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.

There are some great ideas on here but I just wanted to stress that you should be kind to yourself. You're looking after 3 kids, you've just done loads of renovating and you've lost your lovely dad.

Things will get better after this blip.

Time to go through everything you pay for.
All your subscriptions/memberships e.g.:

Phone contracts - switch to sim only if you can and explore options. I'm with Voxi and pay £12 a month.

Wifi - call up and ask for a new deal - get rid of any fancy add-ons.

Streaming - if you have Netflix/Disney/Sky/Prime/NowTv - time to pick one. Get rid of the rest.

Apple music/Spotify/etc - get rid temporarily

Clothes/lifestyle subscriptions - again, get rid. Find cheaper, high street alternatives/charity shops. Shop your own wardrobe.

Beauty - if you have hair/nails etc done regularly, make this less regular or learn to do it at home.

If you make all these changes, it quickly adds up and it can all be put towards the repayments.

Sorry to hear you're going through this.

The good news is - you can suck up the payment for the time being. Don't listen to all the people on here who think that spending 90% of your income on a mortgage is ok but the second it's cc debt it's the end of the world. Selling her home?! What a ridiculous thing to suggest.

It is not worth you beating yourself up about this - we're in a similar boat, it's not ideal, but it is what it is. Obviously if you can cut corners elsewhere then do, but if not, just funnel as much as you can towards the debt - even a couple of £ every week or so will help.

But honestly @Janedoer, give yourself a break. I don't know what possessed you to self-flagellate here but step away!

Get advice from a FREE debt agency. Stepchange is a charity giving advice; National Debt Line is also free. Whatever you do, don't pay for advisors to help you.....absolutely not necessary. Lots of people/organisations making money out of people's problems. Citizens Advice in London are funded by the Mayor of London to help people with debt.

Don't beat yourselves up over it, you're not the first and you won't be the last.
Learn from it and move on.

Start with a strict budget that doesn't include expensive holidays, club memberships, subscriptions, buying each other expensive presents and other luxuries you know you can do without.

Then create a spreadsheet and list all of your fixed monthly outgoings, including mortgage, council tax, utilities, broadband/mobile phone costs, insurances etc.
Use this spreadsheet to track your outgoings and create a separate column for daily spend on debit cards so you can see exactly where all your money goes. This really adds up if you're partial to a daily coffee on the way to work, have regular takeaways or eat out a lot. This may incentivise you to cut down on this kind of expenditure.

Finally, estimate the amount of money you're likely to spend annually on running your car(s), household maintenance/servicing, clothes, footwear, hairdressers etc. Divide the total by 12 months and create a direct debit to put this in a savings account each month. The money is then there when you need it.

After a few months of these measures in place you may have more money available each months to reduce the debt faster.

Good luck 💐

see if you can make your mortgage term longer or take a loan for home renovations against it ?
dont worry you are going to be repossessed.
i claimed child benefit when our earnings went about £1k over in error because i got a bigger bonus than expected and worked full time for 4 months to help out. my mum died and i just wasn’t coping. don’t be so hard on yourself. put it down to experience. the tax people were really good when i explained that and didn’t get a fine.
honestly evough beating yourself up you will get through this. go on the money acrimony website and start looking on vinted for xmas presents. family need to understand not every year is going to be a good one.
if you can handle a second weekend shop job or pub evenings then great but don’t make yourself ill. grief is exhausting enough xxx

You have £2000 a month after bills have been paid. Do I have that right?

You can easily do this.

Breathe. Stop catastrophising.

Nobody will starve. You do not need to start foraging for berries or looking up recipes for nettle soup.

Otoh, nobody needs new clothes until next Easter, and if items like expensive school trips come up, you'll need to make some choices.

You can scale back Christmas gifts, and reduce grocery shopping to reflect a little belt tightening - Aldi for half your shop, stop buying pricey items like fresh berries, look for shop brand instead of name brand items, eat your way through any pantry stores of items like pasta before buying more, at least until you see how youre progressing.

Stop buying coffees or other treats when you're out. Cut back on manicures, etc. The advice to use cash for walking around money is solid. It will reduce impulse buying.

