn off.
    Water £26/Month
    Life Assurance £18/Month
    Council Tax £113/Month
    Dog Insurance £15/Month Do you really need to insure your dog?
    Washing Machine rental £13/MonthTake a look on Freecycle and try asking whether anyone has a washing machine free to a good home. Failing that, try looking on your local supermarket small ads boards.

    Car
    Petrol £170/MonthCan you cut this back by using the car less and walking or cycling more, especially now that it is summer. If you use the car for work, do you get your mileage paid back?
    Car tax £175/Year
    Car service/MOT £800/Year How much?! Again, is there a reason this is so high? Is this spent getting an old banger through it's MOT, or is it haivng a full service performed at the dealership? If it is the former, you might be better off trading in your car for something a bit more reliable, if it is the latter, think about getting it serviced somewhere cheaper or even forgoing the service until you get back on your feet
    Insurance £377/Year

    Other
    Childcare £44/Month
    Childrens Savings £40/Month I know it seems heartless, but stop saving for the kids. You are getting a couple of percent on their savings but paying out 15% on your cards. Re-start when you have cleared some of the debt and pay in double or treble the amount you pay in now.
    House insurance £469/Year
    Magazine Subscrip. £30/Quarter Get rid of the subscriptions. £10 per month is a lot for magazines which you throw away after a couple of weeks. Get a library card and use online magazine/newspapers instead
    Mobile Phones £15/Month
    Food £400/MonthHow many people is this for? Does it include packed lunches, coffees etc?
    Clothes £60/Month This is a lot of clothing - I realise that you have a large family, but this needs to be reduced, say by half

    Savings
    Egg Savings £43/MonthAgain, lose the savings - I bet you're getting 5% interest at most on your savings, but paying 12% interest on your Lloyds TSB overdraft. Have you got much in the way of savings built up? If so, use them to pay off the debts with the highest APRs such as the overdraft and the Egg card. The same applies to the money you have put aside for the kids


    Total Monthly outgoings £2910 Potential savings of £300 per month



    Total Owed
    LLoydsTSB Plat. Over Draft £3500 £40/month 11.2%APR
    Egg Credit Card £1000 £20/Month 15.9%APR
    Cahoot Flexible Loan £10400 £300/Month 8.9%APR
    Capital One Credit Card £9500 £300/Month 6.5%APR
    LloydsTSB Loan £17200 £292/Month ?%APR
    NatWest Mortgage £96000 £658/Month 4.85%APR

    Total £137600 £1610/Month

    By my reckoning, you are left with about £90 per month to pay off £1610 of debts. Even by cutting back harder than I've suggested you are unlikely to be able to manage the type of economising you need to be doing. I think you need to be considering at least talking to someone like CCCS to see what options they feel are best for you, whether this be re-mortgaging your house or going onto an IVA or DMP.

    Kat
    • lazy&indebt
    • By lazy&indebt 24th Jul 06, 3:51 PM
    • 572 Posts
    • 216 Thanks
    lazy&indebt
    • #6
    • 24th Jul 06, 3:51 PM
    • #6
    • 24th Jul 06, 3:51 PM
    I agree with everyone but one more thing to add...

    What car are you driving? Your tax is high. If you were driving a car with low CO2 emissions (registered after march 2001 I believe) or an older car with a smaller engine this would be cheaper. My car has very low CO2 emmissions and as a result costs me only £100 to tax for twelve months
    Was debt free... then went travelling!
  • Talheedin
    • #7
    • 26th Jul 06, 11:36 AM
    • #7
    • 26th Jul 06, 11:36 AM
    Hi Everyone,

    Thanks for all your comments and suggestions Iíll certainly be acting on them.

    As KatrinaC said itíll be difficult to save enough this way to be able to turn things around so Iím faced with either a re-mortgage or an IVA or DMP. What Iím most worried about is losing the house if we go on an IVA or DMP through CCCS. Iím also fairly concerned about the amount of income weíll be left with on one of these plans. Could someone tell me what they involve and what the chances are of having to sell the house?

