Money, money, money

[stonybroke]

Hi there - could really do with some advice, opinions, experience! I have changed my name (what a wimp!) as I am too embarrassed to use my normal name. I am even nervous as I type, as I know some will wonder how we got in this mess.

Anyway... the subject is AGGGHHHHHH MONEY! We are in a major, and I mean major, mess and we have worked all weekend on figures trying to work out the solution.

I don't have the exact figures with me but the situation is:

We owe £30,000 on credit cards, personal loans, car loan.
We own our house through a shared housing scheme, where we have a mortgage for half and rent half. The equity is only around £8,000. Property prices don't go up very much where we live approx. £2,000 per year. Our mortgage is £31,500

We need a new roof, we only have two bedrooms and now need additional one with dd's arrival. We could convert our room into two bedrooms for 2 kids and we move into ds room. Our garden needs major work done - it is a big old concrete jungle.

We earn about £26,000 between us. I work parttime, childcare is £75.00 per week.

Anyway there lays bear the facts of the situation - scarey eh? We do not live lavish lives - don't buy many clothes, have had one holiday in 10 years, etc. I stayed at home with my ds for 3 years and that is where the problem began. We also bought our first house in the sticks which turned into a major mistake.

The figures this weekend showed that we get into debt every month just paying for our household bills and loan repayments. That leaves nothing for clothes, going out, christmas, birthdays, etc. No extras of any shape.

The option we think my be the one to go with (even though I am a avid watcher of Alvin Hall and he says never to do this) is to consolidate over 25 years (if we would even be accepted for this?) In theory this would reduce our monthly repayments from approx £750 to aprox £260 or thereabout. That at least would mean we would have some cash for clothes, school fund, christmas, etc.

Anyway, I think that is the details. I am shaking as I type this. Please Please any sound financial advise would be very much appreciated! I am off to the ladies to have a cry.

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janh - have just printed these pages - 30 pages! We have a communal printer here so was loitering for what felt like an age!!

beetroot and dadslib I am surprised that you consider our cc amounts manageable - I thought they were so horrendous - so that reassures me a bit.

The rest of debt is: £10,500 personal loan, £9,000 car loan, £530 credit union, £500 approx on two others (tv video and bed).

Have been putting lots of WWW's thread suggestions into action. Have made reusable baby wipes (very pleased with the results and they smell much nicer than bought ones), done shopping in Lidl (very impressive!), am considering getting a mooncup (? can't quite get my head around it though!), told another friend yesterday that I will not be exchanging Christmas pressies this year - I think she was actually relieved too. Have been working out how to make some gifts also. Am considering making gloop too! Thanks again WWW!

Roll on Monday now so we can deal with the big stuff.

I bet you can get a better deal on your personal loan and your car loan - getting a £23,000 loan with the lowest interest rate you can find and paying off all your other debts probably will reduce your outgoings considerably. The 9k car loan seems really, really high to me. Did you buy a new car? What car do you have? Could you sell it and buy another less expensive car?

Thanks aloha good thoughts about a full loan. Yes we did buy a newish car in January - its a ford focus estate - I had thought about selling it (although I LOVE it and its our first 'grownup' car iykwim and we need the room) but anyway some b*@d ran down the whole of one side one night when it was parked outside our house - at least £1,000 worth of damage which we didn't get done as can't afford! It was a hit and run. We only had the car a week when it happened - do you think we're jinxed or what!!!! Anyway I'm sure what we would get for it would make the saving not worth it?

dh just rang. We had applied to Ocean Finance for consolidation loan over 25 years. Did this before I posted on here last Sunday. We have been approved paying £317.34 per month. Don't think we want to go this route after all the great advise given but what does everyone think?

Also we got redemption figure this morning from mortgage company - the penalities would be £2,000 (just over) to redeem early - two years to run. Don't think this means it would be worth changing mortgage companies?

Sorry for asking so many questions - I'm sure you're bored reading me whittering on and I apologise if this is the case, but am grateful for all advise already given.

Working out the full amount the repayments of the loan come to you will pay back £95,000 if you take this route. Have you tried applying to a bank as you may well get a better rate?

Mortgage - divide £2,000 by 24 months gives £83. If you can get a mortgage which works out more than £83m a month cheaper than the one you have now it is worth doing. Don't forget to add on conveyancing costs.

If I were you I would put as much as possible on to the 0% credit card deals, making sure that I don't actually use the cards. You will not find a better deal than 0% interest. If after 6 or 9 months you can't transfer to another card (but you will be able to) you are still better off cos you will have paid off some of the debt at 0% and then you can use other options.

If you did this you could still get a loan for the remainder of the debt, that way you are only paying interest on some of your debt.

I should have said £83 a month not £83m!!! If only, eh....

I agree with all Janstar said. Just adding I still think the consolidation loan is worth avoiding if you can find a better route. You have started well down the road towards figuring out how you can reduce some debts (the TV, etc.!). Work on that some more before you go for the consolidation loan. have you looked at the sort of mortgage that consolidates the loan? Virgin One, etc.? It secures your house against your debts (not great), but can effectively work like a consolidation loan, but at very good rates.

