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  • FIRST POST
    • mandi80
    • By mandi80 9th Apr 18, 12:26 AM
    • 17Posts
    • 4Thanks
    mandi80
    Sorting out this massive mess
    • #1
    • 9th Apr 18, 12:26 AM
    Sorting out this massive mess 9th Apr 18 at 12:26 AM
    Evening all,

    I have been planning this post in my head all day! I am posting here for support, advice and generally somewhere to vent about our current circumstances.

    DH and I, both 37 with one kid, are in debt to the tune of around 60k.. The debt is made of up a combination of credit cards, and a loan. we have been in debt ever since we became a couple. We lived our twenties during the noughties and we took advantage of the 0% balance transfers that seemed to be everywhere back then. We funded holidays, weekend and away and general lifestyle stuff with credit cards, before balance transferring to another 0% card and so on, so on etc. Totally foolish in hindsight but we were totally taken in by the debt culture.

    our debts up until around 5 years ago were around 25K, Whilst this was lot, it was easily manageable on our income and we didn't really think much about it. Fast forward to 2018 and we are around 60K in debt... how did this happen.... I'll digress!

    we were supposed to receive a large sum of money last year (50Kish) that was due to us. Sadly, due to the actions of others this money will not be coming our way ( well not all of it). I can't really go into much more detail. DH is happy for me to post on here, on the condition that I don't reveal anything too specific, so I need to respect this. We have done everything we can to get the money that we are due, however we have had to accept that it isn't going to happen.

    We racked up a lot of debt using a loan, and 0% credit cards with the full intention of clearing it when we received out 50K. This money was used to fund our house renovations, maternity pay gap, as well as funding a 9 month gap when I was not able to work. I need to be jonest and admit that a good 10K was used to totally non-essential things such as holidays, expensive furniture, and being too generous to people who, in hindsight, didn;t appreciate of deserve it.

    We hqve both made peace with the fact that the 50k isn't going to appear. We have had to, in order to maintain our sanity. I am a practical person and not really a worrier, therefore I am taking on the role of 'money manager' in our house - DH is on board and fully aware, but tend to fret and worry and IMO this gets in the way of progress!!. I like to look at things logically, so I have spent sometime today thinking about the reasons why I am/am not worried

    I am worried because Ė
    • Itís a massive amount of debt, regardless of income
    • A sudden loss of income would be catastrophic for us
    • It makes my DH anxious and stressed, which I hate.
    • The
    0% deals are running out soonish

    I am not worried because Ė
    • Itís only money Ė I have witnessed family and friends deal with all sorts of horrendous things during the last few years and our money woes are minor in comparison
    • We have a reasonably small mortgage of just over £500 per month, which enables us to throw more at our unsecured debts
    • We have a good joint income, taking home around £4800 per month. Minimum debt payments are around £1200 so this still leaves an income of £3600 after minimum debts are paid, which isnít too bad. We managed on far less at the start of our relationship
    • We have paid off 10K since oct/nov 2017
    • We will definitely receive around £17k mid 2019, so this can be knocked straight off the debt, with perhaps a couple of grand retained as an emergency fund
    • Stepchange said that we donít need to consider a DMP as we can easily afford minimum payments.
    • I have put the figures though the snowball calculator with the interest set at 20% and we can still manage it
    • I pay everything on time, and have been overpaying so I am reasonable confident that I will be able to obtain more 0% transfers when the time comes
    I will do a full SOA tomorrow when I am not so tired, but as a general idea, our finances are arranged in the following way Ė

    Income £4800
    Mortgage and all house related bills and direct debits £1250
    Food, fuel and kids clubs £600
    Minimum debt payments - £1200
    TOTAL outgoing- £3050

    Do this look doable? I think that we can do it without resorting to a formal debt solution, based on the fact that we do have a good surplus at the moment. Our jobs are secure so we should be able to make a decent dent in the debts this year.
Page 1
    • Tarambor
    • By Tarambor 9th Apr 18, 3:50 AM
    • 3,567 Posts
    • 2,645 Thanks
    Tarambor
    • #2
    • 9th Apr 18, 3:50 AM
    • #2
    • 9th Apr 18, 3:50 AM
    our debts up until around 5 years ago were around 25K, Whilst this was lot, it was easily manageable on our income and we didn't really think much about it. Fast forward to 2018 and we are around 60K in debt... how did this happen.... I'll digress!
    That's easy, lifestyle inflation. As your income goes up so does the money you spend on things. A Ford Mondeo becomes a BMW or Audi and when you put fuel in it you no longer care the nearest petrol station is 10p/litre more than another one you pass on the way to work, £30 pairs of shoes replaced by £100 pairs of shoes, a meal and drink out at a local chain pub becomes one at a much more expensive restaurant, a package holiday becomes a cruise...

