Im struggling, need some advice!

[DanielN1989]

Hi All,

My name is Daniel, im 23 and have been in business for 6 years, offering my services within the groundworks and construction industry.

I went self employed at 17 after being made redundant, and started with an old car on hp and 100 quid in the bank.

over the intervening years obviously it has been difficult, when i couldnt find work i had to live on credit cards etc so i have accrued around 25k of debt.

Keeping up the payments month on month is such a struggle i cant earn enough money quick enough, i have lots of work on at the moment and tommorow will be 20th day without a day off.

I have never missed a payment on anything. Ever. but keeping up with credit cards, hp, insurances, tax, and all the other general stuff needed to live a very basic life is absolutely grueling, i cant afford to start any savings of any kind, buying a house is looming

So what do i do? I am the point now, that if i was debt free i would be flying, i have big companies requesting my services and offering me multiple tenders on a daily basis some worth up to 150k but i have to turn them away as i cant afford the H&S training in order to undertake them.

Dont want to blow my own trumpet or anything, but i, for my age, am very good at my job, ive had to get good, so its not the service i am offering that is bad it is my finances that are ridiculous

I feel that 5/6 years unbelievably hard graft and sacrifice of my social life is long enough to see if i can do it or not. What do you guys think?

Thanks in advance from a a very boring, sick to death of the daily slog in the rain, 23 year old.

 

[lynxus]

http://financialplan.about.com/od/creditdebtmanagement/qt/how-to-get-out-of-debt.htm

Thats a clever way if you have a lot of cards...

http://www.moneyexpert.com/money/debt/home.aspx
Maybe look into an IVA? or similar?
( Actually, IVA is probably not a good option , but handy as a VERY LAST resort.. )

Anyway, Im sure one or two of the more fiscally minded people will know a better way

 

[Big Pete]

Hi All,

My name is Daniel, im 23 and have been in business for 6 years, offering my services within the groundworks and construction industry.

I went self employed at 17 after being made redundant, and started with an old car on hp and 100 quid in the bank.

over the intervening years obviously it has been difficult, when i couldnt find work i had to live on credit cards etc so i have accrued around 25k of debt.

Keeping up the payments month on month is such a struggle i cant earn enough money quick enough, i have lots of work on at the moment and tommorow will be 20th day without a day off.

I have never missed a payment on anything. Ever. but keeping up with credit cards, hp, insurances, tax, and all the other general stuff needed to live a very basic life is absolutely grueling, i cant afford to start any savings of any kind, buying a house is looming

So what do i do? I am the point now, that if i was debt free i would be flying, i have big companies requesting my services and offering me multiple tenders on a daily basis some worth up to 150k but i have to turn them away as i cant afford the H&S training in order to undertake them.

Dont want to blow my own trumpet or anything, but i, for my age, am very good at my job, ive had to get good, so its not the service i am offering that is bad it is my finances that are ridiculous

I feel that 5/6 years unbelievably hard graft and sacrifice of my social life is long enough to see if i can do it or not. What do you guys think?

Thanks in advance from a a very boring, sick to death of the daily slog in the rain, 23 year old.

Ok , maybe try and get a long term loan to consolidate all the 25k in one long term set up.. that then gives you a manageable set outgoing single cost and fingers crossed then you can get the business going , rather than delving on with all the hassles and extra interest charges etc etc.

 

[DanielN1989]

Thankyou for the replies, i shall have a look into the consolidation loan idea, i only have two cards that amount to around 7k

so 7k on cards
9k vehicle hp
7.5k business loan
6k over draft

That comes to 29.5k call it 30k with a small hp that ill finish paying in a few months

sorry about the 25k figure i forgot about my overdraft

cheers

 

[lynxus]

Thankyou for the replies, i shall have a look into the consolidation loan idea, i only have two cards that amount to around 7k

so 7k on cards
9k vehicle hp
7.5k business loan
6k over draft

cheers

Ah then yeah a loan may be a better option.

Dont rush into a loan though. REALLY! hunt about because im fairly sure theres ways to get quite low interest loans compared to the rubbish banks offer.

