Help me get out of debt

[Outwiththedebt]

So we have a very good household income - £7000 after tax.

We are in £20k of debt

We have £3k in the bank (that's every single penny we have between us currently)

The debt has built up over the last 2 years - we moved house which took most of our savings but when we moved in to the new house the tenants hadn't moved out and we ended up in a legal battle with the sellers. The court case was found in our favour and the sellers have to reimburse us but have declared bankruptcy and it's very unlikely we will ever see the money. The debt was accrued because we needed to store our belongings, rent somewhere to live (a hotel initially and then an air b&b) and then the tenants had done damage to the property when forced to move out and we had to put it right to make the house liveable (they did significant damage to the kitchen and bathrooms).

So anyway, we're now moved in and things are liveable but we're in £20k of debt and unlikely to see any recompense. So new year, new budget! Any help in how we can cut back or make savings would be really helpful.

So income £6998
Outgoings:

Mortgage: £1995
Childcare: £650
Food/ supermarket spends £600
Pets £150 (food and insurances for 1 dog and 2 cats)
Car £250 (petrol, insurance, tax, MOT - we own the car outright)
Commuting £80
Broadband £35
Gas and electric £319
Water £53
Home insurance (contents and building) £48
Mobile phones £31
Netflix £24
Prime £8
Swimming lessons £68 (2 kids, council pool)
Gymnastics £24
Music lessons £60
Haircuts (DH and DS) £25
Window cleaner £12
TV licence £13
Trade union subs £15
Professional registration £15
Student loan £68
School lunch £45
Life & critical illness insurance £95
Lottery £10
Council tax £200

Total £4893

Minimum payments on debt= £448

Total £5341

This leaves £1657

This is for day to day spends, Christmas, birthdays, school trips, clothes, household repairs, school uniform, shoes, days out, holidays etc.

I am very, very aware that our "remaining" spends are similar to some people's earnings - I am NOT pleasing poverty in the slightest, but we are in debt and we do need to clear it asap.

What I do want is a realistic plan as to what is reasonable to budget for Christmas, birthdays, other household expenses etc and what we can therefore pay off the debt.

What I don't want is to attribute all of that £1600 to payment of debt and then find us getting in to debt again to pay for school uniform etc.

As you can probably imagine it's been a really stressful time and I'm only just feeling we can get a grip on things now.

2 adults working full time, 2 children in primary school. No family support.

TIA.

Oh yes - chapattis. A litre of chapati flour is quite expensive but makes huge numbers they are fast and very filling, also nice (when fresh anyway).

So with a mileage of 10k a year (very low) you only need new tyres every other year (25k miles) – I have to get tyres almost annually bc of my high mileage.

I think your "just in case" seems high but ofc if things go wrong then it is £££. But certainly in terms of running costs, you are not spending that much.

The insurance is a shocker. Is this bc the engine is so big? Excuse my ignorance as I drive a lovely little 1L Aygo.

A kilo not a litre!

Have a look round for a community fridge too, obviously not a food bank but the sort that is open to all to reduce food waste. Often they have big rushes of bread etc which they need to get rid of and you can put in the freezer.

Yep basically!

We turned up with the removals van full of our stuff to a house with no one in it but loads of stuff in a very clearly lived in state (breakfast bowls in the sink, shoes in living room etc) and fully furnished and no signs of packing. After lots of ringing around it turned out the sellers didn't disclose it was tenanted and failed to serve the tenants with notice. Obviously a real shock to us and the tenants! Took months to get the tenants out (who stopped paying rent) and get our house back. We absolutely wouldn't have bought a house with tenants in, I have no desire to be a landlord!

Yeah looking at Netflix now. We'd had the multiscreen ad free version as in the air b&b we didn't really have much in the way of options. Wasn't even aware there was an ad version now!

fair enough…….
you save what I earn in my main full time job as a school nurse….

Insurance can be. Much higher if you have to park on street not off road etc, could cut Netflix to 1device about £7.

I would try and kick start it by a no spend January beyond essentials. You have 3000 emergency fund that should be enough, unless you have very precarious jobs. apparently the average emergency is 400. ( New washing machine)
I think you have to budget the remaining 1600, no new clothes or shoes unless absolutely necessary or broken stained or outgrown with no obvious substitute. You and DH might manage with no new clothes but your kids won't but don't get new stuff next September unless it's actually outgrown. Only free days out until February half term. Realistic birthday and Christmas budget estimatess is 8 x school friends birthdays at £10 , 6 x family @25, both kids 100, plus party or meal, the same for Christmas plus extra 100 for food, how many days out during the holidays should be debt free by summer 2027 so maybe no holiday this year or just camping. House maintenance 50per month
Agree with DH no spending without discussion so you throw all spare money at debt.
Cut netflix to 7 that's 17 saved, ditch prime that's 8, if you can Lebara 2 x 10 SIM only deals another 10, should be able to getting heating down by 50 shave 5%off food another 30, that's over a 110.

Be honest with your kids just say this year is essentials only with planned cheap fun as we need to sort out bills from moving but if we plan to save next year will be much better

to be fair @cityanalyst678 that’s two incomes. We have no childcare costs. We pay very little for the sports that the dc do. We have no debts or car payments either. Also there is no council tax or water bills here.

DH and I are both in contract for our mobiles - me £12.50 and DH £16 but we'll look for cheaper when they come up for renewal.

Can you consolidate the money you owe into one with a low interest rate?
For now though,you need to start paying this down by doubling the minimum monthly payment. It will hurt for a while but you could potentially clear it in a couple of years.

