Financial Hell - Please help!

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Q. I could really do with some help. I have been trying to sort my finances out for the last 5 years but spending a lot of energy standing still.

After ten years of marriage my wife decided she didn’t want to be married anymore.

My ex-wife retained the majority of the matrimonial assets such as our flat and car. I accumulated a debt of $20k from legal bills etc as it took a long time to arrive at a property settlement. The debt is sitting on five credit cards which I planned to close and consolidate into a personal loan as soon as possible.

However, after the five years I still can not obtain a personal loan. I naturally had to find a new place to live and I have had three changes in job in the last three years due to factors such as contract work.

I now have almost completed 3 months in a permanent on-going position with a university. I have cut my personal budget back to the absolute bare minimum and kept up the interest payments on the credit cards but I do not have perfectly clean bills.

I have tried banks, credit unions etc but with no success in terms of debt consolidation. I have been advised with a salary of $53,500 that I would have no problem servicing a loan but can only apply for unsecured loans as I have no security.

The debt is starting to become more difficult to manage. Can you suggest or offer any other options, strategies or suggestions besides a debt agreement or bankruptcy?.

Josie’s answer: You really have been through a lot in recent years. It appears that your ex-wife received the goldmine and you got the shaft.

I am also tired of hearing stories of people struggling to get out of debt because of lawyer fees. They seem to be masters at playing with people’s emotions during difficult divorce and property settlement proceedings.

Nevertheless, you are stuck with the debt and obviously have been trying very hard to get on top of it. As you are aware, banks like to see a history of consistent income before they approve loans (they also like to
give you credit cards because they are more profitable to them!).

To be blunt, and as you are fully aware, there is no magic formula and I provide the following thoughts on your situation:-

You mentioned you have cut your personal budget back to the absolute bare minimum. I am assuming you have done a detailed i.e. you have put pen to paper and have analysed all your spending with a ‘fine tooth comb’.

This job must be done on a regular basis.

You need to separate needs e.g. food and shelter, and wants e.g entertainment, takeaways. From my experience, spending money can also be an emotional thing, in other words, sometimes we spend because it makes us feel better (perhaps it’s a female thing!).

A way around this is to ‘stop, breathe and think’ before you spend any money.

A mind game that works for me is to annualize all spending e.g. you might spend $10 per week on lunches at work = $500+ per year and suddenly all these small amounts seem very expensive.

I also think about how many hours I have to work to pay for the item e.g. let’s say your net hourly rate is $25 per hour, and you want to spend $100 you have to work 4 hours (half a day) just to fund it.

I get tired just thinking about that and it loses it lustre. Also, look at everything you own. Can you sell some of this ‘stuff’ on ebay? (I know it sounds desperate, but every little bit helps).

You appear to be trying very hard to consolidate your credit card debit and roll over this debt into a personal loan. I suspect you might have a bad credit history as they usually check with organisations such as Baycorp (you can contact them to get a copy of your history).

Please don’t give up and keep shopping around. Have you explored www.ratecity.com.au? This website helps you search for the best deal available for savings accounts, secured and unsecured personal loans,
credit cards etc and you can apply on line.

When you have been in your current job for a reasonable period of time (6-12 months), they might be more sympathetic. Please ensure you
do your homework in relation to the annual fees and interest rates on your credit cards.

If the banks have charged you those horrid late payment fees, which are usually $25-$50,Choice are on the bandwagon.

They have suggested we contact our bank and tell them that they are illegal and unfair and indicated that we should attempt to claim back up to three years.

The weight of this debt seems to be consuming you at the moment and hopefully your new job will ease some of the pain.

If you are struggling to repay on time, make sure you contact the financial institutions as they might be sympathetic.

As you know bankruptcy should be a last resort, as it has very serious consequences for the rest of your life. Every time you fill out a loan application you will need to reveal that you were once a bankrupt. It is just not worth it.

If you need professional help, I would suggest you contact a financial counsellor, who usually provide a free service (not a financial planner as they can be quite expensive).

If you go to http://www.afccra.org you should be able to source a financial counsellor in your area. They can help with negotiating with your financial institution and explore alternatives to bankruptcy.

Your situation is not unique and sadly there are far too many people in the same situation.

Unfortunately, most of us don’t have a rich uncle to help out during these difficult times.

I would imagine that most people reading this answer, would be thinking that the most obvious way to overcome this problem would be to source a second or third job.

Without know your existing family and work commitments I appreciate this might be difficult.

Good luck and I wish you lots of success for the future. Wish I could wave a magic wand and fix it instantly for you.

Josie Kay

Don’t forget that the above information is general in nature and not specific to your goals and objectives. It is recommended that you seek personal financial advice specific to your needs.

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