    Iíve got a meeting with the NatWest (where my current mortgage is) mortgage advisor this afternoon. So Iíll see how that goes and then give CCCS a ring.

    Just to answer a few points that people commented on:

    First the gas and electricity, I was with Amerada and paying £45 a month and always in the black. Then they were bought out by Powergen and I didnít receive a bill for around two years but continued to pay the £45 a month. When they finally sent me a bill it was for over £800 arrears plus what they wanted me to pay monthly. Now, Iíve cleared this and reduced the payments but I agree they are still high. I will look at switching.

    We decided to rent a washing machine because itís on four or five times a day and they only last about two years at this level of use. When I looked at this problem it was cheaper to rent than to buy and get the extended warranty. Weíve since been shown the large semi industrial machines that cost a lot more but would do our washing in one or two loads and would last for years. When the rental contract runs out I was going to look at one of these but Iím not sure Iíll be able to if we go on an IVA or DMP.

    The Dog does need to be insured. Heís a biggun! If he takes a nip at someone itís likely to take their leg and cost a lot in legal fees. Itís been quite amusing to watch the thieves run (not just from my house but from all those around) when he stands up at the front door and starts barking at them; especially after being burgled twice in the last six years. However, as all dog owners will say, heís as nice as pie and is all mouth and no trousers.

    I know £800 seems a lot for a car through the year but really I donít think itís that much. If you factor in tyres, exhausts, clutches (all of which can go), minor service (itís 10 years old and so it will need one of these), major service, MOT, extras that are needed every now and then (cam belt change this year), etc it can easily mount up. The car is reliable and in extremely good condition for its age and I try to keep it that way. If I were to buy a newer car it may cost me slightly less in running costs but probably much more in initial costs that would have to be put on credit. It is a big car (Laguna estate) but I have got five kids and a big dog. I know this has started sounding like making excuses to keep stuff but the car really is an essential. I have however started jogging to work whenever I donít have meetings that I donít need to drive to.

    The house insurance is high. Two burglaries and a burst water pipe in the loft will see to that. However, when it comes time to renew again the burglaries should be off the record.

    I will be cancelling the magazine subscription. Iíll miss it (New Scientist, very interesting) but, while I used to read every issue cover to cover, I am finding less and less time to get to it.

    Food at £400 a month does seem excessive but what I should actually have put is household shopping because this includes all the washing powder, toilet rolls (and we go through a lot of these), cling film and shampoo, etc, etc, etc. We have spent the last year trying to get this cost down and now practice a mix of bulk buying and cheap shopping (3 chillies from ASDA 54p 10 chillies from Asian supermarket 10p!) at markets and specialised grocers.

    I agree with the savings and I will start putting those against the debts now. It will be a real wrench to stop the kidís savings though.

    The TV Phone and internet break down to £11 TV licence, approximately £26-£27 Broadband and phone and calls with Pipex (I will be leaving them to go to Sky soon and so this should almost disappear) and 42.50 with sky. Yes I know, the sky thing is terrible especially seeing as no one watches the sports. The initial contract is up in 2 months time and I will be going to the basic package all of which should take the £80 down to around £40.

    Thanks

    Talheedin
    • lynzpower
    • By lynzpower 26th Jul 06, 11:54 AM
    • 24,746 Posts
    • 39,940 Thanks
    lynzpower
    • #8
    • 26th Jul 06, 11:54 AM
    • #8
    • 26th Jul 06, 11:54 AM
    Can I make a suggestion.

    You seem to be making a fair amount of excuses/ justification for your spending.

    We use the washing machine at least 3 times a day (im a bit of a washing obsessive) adn we have no problem with it in 2 years of owning it. I paid over the odds for mine as i wanted a chrome one ( ) but it has paid for itself already. Renting washing machines is a silly idea.

