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.

If the other loan has come to an end then once it drops off your credit file you will probably be in a better position.

If there's a positive that you can take from it, then this is a big wake up call. There was a poster on here not long ago where it had reached 100k and they were also high earners.

If you reset your financial attitude, pay off as much as possible before the interest free period ends and then knuckle down for six months, you'll be in a position to shift it to lower interest options and can then start clearing it more rapidly.

Changes to spending attitude are usually permanent and so you'll probably end up better off in the long run than if you carry on in wasteful ways for decades because nothing forced you to address it.

Age old story of living way beyond your means and getting burned.

It is going to cost you, all you can do is tighten your belts and live as frugally as possible for the coming months and clear the debt as quickly as possible.

Don't beat yourself up over this. And actually some positive might come of it. It's forcing you to really look at your finances and cancelling anything unnecessary. If you really cut down, there'll be many things you won't resume afterwards and some of those money-saving habits will stick, even when you are no longer in such a difficult situation. Over the years you may find you end up saving money as a result of this experience.

Stop. You did something not smart but the same and worse is done everyday. Be kind to yourself. You have a plan and you will pay it down.

Seriously? She missed a payment. They have to record that accurately. There is nothing to complain about, she hasn't been treated badly.
And the OP and her partner can easily repay this debt, they are not in the slightest financially vulnerable. Even with the additional interest they probably have about 1.5k each month to pay against it.

OP, please do not follow this advice. It is awful and will screw you over financially for the next 6 years. You do not need a payment plan. You say yourself you can meet the minimum payments and there is more from the 2k you have each month for food fuel etc. Your credit history is not currently screwed despite what this poster may think. You have 1 missed payment, the impact of which will lessen significantly in a year or 2. Defaulting will fuck you over for much longer. If you have more than 1 creditor you also run into the issue of preferential payments. So unless you are prepared to default on all your credit agreement please ignore ismu.

You also don't need citizens advice. If you need help with your budget pop over to the moneysavingexpert website on the debt board - lots of people there will help you with your budget.

I'd set a very small budget for essentials for the next few months and transfer every saved penny into paying off more of the loan. Very cheap food, no treats or new clothes for adults. Make your new hobby putting things up for sale on Vinted and Ebay - just post a couple of things every evening and put all funds from sales directly into paying the loan off. If you get any financial bonus at Christmas - put that in too.

You'll get there. It might be a bit expensive for a few months, but you'll do it.

You are not alone, I promise you that.
Very importantly, you need to change your attitude to spending. Make a vow right now to not put anything on credit, not even a penny, until this is paid off. Only when you stop using it will you start to see that number come down.

Throw every spare penny you can at it, keep an eye on your credit score as to when some 0% offers might become available to you again.

These are the hard times now OP but you’ll come out of it!

Did you tell the CC company this was the reason? They must have hearts of steak to punish you for this.

As other posters said its good that you have looked at the debt now you know what it is. This is often the hardest part and leads to even further issues.

Yes its stressful, but you have the resources to get out of this especially if you have 2K a month that you can overpay, and hey you might find that someone can lend you the balance down the line and you can pay them back.

You have 2k a month to play with. Just chuck as much as possible at the debt. It'll be gone before you know it.

You're in a far more comfortable position than others who scrimp and scrape all the time. You'll live.

Sorry about your dad.

Have a look at MSE breathing space, nor sure how it works. Also there is the mortgage charter where you can switch to interest only for 6 months with NO impact on your credit file. It was introduced during covid by government. It just switches back at the end of the 6 months. Really simple. Obviously payments then go up slightly.

If the rate runs out in Feb, you still have several months to pay back as much as you can- you may find you are eligible to switch some of it to interest free cards again by Feb.

You have 4 months to pay back as much as possible. It's probably a blessing in disguise.

@Janedoer haven't read the full thread, but get a private loan at around 8% to cover this in the short term

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

Did you read or comprehend the op at all?

