Possible Debt Consolidation

AussieDolphin on 02/01/2021 - 23:29
Last edited 06/01/2021 - 19:36

Hi Everyone, I'm trying to take the first steps to get out of debt. My current situation is this - work full time, divorced and have children in shared care. The only income I have is from my job (80k) about 75k because of salary sacrifice and $350 per month from Centrelink for Family Tax Benefits and Carers Payment for one of the children. After all deductions, I clear $2,020 per fortnight. I do not receive child support even though my ex-husband earns 50k more than I do. Out of my salary, my deductions are tax, superannuation, HECS debt and salary sacrifice for my car. I have 2.5 years left for that then there will be a balloon payment at the end.

I have struggled and had to use what savings I've had to get by each month. I calculated today that I owe 16K. This includes $5,200 left to pay for my son's braces, 6k from a personal loan that I stupidly took out to squash the debt I accumulated when setting up our home. The rest was from an urgent trip overseas to see my father before he passed, then a new fridge, school excursions pre covid etc. I have tried to contact the National Debtline on numerous occasions and get cut off every time. What is the most sensible way forward? One payment would be easier than 10 different payments every month. The interest rate is another problem. I had a direct debt bounce last week and I know this is a terrible place to be. My credit rating is good and at some stage in the future my dream is to buy a house for us but until we're in a healthier spot financially for now it's only a dream. I've thought about trying to get another job but I'm unsure how I could do it when I work 50 hours a week.

I hope someone can share a way forward. Thank you for reading.

EDIT - I just wanted to say thank you to everyone for the helpful links and many PM's reaching out. I'm humbled and also relieved that I'm not alone getting out of this deep hole. I can share one positive outcome for today. I phoned my NBN provider and my monthly internet has been reduced to $65. I was previously paying $75! It's probably not a great deal for some but it's a saving none the less. I need to have internet access for research and planning purposes when I work at night after my children have gone to bed. I didn't consider GEM and GO credit cards because I never used the cards! I made a purchase on each last year and filed the cards somewhere never to be seen again. Anyway I contacted Latitude and have reduced both debts to the minimum until I've seen the financial counsellor next week. I was behind on one of them and had to pay $40 to catch up. The next payment is due next week already. I'm trying to get hold of the bank that has my personal loan to ask if anything can be done there. I have opened two ING accounts as per the Barefoot Investor book and will open the rest tonight. I have to contact ING because I couldn't see how to do it in my account!

Financial

Comments

            • AussieDolphin on 05/01/2021 - 01:51
              +1

              @Punda: The court orders and then parenting plan specify that their dad needs to pay half of all expenses over $100. He has broken the order and this means I need to return to court. What the judge will do i have no idea. At the moment I can't take on that battle just yet.

              • Punda on 05/01/2021 - 03:14
                +2

                @AussieDolphin: Save all the receipts for when you can. I think you’ll find your debts will shrink once he pays his 50%

                • AussieDolphin on 05/01/2021 - 09:54

                  @Punda: I believe so. I've just read another story about a sole parent in a similar situation. He has the capacity to contribute towards the children he's just refusing to out of spite and for him its also about control.

                  • Punda on 05/01/2021 - 10:23
                    +1

                    @AussieDolphin: Yes, been there done that. You could go to legal aid and get advice. Or invest in a lawyer to sort it out. A few hundred dollars will save you plenty by the time your kids are 18

  • field1985 on 04/01/2021 - 21:47
    +7

    Use the MoneySmart Budget Planner provided by ASIC:

    They also offer guides for people struggling on low incomes.

    Find a Financial Counsellor located near you

    Best of luck

    • AussieDolphin on 04/01/2021 - 21:52
      +4

      Thanks I have an appointment next week with a financial counsellor.

  • darkchoc on 04/01/2021 - 22:25
    +6

    Hi

    Sorry to hear about your situation.

    You could write to all your creditors and ask for help in paying your loans. https://ndh.org.au/Debt-solutions/Negotiate-payment-terms/

    See the template letter below

    https://ndh.org.au/wp-content/uploads/2020/07/letter-or-emai…

    Reducing expenses: Another approach might be when large expenditure comes up, e.g. need to replace broken appliance or furniture, you go with gumtree, Facebook marketplace and start using second hand. You can get some really good deals and make sure you meet nice people (can tell from email and phone manner) so that you are picking up from someone trustworthy.

    Car expenses: it appears your car might be a large expense. If it is possible, sell the car and pay off the loan as best you can. Then buy a cheap but reliable second hand car. A high mileage but good condition Toyota Camry or something like that would help.

    • darkchoc on 04/01/2021 - 22:36
      +7

      Also, children are very resilient. They may want the best and as a parent, you may feel guilty and want to give them the best.

      In 20 years time, your kids won't remember that you bought them hand me downs.

      That is a trap that people fall into, they get into debt trying to get the best for their kids. When truly children just need a roof, food, education and love. They don't need the fanciest clothes and shoes - Kmart will do. They don't need iPads and iPhones. They want them but if your sit down and explain to them things are tough and you need their help, they will be far more empathetic and understanding.

      Of course there will be some disappointments. But disappointment can be a good thing too if handled in the right way. They don't need to know all the ugly details. But enough to understand the value of money and the challenges that you face.

      I recommend you speak to your children and let them understand your situation rather than shield them from it completely. They will be remarkable and will support your through thick and thin. Teach them that not everything is easy in life.