    Food at £400 a month does seem excessive but what I should actually have put is household shopping because this includes all the washing powder, toilet rolls (and we go through a lot of these), cling film and shampoo, etc, etc, etc. We have spent the last year trying to get this cost down and now practice a mix of bulk buying and cheap shopping (3 chillies from ASDA 54p 10 chillies from Asian supermarket 10p!) at markets and specialised grocers.
    Yep, thats what most of us include. We do 100 pcm but reducing, all toiletries, washing powder, food , lunches the lot. INcluding a fair amount of organic, fair trade and "finest". See how low you CAN get your food/cleaning bills, instead of saying you cant.

    your house insurance is high, mine is half that, and I dont think Ive got the cheapest, im with CIS.

    Cancel sky now, dont hang about losing money!!, lots of people have threatened to leave and got reductions in the meantime then cancelled once the reductions have expired.
    Last edited by lynzpower; 26-07-2006 at 5:19 PM.
    Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
    Theres no dollar sign on piece of mind
    This Ive come to know...
    So if you agree have a drink with me, raise your glasses for a toast
  • Richie23
    • #9
    • 26th Jul 06, 12:57 PM
    • #9
    • 26th Jul 06, 12:57 PM
    Hi

    You dont have to wait for you contract to run out before you drop some channels on Sky.. If your paying full package at £42.50 yo ucan drop sky movies and sports and have it for £31 or go even further and pay the minimum which i think is £21..ithink. Saved yourself £21.50 already a month. Use that towards something else then.

    Good luck.. i'm in debt to and currently asing advice to clear debt.. we are in the same boat!
    • calleyw
    • By calleyw 26th Jul 06, 1:38 PM
    • 8,905 Posts
    • 16,199 Thanks
    calleyw
    I agree with what ever has been said. But as I said to another poster today it is case of slash and burn on your budget and no excuses. As lynn has already pointed out.

    One I will take point up with you is you blaming the CSA for getting in to this mess. No you did, you spent more than you had coming in. CSA money should never be relied as it can stop at any time due to loss of job etc. And once the children leave school or college then it stops as well. You can included it in budgets but don't ever rely on it.

    As has been said drop the sky down to bare min and then get rid of and get a freeview box that will save you once it is binned will save £42.50 a month

    TV/Phone/Internet £80/Month I assume sky is inlcuded in this. Line rental is only £11. And to be blunt hardly anyone unless they are hardcore downloader needs highspeed internet access. I have two pc's that access internet at the same time on a 2mb line and it is not really slow. Use someone like 1866/1899 for calls.

    Food £400 on food needs to come down I spend between £60-£100 a month for two hungry adults plus another £10 a month from washing powder. I am still not sure how many there are in the household. But even if there are 5 of you £300 a month on food/household should be more than enough. If you plan.

    Car £800 a year. Tax is only £160 a year and new tyres once a year say £150 and a service say £150 that is only £460 a year.

    Magazines got to go. Clothes drop to 40 a month as an adult I suspect you have lots of clothes so you and your wife should not need any more.

    Child savings/egg savings have to go as well.

    Also you need to just stop spending if you don't need it you don't buy it. Sell unwanted stuff on ebay.

    I would not add your debts to your mortgage if you can't pay the mortgage then you have no home.

    I would approach either payplan/cccs now. And cancel the appointment with the bank.

    I wish you all the best.

    I would add up the savings I have suggested but I am at work and feeling really lazy sorry

    Yours


    Calley
  • Talheedin
    Went to NatWest last night to be told that the appointment Iíd made with the mortgage advisor hadnít been booked in and when the mortgage advisor came out to apologise for this he told me that he wasnít the person to speak to anyway and I had to ring a number to talk to someone about it. So according to NatWest a mortgage advisor doesnít advise about mortgages! I rang the number and was told that adding the debts onto my mortgage (which would actually be a second mortgage) would be around £345 per month over 18 years (same length as my current mortgage). This is pretty much what Iíd expected and what I think is affordable. However, to find out if I can get it I would have to apply which would mean a credit search and if rejected could stuff me for getting a re-mortgage with someone else. What I wanted to do was to sit down with someone at NatWest first and talk through the options but apparently ďthereís another wayĒ that they do it.