    Absolutely doable and it already looks like you're starting down the right path shifting everything you can to lower rates, getting a SOA together. I reckon there's a fair bit of fat to trim as well as you'll find out when you post a SOA BUT YOU HAVE TO BE TOTALLY HONEST WITH IT and include everything you spend, even those odd few quids here and there on a Costa Coffee etc.

    You have as it stands at least £1700 a month to throw at this. 3 years or so and it would be done with.

    DO NOT RELY ON THE £17K. If you do get it keep it for an emergency fund. £2k is not enough of an emergency fund for you, you need at least 3 to 6 months of outgoings.
    Last edited by Tarambor; 09-04-2018 at 3:55 AM.
    • a_silver_lining
    • By a_silver_lining 9th Apr 18, 7:53 AM
    • 327 Posts
    • 897 Thanks
    a_silver_lining
    • #3
    • 9th Apr 18, 7:53 AM
    • #3
    • 9th Apr 18, 7:53 AM
    I agree with the previous poster. I would treat the 17k as your emergency fund, and repay the debt with your income. Try using a spending tracker on your mobile and record every little spend, you'll be surprised where it all goes and where you can cut down.
    19/12/14: Spent 10 years of savings!!
    ..... to buy my first home.

    2018: 2.4k personal savings --- Family Loan (3.6k paid direct + 3k in saver + 425.21 saver 2) 7025.21/ 10K paid 70.25%
    Extra cash made 2018: 927.93
    • mandi80
    • By mandi80 9th Apr 18, 8:43 AM
    • 17 Posts
    • 4 Thanks
    mandi80
    • #4
    • 9th Apr 18, 8:43 AM
    • #4
    • 9th Apr 18, 8:43 AM
    Thanks for the replies guys.

    I agree that 2k Isn't enough - I was just thinking about having some money in case the washing machine broke, etc. Normally, that sort of thing would have gone straight onto the credit card.

    I am going to so the SOA as soon as I have had breakfast
    • mandi80
    • By mandi80 9th Apr 18, 10:34 AM
    • 17 Posts
    • 4 Thanks
    mandi80
    • #5
    • 9th Apr 18, 10:34 AM
    Soa
    • #5
    • 9th Apr 18, 10:34 AM
    So here is the SOA. I have tried to be as accurate as possible and reflect how we have been spending since the end of last year. It's actually a bit worse than I thought - I thought that we had a bigger surplus. Just shows the importance of writing it all down and looking at it in black and white.

    I should add that we are not currently paying for TV licence as DH's 75 year old mother is staying with us for around a year. She pays for her own food etc so doesn't really cost us anything.

    Household Information[/b]
    Number of adults in household........... 3
    Number of children in household......... 1
    Number of cars owned.................... 2

    Monthly Income Details

    Monthly income after tax................ 2450
    Partners monthly income after tax....... 2365
    Benefits................................ 82.8
    Other income............................ 0
    Total monthly income.................... 4897.8


    Monthly Expense Details

    Mortgage................................ 518.2
    Secured/HP loan repayments.............. 179
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 120
    Electricity............................. 30
    Gas..................................... 60
    Oil..................................... 0
    Water rates............................. 0
    Telephone (land line)................... 35
    Mobile phone............................ 40
    TV Licence.............................. 0
    Satellite/Cable TV...................... 0
    Internet Services....................... 25
    Groceries etc. ......................... 300
    Clothing................................ 30
    Petrol/diesel........................... 200
    Road tax................................ 10
    Car Insurance........................... 25
    Car maintenance (including MOT)......... 30
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 200
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 15
    Contents insurance...................... 15
    Life assurance ......................... 38
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 50
    Haircuts................................ 10
    Entertainment........................... 250
    Holiday................................. 0
    Emergency fund.......................... 0
    Total monthly expenses.................. 2180.2



    Assets

    Cash.................................... 0
    House value (Gross)..................... 205000
    Shares and bonds........................ 0
    Car(s).................................. 12000
    Other assets............................ 0
    Total Assets............................ 217000



    Secured & HP Debts

    Description....................Debt......Monthly.. .APR
    Mortgage...................... 71500....(518.2)....1.95
    Hire Purchase (HP) debt ...... 12000....(179)......6.9
    Total secured & HP debts...... 83500.....-.........-