  • 91rs on 04/01/2021 - 23:05
    +1

    Don't know where you are living but is moving nearby to somewhere cheaper an option?
    Friend recently reviewed her rental costs compared to whats offered within a few kms of where she is now, is now $60 a week better off for it, after she had COVID pay cuts (temp measure) she was struggling to cover all the bills also and with help from a couple friends moved all her stuff to the new place.
    Thats nearly $3k a year for her in this case, YMMV but its an example that things are out there.
    Having kids and needing to be convenient for schools makes things harder I understand.
    Even if its 12-24 months it could be worth it for that kind of savings if you can find it nearby.

    Otherwise, OF? (jk, but well seems every other person is doing it).

    • AussieDolphin on 05/01/2021 - 01:48

      Moving further costs more. I can't even move interstate as I won't leave the children and I'm not allowed to take them interstate. We have court orders as well. Looking at suburbs around my town is pretty much the same in rents. We moved from a house into a unit as well.

  • ajxutao7 on 04/01/2021 - 23:23
    +1

    barefoot investor, a good book to read

    • AussieDolphin on 04/01/2021 - 23:36

      Thank you, I have a copy and I've started reading it.

  • DemocracyManifest on 04/01/2021 - 23:52
    +2

    With the HECS debt, i believe you can defer compulsory payments on hardship grounds, contact the ATO about this. Also with barefoot investor, his main mantra is no credit cards, which is all well and good if you have money, the pages are full of testimonials from well off people who rejigged things and found $30k etc. Is the interest on the braces severe? And the personal loan? There could be an option to consolidate them at a lower interest rate with your lender if you discuss with them - you have a steady job by the sounds of it so it could be possible - beware of companies that 'do it for you' as they will add their fees on top. Access to super has closed off, declaring bankruptcy on $16k could be a bit extreme, but seek advice about that, but it could be an option especially as international travel is basically a no go for a few years. Some neighborhood centres have free financial advice as well, you can get assistance with your energy bills if this is a issue as well.

    • AussieDolphin on 05/01/2021 - 01:45
      +1

      Thanks I wasn't aware. My HECS debt is automatic deducted from my salary. I'll contact the ATO anyway.

      • b0b on 05/01/2021 - 21:28
        +1

        Seems like the HECS debt repayment is actually quite substantial on your salary (about $4k?) so that is a good option. The interest rate on the HECS debt is a lot lower than any of the credit cards so if you can defer that for a couple of years, it should help put you in front compared to paying the HECS.

        https://www.ato.gov.au/individuals/study-and-training-suppor…

    • Sean R on 06/01/2021 - 03:38
      +1

      From what the OP has said, I don't think she meets the ATO's financial hardship criteria.

      You're considered to be in serious hardship when unable to provide the following for yourself, your family or other dependants:

      food
      accommodation
      clothing
      medical treatment
      education
      other basic necessities.

      • DemocracyManifest on 06/01/2021 - 10:55
        +1

        Well if you’ve taken a loan out for medical treatment you are in hardship, it’s not your money so they might qualify? I think her situation is unique and worth discussing with the ATO, they get you to outline your budget over the phone; I’ve done that with a tax debt under $1k and it was waived

        • Sean R on 06/01/2021 - 12:31
          +2

          My understanding of the ATO's serious financial hardship criteria re: medical treatment is that it's along the lines of "Help, I need to pay for this medical treatment and I won't be able to pay for essentials like food and accommodation for my family, and/or the treatment, without a deferral of my HECS repayment".

          That's a bit different to a request along the lines of "I've got my kid's orthodontic treatment on a payment plan, and I also have ~$9K of personal loan/credit card debt, and because the 'interest rate' is lower on HECS I'd love a HECS deferral for two years so that I can pay off the loan instead of making HECS repayments".

          Sadly I don't think a financial situation like the OP's is unique, but I do agree it doesn't hurt to ask the question - worst case scenario the ATO says the OP has to continue paying off her HECS debt, which is the same situation she's in now.

  • khomeini on 04/01/2021 - 23:58
    +2

    Firstly, sorry to see you're in such a tough position but be positive that you'll be out of it soon.

    Secondly please please please use this resource to help you budget. It's from ASIC and helped us when we first bought our home and had a single income.

    https://moneysmart.gov.au/budgeting/budget-planner

    It has a downloadable Excel sheet which will help you.

    The above will help you know what your current expenses are and from that you can further filter out what is necessary or not. I'd suggest removing all unnecessary expenses for the next 12 months (gym/payTV/phones/eatng out/coffees)… Some will say that's too much but I've seen people go without these in more dire straights/less income and get through.

    All the best but as others have said, you will be out of this in no time. :)

  • cashless on 05/01/2021 - 00:15
    +1

    Lots of (mostly) good advice on here, although there are always a few idiots on these forums trying to blame you for the situation you’re in.
    First of all, do not panic! It’s really not that bad and your numbers are not unusual, they’re actually quite common.
    Next, do take all the (free) advice you can get. Moneysmart website is a great place to start & there are other resources.
    Next up, you are not going to solve this overnight. It’s going to take a year, maybe 2 or 3, but if you have a plan you can stick to it & it will give you huge satisfaction as you watch the debt decrease.
    OzBargain, as well as being useful can also make you spend money on stuff you don’t need (that’s me), so just stick to the forums, not the deals;)
    Finally, live your life. Don’t hold a grudge against the ex. Take control & exorcise his memory. Make yours a model lifestyle so that, if anything, he’ll be jealous as hell about how successful your new life is. Move on and live as best you can.
    Finally, come back here in 2 years time and tell us how great you feel and what the key moments were for you when making the change.
    Seeking help has already started the pathway to solving the problem.