 

[lynxus]

Long shot...

Maybe ask for £30k investment into your business?

 

[DanielN1989]

Cheers, i have in the past on two occasions decided to stop trading and go for bankruptcy, but i couldnt bring myself to do it.

Any ideas on where i should look for such loans?

 

[DanielN1989]

Ok, can i have 30k please?

 

[tony84]

Im not really able to help as such on the front your looking.

Although, you say one HP is due to finish soon - if i was able to id start putting that towards the next highest interest baring debt which allowed me to overpay without penalty - if that makes sense?
Maybe see if any of your credit cards have low interest balance transfer offers to get the rates down?

The bit i can help with is....
Someone has mentioned an IVA, with you mentioning you were looking at a mortgage if you have an IVA it will affect you for a long time in the sense of going for a mortgage - so i really would make that a last resort if possible.

Do you live at home with parents? If not is it possible? Can you get a lodger if not? The lower your outgoings are, the quicker you can get the debts paid off.

Its good to see you have a good business behind you though at such a young age.

 

[DanielN1989]

Hello,

Good idea, so the £100.00 im paying on this hp that is due to finish, when that is done, use the £100.00 that im already accustomed to paying, to pay something else off? Good idea i shall do that.

The credit cards where on minimum payments for a long time the total min for both was around 150.00 i now pay 300.00, every little helps right?

The main thing i think that cripples me is my unreliable pickup, every month, something on the damn things either breaks, falls off, or blows up, its a joke, ive had it two years, i sent it back to the people i bought it off no less than 12 times in one month with major problems, i have since had it bits with my old man 10+ times.....that many new parts its a different car now id love to get out of the hp and swap

yea the IVA or bankruptcy is a no no for me, i live at home with my parents, that are even more skint than me, so hopefully in a few years i want to buy a place.

yea business is good, the things i could get into if it werent for the bloody debt!

 

[DanielN1989]

what would the interest be on a standard consolidation loan?

 

[tony84]

Hello,

Good idea, so the £100.00 im paying on this hp that is due to finish, when that is done, use the £100.00 that im already accustomed to paying, to pay something else off?

Exactly, but thats only doable for a certain length of time if your running yourself to the ground.

Alternatively if you think the money would be better spend on H&S courses then maybe use it for that?

For me though whilst your busy i would be conentrating on getting rid of the debts - if you were quiet then i would be thinking get extra things under my belt to get me busy again.

You will find though that as you get rid of one debt and use that money on another debt, the whole snowball effect will start.

If you go down that route with your friend, double check with the different lenders that your credit file will show as paid off and satisfied in full (and get it in writing) - the last thing you want is a credit report showing debts not satisfied in full.

 

[Matt1959]

make sure you are not kidding yourself as to the potential of the business if it was that good, you wouldnt be in the sh%t - its not as if you've had to fund a divorce or something (I assume).

 

[DanielN1989]

I removed the bit about my friend, as tbh im not sure it will happen, and i dont want to be in his pocket, but thankyou for the advice regarding my credit score.

Yea i can see what you mean about the snowball effect, thing is winter is coming, i have no money in reserve to help through the lean months, i reckon this may be the last time im sliding round in snow and mud this year

I need the H&S courses, but i also need (some) money to bankroll me through the job until i get paid 30/60 days later, but thats another issue

 

[DanielN1989]

Matt...i probably am a bit, i have struggled like mad to get here, hundreds of people make a living out of it.....thats all i want, nope no divorce!

There is no way i can go from earning £150.00 - £200.00 per day to doing the equivalent job for someone else for £7.50 p/h....i would be in the sh*t then lol so jacking it in and working for someone else is out of the question

 

[Employment Law Clinic]

i have big companies requesting my services and offering me multiple tenders on a daily basis some worth up to 150k but i have to turn them away as i cant afford the H&S training in order to undertake them.

I need the H&S courses, but i also need (some) money to bankroll me through the job until i get paid 30/60 days later, but thats another issue

Can't you at least ask for a deposit on a job, or for them to pay for your H&S training as part of the contract?


