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  • FIRST POST
    • becks818
    • By becks818 14th Apr 19, 8:47 PM
    • 8Posts
    • 23Thanks
    becks818
    Trying to avert disaster
    • #1
    • 14th Apr 19, 8:47 PM
    Trying to avert disaster 14th Apr 19 at 8:47 PM
    Hi Everyone

    My username may make you think of a work famous footballer, however that is where the comparisons end i'm afraid! I am pretty sure that the actual Becks earns enough in a day to clear all of our debt, anyway..let me get on with it.

    We are in a HUGE amount of unsecured debt. HUGE. We have more unsecured debt that anyone I have ever know or met. I know people with mortgages less than our unsecured debt. Today we sat and worked out exactly just how HUGE..... 65K. Just typing that was hard.

    We are married with 8 year old twins. We are both going to be turning 40 within the next 12-18 months and we are at a point where we HAVE to do something about our debts. I will try not to bore you, however here is a brief summary at how we arrived at this horrendous figure...

    As young twenty somethings we led a fun packed life full of holidays, weekends away, shopping trips and endless nights out. We both worked hard and earnt good money but would regularly plug the gap with credit cards, plus a car loan ( or two). Despite our spendy ways, it was generally under control and I estimate that we owed around 30K between prior to having the kids. a Large amount of debt, but nowhere near where we have ended up now.

    We needed to undergo several rounds of IVF to have our twins. As we had no savings, a large part of this was funded by loans and credit cards. Of course I don't regret this, however it did add to our debt.

    Next came the house. We had actually purchased the house some years before in 2006 for a bargain price however it needed quite a bit of work that we had been putting. It hadn't been a priority. New bathroom, kitchen, rewiring, redecoration and some work to the roof was all funded via credit. We felt it had to be sorted before out two bundles of joy arrived.

    My wife didn't work for the first 3yeasr after having the twins. This was a big strain to our finances and despite our best intentions, we often resorted to credit cards to plug the gaps again. She returned to work part time but has recently gone back on a full time basis.

    Apart from the IVF, home improvements etc we have generally made really poor decisions with money and have allowed ourselves to fall deeper and deeper into debt.

    Anyway, what's done is done and not we want to start the process of sorting it out. We know it's going to be a journey and we are not looking for a quick fix. We have LOTS of things to be grateful and I will list them below in order or priority

    We have two beautiful, happy healthy children
    We have a nice home
    We have a relatively small mortgage of 60K (house worth 200Kish)
    We not have a combined take home income of just over 5K per month
    We are no in arrears, missing payments etc
    We are both 'on the same page' regarding our financial goals.

    I will do a full SOA asap, however for now here are our 'numbers'

    Take home pay - 5.1K
    Minimum debt repayments - 1250
    Mortgage - 509
    All household bills and insurances/phones etc - 690
    Diesel for both cars - 160
    Before/after school provision - 120
    Food - 300

    Total outgoings - 3029

    48K of the debt is spread across credit cards. 22K of this is currently on 0% or low rate, The rest is across 2 loans.

    We currently pay around 400 In interest each month. We are keen to reduce this but we are not eligible for any more promotional offers at present. I think that our high credit utilisation scupper this.

    I have a long conversation with Stepchange. The guy was lovely but explained that DMP or any other formal solution would not be an option for us as we can afford the contractual payments. Not sure if I am relieved or disappointed about this??

    Not really sure what I am looking for from this forum... I think it's probably moral support and a place to vent when needed. The only thing I ask is that any comments are constructive. I am fine with tough love, but my wife is struggling a bit with the emotional impact of our current situation. I am sure she will be fine when we get into a better routine with our finances.
Page 1
    • ChasingSunshine
    • By ChasingSunshine 14th Apr 19, 9:01 PM
    • 178 Posts
    • 1,184 Thanks
    ChasingSunshine
    • #2
    • 14th Apr 19, 9:01 PM
    • #2
    • 14th Apr 19, 9:01 PM
    Welcome to the forums. Well done on posting, there are loads of lovely people on here who can give advice and support. There are also lots of people who have large debts similar to yours. The good thing is your income is very good and on the numbers you have posted the situation can be improved and your debt cleared. You can do this especially as your wife in on board, you are both committed and you have increased your income from where you were.