  • geekcohen on 05/01/2021 - 06:48
    +1

    Speak to https://www.creditmediation.com.au/ and see if they can help.

    • AussieDolphin on 05/01/2021 - 09:57
      +1

      Thank you. I've just had a look at the link. I'll be phoning them today.

      • morse on 05/01/2021 - 11:24
        +2

        Just be aware with this kind of company that they are a for profit business. So whilst using them could be very helpful, they are doing this to make money. There are non government not for profit organisations that do the same thing for free and are not looking to make a profit. See info in my post below.

        • Sean R on 06/01/2021 - 12:37
          +1

          I agree, morse. Putting aside their fee structure, the other problem with 'credit remediation' businesses is that even if they're technically correct when they claim your credit history won't be directly impacted, their attempts to reduce or waive debt with your banks/other lenders can mean that your credit worthiness in the eyes of those banks/lenders is shot.

          This isn't always a bad thing, particularly if you have significant debt that you won't be able to pay off in the foreseeable future, but if you're on $80K and have ~$9K in credit card/personal loan debt, it may not be the best move - particularly if you want to keep using the credit card or redrawing from a loan, for example.

          Your credit worthiness in your lender's eyes is damaged because you've essentially told them you can't afford the debts you took on with them, so obviously you are indicating to them that it's a risk for them to continue allowing you to obtain credit (they have an obligation to limit your financial over-commitment), or lend to you in future.

  • Eeples on 05/01/2021 - 07:30
    +2

    Goto finder and take out a $16000 24 month or so balance transfer credit card at 0% interest (usually first year fee of about $59 waived).

    Google: “finder balance transfer” and put in $16000 and find the best card for you. Spend at least 1 hour finding the best card for you.

    Balance transfer the money onto your existing credit card (it will go into a positive balance).

    Contact (by phone) your exisiting credit card to pay the excess into your bank account.

    Pay the new credit card off in 12 months (if you can) to avoid the $59 fee in the second year. Not just the minimum balance; pay $615/fortnight (1 year) or $309/fortnight (2 years). Set this is an auto payment on your payday.

    Stop paying extra superannuation (if you are doing that).

    Note: This can be a trap that some people fall in to if they don’t curtail their spending and just run up more credit card debt. So be warned.

    • AussieDolphin on 05/01/2021 - 10:06

      Hi, thank you. The debts I have are not on credit cards but I assume if I follow this option I'll be able to transfer most of the debt to it? I haven't done this before so I'll Google balance transfer cards now. Two to three years would be better.

      • Eeples on 05/01/2021 - 13:54
        +1

        No, it doesn't work that way.

        When you apply for a new credit card with a balance transfer you specify where to pay the balance transfer to. You choose your existing credit card, then after the transfer happens you ring the bank of your existing credit card by phone (make sure you contact by phone don't move it yourself; as some banks might charge you an auto fee) and ask for them to move the money into your bank account (which I assume you have with them).

        You can then pay your debt or big bills when they come up out of your bank account.

        Note: When applying for a balance transfer credit card you might be able to transfer the balance (on the new card) to more than one debt vehicle. That's up to you. But, to your existing credit card (even if it has no debt on it) makes things simpler.

        • Sean R on 06/01/2021 - 12:40
          +1

          I'd definitely be discussing with my bank prior to taking up this option.

          I think Citi may still be willing to cut you a cheque when you balance transfer, which is an option.

  • OzzyOzbourne on 05/01/2021 - 09:44
    +1

    Can I ask why you don't get child support from your ex? You should get around $600pm for a single child and $1000 for two,assuming they are under 18.
    My experience is that you raise it with the csa and they take the money direct from his wages based on his last tax return and number of nights he has the kids.

    • AussieDolphin on 05/01/2021 - 10:02

      I didn't want to disclose it but he has made it difficult. Court orders have been broken, emotional abuse and as my counsellor pointed out its a form of control. He ignored all CSA contact (phone and mail). They stuffed up the assessment also. This went on for months at the expense of my mental health. I think the small claims court might be a way forward. It would be a different matter if he didn't have the capacity to pay a cent. He does but chooses to be tight with money. Buys what he wants but leaves the children's expenses to me and he knows I won't let them go with out.

      • OzzyOzbourne on 05/01/2021 - 10:40
        +3

        Sorry to hear that, makes it tough.
        Just going off my experience again, the CSA just took the money based off the primary carer's claim. No court order, no need to agree (non-primary carer could have filed a disagreement, but didn't).
        CSA has incredible powers like the ATO to recover non-paid support including taking out of tax returns, blocking overseas travel and taking it from overseas income.
        Not sure why the system doesn't seem to have worked for you in this case. It would make it a lot easier to budget with a fixed support payment each month instead of trying to claim a portion of costs.

        • AussieDolphin on 05/01/2021 - 11:04

          Most definitely. This is why I have to get out the debt with what income I have from my job. Getting child support would have lightened the burden though.

        • Sean R on 06/01/2021 - 12:42
          +1

          If CSA is unaware of how much the partner is earning (eg. false declarations, failure to lodge tax returns), then that may explain why the assessment was a couple of minties per month.

          In one case, someone earning around $100K was paying child support based on a $50K salary because they hadn't lodged tax returns in 5+ years.

  • Yiddos on 05/01/2021 - 10:00
    +2

    Many helpful (and not so helpful) suggestions in here, so I'm not going to add to your predicament.

