On the brink of losing it all

[pibby]

• PLEASE READ FULL THREAD BEFORE WRITING LONG, MASSIVELY HELPFUL REPLIES**

(If you want to of course)

I'm using this username as my other is connected to my work so hopefully that's OK.


Just a note to start is that this is all self inflicted and no one is to blame except myself.
I have no one to talk to about this but need to get it out and ask for some advice as the best solution to sort my life out.

Some points to note:
I take home £4k a month
My mortgage is £1,550 a month
I have 3 years left on my fixed mortgage meaning I have to pay £17k on ERC.
I owe around £14k on credit cards
£10k on a personal loan
£9k on another loan
Council tax is £315 a month
£320 a month on a lease (ends in May next year)
£235 a month on a lease (ends February 2020)
Plus the normal family household bills.
I've removed all outgoings that don't drastically affect my family.

I had a good business that failed miserably due to borrowing money from the wrong people and had to payback £30k within a days notice that meant using credit cards and my savings which has put me in this situation and then the business just collapsed.
I am now working for a company for a very good salary but my outgoings are more than my income.

My house is worth circa £390k with a mortgage of £330k.

I am having to use my Amex card month in month out to survive on our daily spends and every month it just gets worse and worse. As this is all my fault, it makes me. Feel absolutely awful that we're in this position and I can't see through it.

I have 2 'disabled' kids and whilst we get help from the government, this doesn't cover anywhere near what they 'cost' every month.

I realise this is a long post but I honestly don't know what to do.
I sell the house, realistically pay off halfy debt and I'm not massively in a better position and realise I have no way of getting on the property ladder for a very long time or is bankruptcy even an option? It feels like that option is the worst but is it inevitable at this rate?

I have 2 kids I absolutely adore and an amazing wife but I can't go on like.this much longer as I can't sleep and I'm generally just depressed and have no energy at all and haven't done for god knows how long.

Edited by pibby on Friday 9th August 15:52

[pibby]

Thanks noneed.

Loans are 6.9 and 3.9 so pretty good but both were around £15k each and realistically, I wouldn't get lower rates for a big loan due to my overall debt.

Neither vehicles can be VT'd as they're leases but the £315 a month one is still circa £1500 to cancel which I don't have.

[pibby]

My wife definitely can't work sadly due to the kids and I'd never want to put her in that position even if it were an option as our kids are more important.

Mortgage wise is tricky as although I'm earning £4k a month, it's on a self employed basis so haven't been doing it long enough and having 3 years left I don't think allows me to re mortgage.

[pibby]

67Dino said:

Well done getting this off your chest and seeking help. I’d recommend you contact the government set up Money Advice Service and get some professional debt advice. There are phone numbers and details at:

https://www.moneyadviceservice.org.uk/en/tools/deb...

They should be able to help you come to new arrangements with the institutions you owe money to, most likely a combination of writing some of it off and rescheduling the remaining payments to be more manageable.

Best of luck with getting it sorted.

Is this pretty much the same as declaring myself bankrupt in regards to our future?

[pibby]

EddieSteadyGo said:

Couple of initial thoughts and questions.

In terms of your depression and lack of energy, have you visited the doctor and discussed your symptoms with them? Some medication which helps with anxiety and stress could be very helpful in the short term to allow you to see things more clearly.

Can you speak to your mortgage company and explain the situation, and ask to move to an interest-only or to a reduced payments arrangement for a short period of time while you find your feet? If they properly understand the seriousness of your situation, they are likely to try and help.

Thanks for the advice but as my wife is on medication for anxiety (kids and other little things) it's just not something I could do.
Happy to be corrected but won't the mortgage company want proof of income, x amount of months accounts etc for self employed?

[pibby]

fesuvious said:

Contact mortgage company. You need to release the 20k ish to get you to 90% ltv. Ask then what deals are open to you.

You need to use that to get shot of the credit cards and the 9k.

Take the mortgage out over the maximum term you can.

That's step one.
Step two is cutting up those cards.