    When you can please post a SOA so people can help you see other areas you might be able to cut back on. It's frustrating not to be able to get more 0% credit offers but you have a large amount on 0% so that will help and allow you to focus on the more extortionate rate cards.
    • theoretica
    • By theoretica 14th Apr 19, 9:07 PM
    • 5,743 Posts
    • 7,085 Thanks
    theoretica
    • #3
    • 14th Apr 19, 9:07 PM
    • #3
    • 14th Apr 19, 9:07 PM
    The first thing you need to turn your finances around is good information about them, so you are making a good start. Then there is the challenge of making sure what you have on paper and your SOA matches reality - this is where you will discover money that has just somehow been spent.



    From the figures you have given so far it looks like you have a choice - how much of the 2000 you have 'left over' are you going to throw at the debt and how much are you going to spend? There will be a sweet spot for your family between debt looming over you and feeling you are scrimping on everything- but make a conscious and discussed decision in advance, don't try to reinvent your budgeting every time potential spending comes up.
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
    • Karonher
    • By Karonher 14th Apr 19, 9:42 PM
    • 563 Posts
    • 2,229 Thanks
    Karonher
    • #4
    • 14th Apr 19, 9:42 PM
    • #4
    • 14th Apr 19, 9:42 PM
    A complete SOA will help people give advice. You don't mention money for entertainment, presents, holidays and I am sure there are other areas missing. There is often a suggestion of keeping a spending diary and trying to account for every penny. It may help cut out un-needed expenses such as lunch at work and overpriced take away coffee all the time.

    I know turning unsecured debt into secured is not seen as a good idea, but with so much equity in the house could that be used to your advantage?
    Getting ready for Christmas 2019

    Aiming to make 5,000 online in 2019.
    • JayRitchie
    • By JayRitchie 14th Apr 19, 9:43 PM
    • 91 Posts
    • 111 Thanks
    JayRitchie
    • #5
    • 14th Apr 19, 9:43 PM
    • #5
    • 14th Apr 19, 9:43 PM
    Hi. Tough though it looks you are in a way better position than many. Having a relatively low mortgage makes a huge difference. As said above its best to prepare a detailed SOA - I'd pay particular attention to the interest rates and any end periods on the cards. Also, how were your cars funded and when might they need replacing. Could you cope with one car for a while?
    • beany_bot
    • By beany_bot 14th Apr 19, 9:51 PM
    • 354 Posts
    • 147 Thanks
    beany_bot
    • #6
    • 14th Apr 19, 9:51 PM
    • #6
    • 14th Apr 19, 9:51 PM
    You have equity of 140K in your home and 65K of debt.

    I think you know what you have to do ...

    It's either that or bankruptcy and it's taken anyway.
    • JayRitchie
    • By JayRitchie 14th Apr 19, 9:55 PM
    • 91 Posts
    • 111 Thanks
    JayRitchie
    • #7
    • 14th Apr 19, 9:55 PM
    • #7
    • 14th Apr 19, 9:55 PM
    You have equity of 140K in your home and 65K of debt.

    I think you know what you have to do ...

    It's either that or bankruptcy and it's taken anyway.
    Originally posted by beany_bot
    They are no-where near to bankruptcy from the information given. They have 2k a month left over after minimum debt payments of 1,250. Depending on how outrageous the interest rates are they can clear this with no major dramas required.
    • becks818
    • By becks818 14th Apr 19, 10:33 PM
    • 8 Posts
    • 23 Thanks
    becks818
    • #8
    • 14th Apr 19, 10:33 PM
    • #8
    • 14th Apr 19, 10:33 PM
    You have equity of 140K in your home and 65K of debt.

    I think you know what you have to do ...

    It's either that or bankruptcy and it's taken anyway.
    Originally posted by beany_bot
    Whilst I acknowledge that our debts are high, I know that we are not anywhere near bankruptcy, in fact I doubt that we would even be allowed go go bankrupt even if we wanted to. We aren't even eligible for a DMP.

    I hope that your post was based on you not reading all of the info ( I did go on a bit!) and not out of a desire to alarm or cause concern.
    • becks818
    • By becks818 14th Apr 19, 10:36 PM
    • 8 Posts
    • 23 Thanks
    becks818
    • #9
    • 14th Apr 19, 10:36 PM
    • #9
    • 14th Apr 19, 10:36 PM
    They are no-where near to bankruptcy from the information given. They have 2k a month left over after minimum debt payments of 1,250. Depending on how outrageous the interest rates are they can clear this with no major dramas required.
    Originally posted by JayRitchie
    Thank you!