    Just wanting to say that you are not alone in this and there will always be help in some form or another. Hang in there!

  • DiscoJango on 05/01/2021 - 10:16
    +2

    Read the barefoot investor.

    • AussieDolphin on 05/01/2021 - 10:17

      I have the book and I've started reading it.

      • DiscoJango on 05/01/2021 - 10:23
        +1

        Good start, its pretty basic, and much of it is "common sense", but you just need to be told it, to reiterate how effective it all is.

        If the generic national debt line cant/wont help, maybe a quick chat with your bank about a debt consolidation loan, as interests rates are pretty low at the moment.

  • Akya on 05/01/2021 - 11:14
    +1

    Look into the My Millenial Money podcast and their Glen James Spending Plan (code m3x for a $20 discount). They provide really good life-changing general financial advice. Another good financial podcast I've found is She's On The Money. Good luck :)

    Edit: There's also a My Millenial Money community on Facebook to ask questions or discuss the podcast and finances.

  • morse on 05/01/2021 - 11:20
    +3

    I'm not sure if anyone has suggested this, but some non government organisations have financial counsellors who can go through everything with you and set up a plan. They can possibly help you get all your debts rolled into one low or no interest loan. They might also be able to help you navigate the issues with not getting child support from the kids dad. I think calling the National Debt Hotline will often result in a referral to a financial counsellor. It's weird that you've been cut off every time you call, as this really would be a good place to start.

    Here are a couple of organisations in the NT that do this:
    https://www.catholiccarent.org.au/our-service/financial-well…
    https://somerville.org.au/our-services/financial-counselling…

    The other thing I would say is to maximise your income as much as possible (of course easier said than done), if you can't work more hours, if there is anyway to get a higher paying job, it's just going to make it easier.

    • AussieDolphin on 05/01/2021 - 11:36
      +1

      Hi, thanks for your reply. Due to my employment terms and conditions I am not allowed to work an additional job. This is because my current job is 50 + hours most weeks however, it requires weekend night away twice a year. I think this is why. I have contacted Somerville and have an appointment with them next week.

      • morse on 05/01/2021 - 13:42
        +2

        Glad to hear you've got an appointment - hopefully it goes well. Your work sounds intense - 50hrs/week and looking after a kid is a lot. Good luck with the debt.

        • AussieDolphin on 05/01/2021 - 14:35

          Thank you. Wish you the best for this year.

  • happyhammer on 05/01/2021 - 11:46
    +2

    This may have already been done/suggested. But create a spreadsheet of all outgoings each month - this should detail everything, from big things like rent and car to little things like groceries and haircuts etc. Once you see absolutely everything you spend on you will see what is needed and what isn't. Also rely on your family/community/gumtree for items rather than pay full price. I grew up in a fairly financially tight family and was aware from a young age - your kids will understand if they cant have the latest clothes, toys etc and will likely make them financially savvy later in life.

    Barefoot gets credit/stick depending on who you listen to, but one advice I like is to pay for things in cash not cards and take out an allowance each week - it makes you realise exactly how much you are spending.

    Good luck! Once you get out of it, you will have lessons for life and likely avoid the same situation again.

    • AussieDolphin on 05/01/2021 - 15:39
      +1

      Another great suggestion. A really helpful member sent me a spreadsheet that I can edit . I'm no good at using EXCEL so thankful to give this a go.

      • happyhammer on 06/01/2021 - 08:52
        +2

        No problem. The good thing about the spreadsheet, is that you can see how much everything costs you in terms of daily, weekly, monthly, yearly costs and concentrate on the highest $ savings. For example people always say to stop Netflix, when it might be important and costs $100-150 a year, but you could save a lot more by switching car/health insurances/utilities or not eating/drinking out.

        • Sean R on 06/01/2021 - 18:26
          +2

          For example people always say to stop Netflix, when it might be important and costs $100-150 a year, but you could save a lot more by switching car/health insurances/utilities or not eating/drinking out.

          This is great advice.

          Counting the number of coffees has its place, but bigger wins are going to have more impact. Making sure you get the best deal on car insurance, utilities, mobile phone/internet and so forth are often low-hanging fruit where you can cut costs just by switching providers.

  • Kurtn on 05/01/2021 - 12:03
    +2

    Hey OP, I jut signed up to Ozbargains after a decade of lurking with your post. I can feel how tough things are right now for you given I am a parent myself. Also sorry that you had to endure a bunch of comments on just budget better, the problem is your lifestyle etc. With children, the cup noodles only attitude is way easier said then done.

    So I left a well paying corporate job in April of 2020, and we had a 60% drop in household income, so here is a list of things I did to re-orient our finances, hopefully you can do some of these too to reduce your monthly out-goings:

    1. Reduce days of childcare / after school care by putting the kids in with family or friend houses a couple of hours / days a week while you need to work.
    2. Have extra leave at work? Why not take every 10th day off and look after your children yourself.
    3. Call up medical insurance and get a premium reduction due to income changes
    4. Call up the council for deferral of rates
    5. Check with energy suppliers if they can do anything
    6. If you have family that can gurantee a portion of your debt and have good servicability, try get a loan from them to pay of a portion of the debt. The current interest rates of c. 2% against a home loan is probably way better than most debt you have.
    7. Get kids in gardening / growing if they have the temperament. It's a free activity and you can use a community garden or a styrofoam box from the veg market to grow some plants on your garden (great time killer for a few weeks)

    Just working more hours is probably not the best solution. Might like to think about how you use that extra energy to train / learn a new skill and either apply for a role change at your company or get a new job that pays 10-20K more (if your in technology / general business or digital roles, you can audit them for free using Coursera or any other online courseware platform).

