Advice please ...

[SarahR91]

So I know this is going to cause lots of angry comments and back lash but I need advice so I am hoping someone can help ...

• I have been married nearly 5 year and have two young children
• We own our own house which we have been in 1 yr (we owned a house prior that we lived in for 4 yrs)

So heres the problem

• £3500 on a credit card 0% for another 2 years
• £12000 on a loan we pay monthly
• no saving

Now these debits have come from buying a second hand car on the loan (£6000) having many car troubles and our youngest child being unwell so drop in wages for husband from time off and expenses from traveling to hospitals etc. We have a spreadsheet which has all of our outgoings and expenditure etc. We have no sky or anything like that so bills are the 'minimum' they can be. I have rung all the companies and made sure we have the best 'deals'. We really want to rid ourselves of the dept and we have drawn up a plan of how to do so as quickly as possible with over payments when we can etc. I have rung the bank to see if we can get the £40000 equity out of the house but we can only loan it for 10yrs not add to the mortage as its 'debt consolidation'. Can anyone think of anything we can do, I hate being terrified that the boiler or car will brake and we have no savings to cover it .... I KNOW THIS IS OUR FAULT, I just want to see if anyone can see of something that we could do that we may have missed

Are you working to a monthly budget to keep control of your spending?
That to me would be the first step - it can take 3-4 months to really get the budget right but when you know how much you have available to spend in each category it really helps you to say "No" to anything that is not pre-planned expenditure.

Priorities what you spend money on - the essentials for living come first such as food, mortgage, council tax, water/electric/gas. Then comes transport (as you need that to get to work) then a little bit assigned to clothing/footwear.

Use the standing order method to pay off the credit cards, making sure you repay the one on 0% before the end of the 0% period.

When you do the budget assign as much money as you can initially to building up an emergency fund. £500-£1000. Then do not touch that emergency fund unless a really unexpected event happens (so routine boiler maintenance is not an emergency, the boiler suddenly not working is an emergency. Car repairs are not an emergency. A car tyre suddenly bursting is an emergency.) If the emergency fund is ever dipped into, stop all overpayments on debts and restore the emergency fund.

Thank you for the comment.
DH gets paid £2230 a month and we get child benifit £137 a month
We have
Mortage £640
Council Tax £150
Electric and Gas £100
Water £35
Insuranc (us and car etc) £80
Loan £230
TV licence £13
Tv phone etc £38
Mobiles £65 (fixed for another year)
Bills total is £1417
Then we have the min payment for cc
£200 for food and £200 for fuel
All the rest goes on over payments etc

You may have missed a bill as the total does not get to your total figure.
Taking your total, plus the food and fuel, you are left with around £550.
You want to be putting £150 a month at least I expect to repay the credit card (3500/24=145.83). So that leaves £400 which can go towards your emergency fund.
Within 3 months you will have £1000 in your emergency fund, so can then increase the amount going towards the credit card, so increasing from £150 to £400. If you did that, you would have repaid the credit card within 12 months. You then have £550 a month to put towards the loan.
Figures may be a bit off, as you have not made any provision for clothes. Children grow, so you need to budget for their clothes and footwear and also your own - though adult clothing may not be needed at all as you probably have a lot already.

However, can you see that within about a year you will have a small emergency fund and not have the credit card debt.
The loan will then take 18-24 months to pay off, so within 3 years you will be debt free excluding the mortgage.

You have a spreadsheet, you will be tracking the expenditure, you will not be taking out more debt, you have a plan... you can see the dim light at the end of the tunnel... Looks to me that it's a three year long tunnel... it will take time but you can do it.

Hello,
My DH thinks its best to pay off the loan first as its got the interest and then pay the CC when the interest starts ... its so hard to know what to pay off first !

You have to pay off the credit card within the 0% period, so you must calculate the monthly payment to that.

Then paying remainder to the loan makes mathematical sense but not motivational sense as it will take longer to achieve.

Google: Debt snowball vs deb avalanche

Hi
I think you can pay this back so try not to worry, are you able work to pay off some of the debts, an increase in your income would be the best way out.

Thanks all !
My DH works but I am a SAHM with the 2 young ones so no childcare costs, because of hospital visits etc I dont think any workplace would want me (I use to do a supermarket in the evenings)

A few thoughts.

Firstly is your council tax already split over 12 months and not 10? That could save a small amount pcm.

Have you transferred your tax free allowance to DH as you are not working right now?

You mention hospital appointments for one of your dc. If they have an illness or disability that means you need to use more water as a household (extra washing of sheets/clothes or frequent baths etc) then some water companies do special discounted rates for you.

Your water bill seems very reasonable anyway but just thought I'd mention incase it could save you a few £.

Are you on the best rate for your mortgage?
Can you sell anything on eBay, kids outgrown clothes in bundles etc, doesn't bring much in but offsets the price of new clothes for them at least.
If you are a sahm, how do you spend your days? When I was on mat leave I'd spend money more as I was bored and needed to go out. Do you grab coffees etc?

