Reply to: Personal loan options for contractors

[jim2406]

i thought so too, and i've got no problem at all with it sitting there gathering interest (its a low rate 3.8%)

but, the accountant has figured it out as part of my self assesment (not yet sent to HMRC) and stated that i owe £3300 due to student loan - 9% of everything over 15k

so far, SLC have told me over the phone (anonymously on my part) this is the correct way of doing it. i'm waiting for feedback from the accountant. if anyone knows any ways of 'playing the system', as regards the self assesment and student loans, i'd love to hear them as removing that 3300 would be a godsend right now

[NotAllThere]

...
absolutely horrible situation, but worth it, as although i'm still in pain, its nowhere near as bad, and normal life is resuming...

Sorry to hear you're still in pain. I had two slipped disks in my neck 5 years ago, that paralysed my left arm, and caused immense pain (pain of 9-10 if sitting for more than five minutes, 3-4 when lying doing - and that's with tramadol, 2400mg ibuprofen a day and valium ) I had a double discectomy and spinal fusion, and, thank God, it was pretty much a success - the pain was just switched off. Still slightly paralysed in my left arm and have lost feeling in thumb and index finger.

Had another slip higher in my neck a few weeks ago. Now I've a numb patch on my right shoulder, but, fortunately, it's otherwise healed.

I've heard good results with the Alexander technique, for reducing pain and increasing mobility.

[ookook]

Its easy to defer your student loan if you are paying yourself the minimum wage - they only need 3 months worth of wage slips as proof. However as to whether its permissible or if you should declare all income inc divis, I'll have to leave that to the experts. Student loan is usually very low interest (2% odd) so should be low down on your list to repay.

[jim2406]

couldnt get the ops done on the NHS as no result was guaranteed. couldn't get them done on BUPA as there's an exclusion on my policy.

also was in so much pain i was pretty much not able to work, so getting it done immediately became the 'only option'.

absolutely horrible situation, but worth it, as although i'm still in pain, its nowhere near as bad, and normal life is resuming

i'm very much in debt-paying-off mode now.. i think the hardest part is facing up to how bad things are. at least i'm a contractor - doing this on permie wages would be extaordinarily difficult.

i was reading some posts on moneySavingExpert of people in 40, 50k debts who earn 1200 a month.. i can't comprehend how they're coping.

[NotAllThere]

Just cos I'm nosy, why did you have to self-finance?

btw, the feeling you get when you're finally shot of these debts is quite good!

[jim2406]

richardCranium:
thanks for your advice. please bear in mind that our situation is likely drastically different from yours:

• the wolf isn't at the door (Yet) - i'm just trying to pre-empt it;
• the only reason we're in this mess is i had to self-finance operations that were necessary for me to be able to walk (and in-laws know it) - so not only paying for operations, but significant loss of income during the downtime;
• we are a very close family, the only reason we haven't asked so far is we were trying to do it on our own.

I did a lot of digging yesterday and have come to the following conclusions:

• mortgage company - no help
• Banks for personal loan - likely no help, also i've had an application rejected so can't try again for a while
• Student loan (massive student loan repayment in my self assessment) - currently trying to defer it - this will free up 3.5k (anyone got any ideas on how to do this? i'm talking to my accountants but they don't seem to know)

Other than that, I think it's just going to be a case of living as frugally as possible till we're out of the mess. i've got 2 contracts running concurrently at the moment and earning potential of about 1600/week until March 2009, and Mrs Jim also works, so we should be able to pay off a fair amount each month. i'm aiming for 1400 a month.

Total liability is:

• Credit card 1 - 5000
• Credit card 2 - 4000
• Credit card 3 - 3100
• Directors loan - 3000
• Income tax (due jan 31) - 3000 - i have this already
• Student loan (due jan 31 - trying to defer it - anyone know if i can???) - 3300 - i didn't know this was coming!
• => 21400, of which i have 3k

so that's 18400 to save / pay off. i'm hoping it'll seem a lot more managable once it's down to 16000 in a couple of months.

happy days..

