Massive debts

A question about : Massive debts

Hi all, I'm sure the last thing you all want is yet another diary! However, I lack focus to be brutally honest and I was fortunate enough to have my/our LBM around 2 weeks ago. In the meantime I have self-admin my own DMP, and written to all of our creditors offering reduced payments. I'm ashamed and embarrassed to have gotten ourselves into this mess, but here it is the brutal truth. The SOA I've compiled is with the reduced payments and not necessarily the minimum payments. My letter has asked them to freeze interest and charges however I haven't received confirmation from any of them. I intend to persevere as we can't really afford much more, and I'm trying all the time to stash a little to make F&F when we can manage to do so.

My OH is extremely hard working, and owns his own van which he uses to do homers with his trade for extra money. I am just about to qualify as a midwife (waiting on my registration due mid October in order to practice). Sadly there are no jobs in Glasgow / Scotland. All the work is in London and surrounding areas which gives us additional costs if I need to work away from home. We are in a quandry. I work part-time but given the economic climate there is no option of going full-time / overtime in the meantime.

We realise we have stupidly gotten into ALOT of debt over the years, and want to be rid of it finally. The wage used for my husband is the minimum he would receive any week. Any additional income is planned for debt repayments.

I do surveys etc for shopping vouchers to manage Christmas and birthdays, and have budgeted for this also as my lovely son has friends and family parties to go to. The surplus goes towards Christmas.

We try really hard. I am expecting my LAST bursary payment this month (31st), and haven't included this in the SOA because after this payment I get zilch! We are trying to work out whether I can afford to take work in London (I have an interview scheduled for 31st July), with the additional living costs, childcare costs for my OH to manage DS and travel to see my family when I can. What kind of existence would it be?

Sorry to rattle on, I've posted my SOA. We have tried cutting back our living costs. I've already bought my DS school uniform for next year in M&S using survey vouchers . In my entertainment budget I've included Ј15 for DS tae kwon do. Its his only hobby and paying by d/d means we get one class free per month. Our Council tax includes 25% student discount which we won't be entitled to after September 2009, and includes Ј25 arrears payment. Our mortgage has been changed to interest only last year at 1% above base rate variable to give us some breathing space until I secure a midwives salary. The plan is to return to repayment once secured employment.

My plans are:

Use OS board to get ideas for reducing grocery budget
Continue to Ebay / Amazon anything not pinned down (or that we don't need)
Cahoot loan due to finish Jan 2010 therefore reattribute this money to debt payments
Continue with survey sites for vouchers
Make further enquiries re: employment as a midwife, send speculative letters to maternity hospitals in Scotland.
Pee/shower in the early evening to save turning lights on
Aim for 10 NSD's for rest of July and join the challenge for next month
Start a spending diary to track down this missing money

I'm sure we have missed out some expenditure because we definately do not have literally anything to spare at the end of the month. We have a hardship claim in for bank charges (we had council tax arrears at the time but have now entered into a repayment plan - not holding out hope for this to be honoured). Other bank charge claims are on hold. Credit card charges have been claimed around 2 years ago and used to get rid of old CC's - MBNA and Morgan Stanley.

Any help is appreciated, and your support is much wanted as I have NO WILLPOWER! Hopefully keeping a diary will keep my motivation high and let me see I am getting somewhere! I am missing some APRs will get a hold of these over the next few days and update. Thanks to you all in advance.

Should mention that we have recently opened another bank account with a bank which we have no financial relationship, so that we can control what we pay our creditors.

Number of adults in household........... 2
Number of children in household.........1
Number of cars owned.................... 1 (also own a van - paid off)

Monthly Income Details
Monthly income after tax................ 666.00 (spooky I know)
Partner’s monthly income after tax....... 1733.33
Other income............................ 122.08 (child benefit + tax credit)
Total monthly income.................... 2521.41

