09 Mar 2015

A question about : Help

Hi everyone, I'm new and can only apologise for long panic-stricken rant that is about to follow. I'm a married mum of two girls (aged 2 and 15 weeks). I'm not going to lie - my husband and I have never really had any money but now the proverbial is really hitting the fan.
We have had difficulties keeping on top of everything financially for the last couple of years particularly but now with our second daughter arriving we are really facing problems.

When I return to work in October the best off we will be is over Ј700 a month in the red - mainly due to a combination of massive debt repayments and dropped hours/childcare bills (the dropped hours are the cheaper option than working full time - sad but true). We have no contingency for clothing, car maintenance, things breaking down etc and it is frankly scary.

Our current plan is to sell our home, in which we have some equity, and pay off a large portion of our debts - either renting for a while or buying a cheaper house (we have quite a big house in a nice area which is quite old and a total money pit). BUT - it takes time to sell a house and it is not quite ready for the market (we are trying to get the work done as quickly as possible but it's difficult with the little ones and a husband who works such long hours) so we are realistically going to run into problems before we can sell up.

I've done the budget thing on here and am really struggling to see where we can cut back much more - I only spend Ј60 or less on food and household per week (for a family of 4 with two dogs). I use soapnuts for laundry and make my own kitchen cleaner etc to save money. We don't really have any treats. Pretty much all of our money goes on bills - over Ј1000 a month just for our loans and credit cards. We have swapped our insurances, phone and broadband to cheaper options and are looking at gas and electric etc. We both travel long distances to work and therefore can't cut down the amount of petrol we use (I already walk rather than use the car where I can).

Can anyone make any suggestions? I tried applying for a new loan to pay off the old one and make monthly payments cheaper (long-term more expensive but only to help until the house is sold) but got turned down. I am left thinking my only option is to contact our lenders and ask for reduced payments for a few months until we can sell up but are they likely to agree to this? Plus if they do agree does this ruin our credit rating meaning we might not get another mortgage?

I am so scared and confused - any advice is really appreciated.

Best answers:

