Oh what financial fools we’ve been

[Platform8]

Good evening,

So today DH and I finally sat down, pulled our credit reports and faced up to years of spending fuckery. We are early 40’s with 2 teens. In ‘good’ jobs with a reasonable mortgage. I earn 65k and DH earns 50k. I also earn an additional 5-10k on freelance work .

for years we have been financial dickheads taking fancy holidays, spending on the house, cars, supporting other family members and generally buying whatever we want. We’ve consolidated many times and run up debt again and again. We tried to remortgage recently but we were declined due to our level of borrowing.

I owe 47k and dh 44k. Please be gentle…. I know how atrocious this is. We also owe my mum 18k but she has said that there’s no rush to repay.

so…. This is where things change. Thankfully we can afford the payments if we get our spending under control. we’ve been through everything and we think that we can throw £3500 at the debt. It will still take a while but we WILL do it

what fucking idiots we have been

You will fix it and move on. I would second the suggestions you've had to go on Debt Free Wannabe on MSE. I hadn't got much debt realistically but I still had one at university and retirement was not far off so I followed their advice and now I have no debt and money in savings, not to mention have had money to help my kids with big expenses e.g. helping with baby expenses, money when they were buying their first homes (they saved the deposits but when they were moving in they got money towards things they needed.)

The only downside is I feel like kicking myself that I didn't do it 40 years ago and I'd be a wealthy woman now but it is done, I enjoyed it and I paid it. No need for shame and regrets.

Good luck.

I think that is absolutely reasonable.

Wishing you well, you sound very sensible in your approach to this. Do make sure there is room for some fun and frivolity in your budget still

Well, it was a combo of hard, frugal budgeting, going without, no takeaways, no expensive coffees, using coupons, maximising income, minimising expenditure and claiming everything I was entitled to. I had 3 kids at home at the time of my divorce and ended up defaulting on my credit cards that I'd used to pay my legal bills.

I was so skint I had to self rep in court for the remaining hearings that Ex husband put me through, including 2 Non Mols and an Occupation Order.

When I sold the family house in 2014 (on a Mesher order which was triggered when dd went to live with her dad) I downsized which left me with a very small mortgage. I've never, ever taken on extra borrowing on a mortgage ever. Having a large expensive house just to keep up with others has never been.a thing for me.

I upped my hours at work to FT as soon as I could after my divorce and qualified in different disciplines of my work to increase my salary.
I also opened a small business as a side hustle (officially, pay tax on earnings) which fits around my day job. I've fitted in dog walking, cat sitting, surveys, focus groups...making money became my hobby.

Frugality basically becomes a habit, you look for the best deal, the cheapest way of living, trust me, it pays off. 😉

OP, you can do this, we've got your back x

When I was in debt the debt free wannabe forum on MSE really helped me. I had less than you but also less income than you so a significant chunk.
It felt insurmountable at the time.
Now I only have my student loan, mortgage and don't own a credit card. I came through and you will too. Good luck.

The worst of it is that, in my case, when I really needed help to get my credit card debt down, I applied to them for a loan which would have taken place of the credit card debt. It was declined.

Now that I don't need them, they are almost hounding me to take out this and that product, on amazing rates. I will never do that and if I did need a loan in future, it wouldn't be with them.

What's so unfair is that when you don't need credit, it's thrown after you in the hope that you'll take it up, on incredible rates. The people who need the low rates and the help not to enter the sub-prime market are the ones who will never qualify for it.

All the best money deals are there... for people who have money already. Struggling people who could really benefit from those great deals can't have them.

Have you got a plan? I'd agree with focusing on the debt with the highest interest rate.
In the meantime, avoid wild expenses. You don't need new clothes, furniture, holidays, etc so simply don't spend money on these.

I’m not sure I would classify 110k of debt as silly and irresponsible. It looks like you’ve reached such a level of repayments you need to deal with it,

have you a mortgage or do you rent? I wonder if there is a way to consolidate in a loan. I would speak to step change, you’re in so much debt. See if they can help you.

why did you borrow off your mother, why did you need to ask her for money?

What's so unfair is that when you don't need credit, it's thrown after you in the hope that you'll take it up, on incredible rates. The people who need the low rates and the help not to enter the sub-prime market are the ones who will never qualify for it.

that’s not unfair, it’s common sense, why would you lend to someone who has proven they can’t manage their own money. Of course you’d give it to the people who can.

