What fools we’ve been - credit cards

[Janedoer]

Hi,

so went screwed up spectacularly! We’ve had two very expensive years of renovations to our house. In our stupidity we totally underestimated the costs. In even further stupidity we continue to overspend, using credit cards. We’ve played the 0% credit card shuffle game but it’s about to come crashing down. We fucked up and missed a loan payment and it impacted our credit files. We can now only get very high interest cards and no chance of a 0% balance transfer. This means that in February we’ll have £17k of credit card debt at 26%. This means that our current payment of 170 will be over £500. I’m sick to my stomach.

the good news is that despite the interest hike, we can afford the increase. It’s just a sickening waste of money. We were turned down for a remortgage and we’ve been advised to not apply again for at least 12 months. Probably not the best idea anyway.

were a couple of professionals with a 100k Joint salary. What utter fools we’ve been. I’m so ashamed.

No, mine is worth 3k and dh has a company car

Yes I’ve been doing that all day

Paying £500 per month how much are you paying off the principal of the debt? As opposed to just interest?

I would try and find some more money to reduce the principal. Go through what you spend each month and try and make savings. See if you can switch any of your utilities. Consider if you have anything you could sell.

I'd be looking at whatever you can overpay and whatever you can sell.

Does it all end at once or can you use the snowball method to throw the most at the highest interest?

Okay you won't clear it all but the more you can do now, the better. It is going to be a really long slog to clear at that level of interest.

I would certainly ask your Mum. Humiliating it may be but if she were willing to lend you even a small amount it would be worth it.

I'd take the view that every single pound you can throw at it is worth doing. It sounds as if you can get it down to £14k just by paying the £500 a month now.

Gosh, I wish I had that much money to play with in the first place. 😩

You made a mistake, and it sounds painful, but if you’re doing everything you can don’t beat yourself up any more. It sounds like you have a stressful lifestyle.

Loans, credit cards, debt and more debt whilst on 100k of income... Yeah sorry, that's dumb. Is the point of more money the ability to get into greater debt?

I'm a pauper in comparison. But I have no debt, no mortgage, I have savings, my credit score is excellent and I manage to have my house renovations ticking over. The house is progressing slowly as I save up to pay for the bigger jobs. I don't live above my means. I'm happy with my lot.

Though my experience (all from watching Grand Designs) tells me that one way or another, you'll still come out on top. Particularly if you have "friends and family".

You'll be alright.
Or never alright on any income.

Have you tried a credit union? I have no idea but they might be less stringent than a bank in terms of who they offer loans to. Worth asking the question

This, and literally anything else. I would be getting a second job for a bit. I feel paniced for you. Do you follow any debt councillors online? Worth doing.

I presume you’ve already written up your monthly income and expenses? Determined your stricter budget?

Focus on paying off the one that ends first. If they are pretty much the same time pay off the smallest balance first so that you will have more to throw at the next one. Also, it will improve your credit rating.

Your minimum payments will barely cover the interest. Throw as much as you can now, it will make so much difference to you before the interest rates hike.

I totally agree. I’m deeply ashamed of myself to the point of feeling depressed. I’ve actually had to visit the GP as it’s consumed me with stress and anxiety, albeit totally self Inflicted and avoidable

Have you considered taking in a lodger to raise extra cash?

I ran up nearly £20k on credit cards over about 6 years but had no way to pay it off and eventually had to go bankrupt. Despite the shame of it, it was actually the best day of my life to be finally free from the constant anxiety. 15 years later and I have a perfect credit score and a mortgage. You’ll be fine. Yes, it’s an expensive lesson, but it’s hardly the end of the world.

We will have about £2000 per month leftover after all bills including the increased payment, out of the 2k we have to pay for fuel food and clothes ( 3 kids) and also money for any gin, not that we can afford much of that now.im hoping that by neal planning and using Aldi/lidl I can feed us for £150 per week

We have 3 kids and no spare room

How much do you have in savings? What can you use to clear the debt?

Zero!! We’re literally living month to month

In your shoes I’d try and have a really cheap 6 week period starting today.

Petrol only for work, try and use up the food in the house to get groceries right down, sell anything you’ve finished with on Vinted, no nights out or treat nights in, pause all streaming services etc etc etc.

Basically, aim to have loads of money from October salaries left in your account when you get paid in November. Pay all of this off the credit card.

The other thing I would do asap is contact everyone who you usually buy Christmas presents for and say “ We aren’t doing Christmas presents this year as we’re trying to pay off some debt from the house renovations. Please don’t buy us anything this year’ Make an agreement that your budget for each other is £10 and neither of you go above that. Pay everything you’ve saved off the credit card.

You need to bring in some extra cash. Can one of you get a second job to enable you to throw as much at clearing this as possible? Even if its only a few hundred extra a month and all taxable, over a year it all adds up. Once back on track you need to cut up the cards and start to save for things you want.

When did you miss the payment? And how?

Advice for anyone else, make sure all cc have a direct debit for the monthly minimum!

It may be worth speaking to the lender who’s payment you missed and seeing if you can “catch up” on it and they’ll adjust your record.

Good luck! I had a similar amount of debt in my 20s. Life was incredibly dull whilst I cleared it but it went down surprisingly quick.

So if you're going to have £2k available for non essentials, then surely you can spare £1k of that (at least) to pay towards the debt?

£1k a month should be more than sufficient for groceries, clothes, haircuts and other family expenditure that isn't in the luxury or treat category.

Absolutely this

My dad died and I forgot to transfer the cirrrct amount of money into our bills account. The dd bounced etc. totally my fault

You won't be the only ones!
You have been brave and looked at all the numbers now- so are in a better position than you were.
Pop and have a look at the Martin Lewis Debt free forum- loads of good advice there .
Lots of luck.