  • PS - also I am trying to get the PPI thing sorted but presumably the bank isn't going to look kindly on giving me a break with my payments and then having to refund my PPI payments?!
    PPS - sorry for waffling on!
  • Hey Lovely,
    Sending a huge hug your way. Just a thought but why not post you SOA so that we can see a clearer picture of anything else that can be cut as sometimes a fresh pair of eyes really will help.
    There isnt much point getting a loan to pay a loan so trying to agree a reduction in payments seems to be a better option. It wise of you to seek help regarding moving as im not sure the impact that the debt restructuring will have but in any case good luck and I look forward to seeing you come out the other side of this. xx
  • Don't panic huni, it is usually sortable, seems like you have done the usual things like cutting your grocery bill etc so contact one of the debt charities tomorrow and get their advice, CCCS is a popular one and you can start the ball rolling with their debt remedy tool
    https://debtremedy.cccs.co.uk/start....vingexpert.com
    There are other free ones and there is a list here
    http://forums.moneysavingexpert.com/....php?t=2077631
    Good luck x
  • Thanks for the kind words. SOA below. I tried the CCCS debt tool thingy - it randomly came out reckoning I have over Ј200 spare per month (whereas I am actually about Ј700 in the red) and still recommended an IVA - which reading it there is no way we could go for as we would lose cars etc which we need for work. Plus that seems like a really scary option!
    Statement of Affairs and Personal Balance Sheet
    Monthly Income Details
    Income from Employment (after tax). . . . . . . . . . . . . . . . . . . . . . . 3,115.00
    Income from Self Employment (before tax). . . . . . . . . . . . . . . . . . . . 0.00
    State Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Private Pension / Annuity Payout. . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Benefits (Inc. Child Benefit/Tax Credits & Income Support). . . . . . . . . . . 143.00
    Income From Savings & Investments . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Gifts From Family / Friends . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Monthly Expense Details
    In Your Home
    Mobile Phone(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.00
    TV Licence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.13
    Internet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.00
    Home Phone. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.00
    Cleaning Products/Cleaner . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.00
    Garden Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.17
    Household Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.33
    Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.00
    Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.00
    Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.00
    Council Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140.00
    Overdraft Cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.00
    Bank Account Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.00
    Home Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.00
    Mortgage/Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 670.00
    Plumbing/Boiler Cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.00
    Mortgage Life Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.00
    Mortgage Payment Protection . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Life Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.00
    Food and Household Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . 260.00
    Drinks for Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Motoring & Public Transport
    Petrol/Diesel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476.67
    Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.00
    Car Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.00
    Car Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.00
    Car Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.67
    Rail/Bus/Taxi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Breakdown Cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Debt Repayments
    Credit Card Repayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320.00
    Hire Purchase Repayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.00
    Personal Loan Repayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 700.00
    Car Loan Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Savings & Investments
    Pension Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00
    Buying Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Mini Cash ISAs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Lump Sum Saving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Regular Saving. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Family
    Pet Food. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    School Trips. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    School Meals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Pocket Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Nappies/Baby Extras . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Laundry/Dry Cleaning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Children's Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Baby Sitting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Childcare/Play Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600.00
    Pet Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.00
    Travel Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Entertainment
    Satellite/Digital TV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Family Days Out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Cinema/Theatre Trips. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Books/Music/Films/Computers . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Big Days Out. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Shopping for Fun. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Pet Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Hobbies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    IT/Computing (eg Anti-virus etc). . . . . . . . . . . . . . . . . . . . . . . . 0.00
    DVD Rental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.00
    Drinking Out. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Eating Out. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Clothes, Health & Beauty
    Complimentary Therapies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Optical Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Haircuts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Dentistry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Beauty Treatments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Healthcare Cashplans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Dental Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Private Medical Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Fitness/Sports/Gym. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Work Clothes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    New Children's Clothes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    New Clothes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Education & Courses
    University Tuition Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.00
    School Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Your Courses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Big One Offs
    Funeral Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Wedding Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Sofa/Kitchen/TV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Birthdays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.00