    Worst case scenario would mean that around 35K of debt would accrue interest at 20%. This would mean about 600 per month. Now as much as we would HATE this scenario, we would just have to chuck as much as we could at the highest interest. We have played around with snowball calculators and with our disposable income it would still be doable. i asked Stephange about this and the explained that even in this situation a DMP wouldn't be appropriate as we would be able to afford the payments. It would mean about 200 more in interest than we are currently paying.

    I am confident that we will continue to be able to shift at least some of the debts onto promotional rates as the balances decrease.
    • enthusiasticsaver
    • By enthusiasticsaver 14th Apr 19, 10:46 PM
    • 8,373 Posts
    • 19,188 Thanks
    enthusiasticsaver
    You have 2000 a month spare but i think a full soa is needed for you to start budgeting, living within your means and start reducing the debt. You need to account for everything. Entertainment, clothes, car maintenance and presents.

    I would start paying off the credit cards first starting off with the one with the highest interest rate. Read up about debt snowballing. You also need an emergency savings account so you are not tempted to put more on credit cards. Resolve not to use them again. You don't have the highest unsecured debt on here - many have more without your level of disposable income. The 0% deals are not as readily available now but hopefully as the debt reduces you will be able to get the rest of the debt on 0% as time goes on. It will be a hard slog though and you need to be disciplined and focused to sort this out.
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • trailingspouse
    • By trailingspouse 15th Apr 19, 8:01 AM
    • 3,499 Posts
    • 6,099 Thanks
    trailingspouse
    Well done for coming this far. You've done the two most important things - you've realised there's a problem, and you're both on board with trying to fix it. Everything else is just paperwork.
    A spending diary is key. I found that the best (and most accurate) way to do this is to use your debit card for everything, even the smallest amounts, wherever possible. That way your bank statement becomes your spending diary. And there are some 'quick and dirty' ways to work out if you're spending too much on certain things. For example, buying a coffee every day on the way to work doesn't sound much - but that's 10 coffees every 2 weeks. So do 'cost of coffee x 10' in your head, and if that figure shocks you, then you know what to do.

    Once you've posted your SOA, the lovely people on here will set to work on it and tell you where you're spending too much (and, sometimes, where you're not spending enough!!)
    • becks818
    • By becks818 15th Apr 19, 11:42 AM
    • 8 Posts
    • 23 Thanks
    becks818
    Thanks for all of the supportive comments. We are going to sit down and sort the SOA over the next day or two

    I feel better already just knowing that we are getting a plan together. I have spent a lot of time looking at the diaries of others and have now seen others with similar or higher debts than mine. I think it’s just that nobody I know owes such a large sum so it feels quite lonely
    • JCS1
    • By JCS1 15th Apr 19, 11:53 AM
    • 3,860 Posts
    • 7,843 Thanks
    JCS1
    You have equity of 140K in your home and 65K of debt.

    I think you know what you have to do ...

    It's either that or bankruptcy and it's taken anyway.
    Originally posted by beany_bot

    They would not be allowed to go bankrupt as assets are more than liabilities.
    • EssexHebridean
    • By EssexHebridean 15th Apr 19, 12:02 PM
    • 9,181 Posts
    • 48,185 Thanks
    EssexHebridean
    You have equity of 140K in your home and 65K of debt.

    I think you know what you have to do ...

    It's either that or bankruptcy and it's taken anyway.
    Originally posted by beany_bot
    No no and absolutely no. That kind of knee jerk reaction has no place here - we've not even seen the OP's SOA yet! PLEASE do not encourage people to turn unsecured debt into secured - effectively or literally - without all the facts in place. It's also extremely cruel to "threaten" them with bankruptcy when they are already clearly terrified by their situation already - that sort of reply can be the difference between someone following through on a lightbulb moment and burying their head back in the sand again in sheer fear.
    MORTGAGE FREE 30/09/2016
    SOA CALCULATOR (for DFW newbies): Stoozing.com SOA Calculator
    • EssexHebridean
    • By EssexHebridean 15th Apr 19, 12:07 PM
    • 9,181 Posts
    • 48,185 Thanks
    EssexHebridean
    Well done for facing the situation head on Becks - and you have at least already done the most scary thing - writing down that figure! You definitely aren't the highest debt figure we've seen on here either!