Monthly Expense Details
Mortgage................................ 99 (interest only until we are out of this mess)
Secured/HP loan repayments.............. 446.97
Council tax............................. 125.87
Electricity............................. 40
Gas..................................... 60
Water rates............................. inc in Council Tax in Scotland
Telephone (land line)................... 12.00
Mobile phone............................ 35 (2 mobiles - contract due to finish Nov will cancel for PAYG)
TV Licence.............................. 12.00
Satellite/Cable TV...................... 21.00
Entertainment..............................100.00
Internet Services....................... 7.34
Groceries etc. ......................... 220
Clothing................................ 20 (uniform is already bought for this coming year)
Petrol/diesel........................... 80 (for both)
Road tax................................ 15.00
Car Insurance........................... 38.76 (for van and car)
Car maintenance (including MOT)......... 10.00
Pet insurance/vet bills................. 0.00 (no pets)
Buildings/ Contents insurance..................... 17.90
Life assurance ......................... 9.29
Other insurance......................... 0.00
Childcare................................72.00 (2 days after school club each wk)
Presents (birthday, christmas etc)...... 40 (I do survey sites for vouchers to cover the rest)
Haircuts................................ 10
Critical Illness Insurance.............. 0.00
Dental Insurance........................ 27.00 (for both adults)
Mortgage Payment Plan................... 0.00
Total monthly expenses.................. 1472.13

Assets
House value (Gross)..................... 110,000
Savings (Endowments) ………… 0.00
Car(s).................................. 6000
Other assets............................ 1500 (van)
Total Assets............................ 117,500

Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 74000.... (99).....1.51% (int only at present)
Secured Debt................ 49,898.... (446)......7.4% (used prev. to consolidate
Total secured & HP debts...... 123,898

Unsecured Debts
Description......................... Debt.............Monthly...... APR
AA VISA................... ...... 1920.58........40.00.......... 24.9%
BOS VISA..........................4914.63...... 60.00.......... 22.53%
Cahoot................................886.07...... ...131.72.........12.7%
Alliance & Leicester............3898.09........164.31........ .12.9%
Barclaycard.........................1820.89....... .50.00...........25.97%
BOS Overdraft.....................699.97........30.00. ..........7.9%
Next.....................................1210..... ......30.00...........29.9%
Shop Direct Littlewoods........2128.32......40.00...........? TBC
Shop Direct Choice...............3260.24......50.00........... ?TBC

Total unsecured debts......20738.79......... 596.03

Monthly Budget Summary
Total monthly income...................2521.41
Expenses (including HP & secured debts) 1472.13
Available for debt repayments........... 1049.28
Monthly UNsecured debt repayments....... 596.03
Total............................................. ............2068.16
Amount left after debt repayments....... 453.25 (this is a fallacy I must have missed something!)

To be fair by offering reduced payments to our creditors I have saved around Ј450 per month. This is the first month where we have made reduced payments so will need to see if I can increase some of these if this surplus cash turns out to be real.
Apologies for the lengthy thread - look forward to your feedback :rolleyes:

Personal Balance Sheet Summary
Total assets (things you own)........... 117,500
Total HP & Secured debt................. -123,898
Total Unsecured debt.................... -20738.79
Net Assets.............................. -27136.79

Best answers:

• Hi Gargrave.
  Good to read your whole story and sounds like you are making good progress with cutting things back. Congrats on nearly qualifying and fingers crossed a job appears somewhere near to home.
  With regard to the reduced payments can I ask how you worked out what to pay to each of your unsecured creditors? Usually in a DMP you fix a total amount for unsecured debt repayments, say Ј600 per month and then allocate this pro-rata based on the outstanding balance. This is usually the best way to get each creditor to agree to the DMP and is what CCCS/ Payplan etc do.
  On yours you are obviously paying most pro-rata to cahoot, and the other creditors may consider that you are unfairly favouring cahoot. (Apologies if I am saying something you already know here).
  You may find some creditors will never formally write to accept your DMP & reduced payments. If they keep charging interest send them a please reconsider letter (there is a template on national debtline).
  Other advice would be to join in some of the challenges, perhaps the grocery challenge and the monthly NSD challenge (if you haven't already- I see you have mentioned NSDs above).
  Spending diary is a big priority, hopefully that surplus is all from cutbacks and you can up some of your repayments.
  Good luck.
• Thanks Tixy, I've had some great advice from you before and thought it was time to share my horrific story with the world! Give me the jolt I need to knuckle down and address this!
  The only reason I haven't included Cahoot in our DMP is because its due to be paid in January 2010 and it seems so close that I would prefer to get rid of that so that it frees up some cash. If I offer reduced payments it will mean I'm left with this debt for longer. Does that make any sense? The rest of the money is allocated on a pro-rata basis based on the total amount which CCCS suggested for DMP payments.
  Some creditors have asked for a list of creditors and amounts due which I have supplied, but none have asked me to detail how much is being paid to each creditor. I'm not giving them the chance to "accept" my proposal. Instead I'm just going ahead and paying what we can!!!! Will wait and see which ones continue to charge interest and send that letter you recommend.
  Do you think its worth signing up for PAD - my worry with that is that creditors will see adhoc payments come in and ask that I increase my regular payment as a result? Am I better saving this to make F&F's?
  The grocery and NSD challenges are a must - first on my list for tomorrow morning.
• Hello gargrave50.
  I think the spending diary is a BIG priority. perhaps you should try and go back over today's spend so you already have one days spending diary under your belt by the time you go to bed.
  You have obviously been spending more than your incomes for a very long time. (ref your consolidation loan) You have to get this under control NOW.
  If we can help with your will power we will.
  However remember you are getting closer to the time when this may get out of your control.
  Good Luck and take each day as it comes and enter in to that spending diary.
• Thanks Gfplux. I've got 2 small notebooks - one for OH and one for me. Starting fresh tomorrow - HAVE to change our spending habits now.
  I would appreciate a kick up the backside when required! Thanks for reading my war and peace.
• What immediately jumped out at me was the Ј100 a month for entertainment. Are you able to break down what exactly that entails? It seems a huge amount, given what you're trying to accomplish. Good luck! We'll be with you.
• Good luck Gargrave, sounds like you have an action plan worked out. It will be tough but you will get there with determination. Keep applying for jobs, there is supposed to be a shortage of midwives, and although I fully expect a jobs freeze in the NHS in a couple of years' time (due to reduced funding) there should still be plenty of jobs about at the moment. Any preceptorship posts around? I.e. a temporary contract for newly qualified staff with a designated mentor to get competancies signed off etc? What about advice from your place of learning?
• Hello...
  I'm obviously in a very silly mood as the part that jumped out at me from your post was....
  Pee/shower in the early evening to save turning lights on
  I might have to consider this one myself.. not sure I can train my bladder to behave in this manner though.. how about a torch for the bathroom.. hey a new invention.. a light up loo.. now that would be useful...!!!
  Good luck. xx
• Sending a letter off today to AA VISA to claim back some old charges - it won't be a huge amount probably about Ј150 in total. They are mainly Ј12 charges, but I've read about some success with others persevering and managing to get the whole lot back. Worth a try! I've cut and pasted the bits I like from everyone's letters - may as well fight the good fight!!! Transferring Ј1 to savings (not my biggest life decision) but trying to do it in a sort of PAD style, only I don't want to pay it direct to a creditor in case they try to increase my reduced payments I've offered! Instead saving for F&Fs in 6 months.
• Not much to advise re "balancing the books" but on an employment note, I work in Manchester and one of our midwives is from Glasgow. She works three, long, consecutive days and has 4 off. If you secure a post away from home, this might be worth considering. Good luck.
• Regarding saving lighting costs in the bathroom, there is a gadget known as a Lavnav. It's a stick on light that you fix to the underside of the toilet lid. It lights up when it senses someone approaching, and if it lights up red, it means the seat is down, but if it lights up green then the seat is up. Or vice versa. It's handy as you get enough light to see what you are doing (so to speak) without having to have Blackpool Illuminations on in the middle of the night. Just a little nonsense to light up our doom-laden lives...
• Just looking at your post and the Grocery jumps out at me, Ј220 is really not a lot, I went on a DMP with the CCCS and only put Ј250 for groceries for 2 adults and 1 child and they upped it to Ј400 and apparantly this is still less than they recommended. did you remember to include toiletries, loo roll, cleaning stuff etc.
  the last thing you want is to budget for Ј55 a week and then realise you have underestimated
  good luck