Hello,
Mortage is fixed for another 2 years so at least we know its not going to go up any time soon!
We were very lucky and family got us annual passes for some local places for birthdays etc so we visit those places and always take a packed lunch etc. Not sure when the last time I steped inside a costa etc ... probably about 3 years ago !

Didn’t want to read & run just wanted to say I feel for you it’s so easy to stack up outgoings without realising. we all do it. I would suggest calling utility bills & asking if they can reduce your bills by ££ water rates are usually really good. Save £100 odd up & pay your council tax for the year. If you can do that it’ll save you £150 at least for the year. You say £200 on fuel do you have nectar cards & more cards? Def get those if you don’t you’ll get points and free fuel x

Insurance etc, 80
Tv & phone £38
Mobile phone 65
Total of £183 per month

Car insurance is a legal obligation
You quote your tv licence as £13, so not sure what the tv & phone is for £38, why pay to have a phone and tv when your already paying £65 for a phone - and you’re tied into the £65 contract for another year so keep that and ditch the other

How much is the car insurance? What else are you paying for in that?

Sorry to scrutinise,

Is your council tax over 10 or 12 months?

Your fuel bill - can this be reduced? What is the car used for? Is there a cheaper alternative?

Could you look for weekend or evening work again?

Working outside the home 10 hours per week at minimum wage would make you £4000 in one year.

If you paid that all into 2 monthly savings accounts for a year you could earn £150 in interest

Are you claiming any types of benefit?

We dont claim any benifits as DH earns to much to claim any (apart from the child benifits which I think everyone recieves).
Alot of our higher fixed bills were from before DS was ill and the broblems started.
O2 bill is £65 for two phone contracts then Plus net for £38 which is landline, internet and daytime calls, they say we are fixed for a few more months and then can reduce.
We pay council tax over 10, didnt know 12 was possible so will be giving that a go. Car insurance is £53 a month for 2 cars, we could have one but DH drives for 45 mins to work and I would then be without a car in the day (not a serious problem I supose but if DS goes into hospital may make it very awkward or if I needed to rush him in ... something to think about) we could get maybe £2000 for his car plus the lower ins etc.

There is no point in moving your 0% card until it costs you to do so. So make the minimum payment on it each month for the next 2 years. Concentrate on getting the loan paid down. Then when your 0% cc gets to the end of the introductory period roll the 2 outstanding debts together and shop around for a low interest loan.

Have you looked at tax credit eligibility? The cut offs have been reduced but you may still qualify.

Have you looked at alternatives for you dp getting to work? Or have you checked the price of a taxi to the hospital? If you son is rushed in - should you be driving in this situation? Would it be safer to get taxi so you can focus on your son ?

168 hours in a week and your dp uses it for 7.5 that’s 40 per week it’s sat doing nothing at work and 128 other hours which I bet 3 hours of driving it’s used. So for approximately 12/15 hours per week that car costs you - car tax, insurance, servicing & MOT. How many hours per week is your car sat on the drive? Would you spend more than £50 per month on taxi or buses?

How old are the children?

I think I'd be looking to up my income. 2 nights a week in the local pub, take in ironing or clean during the school day. Like the poster upthreaf said that's an extra 4K per year. Doesn't take long to pay off your debt then and then you can have some nice holidays/add to a pension/build savings.

Also head to moneysaving expert - there's some fab boards there.

Good luck.

Hello all again, DD is 3 and a Sept baby so wont be going to school until 2020, DS is 1 (the poorly little one).
We are looking into the 1 car idea and maybe me picking up a couple of hours in a local pub. My main concern is when little one then needs to go into hospital (varies from being in for 4 hours to being in for 7 days and with regular appointments 1 and a half hour drive away).
Thank you all for the help, we will definatly be over paying on the loan/card each month, we just need to pick which now.

I wouldn't have council tax over 12 months. Currently you get 2 months 'free' and I'd use the normal council tax payment those months to pay more off the credit card or the loan.

If you need to pick whether to overpay on the card or the loan, I would personally choose the loan.

Once the card reaches the end of it's 0% interest period, you should be able to do a balance transfer to another 0% interest card.

Take a read through the MSE website - it's great for financial education

www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards/

www.moneysavingexpert.com/loans/debt-help-plan/

You don't mention what health problems your DS has but have you looked into Disability Living Allowance for him?

You can hire a car for £120 per week
Drive your dh to work and then go to hospital
That’s two alternatives instead of owning a second car for a while - it doesn’t have to be forever

Sell the car and get 10 hours work and you’d pay if £6000 of the debt in a year

AnnieElliot you get a council tax demand and the bill maybe £1600 you can have it divided into 8 payments, 10 payments or 12 payments - you will still pay the same total

If you have the demand divided into 12 payments you will have extra money left over each month ( as monthly payments will be less) and you can use that money each month to reduce debt and by paying extra each month you’ll save money on interest on debt

How soon can you ditch that Plusnet Bill? You don't need a landline. And I'd look to cut those mobile costs Asap - I pay £65pm for five phones in my house. All you need is two mobiles and the Internet, I bet you could get that for £40 pm which would save £700 a year. You can do this!

Vodaphone are doing internet and landline for £21 per month

If you can get two sim only deals for £10 each

That would save you £62 per month