  • peterw1 on 05/01/2021 - 15:12
    +2

    Can I suggest while you are doing all this you send a letter of complaint about your situation to the complaints dept at the CSA: https://www.servicesaustralia.gov.au/individuals/contact-us/…. You mentioned they have erred. A letter to them will provide a speedier response and possible solutions to get your ex to pay up. Could I also suggest you send a letter to Senator the Hon Anne Ruston Minister for Families and Social Services, email: [email protected], outlining your circumstance and issues. I feel doing both these things will bring some assistance. Goodluck.

    • AussieDolphin on 05/01/2021 - 15:31

      I'll do that as well. That's tonight's job. Thank you.

  • T1OOO on 05/01/2021 - 15:28
    +1

    Ur not that bad in debt actually.

    I would suggest all you need is a 0% credit card balance transfer for 24 months to get out from under it all.

    If u want long term get Citi backs upto 5 years at 5.9%

    Just chip away at it. Even 1 or 2 grand every 3 months adds up in the end.

  • [Deactivated] on 05/01/2021 - 17:09
    +2

    https://stepuploan.org.au

    • AussieDolphin on 05/01/2021 - 18:16

      Thank you. It looks like I can get between $800 to $3000 interest free.

      • Sean R on 06/01/2021 - 07:06
        +1

        StepUP loans are designed for people on low incomes who can't access credit from a bank.

        The loan can't be used for debt consolidation, and my understanding is they do not give you cash - instead, they make a payment directly to the supplier of whatever essential goods/services you need help with (eg. you urgently need some house repairs, they pay the invoice for the repairs, and you then repay the loan amount to NAB, who partners with StepUP).

        Reducing interest by consolidating loans etc is helpful, but my reading of your posts is that your problem is probably more around budgeting/spending. If so, that is the #1 thing you need to rectify.

        If you're spending more than you earn then you're never going to get out of the debt trap. There have been some good suggestions re: how to track and categorise your spending so that you can actually get a clear picture of your financial situation.

  • superuser on 05/01/2021 - 17:29
    -2

    Marry someone who need australia citizenship, the price is around 100k, ez money

    • MontyMacaw on 05/01/2021 - 17:31
      +1

      Not even remotely funny as I am sure you intended.

    • AussieDolphin on 05/01/2021 - 18:14

      No thank you. Besides I'm sure that's illegal.

  • TheWetHusky on 05/01/2021 - 18:17

    In your situation I would seriously consider accessing superannuation early to pay off debt. Other than this and the balance transfer suggestion, there are definitely charities around that could help.

    • AussieDolphin on 05/01/2021 - 18:20

      Thanks, I checked and to access the maximum amount of $10k I need to be receiving government assistance for 26 weeks.

    • Vote for Pedro on 06/01/2021 - 14:53
      +1

      This is terrible advice. Not only will it impact you short term (lenders are now also asking if you accessed it) but long term it will be devastating to your retirement savings.

  • magster on 05/01/2021 - 18:26
    +1

    I don’t have any good advise but would like to tell you that you are a very strong woman and an awesome mum. Your children are very lucky to have you.
    I wish you all the best. I hope your ex ends up paying up half of the children’s expenses and proper child support, even though you say it’s not the main purpose of your post. Sounds like he’s playing the system or possibly even defrauding the ATO, which I hope he gets served for. I’m sorry he’s putting you through so much, but you can get though this.

    • AussieDolphin on 05/01/2021 - 18:29

      Bless you. Thank you for your kind reply.

  • wau2 on 05/01/2021 - 18:53
    +1

    Download your bank statement / credit card and put green on all essentials (you will not live without it)
    Red on non essentials (nice to have)
    And yellow on 50/50 (kinda essential but can be downgraded to something cheaper)

    Ie
    Yellow: food (no more avocado! Or cukes)
    Internet
    Mobile
    School fees?

    Red: coffee, toys

    I did that once I was unemployed and have moved from a 6k monthly income to 2k.

  • Hunter14 on 05/01/2021 - 20:06
    +1

    Firstly, sorry to hear about your situation.

    If it was me, I would type out all the debt into an Excel spreadsheet and order them by the highest interest rate.

    Start by aggressively paying off the debt with the highest interest. Alternatively, some say it’s psychologically better to pay off any smaller debt to begin with. I’d go for the highest interest though.

    Also, I would rather face each debt rather than consolidating them. I think consolidating the debt will give your mind the false sense of illusion that somehow the debt is smaller. If you want to get out of this rut, I think acceptance is the first key. Knocking down each debt barrier also gives you a purpose and motivation to knock out the next one.

    After all the debt is gone, I’d look to educate yourself on how to invest so in the future your money works for you.

    All the best.

    • AussieDolphin on 05/01/2021 - 20:55

      Thanks, a very helpful member sent me a spreadsheet to work with.

  • G4life on 05/01/2021 - 20:45
    +1

    Consolidate all your debt into one balance transfer credit card. There are a few that offer more then 20 months. If you intend on paying off the purchases every month the interest rate shouldn’t matter.

    • AussieDolphin on 05/01/2021 - 20:54

      Hi, I'm exploring this option as well. Trying to find one that doesn't have a killer interest rate.

