advice needed please re credit rating

[Devaya]

We have been just coasting by the past few months since my maternity pay ended and I decided not to go back to work...but now our gas, electric and water bills have all literally doubled (it's happening all over apparently, and nothing we can do - we switch lights off, don't leave water running, turn things off at the powerpoint etc, but the prices per unit are just sky high at the moment), our rent has increased (we moved) and I've done the maths...and it looks like we are literally not going to have a.single.cent. left over after food and bills. So...no money for any 'unforeseen things', none for clothes, for christmas presents, busfare, you get the picture. Our food budget is as frugal as we can make it, we make almost everything from scratch and have cancelled expensive things like the organic veg box delivery.

The problem is our debt...we would have at least some cash if not for that. The amounts aren't massive, and I am really kicking myself now for incurring them but times were hard when I moved to this country. DP has a previous overdraft and a credit card to pay off and I have two loans (one will take another 1 1/2 years to pay off, the other 3 years). We already live on the overdrafts we currently have.

The only way things will work out better financially for us is if I get a cash in hand job, because any job I get 'on the books' will just cancel out our benefits and leave us no better off than before (plus all the hassle of me giving up SAHM-ing, which I don't want to do, and having to organise or possibly pay for childcare, or work back to back with DP so that we never see each other).Cash in hand jobs are hard to come by. I'm teaching one yoga class a week and this may go up to twice a week in the next few months, but the money is unpredictable and often I make no profit once the room is paid for.

I'm trying to decide whether to stop paying the full amount on my loans and telling the bank I will only pay a token amount. This is something the debt advisors say you can do (I called them a while ago) but it will kill your credit rating, and mine is good so far. I'm worried b/c that might really affect things down the line, say if the housing market improves in a few years and we are able to buy a house, but our credit ratings are non-existent.

Anyone have any advice or been in a similar situation? I'm afraid to make a move that will affect my future so drastically, but I don't see any other way of freeing up some cash right now.

[ChattyCat]

Could you babysit in your home? Just one kid might give you enough to give you some wiggle room, and it should be off the books? Or, clean a house or apartment a couple days a week?

I would never recommend paying less than what you should on debts.

[Denvergirlie]

I used to have crushing debt, very foolish choices on my part, believe me I learned from them.

At my worst I was 120+ days without a payment, not good for one's credit rating. Now 4+ years later I have a credit score of 752, so that's good.

Yes, if you don't make payments it will hurt your credit, but it is eventaully recoverable. Your payment history makes up approx 35% of your score.

However, it sounds like you need to either increase your income or decrease your outgoing.

Getting work off the books is very hard to depend on, and many places might end up still giving you a 1099 tax form (independent contractor status) at the end of the year. We thought we were doing off the books work until tax time we got these forms in the mail and it made it even worse.

Sure you can look to childcare in your house, but make sure the family you are caring for does know that this is off the books because they might be factoring on being able to deduct childcare from their taxes as well. If you go this route, you might be making well below average rates.

Household cleaning, eBay, selling things on craigslist, half.com, etc might be another route to look at. You can often buy things ar yard sales/ thrift stores and resell for a profit.

Do you have any other skills? Writing (blogging, resume help, small buiness marketing), do you sew (tailoring, custom creations, teaching a class), what about cooking skills (home cooking for the eldery, teaching a class).

What did you do before materity leave? Any possibility of turning that into a telecommuting poistion?

If you did go back to work full time what benefits would you lose? How much would you need to make to break even?

I know you stated you didn't want to work opposite shifts of your DH, but with the terms of your loans you could work for 1-2 years again and be in a much better poistion. It's only temporary, it need not be forever, just long enough to be able to meet your current obligations.

Best of luck to you

[Devaya]

thanks for the advice. I wouldn't feel good about not paying the full amount on my debt, aside from the ramifications for my credit score. So...I'm currently considering looking after another child one or two days a week (I think any more than that would get a bit much for me), possibly put an ad up on a local website for that, and also looking at ways I can use the skills I already have, to make a bit of money on the side. For e.g., I'm qualified as a holistic therapist and also can do (i'm told!) good tarot readings, so I'm going to try and find somewhere I can be 'based' for one day a week (DP only has one regular day off per week due to his shifts), e.g. an 'alternative' coffee shop nearby. I would rather do something I enjoy like that rather than go for something (i think) stressful like barwork which I have no experience in. I am a writer and do some online writing for a percentage, but it's very little and also it goes thru my bank account which is watched like a hawk by the benefits people

If I worked full time we'd be a bit better off, though I'd lose all benefits, but the amount I'd have to pay for childcare would cancel a lot of that out, bc of DP's irregular hours that I doubt any job would be able to work around. Unless I did what I was doing before, which was support work with learning disabilities, and I really was fed up with it. The craigslist/e-bay thing is a good idea to look into too - not so sure about cleaning though, I have to do enough of it here and I really hate it I've heard about telecommuting, unfort my previous job is hands on and not something i could do that way, but perhaps there's something else I could do telecommuting.

anyway i feel a bit more positive now, that i have options and can start to proceed from there. so thanks!