This is ridiculous advice @ismu . The op has missed one loan repayment. One. You're suggesting she defaults on her credit card.

The impact of a defaulted card arrangement will be ten times that of one missed loan repayment.

I'm not sure foraging for fruit is going to fix this one 🤔

If you've been servicing high levels of debt on time for a prolonged period, your credit score should still be good. A single "1" on an otherwise impeccable credit file would make you near prime at worst case, you should still be able to get loans and your credit file won't be trashed. I imagine your remortgage would be turned down on affordability rather than credit score if you've got high levels of debt that you're struggling to repay and high outgoings. Lenders can do a soft search which doesn't affect your credit score. You need to speak to a professional adviser who can find lenders you fit the criteria for and disclose your credit score at the outset before they do a hard search. If you're struggling on affordability, cut your cloth now, make savings, chip away at the debt and when you've got a few months of debt reduction in your payment history, try again. As others have said, take this as a sharp shock, definitely cut the cards up and pay off whatever you can. Good luck!

Dear OP, I'm so sorry you're in this situation and I am sorry as well for the loss of your dad.
House renovations are a lot to manage alongside working full time and raising three kids. It is so easy to get carried away and get finances in a muddle by trying to provide the best life you can for yourself and your kids.
You aren't stupid. You made a mistake and you're doing your best to fix it. It will all be okay and with the salaries you both have, you'll clear this debt and be able to move on with your lives. Chin up! Xx

That's not how it works.

Everyone has a good reason why they forgot to or were unable to pay something.

Banks still have to report accurate data to credit reference agencies. If they started picking and choosing what to report then the data held at credit reference agencies would become worthless and inaccurate.

This is really stressful now. I can really imagine making a stupid expensive mistake like this! You've no need to feel ashamed.

Fortunately, it's just money that you can afford. There are other kinds of mistakes that can never be made right.

This will not define you. Not even in a few years let alone in a few decades. Maybe if this hadn't happened, something even worse would have - perhaps you would have continued to take bigger financial risks. Perhaps on one of the days you've been frantically sorting this out, you would have gone for a nice relaxing walk instead and been hit by a bus!

I'm sorry about your dad. Deal with this problem but also cut yourself some slack. Human beings were never made to deal with all this admin of modern life. I'm sure there are many other things you've done right. Excellently even.

I know it seems undoable but my neighbour was in a similar amount of debt. She did takeaway delivery driving x4 nights a week (on top of her day job). She earned £260-300 a week and threw everything at the debt

And you are human. This is easy done. Sending a hug and try to be kinder to yourself xx

Have you checked your existing cards where the balance is nil to see if they have any 0% offers? I usually login to my account and it’ll show as a message or pop up.

£2000 per month after bills is a lot of money. Surely you don’t need all of that? You say the kids need clothes, but how often do they need new clothes? Even when they’re growing you can go weeks and weeks without needing anything new, and even then you can go to charity shops or cheap places like Asda. And food shopping can be done cheaply too. If I had debts like yours, with that awful interest rate, I’d be living very frugally so I could pay more than the minimum payment every month and chip away at the debt. I assume your kids are young, as you’ve not long stopped needing child care, so you haven’t got all the expense of tech and fashion! If you budgeted well you could have this debt halved in a year.

Can you join a credit union - they will give loans to new members, it's based on your ability to pay rather than simply your credit score. If there's one you can join through your work that's a really good bet. You'll get a lower rate of interest than credit cards and no penalties for overpayment.

You're coming out of a really expensive time in your life - childcare and house renovations can be crippling, but it really does get better!

Re clearing the debt as fast as you can, would you reconsider getting a lodger? Two of the kids could share a room for a few months. Depending on where you are, you could get a student on a Sunday night to Friday morning basis, so you still have the place to yourselves at the weekends.

You will get through this, things will get easier, try not to beat yourself up to much, you were going through a very stressful time. Sorry about your dad.