Start paying as much as possible toward the cc you missed the payment on. Make sure your payment into the current account is done by dd. Set the payment date for the cc bill a few days before the due date to account for any glitches.

Don't beat yourselves up - anyone who claims never to have dropped a ball (especially under stress) is bloody lucky and ought to have more compassion.

17k debt could be paid off within a year by strict budgeting and Aldi shopping with meal planning. I reckon you could get food bill down to 100pw without any hardship - possibly as low as £50 some weeks. If you haven't got a slow cooker invest in one - as big as they come.

You'll get through this!

Agree that would have been prudent in this case but to offer an alternative view we have a 0% one that we have more than enough savings to pay off, it was taken out deliberately to get the 0% on an expensive holiday, we had and still have more than enough savings to pay it off but I pay the minimum and keep the savings in the bank and get the interest. So op you could have put the overpayment somewhere else and got a bit of interest.

But the op seems to be indicating they would keep transfeerring it - but then op you are incurring a fee of what 5% every time you do a balance transfer so the amount will go up. That was never going to be a good strategy as you may have been rejected for a new card.

Start selling things

Challenge is that every man/woman and his dog makes similar excuses, well lie so even if it is true the companies are just cynical. Perhaps op could have written in with a death cert to prove it -Op how late were you?

It's the equivalent of the dog ate my homework excuse to a credit card company.

Well of course in OP's situation, she can show her Dad's death certificate, in my situation, had it come to it, I could have shown my NHS letters showing surgery date.

Mine wasn't that late, I think a week or so, had received a red letter from the council threatening court (which they'd posted to me after it only being overdue by 3 days), and I paid immediately, I was mortified having never missed or forgotten a bill in my life.

Your punishment is very harsh for such a simple error. Of course you know you should have had the transfer on standing order, but stable door and horses.
Sadly we are in the age of computer says no.Years ago local bank managers would have had discretion and approved a loan at a decent rate, so the punishment for a minor error would have been much less. Now such flexibility is long gone.would your mother or another relative take out a 0% card for you or a low interest personal loan. Or another family member. I would do it for my family in such hares circumstances and you could do standing order for repayments.
Just a thought. I do sympathise op

Hi op,

Don’t despair and find a reliable finance/mortgage broker asap. They have so much more good inputs than us and actually get deals that only them can have. Forget about not applying to a mortgage again just share all with a broker so you can get this under control. Noone knows what comes next, secure yourself and family.

Good luck 🌺

Chin up OP, you will get through this. You can afford to pay it off and you will, and a valuable lesson learned without any lasting damage.

Let go of the shame, we've all done stupid things, it's a part of life. All you're losing is money here, and as long as you can feed and house yourselves, it could be a lot worse.

Figure out how long it will take you to pay this off, put that date on your calendar, and look forward to being free of it.

Sorry for your loss.

AFTER all the bills? Blimey. You're doing OK. Just stop spending money on shit you don't need. Food & fuel I get, but would you really be buying many clothes between now and February anyway. Presumably none of you are running around naked now, so you do, you know,have clothes.

I’m sorry to hear this OP, but accidents happen and we are all wise after the event. Keep your head up, keep chipping away at the debt. You will be ok. Lesson learnt.

Phone the bank you have the credit cards with. Explain this is now affecting your mental health and you have been seen by your GP due to this. They have a duty of care to protect you and are governed by the FCA to provide help to vulnerable people. They are not the enemy anymore and the more honest you can be with them and tell them what outcome you are looking for I.e “we need the 0% to continue for 12 months due to the impact on the credit file for the late payment so we can then transfer it over to another 0% provider once our file has improved” worth a try, some people even have debt charged off in various situations so always worth the call and being honest 🙂 good Luck xx

I'd throw everything I could at it to get it cleared ASAP.
No holiday, no eating out, no new clothes, - commit to zero or low spend and pay it off. Second job if you can. If you have two cars but can manage with one, then sell one and use the money and the saved running costs to pay off the debt.
You'd be amazed how fast you can pay it off if you fully commit to living frugally

Good luck OP mistakes are there to be learnt from

When my late husband died, he had been in hospital a long time and visits by taxi expensive. One of the first things I had to do was to clear the balance of the credit card which was in his name, and on which I had put the funeral costs. I kept mine, from another company.

