A question about : Help to sort myself out?
Evening all
Have been reading the forums for a little while, and thought it was about time I posted to try and sort myself out... Apologies in advance for the length, however wanted to give as much info as possible...
First things first, I'm in my mid 20's, in a secure job for the past 6 years, currently earning Ј39,600, rising to Ј45,000 pa this month.
I've recently (last 3 months) purchased a first house with my partner, largely thanks to generosity of my parents by gifting us a 10% deposit in exchange for purchasing their property. Mortgage process went through without any issues, which was a surprise tbh. However the purchase process didnt help my overall situation, as there was all the associated fees that we had to contend with, with minimal savings behind us...
My current issue is that I'm creeping further and further into my overdrafts, and having to rely more and more on PayDay loans, which is only antagonising the situation. So time to try and get back on track.
I've tried to consolidate my debts (existing loan, OD's, CC and PD loans) into a single loan, however have been turned down by my current banks (Santander and Halifax). Looking at my Experian credit report, it doesn't make pretty reading, with a current score of ~400, which puts me in the 'Very Poor' band... 
Up until the last 3 months all my accounts have all been up-to date. However in the last 3 months, I've managed to miss a couple of payments on a CC, and an old current account with HSBC which has gone into arrears due to an unplanned overdraft brought about largely by bank charges that I don't agree with.
Long story short, back in Feb I bought a new car on HP, and the first DD instalment came out quicker and for more than I was expecting, which meant I hadn't transferred enough money into the account to cover. This in turn resulted in a Ј25 bank charge being applied to my account due to 'unauthorised overdraft usage'. However I received no notification of this charge via either post, email, SMS; as it was purely a bills account, I foolishly didn't check the account from one months end to the next, as I was confident that the right money went in to cover the money that was due to go out...
Due to not receiving any notifications, I didn't correct the following months standing order transfer to account for the additional expenditure, which resulted in further charges. Couple that with a mistaken purchase on the wrong card incurring additional fees, and I ended up with an OD of over Ј120. I therefore agreed to set-up a payment plan with HSBC, on the understanding that by doing so, there would be no impact on my credit file. However upon checking this month, the account is now showing as 3 months late
I've currently open a formal complaint with HSBC to try and get that account correct, which should hopefully go some way to helping my CR...
Going back to PD loans, I've been using Wonga on and off for the past 18 months, usually the odd couple Јhundred here or there, however the last few months I've been having to use the full Ј1000 allowance that's available to me, just to cover bills and essential outgoings such as fuel and food. It got to the point last month where I also took at a loan with QuikQuid for Ј500, and staggered the repayments over 3 months to try and stem the flow - Ј70 on 30/10, Ј100 on 29/11 and Ј500 on 30/12. However this month I'm back into the same position, having just taken Ј800 from Wonga to pay some of my bills and put fuel in the car... This will then become a Ј1000 repayment at the beginning of next month...
On paper, we've got a budget that looks fairly comfortable. Between joint house bills and personal bills, total outgoings come to ~Ј1950. My partner earns a fraction of what I do, so can only contribute about Ј200 to the joint bills, which leaves me to pick up Ј1750. I've also got a monthly fuel bill of around Ј250 due to a 40 mile round trip to work 5 days a week. However that should still leave me with ~Ј300 a month for 'general' expenditure - food, going out, etc.