    So I then rang CCCS who went through a load of stuff with me and booked a telephone appointment for the 18th August. But I was even more worried about this after the call than I was before. I was shaking when I put the phone down. Especially when he told me to open a cash card account and just move my priority direct debits to it as the creditors can just take what they want through the direct debits on my current account(especially Lloyds for the loan I have with them). Though after sleeping on it Iím not as worried about this as I was yesterday.

    So my options are: apply for the second mortgage with NatWest and if I canít get it continue with the CCCS appointment or scrap the NatWest idea and just go with CCCS.

    What I really, really need to know are the following:
    - Will my Wifeís income (and child benefit and CSA money) be taken into account by the creditors seeing as there is no financial link between us other than that we are married?
    - Will they be able to force me to sell the house or file for bankruptcy or something similar?
    - How long is a DMP likely to last?
    - Will I have to accept that I wonít be able to move my mortgage when the fixed term ends in two and a bit years time?

    I will be so grateful if someone could answer these questions for me.

    On the plus side I have:
    - Joined the local library and will be stopping my New Scientist subscription this afternoon.
    - Dug out my Pipex contract and found that I am no longer in the penalty phase so I will be ringing them tonight to try and barter this down or leave.
    - Talked to my wife about reducing the sky package down to basic and sheís looking into what channels she wants.
    - Given all my cards to my Wife (who canít and wouldnít use them either) so that I canít spend any more.
    - Acquired a pocket diary from work so that I can start a spending diary (although I havenít spent anything since).

    Thatís all I can bare to do for one day. I will be doing more tomorrow.

    Thanks

    Talheedin
  • Talheedin
    Hi Everyone,

    Good news and bad news yesterday.

    Iíve cancelled my New Scientist subscription, found out that sky can be reduced to £15 a month for the lowest package (doing that this evening) and decided to cancel broadband at home until either the Sky broadband comes out or we go back to NTL. That should save us around £64 a month although we would be back with BT for calls (Iíll look into the 1866/1899 that Mad Maverick suggested though). My wife has reluctantly taken my cards and put them away, probably not totally necessary but it does take the temptation to spend on credit away and is a psychological step. Iíve taken out an allowance for the month in cash this morning so that I know what Iíve got and can see how it is dwindling. Finally, Iíve started a spending diary; £7.34 yesterday of which £3.34 was lunch at work which I calculated is costing me around £750 a year! Wow, that was a bit of a shock and itíll have to go.

    The bad new was that the Water company sent me a bill yesterday (the first one for around three years, I checked through my records for this) and, guess what, I owe them loads. They want to increase my payments to £91 a month for 11 months to cover it. Is there anything I can do about this? Can I phone them and say ďIíll pay you what the monthly payment should be and then pay off £10 a month extraĒ? Otherwise this wipes out the savings Iím making above.

    My Wife and I had a long talk last night about our options and she thinks that we should try to put the debts on the mortgage first. Now, a couple of days ago I would have agreed with this but now Iím not so sure and I think we should probably go with the CCCS plan however, as Iím uncertain about a few things, Iím not really in a position to convince her. The questions she had about CCCS were very similar to mine and Iíd really appreciate it if someone could give me some answers (or at least let me know their experiences):
    -Will my Wifeís income (and child benefit and CSA money) be taken into account by the creditors seeing as there is no financial link between us other than that we are married?
    - Will they be able to force me to sell the house or file for bankruptcy or something similar?
    - How long is a DMP likely to last?
    - Is there a standard amount for living expenses that we can refer to so that we can see how much weíll be left with each month?