[chris79]

Check your mortgage, some places allow you to borrow back (right up to the full amount).. mine does.. I too have funds distributed over creditcards at fixed low interest amounts, and use the combination of my cards and equity to move money around when needed to get money at the best deals possible.. I've even got a few grands on crazy deals like 3.7% for life of balance (2yrs ago).. etc.. just have the minimum payments coming out on direct debit every month. I keep a huge spreadsheet tracking everything including interest, payments, etc on a month by month basis so I know exactly where I am and what I can do.

Might be worth calling your mortgage provider to see if there's any option to either get money back, or to consolidate into your house? They might see it as a good move if they ask you to remortgage or pay a fee, work out if this proves to be cheaper than paying 29.9% on your cards...

[RichardCranium]

i spoke with mrs jim about this last night and we agreed that one way to go may be to ask family for a loan.

we both hate doing it, but her folks will be able to afford it (no mortgage, plenty of savings), and we know we can pay it back (unless something catastrophic happens).

As per previous post - may have a chat with mrs jim's parents tonight to see if they'd be prepared to lend it to us, on the basis of 'we can pay you at least 700 a month but probably at least 1000'.

I'm pretty sure they would - I just hate to ask. But, it looks like it's going to be the best option by a long way.

The CAB would advise you to always take a loan that charges no interest before any other. That is, borrow from friends and family first.

When it comes to paying off debts, do it according to the interest rate, i.e. loan sharks, then credit cards, then overdraft. Friends and family come last.

BUT

If this is really for debt consolidation, give your in-laws your credit cards, so that you show you are genuine. It will stop you using them. Do NOT do a loan consolidation then run up debts. You will lose your home and your wife.

Your best bet is to throw yourselves on the mercy of your in-laws. (Yes, I have been there, yes I know how much it hurts your pride. The wife & I will be paying forever. Not financially, just in humility.) Tell them you need more than your debts; you also need some cash in hand to get you through one month. Get them to pay off your credit cards / overdraft / unpaid mortgage / utility bills and you them owe them the total.

Then set up a standing order to pay them back.

But make sure you tell them about EVERYTHING you owe. Including that damned store card. And the loan against the endownment. Do not be tempted to lie.

The price for borrowing from the in-laws is very, very high. It will affect your marriage. If you work together, you'll be fine.

But if it helps, you're not the first contractor whose life has turned to rat-tulip and the bank did not want to know. Been there, done that, still recovering.

[jim2406]

You're right - overpayment is very important to me, given uncertainty of (a likely relatively high) income.

As per previous post - may have a chat with mrs jim's parents tonight to see if they'd be prepared to lend it to us, on the basis of 'we can pay you at least 700 a month but probably at least 1000'.

I'm pretty sure they would - I just hate to ask. But, it looks like it's going to be the best option by a long way.

[NotAllThere]

Notwithstanding the difficulty you're having actually getting a loan, try to get one that allows you to pay more off than the minimum.

[jim2406]

i am paying off as much as physically possible every month.

i just wouldn't want to commit to a regular payment of more than 600-700, just in case.

[NotAllThere]

...I can comfortably afford to repay 700 a month...

What's the absolute max you can afford to pay each month? Pay that.

[jim2406]

i spoke with mrs jim about this last night and we agreed that one way to go may be to ask family for a loan.

we both hate doing it, but her folks will be able to afford it (no mortgage, plenty of savings), and we know we can pay it back (unless something catastrophic happens).

i've done a fair bit of digging today and am quickly coming to the conclusion it's going to be extremely difficult to borrow money from anywhere bank-related.

[Bob Dalek]

You should know better it's your own fault, etc.

[DimPrawn]

WHS

I never had a problem getting a personal loan off Halifax - I told them my income from dividends and salary was X and they were fine about it. It does help if you speak to someone with a basic understanding of how contracting works though.

That was then, this is now.

Pre credit-crunch there was no lending criteria.

Now banks literally can't afford to take risks.

Getting a loan post-credit crunch involves a lot more hoops to jump through.