If it was me I would figure out how much I absolutely needed for immediate expenses, (food, mortgage, car payment). Set aside the rest of your income for paying off the debts -- and stay in the budget! When you get the zero-per cent credit cards thru, pay the miniumum on those each month, don't use them for any new purchases, and pay off whatever other debts that aren't on zero-percenters as fast as possible. When the 0%-ters expire, you'll have to review what to do.

My husband had NO INCOME and got approved for £2000 credit limit on a credit card a few months ago.

I'm guessing that Stonybroke's mortgage is only about £227 (6%?, 20 year term?). Even if she dropped to 4.2% she'd still pay £197, so not worth redeeming?

Ocean Finance - if you can possibly avoid them do. That is the incredibly suave, creepy man who wobbles his head whilst telling you that he's here to help. They are not. They prey on peoples problems.

When a company does a credit search on you, it does show in some instances how much you owe. I don't know if this is why you went with Ocean. As it can make a difference to your score. But I would definitely advise you to go to someone like Alliance & leicester or Egg (who do very very cheap loans). You should not be paying more than about 7.5% really.

I would sell your place and rent. If your property needs considerable repairs - you don't have the money. End of story. You could end up in a worse position. How old are you both? You can always buy another property further down the line. I would even try to get a council/housing association place if I were you (rents are cheaper). Even if it means doing the b&b route. Having this debt round your neck for years is not a plan if you can do everything in your power to get rid of it. The other alternative - sounds a bit extreme I know. Go bankrupt if you truly can't afford to pay it all off. No point in killing yourself over money.

I think this point is where the CAB can give the best advice - looking at all the specific figures and time periods. The consolidation loan will be secured against the house on top of the mortgage, won't it? Not a good idea...

There are mortgages with silly interest rates for the first 2 years - there is a Guardian page that does calculations for you, wonder if I can find it again...yep, it's here , dead simple step-by-step (reason - eg debt consolidation - amount, period etc) and it comes up with lots of recommendations. (I love the Guardian!)

stonybroke, 30 pages, wow! It's so hard to tell from scrolling how long a thing is (and this one's getting longer by the hour).

Don't forget what my dh said about getting the Times on Saturday. In the money section they list the top deals on credit cards and loans so you don't have to spend ages comparing prices.

wiltshire, I loathe, abhor and detest the man with the waggly head, have to turn him off (him and the huge bloke with the tache who wants to do accident claims). Ugh.

Thanks for your thoughts - it really does help.

Janstar - you are a 'star'! Bloody bloody hell - £92,000!!!!!........... that is 3 times what we want to borrow! No way Jose. I really don't want this hanging over me for the next 25 years either. Even if it would reduce our monthly repayments by over half.

Mortgage - thank you for working out the £83 per month - I use to be good with figures but wouldn't have got there so easily - I thought I needed to find out our interest rate and go to other mortgage companies and find out what they could offer, etc before finding out if it would be worth while financially. So you saved me needless effort - thank you.

I know the above makes me sound really really stupid - would you believe that I used to do the books for a restaurant! I don't know what has happened to my head for figures since I had kids.

Zebra - I also agree with you and Janstar - I do want to get this paid off as soon as possible so going for the 0% cc and will have to start looking at cheaper loans (thanks wiltshire -will try Alliance and Leicester and Egg).

I don't think going for a different mortgage would make any difference (although I think we're paying around 248 per month. Will have to look further into this.

wiltshire - have been thinking about renting-v-buying and I don't think it would work financially. We pay around £350 for house at the moment (all in) and rent seems to be around that or more.

Also the bankrupt option is not an avenue we really want to go down. I suggested this in the early hours of Wednesday morning, when my dh was getting all worked up about the debt - my saying this really snapped him out of his not-coping mode and made him realise that we did have a choice and he didn't want to go there. Saying that I wouldn't write it off completely - will see what CAB say on Monday.

Thanks again.

janh - thank you for link to money supermarket - going into favourites too!! You never know with the huge amount of fantastic info you're all providing I could turn into a financial whizzkid yet!!

Janstar - yep remembered your hubby's advise - get the Times every Saturday anyway (love the new format!), will be all eyes on the Money Section tomorrow (usually goes straight in the bin!)

btw I have never seen the man with the wagging head! Got number on back of some magazine or other. I have to look out for it now. Although maybe its on sky - we don't have .... see, we are sensible in some areas!!!

Sorry to digress but in response to JanH comment about that ghastly man with tache who states 'where there's blame theres a claim'. I think these adverts should be banned. It doesn't take an idiot to work out that 'Mrs smith who was paying 500 per month, contacted us and reduced her payments to 150', has either a) offered sexual services to the bloke for 5 years or b) turned a 5 year loan into a 50 year one to be taken over by her kids when she dies.