In my field, I have to pay the Ministry of Justice if I want to represent employees. I surrendered my first authority (which itself was arranged under similar circumstances) as I wasn't particularly interested in the work (from individual claimants), but when another individual wanted me to represent them, my first condition was they pay for the new application & all the fees that apply to even get authorised again. Only when that was done would I even be able to legally charge them for anything; call it a sponsorship if you like, as I didn't particularly want the authority, they wanted me to represent them so they had to meet the costs to allow me to do so.

If you have a reputation & any business interested in investing in your services, (particularly with a value of £150k) they'll find a way to invest the nominal fee for H&S. You might have to manage without an invoice paid promptly though, although you could agree to issue an initial invoice early, allowing this to make its very slow progress through accounts while you're doing the course, so when you actually start working the first payment follows soon after.



Karl Limpert

 

[GeorgeM]

Its a great achievement to have reached 6 years in business - well done !

But your numbers look very tight. If you are fully utilised, then your getting around £30k - £40k pa gross. But from that you'll be paying your loans plus living costs and travel. So at that rate you will stuggle to ever pay off these loans.

Have you considered taking on a partner as that would then enable you to bid for bigger contracts and increase your turnover ?

 

[DanielN1989]

And that George is exactly where i am at....as soon as i have paid one cheque in, im ready for the next and i havent earnt it yet.

At the minute i am fully utilised, but out of 6 years i reckon there will be a whole year where i havent worked...
Its only the past year where the work has been consistent.

I have thought about a partner, but who wants to take on someone elses debt? And i dont know anyone my sort of age, around here in this business.

The only way out i can see, is IVA/Bankruptcy...forget the mortgage and live at home until i am 30, a winfall of some description, or take on a consolidation loan.

I feel ive worked too hard to kick the bucket, and let some receiver take over and decide my fate

 

[Mitch3473]

If you're that good and that confidant and you have a decent client base......raise your prices.Expect to loose some but I think you'll be pleasantly surprised if you are indeed as you say.

 

[DanielN1989]

I hope ive not made myself look a clever t*#t, im just good at my job, or like to think i am, ive just made a mess of my finances.

I could raise my prices but my biggest customers will not pay it i dont think, especially with VAT registration looming.

most of the time i charge £15.00 p/h if i increase that to say £16.50 and then end up VAT registered that is £19.80 p/h!! Private folk and non vat'd property rental companies that i work for will simply not pay that.

How bad is an IVA? What effect will it have, could i still trade and graft my heart out in order to make a dent into whatever it is have to pay back? If i ever need to buy a house i could always do it in someone elses name i suppose?

 

[DWH Flooring]

I've been in a simular position to you in the past and I know how bad it is! But I honestly think if your credit is still good look at a consolidation load from your current bank as they will see your income and notice the benifit for them and you to put all your eggs in one basket... Just cut the bloody cards up after as the last thing you will want to do is add to the debt and then after say four years you will be in the black. The other thing to look at is peer to peer lending (google it) its very tempting and could work out cheeper still.
Anyway good luck with it and try and get that H&S done once everything is consolodated.
And seriously bankruptcy doesn't have the stigma it once did but will knock you back to square one, you will need a good accountant, good family support and you could avoid the three years of ipa payments, if your not sure what all that entails do a lot of research into it, talk to your accountant and you should be fine, just kiss goodbye to owning your own home anytime soon.

 

[DanielN1989]

Hi there, i have just been doing some sums and my re-payments on just the debts total £957.53 p/m, plus the overdraft that adjusts accordingly

add to that £300.00 p/m for insurances, around £400.00 p/m wages for myself which is what i currently take to live on, £400.00 p/m in fuel for my pickup truck, £100.00 in phone bills, landline, internet, stationary, £200.00 p/m in maintenance on my equipment and vehicle, and finally £150 p/m for adverts in various different places.

Thats £2507.53 i have to find before i can even think about making a worthwhile effort into paying debt off, that figure is about what i earn....when i am busy

Not looking good is it

 

[CKG]

Same situation on my early 20s. Business was flying, one big customer went bust and nearly sent me down with them. I fought on but eventually went down too a few years later still weighed down with the same debt.