      • jellykingdom on 05/01/2021 - 21:00
        +3

        The interest rate won't matter because it's a balance transfer. You should only be needing to pay minimum amount per month, then it'll get you maybe 20mo breathing space. However you might not actually get approved for it

      • G4life on 05/01/2021 - 21:19

        Just stay away from the ones that say no interest free days while there is a balance transfer.

        • Sean R on 06/01/2021 - 06:52
          +1

          The OP should never use the balance transfer card to make purchases, and instead just take advantage of the interest free period to pay off whatever debt she can transfer onto the card. If she does this, the interest-free days are irrelevant because she's not making any purchases using the card.

          If the OP goes down the balance transfer route, she should just look for the lowest total cost (establishment fee/annual fees) across whatever appropriate interest free period (eg. 20-24 months interest free).

  • serpserpserp on 05/01/2021 - 21:05
    +1

    OP: I don't know if this has been suggested as I haven't read the whole thread. However are most of your debts with one bank? If so you can consolidate those debts into one if you call their hardship area and talk about your situation. They should be able to help you consolidate your debts into something that is reasonable enough for you to pay off. Banks have to be able to manage people in financial struggle in a more than reasonable manner (thank the Royal Commission for that) so don't be scared to call them to see what you can do.

    • AussieDolphin on 06/01/2021 - 00:24

      Just the personal loan is with the bank. The 9thrr big debt is the orthodontist. $3k is a result of travelling overseas when my father was very sick. He passed away shortly after I returned to Australia. The rest is from providing all children's expenses (not groceries) everything else.

      • serpserpserp on 06/01/2021 - 08:57
        +1

        No credit card at all?

        I guess with the 3rd party debt there are two unpopular options you can take. The first is calling the ortho or whoever and telling them you are having issues paying and need the terms relaxed, this might strain the relationship with that business so make sure you don't have a whole bunch of work that needs to still be done. The next is the most unpopular, don't pay a cent until it hits a debt collector and still don't pay until you get to a point where they are willing to take a discount to get paid. This will destroy the relationship with the ortho and will affect your credit score potentially. But it also means you can defer the debt for a long time (not without debt collector stress though!) Where hopefully you'll be in a position to pay off the debt.

        With the bank loan, best to get in touch with the bank as suggested before. Good luck!

  • jellykingdom on 05/01/2021 - 21:12
    +1

    I may speak for other people here when I say I'm still a bit confused about the incoming and outgoings of your money…

    You must have around $5.5k coming in per month total

    Minus: rent, car loan, petrol, insurance, phone, kids clothes, etc. HECS is only $500pm so that's barely even worth considering. Car must surely be nearly paid off, you said it was only worth $7k. Even if you're spending 60% of that, you'll have $2k per month left to pay down your debts

    I don't really understand it where all the money is going, and I notice you aren't doing a lot of elaborating. There are a lot of people suggesting you budget better

    • AussieDolphin on 06/01/2021 - 00:12
      +1

      Hi, after all deductions from work I clear $2,020 every fortnight. From C/link I receive $300 for carers payment and FTB. I didn't have a budget to start with. I've elaborated as to why I'm in this predicament. I don't drink, smoke, take drugs or gamble. I pay rent, power, after school care, groceries, insurance, internet, tutoring, orthodontist bills etc.

  • groot on 05/01/2021 - 21:39
    +2

    Do not rush. Just start small to clear your debt. You earn good.
    As other suggested, read Barefoot Investor. it does wonders if you are disciplined.

  • Invisiblefreak on 05/01/2021 - 22:15
    +1

    OP, after this, you will feel empowered and confident that you’ve managed to get through this; and your kids would have learned how to be financially savvy and built resilience. These life lessons will only make you all stronger and better.

    I was the kid where my mum went through a similar predicament (no child support, don’t even have a lawyer, walked away with nothing at all) but I’m so proud of what I’ve achieved now. It does get better. Hang in there!

  • Kylel39 on 05/01/2021 - 22:16
    +2

    I'm not offering much in the way of help unfortunately but just wanted to say well done on reaching out, it's a massive/great first step for you and your family.

    There will be plenty of unhelpful advice/comments on here but there's also plenty of extremely helpful and good ones - have a read of those, ignore the others and good luck moving forward.

  • TheBird on 05/01/2021 - 23:36
    +1

    I'm surprised no one has asked. Have you been with your employer long? Are you a good performer? The reason I ask is some good employers will help valuable employees. Talk to them and they may even be willing to help with a decent sized interest free loan.

    Getting rid of any high interest (from what I could tell, it's only the $6k personal loan?) should be the highest priority.

    Another thing that may be a little left field, but think of selling random crap you don't need around the house. It typically won't generate a lot of money, but something is better than nothing and it may help ground the children about the need to be tighter with money.

    It's almost preachy to say but it's not what I intend, but… learn skills to compartmentalise. That way you can learn to stress less. It doesn't sound like you're in a position where you can immediately solve the issue. Losing sleep will probably hurt your ability to think clearly and might affect your work performance.

    Don't cut your expenses too close to the bone. Eat properly and exercise. You need to take care of yourself. There's no point in getting out of the hole to put yourself in another hole in a different part of your life.

    Be prepared to do things you never thought you'd have to resort to. I'm sure you're already there being a parent, but I feel it's a worthwhile mention.

    Everything else (reduce costs, increase income) I can suggest has already been suggested.

    One last thing. Once you're clear of this, put in a plan of action to ensure you never get in this position again. No one intends to get in a jam like this, but they do say, failing to plan is planning to fail.