    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    credit card 1..................10500.....260.......18.9
    credit card 2..................3000......65........0
    credit card 3..................4800......50........0
    hmrc...........................1300......131...... .0
    tesco CC.......................4600......140.......16.9
    barclaycard....................7000......195...... .0
    mbna...........................5000......120...... .19.9
    loan ( Halifax)................17250.....345.......7.9
    loan (creattion)...............9000......248.......9.9
    Total unsecured debts..........62450.....1554......-



    Monthly Budget Summary

    Total monthly income.................... 4,897.8
    Expenses (including HP & secured debts). 2,180.2
    Available for debt repayments........... 2,717.6
    Monthly UNsecured debt repayments....... 1,554
    Amount left after debt repayments....... 1,163.6


    Personal Balance Sheet Summary
    Total assets (things you own)........... 217,000
    Total HP & Secured debt................. -83,500
    Total Unsecured debt.................... -62,450
    Net Assets.............................. 71,050
  • archived user
    • #6
    • 9th Apr 18, 12:06 PM
    • #6
    • 9th Apr 18, 12:06 PM
    Welcome - sounds like you are at the start of a great journey to getting this sorted.

    At the moment your SOA has nothing in it for emergency fund - read about the £17K, but in the meantime I think you should prioritise putting the "spare money" into the EF - perhaps with setting an extra £5 on top of each minimum payment for your CC' as this will help with your credit score as you are paying over minimums and hopefully help to attract you some 0% BT deals)
    Then in a couple of months you will have £2K in the EF, and if the £17K comes in you could then throw that £2K at one of your debt (prioritising your highest interest ones first)

    Saving cash into your EF rather than off the debt will also help manage if your SOA is actually right as it usually takes a few months to iron things out?

    I'm guessing you will want to start smashing the debt, so purposely not doing this, and building an EF feels a bit counter productive. To keep you motivated you could try doing something like PAD (payment a day) - rounding down your account to the nearest pound, and sending the pennies to a CC.

    There's nothing in the holiday fund, but a good amount in entertainment - I definitely think you need to keep life "nice" otherwise it' all too easy to get demotivated with debt busting - so make sure you plan how you spend this cash and get good value out of it (not just frittered for costas!!)

    Telephone and internet seems a bit high -are you locked in? I got a £28 a month deal with sky for all calls anytime (mobile inc) and umlimited broadband - plus got £75 Topcashback for signing up....

    Car maintenance is a bit low at £30 for 2 cars

    Good luck!!
  • National Debtline
    • #7
    • 9th Apr 18, 12:15 PM
    • #7
    • 9th Apr 18, 12:15 PM
    Hi mandi


    Your attitude and approach to this bode well as you're clearly very determined to get on top of things.


    Just a small observation - there doesn't appear to be any figure for water in your SOA - are you in Scotland, where it's included in your council tax?


    Dennis
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • mandi80
    • By mandi80 9th Apr 18, 12:39 PM
    • 17 Posts
    • 4 Thanks
    mandi80
    • #8
    • 9th Apr 18, 12:39 PM
    • #8
    • 9th Apr 18, 12:39 PM
    HI, It appears that my DH actually paid out water rates in full - using a credit card, so they are in the SOA - they are just part of the debt!!!
    • zippygeorgeandben
    • By zippygeorgeandben 9th Apr 18, 12:46 PM
    • 912 Posts
    • 1,242 Thanks
    zippygeorgeandben
    • #9
    • 9th Apr 18, 12:46 PM
    • #9
    • 9th Apr 18, 12:46 PM
    You know I'm excited for you, I genuinely am. I think you and your DH should start a diary.
    My advice would be like other people and do not rely on the 17k. Some people suggest building a 3-6 months emergency fund so you are totally prepared for any emergency which comes along due to not being able to work.
    A monthly income of £4,800 multiplied by three is £14,400 so you should think of that £17k as your emergency fund. That's what I think anyway.
    Also, if I may say, I really admire your frankness, honesty and 100% responsibility.
    Regarding the 50k, in the words of Elsa in Frozen just 'Let it go'. People never let go in things in life (this was a drunken conversation in the pub I had on Saturday!) and it just takes over you, causes friction, makes you become bitter etc.. so let it go!
    I look forward to reading with interest. Good luck.
    End Sep 2016 End August 2018
    £8236.57 £0
    (Tesco 4.8%) £0pcm
    £6185.75 £0 (Zopa 4.0%) £0pcm

    £5344.50
    £0 (Sainsburys 0%) £0pcm
    £2000.00 £0 (Sister 0%) £0pcm

    Total debt
    £19.766.82 £0 Original DFD May 2019.
    • Tarambor
    • By Tarambor 9th Apr 18, 2:04 PM
    • 3,567 Posts
    • 2,645 Thanks
    Tarambor
    HI, It appears that my DH actually paid out water rates in full - using a credit card, so they are in the SOA - they are just part of the debt!!!
    Originally posted by mandi80
    They need to be listed as a separate figure. Next year you'll not be putting them on a credit card but instead paying by DD.

