What do I do now

A question about : What do I do now

Been on these forums for a while now, and its a great place.

I'm in a real dilemma, first I am being made redundant at the end of July, and after the 7 years ive been with this company, the package is healthy. Also my wife is on maternity leave and her pay has also now dropped, so money is very tight.

But I have debts, over Ј40k, which for the past 3 years, we have been making cuts, and paying off debts, 3 years ago it was over Ј77k between us, but we have managed to clear it down pretty well, and my plan was working (taken on board what a lot people on these forums have also done, SOA, etc etc).

But with the redundancy at the end of July, I am concerned, my mortgage is high, and after speaking to the bank they have said, I could pay intrest only until I find a job again, but in my sector they are far and few and getting less every year. I am confident I will find a job, but how long, and what the pay will be I am not.

So what do I do? use the redundancy money to clear as much of the debts as possible?

Bank it and live off it in the hope of finding a job, but this will eventually run out, and I'll still then have the debts, a little lower, but the bulk will be there.

I feel like all my plans for the future have been pulled from underneath me, we have two children, one who is 2 and one baby 3 mths old.

My original plan was;
1) Change wages bank account - Move my banking from lloyds to another bank, as two of the biggest debts, a credit card and a loan are with the bank my wages get paid into, and in the past when I was falling behind with payments, they would then just take the money out of my account if it was there. hence I could never really default and then enter into a repayment plan.

2) Overdraft - I am currently selling my stuff on ebay to raise enough money to pay off the overdraft with lloyds bank, which I have started and im on target to be able to clear this down this month.

3) Redundancy payment - use this to clear as much of my debts as possible. It wont clear all of it as it stands, and this is where I am worried, I am already into repayment plans with a couple of my credit cards, and one has already offered a full and final over the phone. If I was to default on the other two big debts, and let them chase me for a few months, would I then be a position to get them to negotiate down, by writing a letter to all my debtors, stating who and what amounts I owe and then reduce them down by an even percentage so that all my debts are cleared with the redundancy payout.

I keep looking at my debts spreadsheet and it makes me sick with worry, that if I am not careful, we could be in real trouble. My head hurts and every day I am looking at ways to save more money off our outgoings. Its took a lot of courage to write this, as I am usually the man with the plan, but now I finding it hard to think straight.

In an ideal world, I'd find another job quickly and use the redundancy money to clear as much debt as possible, and then continue with my original plan. But with the market the way it is, and jobs in my career they are far and few. Sorry if this is a little messed up, but im just writing down whats in my head.

All advice from these forums are greatfully recieved

Best answers:

• I am by no means an expert, but I suspect the first thing to do will be to create a SOA (Statement of Affairs). This will give the lovely people here the chance to see where you could save some money.
  The good thing is that you've made a huge step in admitting you're not always the man with the plan - it takes a lot to admit that, so well done.
• The link for the SOA is here...
  https://makesenseofcards.com/soacalc.html
  When you have clicked 'Calculate' on the Statement of Affairs form, click 'Format for MSE'. This gives you a popup window. Click 'highlight text', right click on the highlighted text and copy the highlighted textincluding all formatting codes. Paste the copied text into a post on this thread.
• I am no expert and use this forum for help but I will tell you what my DMP company told me when I was made redundant. They said not to use the redundancy to pay off the debt until I had a new job as I may need it to live on and make repayments.
  I was very strict and cut all outgoings by looking at our SOA and then made up the shortfall (less than my wage would have been) with money form the redundancy.
  Once I had a job I used the remaining redundancy to clear as much debt as possible.
  Like I said I am no expert and other may give you better advice but I though I would tell you what I was told.
• what 'sector' is it you work in? could you get a job i a similar field of work? so not necessarily the same job but same field of work?
• Sorry cant help re debts but in the short term altho as a mother I know it's not what I'd want to do but could your wife go back to work full time and you be a stay at home dad u till you find a job. Your wife could then negotiate p/t hours if she wanted when your on a full wage. You are also entitled to claim JCA not a lot but every little helps! Good luck
• Statement of Affairs and Personal Balance Sheet
  Household Information
  Number of adults in household........... 2
  Number of children in household......... 2
  Number of cars owned.................... 2
  Monthly Income Details
  Monthly income after tax................ 2758
  Partners monthly income after tax....... 500
  Benefits................................ 134
  Other income............................ 0
  Total monthly income.................... 3392
  Monthly Expense Details
  Mortgage................................ 938
  Secured/HP loan repayments.............. 0
  Rent.................................... 0
  Management charge (leasehold property).. 0
  Council tax............................. 93
  Electricity............................. 90
  Gas..................................... 50
  Oil..................................... 0
  Water rates............................. 33
  Telephone (land line)................... 11
  Mobile phone............................ 18
  TV Licence.............................. 12
  Satellite/Cable TV...................... 0
  Internet Services....................... 23
  Groceries etc. ......................... 200
  Clothing................................ 20
  Petrol/diesel........................... 50
  Road tax................................ 36
  Car Insurance........................... 100
  Car maintenance (including MOT)......... 20
  Car parking............................. 0
  Other travel............................ 0
  Childcare/nursery....................... 170
  Other child related expenses............ 0
  Medical (prescriptions, dentist etc).... 27
  Pet insurance/vet bills................. 0
  Buildings insurance..................... 8
  Contents insurance...................... 7
  Life assurance ......................... 0
  Other insurance......................... 0
  Presents (birthday, christmas etc)...... 10
  Haircuts................................ 15
  Entertainment........................... 0
  Holiday................................. 0
  Emergency fund.......................... 0
  Total monthly expenses.................. 1931
  Assets
  Cash.................................... 0
  House value (Gross)..................... 140000
  Shares and bonds........................ 0
  Car(s).................................. 8000
  Other assets............................ 3500
  Total Assets............................ 151500
  Secured & HP Debts
  Description....................Debt......Monthly.. .APR
  Mortgage...................... 139405...(938)......2.5
  Total secured & HP debts...... 139405....-.........-
  Unsecured Debts
  Description....................Debt......Monthly.. .APR
  Loan Lloyds....................12807.....452.......6.49
  Lloyds CC......................13881.....330.......38.1
  Barclaycard CC.................6399......83........3
  Staff Loan OH..................3642......260.......4
  Opus CC........................564.......9.........48.1
  Coop CC........................1854......37........12.9
  Barclaycard OH CC..............2186......31........3
  Barclaycard/Egg CC.............5674......204.......0
  Total unsecured debts..........47007.....1406......-
  Monthly Budget Summary
  Total monthly income.................... 3,392
  Expenses (including HP & secured debts). 1,931
  Available for debt repayments........... 1,461
  Monthly UNsecured debt repayments....... 1,406
  Amount left after debt repayments....... 55
  Personal Balance Sheet Summary
  Total assets (things you own)........... 151,500
  Total HP & Secured debt................. -139,405
  Total Unsecured debt.................... -47,007
  Net Assets.............................. -34,912
  Created using the SOA calculator at
  Reproduced on Moneysavingexpert with permission, using IE browser.
  It so scary when you put it like above, this is why when I look at it, if my redundancy & assets clears the debts we have, then we would be better off, and I really do think I would have to take a pay cut just to get a job. But if we dont have the debts then taking an easier job, would certainly help, plus if things pick up, we would have no debts other than the mortgage.
  I have made so many cut backs and I continue to do so, in my job I have to have a car, as I took the car allowance rather than a company car, hence the two cars, but once I'm out of it the car will sold and the money used to clear some debts.
  Still feel like a headless chicken, thanks again all for your support
• you said theres few jobs in your career, any job you can get for the time being any job is better then no, its money coming you can always go back to your career at a later date.
  edit, just saw the above post.
• Hi. Your mortgage payment seems quite high for the balance you have left and with the interest rate @ 2.5%. My mortgage is Ј86k @ 4.9% and my payment is only Ј500.
  Are you on a fairly short term.....is there any way you could maybe extend it to lower the monthly payments and then when you get a job and are able to pay off your debts you can maybe overpay to catch up?
  I have not worked out the numbers - just looks high
• Hi - how many months do you think your money will sustain you for?
  How long until your wife plans to go back to work? 6 months? 9 months? Does she have a job to go back to and how much would it pay?
  Obviously going interest only on the mortgage would help a bit as well.
  Best of Luck
  df
• Well done on posting your SOA, I think that is possible you should pay off the Opus debt - that's nearly 50% interest!!! At Ј9 a month you might be paying it forever!!
  Also, you have done a current SOA which is very good, but now do one for after July, to see what it will be like then.
  Then work out how much of your Redundancy you will need to use each month just to get by, and thus how long it will last.
  When is your wife's plan to go back to work? Another 6 months?
  D9
• I think generally you need a fairly decent amount of equity before you can go interest only. Usually 20%??? This could be wrong, but best to double check before you rely on this being the case.
  Anyway, I think you will be fine. You are approaching this the right way with a great attitude.