    Good luck.

    • AussieDolphin on 06/01/2021 - 00:17

      Thanks for your advice. I've been with my employer 2 years. They don't offer any loans.

  • cheaptech20 on 05/01/2021 - 23:42
    +3

    As a number of people have said, it comes down to spending smarter at every level. Live below your means.

    I'd estimate you have $1k a week. On that you have essentials like rent, utilities and food - but how much is left? Unless it's an emergency (a real one, not 'needing' clothes ir shoes for a wedding) - that all goes to pay down debt.

    E.g.
    1. Interrogate your last months bills and expenses. How much of that could you have gone without? Smaller items and expenses also snowball. e.g. do you have Netflix, Stan and Disney? Maybe you should cut down to one?
    2. Groceries buy generic brands rather than brand name, buy bulk on cheaper grains like rice when on sale. Scrutinise every item you buy, more than likely it will be uncomfortable as you may miss the brand names. Also always make a list of critical items and stick to it. Could be a substantial saving if you haven't been disciplined to date.
    3. Take a "poor mans" attitude to everything. No ubers, public transport or walk. No eating out or coffees, byo only. Cook basic (carrots, potatoes, rice, eggs) and not too fancy (truffle, chia seeds, kale).

    I think with some strength and will, you can get there. Just need to change your attitude and realise there are always way to cut costs further.

    • AussieDolphin on 05/01/2021 - 23:58

      Thanks, after all deductions I clear $2,020 from work every fortnight.

      • Laurana on 06/01/2021 - 00:57
        +3

        In that case, start simple.

        Per fortnight? How much is:

        Rent
        Utilities
        Phone/media
        Fuel
        Car insurance/rego
        Groceries
        Other absolute necessities (child care?)

        Cover those, set aside half of whatever is left to go towards the debt (and later savings) and leave the other half on your bank account. Anything else is not really a “necessity”. So before you spend the money, remind yourself that the purchase can wait. Instead write down whatever you wanted to buy on a spreadsheet or notebook or word doc and the key is to not spend that money for a month. Write everything down. At the end of the month see which one of those expenses you actually need and which ones you can afford out of that half of the money that it’s still on your bank account.

        Example:
        Netflix $15
        New shoes $40
        More makeup $40
        Lunch at work $20
        Son birthday present $40
        Son birthday party $100
        Car wash $30

        If you only have $200 left then decide of the above which ones can be reduced, which ones can be removed and which ones can be delayed. Kids are very resilient. They’ll be okay without a bought present or a party or with old shoes for a couple of months. The key is to live within your means.

        I grew up super poor, with a single mom and I am grateful for it. If nothing it just made me appreciate her more because I could understand her struggles. I would have never wanted a toy when I knew buying it would have stressed my mom out. Neither do your kids. You have a very tough job and you should feel super proud. Look after yourself and remember that the kids will be okay.

  • juventino on 06/01/2021 - 03:41
    +1

    Cash out all your annual leave if you have some left

  • Kenji2014 on 06/01/2021 - 09:58
    +3

    Apart from all the good tips others have mentioned, another one for you to consider is to decluster your house and convert any unused/unneccessary items to cash. I routinely walk around my house, check my closets and sell things like an old electronics, books rarely used furniture…on Facebook or Gumtree. That does two things. The house is less clogged up with stuff and you have a bit of cash to spend on neccessities. Good luck!

  • BargnHuntr on 06/01/2021 - 10:17
    +2

    I m not in your shoes but I can only suggest which most have is Budgeting, see where you can save most. I keep on trying to look into options for myself how we can save on things we spend most on. Small savings can help too. I wont advice you to get Credit Card, you will be more in debt, otherwise it would have helped you.

    The most important thing is you are paying your previous debts so saving is bit hard but surviving everyday is most important. Maybe after 3years you will start to save but see if any of these will help you:

    Such as do you need both home internet as well as mobile internet, you can just survive by having mobile internet for $25-$35 pm you can easily survive or slow down your internet connection. Use public Wifi if you are at mall or work's wifi if possible.
    Do you have netflix/prime etc? Do you need it? Less you watch, less electricity and internet you will use.
    Save on water and electricity whenever/wherever you can
    Sell Unwanted items in the house on FB and buy second hand stuff if you have to such as laptop, phone etc and don't forget to negotiate
    Shop Cheap: Kmart, Best & Less etc
    Use local transport but time is important for you, which might save you on parking fee, fuel, wear & tear, maybe fines and accidents.
    Grocery shopping: buy discounted gift cards and use hand basket buy only fits in it so you dont buy more than required or buy only discounted items. Collect reward points.
    Make your own coffee and Eat out once a week that too with your child. After working 50hrs a week you are not earning enough then.

    Downsize or Move close to workplace where you dont have to drive or both.

    All this might save you around $200-$300 per month or more. Do it for 6months and revise.

    The last solution is to look for new job with better pay but has risk of probation period.

  • maxyzee on 06/01/2021 - 11:21
    +1

    Hi OP

    Sorry to hear about your situation. Hopefully your doing OK mentally. I don’t know if this has been suggested here already or by your financial counsellor but you might want to think about entering a debt agreement.

    There are a whole myriad of organisations that can setup a debt agreement and what they will do is propose a payment plan with your creditors which can be a 3 year or 5 year plan. These plans should equate to less than what your total debt is, so something like 70-80 cents on the dollar if the creditors agree.