It was very hard going for a time, but when I cleared the balance of both, I determined not to pay interest ever again, and for the last 12 years I have not pain a penny in interest. I keep within the credit limit and clear the balance each month. I do have to take care than I have enough in the current account to meet the credit card balance, and that can be a bit dicey, but have managed it.

The benefits of clearing the credit card balance and not paying interest is that you have about 3 weeks free credit. If, for the sake of argument your balance is due around the 20th of each month, what you spend in one month does not have to be paid for until the 20th of the following month.

There is never a need for quick loans. True, you have to be careful of your spending, but the amount of interest you save is amazing, and your credit card is a convenience for paying online and in the high street.

I have mentioned this to many people who had no idea you could do this. It seemed impossible to me that they did not realise you could clear it each month. Perfectly sensible and intelligent people have told me they pay the minimum amount because that is what they thought they had to do, that it was the reason for credit cards.

It might be best for you to go to your Citizens Advice. They have experts who give their time to help those in debt.

They will want at least two years of bank statements and credit card statements and income details. It is all confidential and they will go over it and let you know when they have finished what your best course is.

If it was uncommon, there would not be so many organisations set up to help you. Some organisations are so busy there are waiting lists.

You are not alone. Determine in yourself not to buy anything you really don't need, and if you do need something, and can pay online, buy it on eBay.

You can sell on eBay too, if you have not already done so. There is the ability on that site to find out how much things sell for. If you have things you can sell, search on eBay for that item. Scroll down on the left hand side until you come to ''COMPLETED ITEMS'' click on it and it will tell you what items in that search sold and how much they sold for. If you have items which are selling well, list them at a slightly lower start. You can always buy it again when you are in credit.

Don't be put off by the small amounts - they all mount up and it is surprising how much you can pay off the debt.

Pay as much as you possibly can onto your credit card, If you apply yourself it could be paid very quickly.

Buy cheaper food for a few months. Do what grandmothers did years ago, and keep a stew pot on the back burner, adding to it every day with whatever the local shop has special. Can of beans keep it tasty. Potatoes, carrots, sweed, turnip, parsnips bought fresh are absolutely necessary for good health. If the kids don't like onion, put them in whole and fish them out before serving.
Ask the butcher for bones - tell him it is for the dog! By breasts of lamb and put them in the hotpot stew. You can keep it going for days at little cost, then as the debt clears, you can buy better food.

For goodness sake resist the urge to buy Christmas food. It isn't necessary. When you are old you will realise that. Buy the children presents, though, as you would normally. Keep money by for that, so that they are not affected too much by the debt which is not theirs.

Sorry if I’ve missed this, but have you checked the existing card(s) to see if they have any offers available? Assume the balance is on more than one card. Offers aren’t just for new accounts, but you’ll likely need to pay a fee to do it, which would likely be cheaper than the interest.
Even if the balance isn’t nil but you still have some of the credit limit available, you may qualify for a 0% BT or Money Transfer offer.
Payments are usually taken off the most expensive part of the balance first or the 0% offer due to expire first, so for example if your limit is £10000 and you have £5000 outstanding, borrow another £4000 as a money transfer to your bank account (it will make you leave enough for the fee and a buffer) and then once that £4000 clears into your account, pay it off back to the card. It will then come off the original £5000 leaving you with £1000 on the old date and £4000 plus the fee due at the new offer expiry which would usually be another year.
Same with a BT, if you have 2 cards with £5000 on each, see it you can do a balance transfer on each to the other card. If nothing is available now, check again at the start of every month.
I appreciate this isn’t reducing the balance as much as all the other options, but if this is what you were planning to do anyway then it’s an option that would work out cheaper than paying 26% on what’s left in February.
I’m also not suggesting you carry on paying tiny amounts; keep paying as much as you can off the offer which is due to end soonest / most expensive rate and the minimum on anything else. Again you may find you qualify for new offers on the card that’s clear.
Source : bank manager with 20+ years experience, also have credit cards with different providers and have done this myself.