However due to the fact that I'm embedded in my overdrafts and PD loans, that just isn't happening
So, my SOA looks like this:
Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 2350
Partners monthly contribution........... 200
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2550
Monthly Expense Details
Mortgage................................ 830
HP car repayments....................... 270
Council tax............................. 110
Electricity............................. 50
Gas..................................... 30
Water rates............................. 40
Mobile phone............................ 0
TV Licence.............................. 13
Virgin TV/Phone/Internet................ 25
Groceries etc. ......................... 60
Clothing................................ 0
Petrol/diesel........................... 250
Road tax................................ 0
Car Insurance........................... 80
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 31
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1789
Assets
Cash.................................... 0
House value (Gross)..................... 193000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 193000
Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 173700...(830)......4.8
Hire Purchase (HP) debt ...... 14210....(270)......0
Total secured & HP debts...... 187910....-.........-
Unsecured Debts
Description....................Debt......Monthly.. .APR
Credit Card....................500.......15........16
HSBC Loan......................8882......300.......0
Santander OD...................700.......0.........0
Quik Quid......................600.......0.........0
Wonga PayDay Load..............800.......1016......0
Halifax OD.....................200.......0.........0
Total unsecured debts..........11682.....1331......-
Monthly Budget Summary
Total monthly income.................... 2,550
Expenses (including HP & secured debts). 1,789
Available for debt repayments........... 761
Monthly UNsecured debt repayments....... 1,331
Amount short for making debt repayments. -570
Personal Balance Sheet Summary
Total assets (things you own)........... 193,000
Total HP & Secured debt................. -187,910
Total Unsecured debt.................... -11,682
Net Assets.............................. -6,592
Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using Firefox browser.
I've seen a few posts on here where people have successfully set-up payment plans with PD loan providers. However what I'm not sure of is how they'd react to someone of my earnings level asking for a payment plan. Or if that's the right way to go for me? How will it impact my already poor CR?
I believe that if I didn't have make the large repayments at the beginning of the month for PD loans, I think I could get back on track and work my way out of my overdrafts fairly easily...
So, over to you guys.
Any suggestions/pointers/must do's?
Thanks in advance for any responses.
Regards
Gav
Best answers:
- Sort out payment plans with them all.
They can refuse to accept your offers and take you to court, but a judge will look at your expenditure and if he thinks you're offering all you can, will make a judgment ordering that you pay what you've offered.
If they don't take you to court, all they can is blow hot air.
Your credit file is trashed because of taking out payday loans so don't worry too much about the effect on your files. You need to work something out ASAP.
Only communicate with these companies in writing by recorded delivery. - Is that a joint SOA or just your half?
No road tax? No car maintenance? No mobile? Only Ј60 on groceries? Nothing spent on birthdays or christmas? Your gas also looks a bit on the low side. - Mattye, cheers for your response.
When you say "all of them", do you mean just the PD loans, or some of the other accounts as well?
What's the best method of working out a payment plan that is likely to be accepted by them?
And is email sufficiently recordable for communications?
Beanie: As mentioned below, my partner contributes Ј200 to the shared bills of Ј1300, leaving me with Ј1100 shared bills, and Ј650 of my own...
With regards to car, it's a new diesel, so no road tax, 3 yr maintenance plan and warranty included.
I've got a company mobile, so no cost there.
Ј60 for groceries covers my share. Partner does the rest.
Partner is doing most of the Christmas shopping atm as well...
And gas is a guesstimate, based on the 1 months worth of usage in September with British Gas before I switched to Scottish Power.
Cheers again for responses.
Regards
Gav - You should be able to live quite comfortably, you earn a good wage and your household expenses are not outrageous. It's your current debt that's causing this vicious circle. You need to look at two things here:
1) How to get out of the payday loan cycle - you've already had some really decent advice on this.
2) Work out why you've got into this mess.
It's no good doing 1 without 2 or in a years time you'll find yourself in the same mess again. You've been overspending. You need to work out where and why. Start a spending diary so you can get figures for all the things you haven't budgeted for (presents, entertainment, holidays etc) and get accurate figures for the others.
Does your partner work full time? If so she'll be earning at least Ј950, why is she only contributing Ј200? Does she have other debt or commitments? If she's not working full time, is this an option while you don't have children?
Your car - you're doing 800 miles a month commuting and spending Ј250?! That's about 18 mpg. You need something more economical if that's really the case.
I think you can turn this around quite easily but you do need to get to the root of the problem and work out how you built all this debt up in the first place.
- Mattye
Cheers for confirming. I've been thinking of moving away from my Santander current account for a couple of months, so think will get a new account opened and move whats left of my money in that account, and then setup a payment plan for the Ј700 OD. I've already moved my wages into a different account for the past couple of months...
