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.

Rather than asking the credit reference agencies to update it, you could ask the credit card company to push an update to the credit reference agency.

Mistakes happen all the time and credit files are updated.

I'd write to the credit card company to explain what happened. Provide evidence of your father's death and explain this is causing 'undue hardship'. Ask them to update/wipe the missed payment from your payment history. That should then feed through to the credit reference agencies and repair your credit score.

It's not great, but don't stress yourself and feel depressed about it too much either. Mistakes happen and these things can creep up and escalate before you know it.
Take a deep breath as you can afford it, which is the main thing. Keep paying as much as you can and each month it'll get lower and lower, making it easier to pay off.

I'm assuming you don't mean gin?

It's difficult to understand how food, fuel and clothes can come to more than £1K a month tops. But be extra frugal - no new clothes for adults, only essentials by way of new clothes for the children, cheap pasta-type meals, minimal travel etc - and the debt should start to go down. Presumably when that happens your credit score will start to improve and you can look at a cheap loan or 0% interest.

Can you try a credit union?

It's not just you; rather common in fact; but a horrible feeling to have this looming. I can only suggest paying it off as quickly as you can by putting a stop to all luxuries including more renovation work, holidays, meals out or takeaways new clothes etc until a good chunk of the debt is paid off. Also return any recent purchases to the shop if you can. And no Christmas presents except to children! You have good salaries and saving money can be fun and good practice for budgeting in future. If your Mum can you could promise to pay it back after other debts are cleared.

omg gin was a typo. Well at least that’s made me laugh!!

Ok but that means whatever you were paying for that loan can now go towards it? So that’s good.
Im struggling to see how you don’t have any savings but tbh on your salary you will be able to pay this off. The problem is the interest. I would be writing to your card issuer get the interest stopped or lowered while you make repayments. It’s worth a letter. Paying interest would make me feel sick too.

whilst I get the sentiment, they can’t afford the debt. They have zero financial resilience here and the decisions they make over the next couple months are going to be extremely impactful. They need to play their cards extremely carefully.
I’ve seen this play out badly so many times in my job when people bury their heads in the sand. It’s good that they are worried about it - they should be and they will get out of this mess as a result.

You need to contact the card company and offer a repayment plan. Start with a really low amount and negotiate to something reasonable and affordable . They will have to accept a reasonable offer.
If your credit score is screwed this would be the most sensible action you could take- after it's paid off you can rebuild with an expensive card that you pay off religiously every month. After 5-7 years you will have a perfect score again.
You do need more information and help on this and citizens advice can be the best place to start.

If you can afford £500 now, why weren't you paying off £500 then?

Ha / I presumed a joke that you needed it because of the stress!

I don’t even like bloody gin 😏

Pay it and suck it up until you can apply for a loan to clear it all.

Don’t beat yourself up. I had £12 grand in cc for a while. Paying a fortune in servicing it. I cleared it eventually. So will you.

That’s what I was going to say. OP, better one or two tight years than letting this hang over you for longer. If you can pay £2K a month towards it (£500 left over) then do that. Good luck, it’s an expensive lesson but try not to beat yourself up about it - the most important thing is what you do now :)

OP, I second anyone who suggested that you will find excellent advice on MSE's Debt Free Wannabe subforum. They'll take you through your budget and give you informed advice without judgment.

Then I don't see the issue. Throw some more of that leftover money on the debt.

By February the negative flag on your file may not be "as bad" and then you can apply for a 0% card again. But for now- stop applying for stuff!

Between now and February, tighten the purse strings and overpay those cards as much as you can. One missed payment won't be the end of the world, but a recent one doesn't look great (which is why you may find it difficult to get credit now).

By February, due to the time that has passed and making sure you make all payments on time and get the debt down a chunk, you might find you will be eligible for another 0% card. It might not cover the full balance, but any amount you can get is a winner.

Other question I have is that won't your missed payment only apply to one of you as it's on a card? So why doesn't the other one try to apply in January as they won't have the missed marker against them, and assuming their debt to income ratio is not too high, they should be able to get a balance transfer card?

Nah we did that - used a 0% for a v big purchase, the 0% ended and we weren’t able to get a balance transfer and now pay triple the original payment with 2/3 just on interest. It’s an expensive mistake to make, but one we’ll never make again!

Go on Money Saving Expert Debt free wannabe forum for some support and ideas. I used cards to support us when my partner was sacked . We separated and the debt ws all in my name . I contacted all the companies and made arrangements to pay them off and interest was frozen . I took a second job . It’s been a long haul but 4 years later I am starting to see the light at the end of the tunnel. I owed much more than you . We all make mistakes just get on with sorting it out .

Not sure anyone's mentioned it, but if your 0% rates are not up until Feb, instead of over-paying now, divert all the extra money to a 5% savings account and / or premium bonds until then 👍

Agree also that you can feed the family well for £100 or less a week. Get the Lidl app (if you don't already) for weekly offers & freebies plus if you spend £250 in a month, you'll get 10% off your next shop. Likewise, I find the nectar app points / prices, gives us our regular items for pretty much half-price - including value items (and I'm not ashamed to say I just go there for these deals only).

Make sure you source the cheapest petrol (check the petrol prices app) and also get loyalty points on top.

Do either of you have discounted gift voucher schemes as part of your employee benefits?? Every little really does help.

If you can put 2k towards it every month for next 5 months then you'll be down to 7k by the time the interest rates go up.

Use 1.5k of your income and then find a way to make or save another 500 a month

Are you both full time employees? If not up your hours. Get a 2nd job. Sell unwanted or unused stuff on Vinted or eBay. Airbnb your house if you go away over Christmas. Etc.

@Janedoer people are being really harsh here!
I’m sorry for your loss, grief affects all your executive functioning, your ability to get general daily stuff done.

It is what it is, you’re a bit fucked for now, but you’ll get through. Chuck the extra money at it and push through until you’re over it.

Have you tried to look at your credit report on experian? It's about £15 a month and they can do soft checks to see if you would be eligible for any credit cards. Not all of them will reject you.

I would also see a mortgage broker to see if you can do extra borrowing based on your increased value following the extension. If it is with your current lender then they won't necessarily do a credit check.

I was in a similar situation after renovation works ended up with £30 K on the credit card. Also couldn't re-mortgage but I was able to do a 0% balance transfer after the soft search. Paid off in two years and no longer have any credit card debt. It is doable but you'll need to cut back and watch how you spend.

You’re not alone. So many people make these mistakes, that’s how they make their money.
You’ve worked out what’s gone wrong and what to do going forward. You have an action plan. There are free and helpful companies that can help you sort out the debts if needed. There are many lessons in life and this is just one of them. I wish you all the very best.