    You actually don't seem to be doing too badly on the outgoings on the face of it. The only thing I can see is telephone/internet. You can get BOTH combined for what you're paying for just one of them. I'm paying £31 a month for both phone line and fibre broadband combined and there's cheaper deals than that around. Not a lot of savings but its another few hundred quid a year in your pocket. Groceries is a little high depending on what you include. The ONS states the average food shopping for a family in the UK is a little over £55 a week including £4 on booze.

    I would also set aside an amount per month in your SOA for holiday otherwise it becomes another expense that goes into the "where the hell did all the rest of the money go?" pot when you do the sums and it doesn't all add up
    • smem18
    • By smem18 10th Apr 18, 4:56 PM
    • 59 Posts
    • 44 Thanks
    smem18
    I'd say £300 on groceries for 2 adults and 1 child per month is huge - where do you shop? I reckon you could cut that in half with some savvy shopping!

    Also, £250 on entertainment per month seems like a lot to me.

    I also agree with others that you should have a view to build up an emergency fund with your remaining income. Then once you've done that, throw everything you've got at those debts. You are both on good money so I totally believe you can clear this over time, but you'll need to be strict and dedicated to it
    • Fireflyaway
    • By Fireflyaway 10th Apr 18, 5:37 PM
    • 1,924 Posts
    • 2,175 Thanks
    Fireflyaway
    I can identify with this. I'm also your age with 1 child and like you my husband and I did holidays, eating out, holidays etc on credit. It's so socially acceptable and we were trying to live the lifestyle we were used to at home, forgetting it probably took 30 years for our parents to get there! I'd recommend 2 things. Do a written budget every month - live within your means and don't borrow any more. Then secondly watch the debt free screams on dave ramsey. It's on youtube. I'm personally a fan of his method but even if you don't follow it, it's so motivational seeing how ordinary people have paid off huge debts.
    Your income is ok so you have means to tackle this. be organized and make a plan.
    • Cakeguts
    • By Cakeguts 10th Apr 18, 9:23 PM
    • 4,895 Posts
    • 7,273 Thanks
    Cakeguts
    £250 per month on entertainment seems a lot to me. Can't you have look for something to do that is free?
    • GSPGirl
    • By GSPGirl 11th Apr 18, 9:27 AM
    • 84 Posts
    • 18 Thanks
    GSPGirl
    Hi

    I don't have time to write a massive reply, but wanted to say what you're doing looks good. We were in a similar situation and after 8 years have finally dug out way out of it. We also ending up doing a voluntary repossession on our home as we couldn't sell it, then got lumped with the debt of the shortfall balance.

    I think if you stay on this forum and keep reading you'll find loads of support and useful information. We very much buried our heads in the sand and just kept plugging away at whatever we could afford, sometimes when things were bad it was only £10 a month but it was a gesture to show we were trying.

    We are now on the final lap with some small debts and are going self managed. We also just bought a house with a mortgage from a high street lender on a great deal. They looked past our historical issues and could see we were reliable and owning our issues.

    We also have two kids and they are expensive even when your frugal.

    You can do this !
    • mandi80
    • By mandi80 11th Apr 18, 2:35 PM
    • 17 Posts
    • 4 Thanks
    mandi80
    You know I'm excited for you, I genuinely am. I think you and your DH should start a diary.
    My advice would be like other people and do not rely on the 17k. Some people suggest building a 3-6 months emergency fund so you are totally prepared for any emergency which comes along due to not being able to work.
    A monthly income of £4,800 multiplied by three is £14,400 so you should think of that £17k as your emergency fund. That's what I think anyway.
    Also, if I may say, I really admire your frankness, honesty and 100% responsibility.
    Regarding the 50k, in the words of Elsa in Frozen just 'Let it go'. People never let go in things in life (this was a drunken conversation in the pub I had on Saturday!) and it just takes over you, causes friction, makes you become bitter etc.. so let it go!
    I look forward to reading with interest. Good luck.
    Originally posted by zippygeorgeandben

    Thanks for your reply.