Where debt is accrued through reckless spending I don't think consolidation is a good idea. It cleans the slate and so the cycle begins again. Keeping it in high interest pots puts pressure on to repay and face up to the behaviours that led them there.

These same people you're disparaging as feckless/reckless are still servicing their debts, you know, paying the exorbitant interest rates.

My post was in mind of people who don't have a lot of money not being able to benefit from the great deals (shopping in bulk, etc.) that other people can. I can get those deals, I have compassion for people who cannot.

Still, hope you enjoyed your finger-wagging. So nice to see.

Then quite frankly you should write more clearly, putting the complaint straight after talking about your own debt and how you couldn’t get the deals due to it, clearly indicated that’s what you meant. If you meant something totally unrelated as you now say , then write that.

I would agree, but they owe 110k. And have been living way beyond their means for years, with escalating repayments. It still didn’t stop them.

Well it’s stopped us now! I can’t turn the clock back but we can make better choices now

OP, if you could go back in time to when you recognise the over spending started, what if any advice would you give to yourself ?

To stop and think “do I really need this”!!

well done in taking steps

Hi OP, well done for facing up to it. It's not that unusual, I've been in this position before. IIWY I would get as much of it on 0% as you possibly can (sorry if someone has already said that) as that way at least you'll be repaying the capital not the interest. Keep track of when the 0% offers are up and either pay it off before the time is up or move it again.

Cut back but keep something for treats or you're in for a miserable few years.

Good luck in moving forward, sounds like you have a good plan.

Just curious about the spending- how much would you say was essential vs frivolous? E.g when you say house stuff are we talking renovation works or spending 20k on furniture that could have been halved

Hate to tell you but teens and young adults can be pretty expensive !

IME overspending can have a bit of a snowball effect to it.

You think 'this room needs repainting'. Instead of just buying paint which matches the current paint and giving the walls a coat of paint you end up with a full makeover: ceiling, walls and floors.

After all, if you are going to be moving everything out to paint..... Also it is a 'big job' so professionals get called in.

The furniture looks a bit shabby on the new carpet/flooring so off to the furniture showroom where there is always a sale and 'buy now, pay over 4 years' terms. The extra special furniture is only an extra £10/month so you go for that.

Instead of £200 for paint etc your debt has risen by several thousand.

One thing I would say is get your teenagers to get a job asap - they are hideously expensive as they head to 16 and upwards. Travel, laptops for school, driving lessons, school field trips, haircuts, trainers - mine are pretty sensible and frugal but those things alone cost hundreds per month, and that’s before uni when (if they go) you’ll be expected to pay at least around £700 a month on their rent.

good luck!

To stop and think “do I really need this”!!

So now you'll have to think 'Can I really afford this'.

What you need is subjective, what you can afford is not.

Have you? You owed 110k? How did you get out of it?

Can't see that anyone has mentioned it yet but do take a look at software and method called You Need a Budget (YNAB). We had a similarish situation and it absolutely helped change mindsets and put us back in control (and pay off debt). It does cost around £100pa which is a lot but it honestly is worth it. It's basically an envelope budgeting system but it forces you to think about what your money has to do. YOu only budget what you have so no forecasting of what might happen next month or in 6 months - just what money do you have right now and what does it need to do before you get paid again. It makes you prioritise spending - if you want that holiday, where are you getting the money from - which of your other pots is less of a priority now. It also handles debt payments well.
There is a learning curve on it but there are lots of supportive fb groups (inc a UK specific one) and there is a book too. There's an app and browser version which has lots of regular updates. I promise I don't work for them, it's just really made things click for me and made us live much more within our means (which is sometimes a bit sad but I'd honestly rather this than the debt worry)

Hello @Soretoothfairy , yes, we owed around £100k, mainly on credit cards. How we got out of it was some rules.

1. No new debt, if we couldn't afford it we didn't buy it
2. All on 0% and kept track of when the deals ran out
3. Kept chipping away. If one card was paid and we'd been paying £400 a month towards it we put that £400 towards the next one on the list

We earn good money so had high disposable income, we just started prioritising the debt and paying it off.