The people who come on to talk about 'it was fantastic, there was no hassle, no forms', 'they were so caring & helpful'. Brrrrrrrrrrrr, do these fuckwits realise that the minute they default they will have the baliffs round that make phil mitchell look like kermit. Does anyone remember Bains & Ernst, they did horrendous things. They reorganised your debts from say 5 years to 50 and THEN charged you a monthly fee for doing this. I am sorry to rant on but these adverts are on during the day when people who can't/don't work who have no dosh are watching. They are aimed at certain people. You don't see these ads in between News at ten. Blood boiling now.

Sorry to digress but in response to JanH comment about that ghastly man with tache who states 'where there's blame theres a claim'. I think these adverts should be banned. It doesn't take an idiot to work out that 'Mrs smith who was paying 500 per month, contacted us and reduced her payments to 150', has either a) offered sexual services to the bloke for 5 years or b) turned a 5 year loan into a 50 year one to be taken over by her kids when she dies.

The people who come on to talk about 'it was fantastic, there was no hassle, no forms', 'they were so caring & helpful'. Brrrrrrrrrrrr, do these fuckwits realise that the minute they default they will have the baliffs round that make phil mitchell look like kermit. Does anyone remember Bains & Ernst, they did horrendous things. They reorganised your debts from say 5 years to 50 and THEN charged you a monthly fee for doing this. I am sorry to rant on but these adverts are on during the day when people who can't/don't work who have no dosh are watching. They are aimed at certain people. You don't see these ads in between News at ten. Blood boiling now.

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This might sound corny but among the many reasons not to go bankrupt is pride. Pay off your debts, even if it takes a long time. Learn better budgeting skills for the future. Feel proud of your acheivement. The day you no longer owe anything will be one of the best feelings you will ever have. You'll never feel that if you go bankrupt.

Not corny at all Janstar! I agree with you 100%. We are really determined to sort out this mess once and for all. We both think that if we took the consolidation or bankrupt roads we wouldn't address the real issues, which are that we fritter money away and it has GOT TO STOP!! As you might be able to tell I am feeling really really motivated! dh and I are communicating really really well and looking at things in a totally different way.

This is mainly down to all you wonderful people who have offered such fantastic support and advice. I don't think you can know what an enormous difference you have all made. If I hadn't posted on Monday morning we would now be on the consolidation road without a doubt and would have kept on spending as we were, resulting in us being in the same boat in 5 years time again. What you have all said has been very logical and commonsense, but we needed someone to point this out to us.

Again I thank you so so much and send you loads of cyber hugs {{{{{{{{}}}}}}}} and every good wish for you and yours.

Roll on Monday - will let you know how it goes.
xxx

janstar, I don't think that having a bit of pride is corny. It's actually really really refreshing to think that there are still people around with it.

Stony, I wish you all the luck in the world with this.

I've just read through this thread and wanted to thank you all. I have learned so much. Talking about money is such a taboo.

Stoneybroke, you are being so good about this. I hope your dh appreciates it and I'm really glad he's joined you in fighting the financial monsters. I hope your CAB meeting goes well.

Incredible Thread! Sheer genious! You Mums and Dads are astoundingly brilliant!!

stoneybroke, I've been thinking about this today and wanted to add another suggestion to the great list you have been given. Please excuse me if this has been mentioned before.

Is your shared ownership arrangement with a housing association? Asssuming it is, have you thought of contacting them and explaining the situation? Housing associations are non profit-making charitable organisations, aren't they? As such, they might be able to help you out in some way, like letting you reduce your mortgage payments for a while, offering you a loan at a good interest rate, or reducing the rent you have to pay (especially if the property is in such need of repair). If the property is in such a mess, then realistically, could they rent it out if you left, without spending lots of money on it first? Whateve their charitable status, could you negotiate a rent reduction? It might be more cost effective for the housing association to help you to stay where you are and help you to do the place up.

I don't know if you or your husband in a key worker in the public sector, but if so, this might strengthen your case as well. I know some housing associations specialise in helping key workers, for instance.

Good luck anyway.

Stonybroke, I think it's incredible how you've gone from sheer panic to a plan of action in just a few days. Brilliant. Can't you get the car fixed on the insurance? Then it might well be worth selling if it's that new. It can't have depreciated that much. You can buy much less expensive big cars - a second hand low mileage Renault Scenic is about £5K, for example. We earn more than you and thought the focus was wonderful but far too expensive for us! At the moment we are driving my ancient and very miniature Fiat Cinquecento - just the one car for me, dh, our two year old and our 12year old stepdaughter. It's a squash, but we've even gone to Yorkshire and Norfolk in it! I personally thing you can't afford your car (and neither could we!).
Good luck with the meeting on Monday. I think it will help to go in feeling clued up.

wiltshire I so agree about those dreadful ads.
There is one on every morning here which not only offfers to "reduce your payments" but at the same time lend you more for .."a car.. a holiday..." Blooming heck! Enticing you into MORE DEBT
I know we all have to take responsibility for our own actions but I think these ads are really immoral.

good luck today Stoneybroke, let us know how you get on at CAB.

I'm finding this thread very inspirational.