    I think that honesty is the only way that this is going to work. We have sent years with our financial heads in the sand, so for me it's about taking responsibility and accepting that our situation is NOT NORMAL!! For years I have kidded myself that everyone is in debt, and that we are no different to others, but the reality is that whilst lots of people may be in debt, very few will owe in excess of 60k!!
    • mandi80
    • By mandi80 11th Apr 18, 2:37 PM
    • 17 Posts
    • 4 Thanks
    mandi80
    Hi

    I don't have time to write a massive reply, but wanted to say what you're doing looks good. We were in a similar situation and after 8 years have finally dug out way out of it. We also ending up doing a voluntary repossession on our home as we couldn't sell it, then got lumped with the debt of the shortfall balance.

    I think if you stay on this forum and keep reading you'll find loads of support and useful information. We very much buried our heads in the sand and just kept plugging away at whatever we could afford, sometimes when things were bad it was only £10 a month but it was a gesture to show we were trying.

    We are now on the final lap with some small debts and are going self managed. We also just bought a house with a mortgage from a high street lender on a great deal. They looked past our historical issues and could see we were reliable and owning our issues.

    We also have two kids and they are expensive even when your frugal.

    You can do this !
    Originally posted by GSPGirl
    Hi, thanks for replying. I am pleased to hear that you have managed to sort things out it gives me hope that we can do this too.
    • mandi80
    • By mandi80 11th Apr 18, 2:38 PM
    • 17 Posts
    • 4 Thanks
    mandi80
    I can identify with this. I'm also your age with 1 child and like you my husband and I did holidays, eating out, holidays etc on credit. It's so socially acceptable and we were trying to live the lifestyle we were used to at home, forgetting it probably took 30 years for our parents to get there! I'd recommend 2 things. Do a written budget every month - live within your means and don't borrow any more. Then secondly watch the debt free screams on dave ramsey. It's on youtube. I'm personally a fan of his method but even if you don't follow it, it's so motivational seeing how ordinary people have paid off huge debts.
    Your income is ok so you have means to tackle this. be organized and make a plan.
    Originally posted by Fireflyaway
    Thanks Firefly, I will def check out Dave Ramsey,

    So much of our debt is due to chasing a lifestyle that was just out of grasp. £50 here, another £100 there etc etc over the course of 15 = 64k!!
    • mandi80
    • By mandi80 11th Apr 18, 2:40 PM
    • 17 Posts
    • 4 Thanks
    mandi80
    £250 per month on entertainment seems a lot to me. Can't you have look for something to do that is free?
    Originally posted by Cakeguts
    Yes, to be honest, I wasn't really sure what to put for entertainment as this differs massively month to month. The £250 was a somewhat arbitrary figure. I will tweak this and change it to a more realistic figure over the next couple of months.
    • zippygeorgeandben
    • By zippygeorgeandben 11th Apr 18, 3:16 PM
    • 912 Posts
    • 1,242 Thanks
    zippygeorgeandben
    If you carry on with this mindset of 'what have i got to show for all this debt? i.e. not much then you'll definitely approach this with the perfect mindset.
    As long as you are both on board! I'm 38 and I had my LBM when just turned 37. I'm loving seeing my debt going down and when I'm working all the hours god sends I'm always thinking, it's another day closer to becoming debt free
    End Sep 2016 End August 2018
    £8236.57 £0
    (Tesco 4.8%) £0pcm
    £6185.75 £0 (Zopa 4.0%) £0pcm

    £5344.50
    £0 (Sainsburys 0%) £0pcm
    £2000.00 £0 (Sister 0%) £0pcm

    Total debt
    £19.766.82 £0 Original DFD May 2019.
    • NelliePie
    • By NelliePie 11th Apr 18, 3:33 PM
    • 237 Posts
    • 512 Thanks
    NelliePie
    Is there any way you can transfer some of the high interest debits to a 0% card? I know it might be obvious but as long as you're making the minimum payments tackle the debt in order of biggest interest and get that snowball effect going.

    It is a lot of debt but you're in a good position as you have a good household income and you've made the first and most important step - realising there's an issue and getting a plan to solve it.

    With regards to groceries, as other posters have mentioned it is quite high. I don't know what you do but simple things like cooking from fresh and avoiding pre-prepared meals and ingredients can help cut costs, as can meal planning (so you don't buy too much) and batch cooking.

    Good luck
    Little One's due date 18/12/18
    5/5/18 I became Mrs Pie
    FTB June '17 - £144k motrgage
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