With regards to selling the car, unfortunately I don't think that will get me very far, as it's on HP, so any money in the car belongs to the finance company atm...
dreamdreamer Thanks for the honest reply.
My parents say exactly the same thing with regards to living comfortably, as I'm earning as much as them combined....
However I guess up until the last 12 months I've had it fairly easy with no real commitments; was renting a flat with my partner which was cheaper, and was probably a bit spend thrift with my money...
But then in late November 2012 I was involved in a RTC which resulted in my car being written off, and having to buy a new one, which took all my savings, and tied over Ј300 up in an excess payment. Even though the 3rd party have admitted liability, I'm still waiting on my excess being returned, nearly 12 months on
The in March all the issues with HSBC started happening...
And the icing on the cake was the house landing in our laps in August, which was a bit of a bolt out of the blue. However it was too good an opportunity to pass up - owning the house I'd lived in for 18 years of my child hood, knowning it inside out, masses of future potential, etc...
With regards to my partner, she works 30 hours a week in a nursery job, so only just above minimum wage. She averages Ј750 a month atm, but has got her own debts - Personal Loan, CC, Mobile phone, car. So we've agreed on her committing Ј200 pm to bills, and then picking up the majority of the shopping tab.
With regards to commuting, I'm averaging 1000-1200miles pm, on a new Diesel car which is averaging 48mpg+. So Ј250 on fuel is probably overkill. Now I think about it further, I usually fill up every 10 days, with a full tank costing Ј60. So closer to Ј180 pm. However my parents now live in Wales, a 200 mile round-trip, and the plan is to try and visit them once a month, so need to allow fuel for that...
Thanks for the positive words though...
Now just to work out what is a sensible payment plan for Wonga, QQ and my Santander Overdraft... Is there any recommendation on what repayment time-frame to aim for?
Cheers
Gav - Congratulations on noticing you need to take measures. As regards to your situation I'm in a similar boat. Mostly keeping on top of minimum payments but I was still turning to wonga every month. Does your partner know the situation? Mine didn't and I got myself into all kinds of knots trying to fix it. On paper we're wealthier than most people but I just couldn't get the figures to add up.
I've no real advice as I'm just starting my journey too but the people on these forums are amazingly helpful and supportive, you're in the right place. I just wanted to say this can be fixed. The hardest part is facing it and accepting there's a problem and you've done that. I'm now very strict with my spending, meticulous about sticking to budgets and joining a few challenges here keeps me on the straight and narrow. I'm a different person to who I was just a month ago. I'm now PDL clear and hope to have the credit cards sorted by this time last year.
I used to spend every day now I hate opening my purse! If I can change the way I live in just a month anyone can. Keep your eyes on the end prize (debt free) and remember that every penny you pay off is a step closer to the goal and a step away from the debts being stagnant or getting worse. Sorry I can't be more help practically but I know I value the pats on the back just as much as the practical solutions and it's a relief to no longer feel alone in the mess I've created.
Kate x - Ask to pay CT over 12 months, which will save you about Ј18pm which, although not huge, is something.
Any chance your OH could increase her salary?
Overtime? Second job?
Even a couple of hours per evening (eg. Bar work) would bring in about Ј200pm extra. - The car payment is absolutely killing you and is utter madness in your situation, you need to sell it or return it and get yourself a decent reliable Japanese car for 2 to 3 thousand. Yes you'll take a short turn loss but save thousands over the life of the loan repayments. Your debts will be halved, your repayments will be halved and you should be able to make your remaining repayments quite comfortably. A new car depreciates on average 70% over the first 4 years. Sell it, its a lump of metal and plastic and its squeezing you financially until its hard to breath and will continue to do so for years ahead. Might I suggest you read, 'the total money make over' by Dave Ramsey. Good luck
- It looks like you are paying around 6% into a pension scheme according to my calculations. Your pay increase should result in around Ј310 extra net per month if this is correct.