    Thanks

    Talheedin
    • lynzpower
    • By lynzpower 28th Jul 06, 9:54 AM
    • 24,746 Posts
    • 39,940 Thanks
    lynzpower
    Securing a debt onto the mortgage, with respect, is one of the worst things you can do.

    1. It adds interest on top of the interest youve already accrued elsewhere, and strings is out for 18 years.

    2. It doesnt change your spending habits. As calley pointed out you havent been budgeting well, and lets face it not one of us has been anexpert budgeter or else we woudnt have ended up in debt. Another example is you hadnt noticed you havnet been paying your water rates for a while. Again, this is poor budgeting. Not having a go,Ive been pretty poor at it myself. but securing your debt onto your mortgage is not going to give you these skills. iF YOU accrue any more debt after this and find yourself in a pickle, its literally a house of cards that will tumble. If you miss payments on your mortgage or on the secured part, yes, they can file for bankrupcy.

    Additionally, plenty of people come on here with secured debts that they cant get out of. if the lucky things happen and you have a win on the lottery or you get left money from a distant relative the penalties of closing secured loans down make it night on impossible to get out of them.

    I believe that you are financilly linked bacuase you are married although others will be able to tell you more about this.

    Securing debt on your home will more as likely put you in negative equity.

    If you want to move and the sale price of your house is less than the mortgage plus the secured loan you are still liable for the extra debt once you have sold the property.

    Aso bear in mind interest rates are set to rise, and although you are on a fixed rate now, newer fixed rates later in the year as predicted will mean that your mortgage goes up, and thus the secured loan goes up too. Have you factored this in.

    The DMP I believe is the better route. It doenst involve securing the debts. SOme people have a DMP that lasts 18 years, but the fact is that you might get a promotion, or get some money from elsewhere and this can bring the term of the DMP down. In a DMP the creditors stop the interest, so tht you wont be chasing your tail, what you pay off will be coming off the balances.

    I believe that you have significant scope for reducing your outgoings, theres 200 pcm off your food bill there for a start, plus as you pointed out a 750 a year lunch habit that can go without too muhc toruble. please dont be hasty in securing when there are clearly much better options out there. A few other things- ewhat have you got to sell? Sell anything you have got you dont need on ebay/bootsales/amazon. You say your wife cant work, what about part time work? Weekend job in a shop or something? Right now its all hands to the decks to get things sorted IMHO.

    All the best
    Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
    Theres no dollar sign on piece of mind
    This Ive come to know...
    So if you agree have a drink with me, raise your glasses for a toast
    • grade15
    • By grade15 28th Jul 06, 10:06 AM
    • 527 Posts
    • 219 Thanks
    grade15
    I think KatrinaC be sitting next Martin Lewis!!
    not sure if this is mentioned but could you reduce your council tax..as you are claiming child benefits ..not too sure..just know that if you are claiming benefits, then it can reduce your CT..
  • caleo
    I think KatrinaC be sitting next Martin Lewis!!
    not sure if this is mentioned but could you reduce your council tax..as you are claiming child benefits ..not too sure..just know that if you are claiming benefits, then it can reduce your CT..
    by grade15
    They have too much income to be able to get any help towards the counciltax etc.


    -Will my Wifeís income (and child benefit and CSA money) be taken into account by the creditors seeing as there is no financial link between us other than that we are married?
    - Will they be able to force me to sell the house or file for bankruptcy or something similar?
    - How long is a DMP likely to last?
    - Is there a standard amount for living expenses that we can refer to so that we can see how much weíll be left with each month?



    Your wifes income, CB and CSA would not be included into your income if the debts are all in your name. Your outgoings would be reduced though, as they would expect your wife to pay towards the mortgage, food, utilities etc

    The CCCS will advise as to how long the DMP will go on for- depends on what disposable income you will have left after you have paid all essentials.

    They will send you a pack which will have a budget sheet in it. Complete this, and you will have an idea of what your outgoings are without the debts, and see what is left over to share between the creditors. When you have the interview with the CCCS, they will run through your outgoings, and they have minimum amounts that you need for food etc.