Step 3 is losing those daft leases and either having one lease cat and one cheap runaround or two cheaper cars. This may have to be achieved by refinancing the 10k loan into 20k.

At this point you're still up per month. However you must put money away to cover repairs etc on the cars. Be disciplined. Open an account, send it by standing order. Have the account in a separate bank or buil society.

Now, remember that cards are evil. Remind yourself.

If this has worked out you're better off each month. Priority is paying down that 20k.

So, after 12months take a 6month mortgage payment break and use it in full to take that loan down to @5k outstanding.

6ish months later it's gone.

2years from now you're @88% mortgaged based on current values but you're free of the st debt.

However you will have 2 old cars. So remember to look after them, if they've gone ok then that maintenance fund will be there to assist.

2years.

Great Post so thanks for that.
As above, not sure the mortgage company will lend more money with being new to being self employed?

I'd love to get rid of the lease cars but I don't have the cash to pay the early cancellation fees.

[pibby]

Thanks.
I suppose I just need to pull my finger out and accept things are st.

Are these debt advice places generally good? No idea why but just dubious about seeing them.

[pibby]

EddieSteadyGo said:

No point in being a hero with regard to medication. If you are not well, you need a doctor.

With your lender, I'm not talking about normal mortgage arrangements. I'm talking about explaining the seriousness of your situation and explaining you don't feel able to afford your mortgage repayments and that it is affecting your health.

In that situation, your lender will want to work with you to avoid making a difficult situation worse.

Oh I definitely don't feel like a hero. Can't even afford to take my kids on holiday when they really deserve it.

I have always been the money parent while my wife looks after the kids so yes it's about pride but also because I'm not willing to put my family through what I'm going through.

[pibby]

EddieSteadyGo said:

You have a family you love, a decent level of equity in your home, and you earn an income which probably puts you in the top 2% of the population. Might not be the right thing to say but, objectively speaking, many have it much tougher.

You have though suffered a set-back. When a business fails it places a huge strain on your health as it triggers so many emotions - I know because a close member of my family has been through that situation.

I have been debating whether to post this for ages purely because of that.
I know £4k a month is a st load of money for one income and I'm very grateful to earn that but in my case, more money more problems.

Used to earn less, have a £700 mortgage and never really worried about money and just lived a normal happy life.
Business went really well, got pursuaded to 'expand' and then it all went wrong.

[pibby]

Thanks fatlad.
Sadly my work is 25 miles away and is one of the most expensive areas in the UK so that's not an option.

I'll be honest, if I didn't have the ERC, my house would've been sold by now but selling my house would mean having to pay circa £350k just to get out and realistically I'd 'only' save about £700/month in debt by doing so.

My son goes to a school near by as its perfect for him and we have a disability thing for him so he has a one to one etc so CANNOT leave this area.
Even renting a 3 bed semi around here is £1200+ a month.

I think I need to look at every little thing I can cut back on tomorrow morning and go from there.
Just so I know as I don't want to have some sort of marker on my account, will my mortgage company want accounts etc to release some equity in my house to help out?

[pibby]

Shnozz said:

If you had a business before, why is it only now you are considered self-employed for lending purposes?

Whilst people can give more general advice, on a day to day level then perhaps you can list your monthly outgoings. On a cursory glance I am surprised outgoing exceed incoming, or certainly not after a little giggle around and once the lease cars can be ditched which isn't too far down the line.

The business had been going a while and I managed to get them to see me as an employee as such where as now, the business is gone and I work for someone else in a similar but different business.

I'll post all of my outgoings tomorrow.

[pibby]

jonny70 said:

Have you discussed your issues with your parents or in-laws (or Siblings or wife’s siblings ) (can they help? - immediate family especially parents will naturally want to help their children even in adulthood)

Nobody knows. My family would love to help but even if they wanted to my parents aren't in a position to.
My wife's family are shall we say, work shy so live on very little money and just plod along content with their own lives.

I appreciate getting help from family is a great way but sadly not an option for me.
I need to do this myself and I hope that doesn't come across like I'm ignoring everyone but why wife is a very lovely woman that even when we had money, she would still ask if it was OK to buy something for £10 so her spending is tiny and not a factor.