    Get that SOA sorted - remember to make it open and accurate, it needs to reflect how your spending is right now, not what you think you should be spending or what you imagine we "expect" to see - an aspirational SOA helps no-one!

    The most important thing in your original post here is the fact that you are both committed to dealing with this situation - that's the most powerful tool you have!
    MORTGAGE FREE 30/09/2016
    SOA CALCULATOR (for DFW newbies): Stoozing.com SOA Calculator
    • sourcrates
    • By sourcrates 15th Apr 19, 12:12 PM
    • 17,006 Posts
    • 16,023 Thanks
    sourcrates
    Hi,


    Every now and again someone comes along who is in your position, earns good money, but still carries large amounts of debt.

    You are extreamly lucky in many respects, but there is only one sensible thing you can do here to stem the tide, and that is to stop using credit to fund your lifestyle, draw a line in the sand so to speak, overpay as much as you can on the cards, and try to stick to a budget that is within your means.


    This should be your Lightbulb moment, you don`t really need debt advice, better budgeting is the key to cracking this, you said yourself youve made some bad life choices in the past, start making good ones.

    You are at a point where this is fixable, but, if you were to slump another 30/40k in debt, it may not be so easily fixed, so best to act now before it gets out of control.
    Last edited by sourcrates; 15-04-2019 at 12:15 PM.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".

    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    • Potbellypig
    • By Potbellypig 15th Apr 19, 12:43 PM
    • 403 Posts
    • 274 Thanks
    Potbellypig
    No no and absolutely no. That kind of knee jerk reaction has no place here - we've not even seen the OP's SOA yet! PLEASE do not encourage people to turn unsecured debt into secured - effectively or literally - without all the facts in place. It's also extremely cruel to "threaten" them with bankruptcy when they are already clearly terrified by their situation already - that sort of reply can be the difference between someone following through on a lightbulb moment and burying their head back in the sand again in sheer fear.
    Originally posted by EssexHebridean
    Ignoring the bankruptcy bit, which is daft, the re-mortgaging isn't such a wacky suggestion. I'm aware the status quo on here is to not turn your unsecured debt into secured, and generally that advice is a good move. However, it can work.

    OP - The first step isn't even looking at your debt and how you can tackle it. The first step is a SOA and a spending diary so that the group can help you going forward.
    • Pip Boy 111
    • By Pip Boy 111 15th Apr 19, 3:24 PM
    • 122 Posts
    • 369 Thanks
    Pip Boy 111
    Hi and welcome

    Your situation resonated with me as being similar to my own (decent income, spendy lifestyle in 20's, high level of debt but not in desperation mode) and thought i would post to offer support and some happenings for you to compare. I'm by no means in any position to offer advice......but i'm gonna

    Disclaimer: I'm not presuming to know what you spend your money on or accusing. This is just our story for comparison. Hope it helps in some way.
    When i realised our situation we were very much like you. We were bringing in 3k a month and had over 30k in debt. As a ratio it's similar enough for this post. I think one of the first big things we did was sit down and work through what it was we owed EXACTLY and then work out a budget from there, keeping a spending diary and tracking every penny. Knowledge is power here.
    The next major step was a mental one. We realised that what we had done was build up debt when we were on a low income, but then failed to do anything about it when we managed to increase our income. Essentially we carried on as we had and used the extra income to buy stuff. Without actually having the conscious thought, we realised we were ignoring the debt to fund a lifestyle that we thought we should have. We were on a good income now so we had to show everyone we were. Once we realised this, a door opened. In reality what we needed to do was stop giving 2 hoots about how others perceived us to be doing financially (and actually no one really cares, it's just insecurity of the human mind) and just live a life that made us happy AND allowed us to sort out our debts before it became too late.
    In other words just because we EARN 3k a month, doesn't mean we have to SPEND 3k a month. In reality we didn't need to spend this money. It's not like we're unhappy now. In fact, I would say we're happier now. Happier because we can see an end to the constant debt bills and interest payments. Happier because we know what we can live off. Happier because in less than 3 years (hopefully) we will have rid ourselves of debt and will have the spare cash to save for the future, have fun etc. without ever needing to walk the path of dangerous levels of debt again.
    The other mind set change was to see this a challenge rather than a problem. I'm VERY competitive and seeing it as a challenge/game to reduce the numbers each month appeals to my (over??) competitive nature. Might this help?
    In our case no one knows the level of debt we have. Certain people are aware we're "paying some stuff off", but no one knows how much. And i'm happy with this. We have a plan. We have the means. We are not in serious trouble, so no one needs to know the figures except us. I would say though, that is us. If you (or anyone) is struggling, talk to someone you trust. When we politely decline certain spendy events (because it's not budgeted for AND because sometimes I just don't want to ) most people aren't at all put out. Some are and think I'm being tight, but I've been called worse
    Our sitations aren't too dissimilar (debt:income) and i hope our story helps in some way (or helps you sleep, either way, YAY I helped ).
    So TLDR: Track every penny. Budget. Change mindset. Remember, knowledge is power.