- The payday loans it looks like you could probably afford to repay over say 3monthly installments. So I would contact them and offer them that (as someone has advised you need to cancel the CPAs etc first and I wouldn't provide them with a SoA or inform them of your earnings etc).
That would still leave you in a position to repay more than the minimums on the credit card, and allow for at least interest/charges on the overdrafts that you haven't included in the SoA.
After that pdls are repaid then you can focus on clearing the other debts and starting to build up a buffer fund. As a homeowner particuarly you need to have a fund so that you don't need to consider payday loans again in the future if you have an unexpected cost.
I'd also suggest keeping a spending diary to see where else you are spending money as at the moment your SoA doesn't explain why you ended up needing pdls in the first place.
Think carefully about what other costs you need to budget for - e.g. you mention that you don't need car maintenance costs, but your deal probably doesn't include tyres at you will need those probably once a year based on your mileage. - Can you get a lodger or 2?
- Wow, loads of replies - Thanks for all...
In turn then:
justjohn - Definitely something to consider.
Bedsit Bob My partner recently dropped down to 30 hours due to work stress, depression etc... So atm I don't want to ask her to look at that... And by some of the suggestions from people I don't think things are that desperate just yet... Cheers for the suggestion though.
And will double check on my council tax bill irt 10/12 months...
nomunnofun - am paying 3% pension contribution, and a Cycle to Work scheme which is Ј48pm. My tax code is also slightly lower than the norm at 928L due to a previous Bupa company health plan last year eating into my allowance.
Running the figures just now on The Salary Calculator, it predicts take home will increase by nearly Ј300, so looks like you're bang on the mark
Tixy Ok, 3 months sounds like quite a short period. I've got Ј1000 owning on Wonga, and Ј600 on QQ, so that would be ~Ј530 pm going out... The QQ loan also wouldn't default until December when the final Ј500 is due. If I wasn't repaying Wonga come 1st December, then I could probably afford to make the Ј100 payment due on QQ... Or is it worth just letting that miss aswell so that QQ defaults early?
Ahh, OD usage fees... On Santander they're Ј1 p/day, and capped at Ј20 pm I think... Halifax has been free up-to now as an introductory account offer, however think they kick in from this month on a similar basis. However as the Halifax is a bills account I'd quite like to get that back into the black and then keep the account ticking over with money in = money out...
A few people have suggested a spending diary, so I've installed an app on my phone this morning which I'll use to track all my spending... Just need to go back through to the 1st of the month so that I've got the full picture for this month
And yeh, Tyres are probably the only expense I'm likely to encounter on the car... Hopefully I should be able to get 20k+ out of the current set before swapping though, which gives me another 6 months run time... But that's Ј400 there that I'll need to budget for...
jayss Currently my dad lodges throughout the week as he still works in Bristol, commuting to/from Wales on a Mon/Fri...
Asking for lodging money also might not go down to well considering they helped out a lot with the purchase of the house... However cheers for the suggestion...
Keep em coming ppl, all really useful info
Thanks again.
Gav - Just a thought - what is parents financial position?
Might they be able and willing to loan you the money to pay off the pdls and then you repay them over say 3-4months?
That would mean you wouldn't need to default on any agreements and so won't have such a long term impact on your credit file. You could explain that these were costs relating to fees on the house purchase etc and you hadn't budgeted for them and ended up borrowing on payday loans?
I have to say I am surprised that you were able to get a mortgage of the size you did with the level of unsecured debt/HP etc which is why its been a struggle in the first few months, coupled with the fact that you didn't have any savings for the fees etc. - I know that some have mentioned the APR on the credit card and, obviously, clearing it is a priority.
But the balance is only Ј500 - what is the limit? Surely the absolute priority is to get rid of the payday loans? Can these not be cleared with the credit card (goes against all advice here!) and the resultant balance of Ј1900 could be cleared over four or five months - especially with your salary increase!
All on the understanding that the credit card is destroyed, of course!
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