Thank you for all the replies so far. It genuinely does help.

[pibby]

Honestly, thank you everyone who has posted so far.
I'm just doing a spreadsheet at the moment and I'll upload it when done.

I do understand the 'live beyond your means' but when the business pretty much collapsed over night, I had no savings, no income and all I could do was live on credit cards to get through.
I was using debt to pay for debt which is an incredibly stupid thing to do but I had no choice.

Just so people know, I have no assets like watches or anything of real value as I generally only buy things for my kids/house.

[pibby]

TYPE AMOUNT
MORTGAGE £1,467.83
COUNCIL TAX £314.82
LIFE INSURANCE £87.00
KID ACTIVITY £25.00
PHONE £39.66
PHONE £15.37
CREDIT CARD £200.00
SKY £61.00
WATER £45.00
HOME INSURANCE £20.28
CAR LEASE £235.37
CAR LEASE £318.41
CREDIT CARD £300.00
LOAN £258.60
LOAN £289.76
TV LICENCE £12.83
FUEL £250.00
FOOD £400.00
KID ACTIVITY £20.00
PAYPAL DEBT £100.00
SPOTIFY £9.99
ELECTRIC/GAS £70.00
RANDOM KIDS STUFF £200.00
TOTAL £4,740.92

[pibby]

DavidY said:

Car Insurance/Tax/Running Costs (not fuel) ???

Insurance was paid for on a credit card, tax is included in lease costs and obviously under warranty so no real running costs except maybe a £300 per year service.

[pibby]

I understand where you're coming from but I can't just get rid of sky or car leases. They're on contracts and cost £££ to get out of.

As for food shopping, even taking into account baby stuff, that's probably £20/week just for that stuff. I'll admit we can definitely reduce the overall food cost but definitely not to £40/week.

I've just reduced my sky bill by £12/month, cancelled netflix (which I forgot to add).
I'm hesitant to get rid of spotify as being completely honest it's kind of my thing I need. I listen to a lot of podcasts when in the car which help my stress massively.

[pibby]

Spotify has been cancelled. I didn't even know about it being free to be honest.
That's another £10 a month I suppose.

We do need two cars. I'll look into the lease selling sites later as i'd be more than happy to atleast get rid of one and buy a snotter for me.

[pibby]

I 8 a 4RE said:

WOW so many great solutions offered by the PH community, but the OP is not willing to take any of them.

You NEED Spotify..? Because you're too good to listen to ads in your leased car? Or because accessing them through your Android / Apple Podcast App is too much of a hassle?

The biggest factor in personal finance is the guy in the mirror, if he does not want to change, nothing will.
I hope you realise that and make some changes.

Finally, sounds like a second job (deliver pizza, become a waiter, etc) is on your horizon.

(Also wondering what happened to all the posters advocating credit cards, car leases and other elements of a leveraged lifestyle..?)

Not willing?
You understand that some things can't be cancelled right? Not quite sure why you're trying to be all high and mighty.

[pibby]

KTF said:

Assuming I have done the sums correctly, the cost of the remaining term on the leases are £235 for 6 months (£1410) and £329 for 9 (£2961).

If you manage to sell on the lease you wont get that amount so how are you going to rise the fund to replace the cars plus other costs rather than continue until the end of the term?

Personally I would be focussing on the personal loan and credit cards - what is the APR on them? - to see if they could be consolidated into a lower overall monthly payment.

Edited by KTF on Tuesday 6th August 10:13

All credit cards are 0% at least until November anyway.
Loans are 3.9 and 6.9%.

It's the Amex card which is killing any hope of paying things off. Pretty much averaging around £900 a month spend on it and that needs to be cleared every month so my £4k income is actually around £3,100 which skews the figures all round.

[pibby]

JulianPH said:

I'm not sure if you saw my post on entitlement to a Mobility car?

Sorry, I did but we're not.
My son has verbal and mobility but not severe enough for a mobility car. My daughter doesn't have a mobility disability.