    I'm sure once you post a full SOA, the good people here will be along to offer much more practical advice. Seriously, you're in the right place for good, honest advice. This place literally changed our lives.
    Good Luck.
    Last edited by Pip Boy 111; 15-04-2019 at 3:34 PM.
    Debts 26/4/2019 (LBM 5/3/2019)
    Overdraft: 900/300 Barclaycard: 3755.55/3468.64 Loan: 21620.29/18005.91
    Total 26275.84 21774.55
    • enthusiasticsaver
    • By enthusiasticsaver 15th Apr 19, 6:22 PM
    • 8,373 Posts
    • 19,188 Thanks
    enthusiasticsaver
    You have equity of 140K in your home and 65K of debt.

    I think you know what you have to do ...

    It's either that or bankruptcy and it's taken anyway.
    Originally posted by beany_bot
    That is very bad advice.
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • becks818
    • By becks818 15th Apr 19, 8:34 PM
    • 8 Posts
    • 23 Thanks
    becks818
    So here goes....

    This is our first SOA and I am sure we will need to change/update it.

    It was actually a useful exercise as it made us really look at our spending. I should add that the entertainment and clothes budget are estimations as we have never had any restraint in these areas.

    It also highlighted that we are able to do this with a little effort and determination.

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

    Monthly Income Details

    Monthly income after tax................ 3840
    Partners monthly income after tax....... 1225
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 5065


    Monthly Expense Details

    Mortgage................................ 509
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 125
    Electricity............................. 66
    Gas..................................... 90
    Oil..................................... 0
    Water rates............................. 34
    Telephone (land line)................... 20
    Mobile phone............................ 50
    TV Licence.............................. 12
    Satellite/Cable TV...................... 27
    Internet Services....................... 15
    Groceries etc. ......................... 400
    Clothing................................ 50
    Petrol/diesel........................... 200
    Road tax................................ 5
    Car Insurance........................... 82
    Car maintenance (including MOT)......... 50
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 120
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 24
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 25
    Contents insurance...................... 12
    Life assurance ......................... 41
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 50
    Haircuts................................ 10
    Entertainment........................... 100
    Holiday................................. 0
    Emergency fund.......................... 0
    Total monthly expenses.................. 2117



    Assets

    Cash.................................... 0
    House value (Gross)..................... 200000
    Shares and bonds........................ 0
    Car(s).................................. 8000
    Other assets............................ 0
    Total Assets............................ 208000



    Secured & HP Debts

    Description....................Debt......Monthly.. .APR
    Mortgage...................... 60000....(509)......1.89
    Total secured & HP debts...... 60000.....-.........-


    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    loan 1.........................13000.....275.......7.9
    loan 2.........................5000......90........3.3
    CC low rate....................12000.....200.......6.9
    Aqua...........................800.......0........ .16
    Very...........................1500......105...... .0
    wife barclaycard...............5400......195.......18.9
    CC ( another bad one)..........4400......120.......20.2
    CC card ( bad one).............7000......251.......19.9
    CC 0%..........................15000.....150.......0
    Total unsecured debts..........64100.....1386......-



    Monthly Budget Summary

    Total monthly income.................... 5,065
    Expenses (including HP & secured debts). 2,117
    Available for debt repayments........... 2,948
    Monthly UNsecured debt repayments....... 1,386
    Amount left after debt repayments....... 1,562


    Personal Balance Sheet Summary
    Total assets (things you own)........... 208,000
    Total HP & Secured debt................. -60,000
    Total Unsecured debt.................... -64,100
    Net Assets.............................. 83,900
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