    Winter Holiday. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Summer Holiday. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Christmas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.00
    Odds & Sods
    Newspapers & Magazines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Tax & NI Provisions (self-employed only). . . . . . . . . . . . . . . . . . . . 0.00
    Regular Charity Donations . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Meals at work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Smokes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Coffees/Sandwiches/Snacks . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
    Total monthly income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,258.00
    Total monthly expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,017.96
  • Oh, I was going to ask (sorry - again!) - is it better to go directly to creditors etc first and ask for a period of lower payments or to go straight to one of the charities?
  • It's worth asking for lower payments, if you explain your hardship. Some companies recognise that you're trying to pay off your debts, even if it's not at the rate they would like.
    Have you checked that your electric and gas is on the cheapest tariff with the cheapest company? Same with your insurances. Use cashback sites!
    Is your water on a meter, if not, check into whether getting a meter may work out cheaper for you.
    Is paying for your bank account essential? If not, downgrade to a basic!
    Can you use public transport for 1 or 2 days a week?
    Are you paying off your higher rate creditors more than your lower ones?
    A lot of questions, sorry, but these are the things that stood out to me straight away
  • Things that also stood out to me:
    Gas/elec v high - good you are looking into switching/turn things off when not being used.
    Even cleaning products seems quite high, use sparingly
    are mobile phones being switched to cheaper options?
    Life ins seems huge! Def switch this - esp as you have mortgage life ins as well - 70 a month going on this!
    Have you got 2 cars? Just wondering about 30 tax
    Are the uni fees from student loans? If so, take this out as this comes off of wages? Gives you more accurate picture
    Just a few pointers anyway - good luck!
  • Don't you get any help at all with childcare costs? I would have thought that with a Ј600 a month nursery bill you should...
    Thing is though, it's your debt repayments that are crippling you. I think you should consider lower payments, or contacting one of the debt charities for advice. I don't really know much about IVA's.
    The other thing is that you're spending almost Ј500 a month on petrol - I assume that is completely necessary?
  • Thanks for the help everyone - you really have helped me panic slightly less!
    Sadly there is nothing we can do about car and petrol costs as that's getting to work and back! We are considering moving slightly closer to one or other of our workplaces though.
    I did remember that the life insurance total I put on is what we WERE paying but we have rearranged those now and saved ourselves quite a bit (sorry, blame the baby brain).
    We have booked a payment break on our loans for next month, which gives us a bit longer to suss out what to do (agree that rushing into anything is not the way forward!). Does anyone know if mortgage companies offer the same thing?
    Next step is to contact the cccs and ask for some help with a debt management plan I think - hopefully as our situation is temporary, i.e. we will be able to repay our debts once our house is sold the lenders will be lenient and we can avoid anything as formal as an IVA.
    Right, I'm off to check gas and electric tariffs and to ring to get my tax credits checked (they stopped a while back but I'm not sure they should have done so am going to check for sure).
    Thanks again everyone! All your advice is very welcome and it is much appreciated that everyone has refrained from telling me what a plonker I am for getting into this state in the first place (I know by the way!)
  • If you had them before, and now that you're on less money if you've not yet gone back to work, ask tax credits to let you put in a current year income estimate. Make sure your SMP payments haven't been included anywhere. Make sure your new baby is on the claim too.
  • Hi
    if you are already seriously considering selling the house, then do not tie yourselves into a 5 year insolvency arrangement that will have to be declared for ever and a day. Not least as the fees are very high and you will end up paying them and the debt, instead of just the debt.
    You need a debt management plan that tides you over until the house sales comes through.
    Try to get on www.freegle.org.uk and freecycle and see if you can get things like paint on there.
  • How much is your salary? - It looks like you are spending Ј600 a month in childcare costs and another chunk to travel to/from work and for the extra car. Is it financially viable for you to continue working or would you be better looking after the kids until they start school?
  • Thanks for the questions.
    We are still paying for my little girl to go to nursery two mornings per week as otherwise she would lose her place (that and she needs the stimulation or she'd be climbing the walls!) - the added cost is going to come from 2 children on full days come october.
    The grand plan was to put away the money we were saving on petrol and extra nursery in the first few months of mat leave but, as we already had some financial issues (which to be honest we had underestimated) this didn't work out.
    We've looked at the house selling option and not sure it is a viable one - we won't have enough equity to pay enough off and still have enough for a deposit to buy somewhere else (looking at cheaper areas) so we could sell our home and actually end up no better off. We looked at renting but are very limited as we have two dogs and not many places will allow them.
    I'm waiting for a call back from CCCS to discuss options and we have an appointment arranged with our bank (who also own our loans and credit cards) so hopefully we can get the ball rolling and get things sorted. Am hoping that as we are pre-empting the major issues they might be kind!
    On the plus side, I did my weekly shop for Ј6 under budget today including 4 birthday presents - go me!
    Thanks again everyone x
  • Just chiming in with a wave of support here
    The thing to keep in mind is that there is always ways to sort the situation and get to a better place - many people's stories here are testament to that
    Also, whilst there's an obligation to pay back what you've borrowed, remember unsecured debt shouldn't be top of the list, and if it comes to choosing food, leccy, council tax, petrol for work etc. and repayments - then don't feel too bad about missing a month or two, just talk your situation through with the creditors
    Good luck with the bank, don't let any of this stop you smiling and enjoying life
  • I just want to wish you luck. It's such a shame that your time that you should have been enjoying at home with your new baby is being spoiled by this cloud of debt hanging over you. And I doubt anyone would think you were a "plonker" (as you put it) for getting into debt because most of us here have done exactly the same thing ourselves. Debt is a spiral - you just keep borrowing more to help pay off and soon, all of your money is going to pay off the debts. I'm learning every day on here.
    Let us know how you get on.
  • A quick thought - would your mortgage lender let you go interest only until you sell?
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