In bankruptcy the average person wont throw anything away other than a pile of debt. If you have a wife, kids and a house to loose then it can get difficult. It's the perceived stigma that eats people up. In reality nothing at all changes - no one that knows me knows I've been a bankrupt.

Your bust on the Friday and back to work business as usual on Monday.

I learnt a lot through going bust, i'd probably say it was the making of me - lots of people say the same.

I've just sold the same business that no one would piss on if it was on fire 7 years ago for £1.5M

Though i'm not saying it's what you should do, more to illustrate the point that you don't throw anything away by going bust.

 

[DanielN1989]

Will they not take my work truck if i go down that route though? What about my bank account, overdraft, my healthy accounts with my suppliers etc?

 

[K2012]

Daniel,

If you have got proven tender agreements worth 150K which yo are turning down then why not attract the attention of an investor... This type of order would surely wipe off your debt and equal a return.

Kev

 

[DanielN1989]

Hi Kev,

They are not proven as such, a large company that is owned by a distant family member, regularly send me tenders for work, but....i will have to tender for them against other contractors and submit my H&S paperwork (which i havent got) and be in a stable financial situation which i am not!

Im not sure about the investor route

 

[zanygame]

Hi Daniel
First my sympathies, been there myself many years ago.
If you could consolidate your debt into a 6 year loan at 9% (about average these days) It would cut your monthly out goings by about £400 and you wouldn't be making minimum payments on your credit cards etc.

Worth talking to your bank if you have a reasonable history of making payments on time etc.

 

[CKG]

Will they not take my work truck if i go down that route though? What about my bank account, overdraft, my healthy accounts with my suppliers etc?

The official receiver wont touch anything you need to earn a living or exist day to day, they're not out to get you unless you have been a bad boy. They will just ask you to declare any assets you have rather than go looking for them.

I just told enough to keep them happy - I got the impression that's all they wanted from me anyway.

Nothing happened to my bank accounts or the money in them. I kept it all as I didn't have any debt with my day to day bankers.

Obviously your overdraft will be canned and your bank will no doubt freeze that account. Ideally get an account with a bank you don't have any debt with and trade through that. Or stash your cash in your mattress.

As for your healthy accounts with suppliers, they don't need to know about them and it's up to you if you tell your suppliers you are bust. You should tell them by rights if you intend to use more than £500 credit a month.

I made sure all my supplier were paid up and kept hush about the ones that were owed money, so I could pay them back and keep my reputation intact. I never told any suppliers I was bust and just carried on as normal. I Just kept my bankruptcy to myself, no one else needed to know about it. At the end of the day it's just a bit of form filling, no need to attach any emotion to it. End of story.

 

[DanielN1989]

Thankyou for the replies,

After having a think, and discussing with my dad, i think im going to go down the consolidation loan route, down grade my work vehicle to something of half the value, and use the remaining money after the sale of the vehicle to buy a van, pay my insurances in full and put some cash in the bank.

Downgrading the vehicle to half the value will do a few things, halve fuel consumption saving £200.00 p/m, half insurance saving £90.00 p/m, parts etc will be a third of the cost (i wont be buying as much anyway), and i will own the van after paying off the hp on my current vehicle with the loan.

Im also going to ditch the advertising at least for the next 6 months, purely because i dont need it.

If i get the loan, my outgoings will be the loan repayments (obviously this will string things out for a further 5 years or so), plus phone bills, fuel and living expenses.

Current overheads - approx £2500.00 p/m

Proposed overheads - approx £1350.00 p/m

Saving £1150.00 p/m £287.50 p/w (ish)

This way i can start saving a bit of money hopefully, and get the required H&S stuff.

Last chance saloon!

 

[Jet Virtual]

Daniel I am not sure why you are focusing on the fact that you have some bad debt when you say you have companies looking to use your services at a possible value of £150K?

Why don't you partner up with a trustworthy (very important) investor and pay that debt off once you start making profits?

Whatever you do don't stay down for too long ... Get back up and move forward!

Your young and you have learnt great lessons for the price of £25k (less than going to University)

Well Done!

Daniel