    You’ll need to bear in mind though that entering a debt agreement will impact your credit rating because the agreement is recorded on a national register and if you want to borrow in the future this might have an impact.

    Also the administrator that prepares the plan will have their own fees for setting up the agreement and plan so you’ll need to make sure their fees are reasonable. Your financial counsellor might have a recommendation of who might be a good one to go with.

    Anyway good luck OP hopefully your situation improves

    • AussieDolphin on 06/01/2021 - 15:21

      Thanks a lot. I have an appointment next week to see a financial counsellor. I've asked to be put on the waiting list in case they have any no shows so I can get in sooner. After the appointment I hope to be able to provide an update for those that have reached out and shared wonderful ideas to help me get back on track.

  • RowanRoe on 06/01/2021 - 13:17
    +2

    Firstly, I just want you to know that you're an incredible mother, who has clearly been through some difficult challenges (financial and emotional), but what you're sharing is brave and I'm sure there are many people reading this post and threads who are probably going through the same thing.

    My #1 advice would be to reach out to a financial counsellor. They're not only skilled in what they do, but they also have strong relationships with all financial institutions, and will do a great deal in helping you out and giving you some fantastic advice. https://www.financialcounsellingaustralia.org.au/

    Good luck on this journey - I know it can be daunting, but know that there will be light at the end of the tunnel.

    • AussieDolphin on 06/01/2021 - 15:23
      +1

      Thank you, the earliest I can see a financial counsellor is next week. Hopefully sooner if they get a cancellation. I think I will feel better if I have some sort of plan and end date to clearing the debt.

  • seraphim2017 on 06/01/2021 - 16:30
    +1

    Not financial advice!

    For the next month, write down on an excel sheet (it will be boring)

    EVERYTHING you spend. The dollar here, the 50c there, the bills, the shopping, the car/home insurance. EVERY outgoing.

    You will see what are luxuries and what are necessities. Shelter, food, bills. An iphone 12 max pro super deluxe xl 10tb , no, a functional phone, yes. and so on. Not forever, just until you have the foundation laid. The kids will be there for you, even if they moan/want like kids do, they won't die from not having the latest and every gadget. The following month, before you spend, think if it's a luxury or a necessity and if you can avoid those spends, you will be surprised how much you reduce your footprint financially. See if the cost of balloon payment then selling vehicle and downgrading leaves you better off financially than leasing maybe?

    Work out your daily/weekly/fortnightly/monthly/annual expenses so you don't get surprised by insurances, car services, dental trips etc. Plan for them. i.e council tax is quarterly, but that extra $500 will derail you if you don't plan for $166.67 every month to ensure it is covered and not on further credit.

    It works for me, you're not on a low income even with the kids, compared to some, but it can quickly get out of hand and become overwhelming, so help is available as links on this thread show. Planning prevents much of this. I still do this even now and I know where the money comes in and goes out.

    It's terrible your ex appears to be avoiding paying for their own children? I guess it's complicated if (he?) has the kids half the time, then large expenses should be at least split and I suppose the difference in care 51 vs 49 compared to 100% care makes a difference, but I've never looked at it. I can't imagine ever leaving mine without a roof/food/medical costs, anything else they could need, no matter what, they're mine, I mean, who does that! I'd rather go without myself, as I'm sure most people would/do.

    Good luck with it all, take a breath and plan, and stick to it, and then..keep sticking to it. Pay off debts from highest to lowest cost, consolidate if it's possible/appropriate, save as and when you can, and downsize expectations in the hope that you can upsize when finances permit, whilst retaining the good financial habits.

  • miles05 on 06/01/2021 - 17:35
    +1

    Saving is pretty simple, if money in is more than money out, you save, if not, you go into debt. My advice is to try and focus on reducing your spending. Its very easy to become accustomed to living a certain lifestyle, but you'd be surprised as to how little you can live off. Some pretty simple things you can do:
    -blanket ban on all takeaway/eating out, always prepare lunches for yourself and your kid. I can make a chickpea and lentil curry for less than $5 and that is my lunches for the week sorted
    -blanket ban on coffee, make your own
    -blanket ban on alcohol
    -find fun free activities for you and your child ie park/beach/hike in nature, or get your child involved in a local sporting club where the $/hour ratio works out low (for example, local footy team, might need to pay a few hundred upfront but if it entertains your child for 2x trainings and a game each week its definitely worth it)
    -reach out to your friends who you know earn less than you and spend time with them, look at how they spend their money

    Remember that when you have debt, anything you are spending is actually costing you more than what it costs as you are paying interest on it to repay your debts. This is going to be a transition, you will literally have to change your lifestyle, so don't expect it to be easy, or happen over night. Get in it for the long run and once you will have good spending habits for life!

  • brad1-8tsi on 07/01/2021 - 19:53
    +1

    To start, well done for at least starting to try and climb out of the hole.

    I haven't read through the thread so maybe these questions have been asked.

    1) Why doesn't the children's father pay child support? Have you discussed the issue with Family Services? I won't make any other suggestions because I assume you've already asked for half the cost of the braces, etc and he's just being an ****.

    2) Your SalSac lease can probably be extended to delay paying the balloon but I know there was no tax advantage in mine beyond the 5 year point. Are you sure you are making the best use of the novated lease? Buying fuel using tax free money, etc? Is there much money in the "buffer" account? I had $2k in mine when the lease ended.

    Unfortunately you will have to shave expenses to the bone and that includes the kids having to make sacrifices for a while. Make sure they know their dad is a deadbeat.

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