    There are a few people on here who work for the CCCS, and I am sure they will be around soon and will be able to give you guidelines as to what you can expect to budget.

    They won't leave you destitute, they will ensure that you have sufficient to live on. They do not want you to be struggling and then not paying your DMP.

    Yes, it is going to affect your credit. If you are concerned about remortgaging in 2 years time, there are some lenders who will let you remortgage. I have just done mine, and got a better rate than with a high street lender.

    Caleo
  • Talheedin
    Ah, I didnít know that a DMP could last that long or that it would freeze the interest. Is there anywhere that I can find out more about what a DMP actually is, Iíve only got a few fuzzy pieces of information on them?

    My wife does work (her wages are included in the SOA above) and we have actually been looking for things to sell on ebay and have amassed a small pile to start with unfortunately having five kids doesnít leave many things in mint condition. (Iíll just explain the family dynamics because I think someone asked about it earlier. I have two teenagers who officially live with their mother but spend three nights a week with us. She earns more than I do and gets the child benefit, I donít have to pay maintenance per se but I do have to pay for them for the three days a week and share a proportion of costs; clothing, birthdays, entertainment, etc. My Wife has a teenager from her previous marriage who lives with us and we have two toddlers of our own. All of them are boys and for anyone who has seen Malcolm in the Middle you will have some idea of what our house is like, except we also have a dog.

    My Wifeís spending habits are saintly (along with many of her other virtues). In the five years weíve been together she has only been overdrawn once and that was because of a mix up with her wages. She refuses to get a credit card. Hence the reason why Iím trying to talk her into being in control of the finances and me just having a monthly allowance. She has reluctantly agreed.

    Unfortunately Child Benefit is a universal benefit and doesnít entitle you to reduced council tax.

    I am trying to get budgeting under my skin and hope Iím starting well but itís only been a few days compared to years of just spending. Iíll just have to see what happens when the pinch starts to bite.


    I was just about to post the above when I saw Caleoís message. Thanks very much for that Caleo itís cleared a few things in my head.


    Thanks

    Talheedin
  • Cantdance
    Please please please don't put the debts onto the mortgage...

    We did that - and then spent it all again - and then got a secured loan from one of those TV lenders - and then spent it all again!

    End result - The house we bought for £90,000 is now mortgaged for £117,000, plus another secured loan of £17,000 which would cost us around £32,000 to pay off if we tried to move.

    Hence we would now need to get around £160,000 if we wanted to move and the house is worth £145,000 max.

    No-one's posted the link to the Snowball calculator yet - this is superb. It shows you how long it would take to pay off all your debts if you carried on just paying the minimum payments on everything - and then how long it would take to pay them off if you just find a little bit more than the minimum each month.

    It also shows you how much more interest you would pay by putting the debts onto the mortgage (in my case about £20,000 more I think!)

    It gave me a debt free date about 3 years from now which I can now work towards as a goal and has motivated me into being much better with the money.

    http://www.whatsthecost.com/snowball.aspx

    When I first came to this board my wife and I had about £500 more a month going out than coming in. By getting advice from people here, cutting back on stuff and moving things around we managed to break even and now even have some spare cash every month which gets thrown straight at the debts, bringing that Debt Free date ever closer.

    I haven't done the sums so can't quite work out if you have enough money to keep meeting your minumum payments, but if after a bit of sacrificing and juggling things around you can just about make them, then my best advice would be to help yourselves. Don't remortgage, and don't go into an IVA / DMP if you can help it.

    Reduce (maybe even halve!) your shopping bill by going to Netto / Lidl / Aldi if you have one nearby - yes the stuff's in different packets but it's just as good and sometimes better. Switch all your suppliers through Uswitch and see if you can save on utilities. Cut your broadband down to a basic package if you don't want to get rid of it totally. Cut your sky back or cancel when possible.

    Then if you do everything like this you can think of and you still don't have enough to make your minimum payments, it's definitely time to approach the CCCS for advice. They're only going to tell you to do the same things anyway so best do it first and see if you can get by without them.

    Things will hopefully only get better as chances are your salary will be going up rather than down so you may find it's only going to be a few months where you have to be really stingy and after that things will get slightly better.

    But cut up every credit card / Store card you and your wife own - it's the only way to stop putting anything else on there!

    Hope this was helpful in some way.

    James
    Total Debt: Owe about £19,000 on credit cards plus £24,000 which is my half of joint loans.
  • Talheedin
    I think we're passed the time where we can save enough to pay the debts as we are. Especially when we make an effort and then Yorkshire Water take it back off us (I was paying the water bill by the way, they just didn't bother to send anyone round to check the meter and bill us properly. I know I should have checked it myself.)

    On top of that more gas and electricity rises! Don't switch now!

    As I've been reading your posts I've been thinking "Oh, yeah, well I am budgeting now and cutting back on things, we'll be sorted." But deep down I know there'll be the temptation to just get this or that. And temptation will lead to purchase!

    I must admit I feel really crap. I suppose this is all just part of facing up to the reality of the problem.

    Talheedin
  • Cantdance
    I think we're passed the time where we can save enough to pay the debts as we are. Especially when we make an effort and then Yorkshire Water take it back off us (I was paying the water bill by the way, they just didn't bother to send anyone round to check the meter and bill us properly. I know I should have checked it myself.)

    On top of that more gas and electricity rises! Don't switch now!

    As I've been reading your posts I've been thinking "Oh, yeah, well I am budgeting now and cutting back on things, we'll be sorted." But deep down I know there'll be the temptation to just get this or that. And temptation will lead to purchase!

    I must admit I feel really crap. I suppose this is all just part of facing up to the reality of the problem.

    Talheedin
    by Talheedin
    Well, if you're really at that point then I heartily suggest the CCCS or PayPlan who are similar and just as good but not as busy.

    But just looking at your yearly thing - you still have just about more money coming in than going out and at the end of the day that means you CAN get by without more borrowing.

    If you cancel your magazine, cancel your sky, change some suppliers, change your food shopping habits, you might find it's enough to scrape by for a while and not have to screw your credit rating over by going onto a DMP, or worse still, putting it all on your mortgage whereby you'll pay 10 times more in interest.

    Take a look at the snowball calculator- I did and it made me feel much better about 'going it alone'.

    James
    Total Debt: Owe about £19,000 on credit cards plus £24,000 which is my half of joint loans.
  • Cantdance

    As I've been reading your posts I've been thinking "Oh, yeah, well I am budgeting now and cutting back on things, we'll be sorted." But deep down I know there'll be the temptation to just get this or that. And temptation will lead to purchase!

    I must admit I feel really crap. I suppose this is all just part of facing up to the reality of the problem.

    Talheedin
    by Talheedin
    And if temptation is the problem (as it normally is for us DFWs!) then just remove all possibility of giving into it!

    Give your wife all your credit cards, as you have done, or better still, detroy them all once and for all!

    Work out how much spare money you have a month and withdraw it all in cash, divide it up week by week and put it in 4 sealed envelopes not to be opened until that week.

    Make it impossible for yourself to spend any more than you have!

    I know you feel crap and believe me I was there but facing it up to it and starting to sort it out is by far the best thing I ever did and worth 10 consolidation loans or remortgages.

    Previously I used to think about money non-stop, during the day, lying there at night, sweating and feeling like I was going to suffocate.

    I still think about money non-stop but because I took control of it, it feels good - I know that I've broken out of the 'must buy this' trap and that I'm doing something to sort myself out once and for all. Eventually it becomes fun - how much can I save this month?

    I don't reckon you're at the giving in stage just yet...

    James
    Total Debt: Owe about £19,000 on credit cards plus £24,000 which is my half of joint loans.
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