As it is on 0% I would pay £1000 a month which will clear it in less than 2 years and still give you some leeway.

@Outwiththedebt I get your concern the only suggestion I have is on pay day put £1000 in a savings account, on the next payday pay £1000 off your debt. Essentially you are deferring payment by one month but the initial £1k gives you flexibility to see how you manage.

As you go through the year you will see if £1k is the right amount or £800 etc.

Op sorry you are in this situation.

Our income and costs are very similar to yours. For me it wouldnt be the amount of debt that would press me to pay it asap rather then structure it a bit longer term, but the reason for the debt being so annoying would make me want to clear it as quickly as possible to then move on with my life.

Like others I would try to pay £1k a month off it, and then monitor it where necessary eg if need to drop back to £750 before Christmas the do so.

Op just on the car front - same car and I budget the same. I think it's a sensible amount for that car, that some years you will need and other years will cost less. I've had mine for over 3 years and some cost me very little but this last 12 months has cost what you have budgeted and I know I have some more upcoming costs in next few months too for it. So I would probably leave that as per your budget amounts.

Firstly, you know you have only accrued this debt through bad luck and not through being wreckless. This should give you confidence to know you can budget. I would start by paying £1k each month off the debt. As you are on 0 percent card you should be able to knock a hole in the debt quickly. I would go without a holiday in 2026 but budget to go on a few days trips by only paying £500 in July and August. I'd also only pay £500 in November and December too to allow for Xmas gifts. If you can stick to this you will repay £10k in 2026. Just vdp the same again in 2027. Promise yourself a decent holiday in 2028 if you've repaid the debt in full.
Why do you need commuting cost if you pay car cost? I'd cut back commuting if it means taking cabs. Your DH and ds can go an additional 2 weeks between haircuts. Cut back food shop by £50 per month and cut back on school lunches and send in a packed lunch a few days each week.

Just wanted to add that I’m sorry you had to go through all of that @Outwiththedebt. Well done on making a solid plan to pay it all off. It will be the best feeling once it’s all done. Keep us posted 🙌

I'd increase the debt payment to £1,000 a month, and then curtail all discretionary spending.

Start every day with an assumption you will spend nothing. Take packed lunches to work. Do your own nails. Switch gym for parkrun and weights at home. Question every single purchase and if it is necessary. Think how you can do it cheaper? Can one of you get a second job, even if only a couple of shifts a week bar work?

Grit your teeth and be disciplined for a whole year, then reevaluate.

So work out how many payments you have left to clear the cards before the 0% interest ends and divide the amount by that number.
Eg
Card 1 owe £10k, have 18 months left @0% so need to pay off £556 a month.
‘Card 2 owe £5K have 12 months left @0% so need to pay off £461 a month
Card 3 owe £5K have 6 months left @ 0% so need to pay off £833 a month. As soon as this one is paid off, put the £833 into a savings account.
Cut up all your cards and don’t be tempted to take out any more.

So 1 of us takes the car and the other commutes by train - £9.60 twice a week on the train.

Unfortunately the school lunches are all or nothing, you can't pick and choose which days you have. I'll look in to if I can make pack lunches cheaper.

Omg! I was thinking it was a case of them refusing to pack up but now I can see why it’s created so much hassle! How can they be bankrupt if you’ve bought their house though!!

Anyway yeah it’s easy to change Netflix plan I think it should bring your cost down to maybe £8 or something.

Netflix is £5.99 with adverts - but tbh there are hardly any ads, possibly one and hour

Broadband £35 there are some deals that are cheaper than £35 per month, certainly Vodafone is doing deals at £28 so £7 saving

Water £53 - are you on a meter? If so give them monthly readings to lower the DD

Netflix £24 - reduce to £5.99 is £18 saving a month
Prime £8 cancel until the summer, don't pay for the months you're unlikely to use it - this is what prime relies on. Save £8

Window cleaner £12 ask window cleaner to come every 10 weeks or every other month

TV licence £13 do you watch live tv? If not stop licence and write a letter removing rights of access - template found online and they will leave you alone

School lunch £45 its unlikely you'll save much money giving packed lunches, £11 a week is not a lot of money for a hot school lunch.

Life & critical illness insurance £95 - im skeptical of the critical illness part - id just have life - Ive never known a critical illness policy pay out without a fuss

Lottery £10 stop and save £10 for now

Council tax £200 you have 2 free months coming up - this would be £400 to throw at the credit card running out in April

Out of this you could probably easily save £100 a month, easily as in you will not really notice the difference

Yes, I hadn't factored in the 2 free months, that's a bonus.

Yeah we bought the house in June 2024 and only moved in in October 2025! So 15 months of hotels and air b&bs, whilst still paying me mortgage and council tax and insurances on the house. And when we were in the hotels (premier inn style stuff) we had to eat out for most meals. Plus then solicitor fees etc.

No idea how they've filed for bankruptcy but they have. Once all assets are liquidized and stuff we may get a bit of money but it'll be pennies compared to the £££ we've spent.

We’ve found Everypaw for pet insurance for one dog and 2 cats very good. It’s around £20/month

We pay £18 for Netflix ( with adds and 2 devices ( so could reduce £72/yr )
We pay £13 and £10 for our phones with 3 ( £96/yr saving if deal still available )

School dinners could be switched to packed lunches

Ditch the paid for window cleaning

Gas and electric. No idea what your thermostat is set at but try lowering it by a degree at a time
Wash clothes at 30 max and only higher for rugby type dirt. Don’t use a tumble dryer
Batch cook to save on bills too

£600 isn’t unheard of for 2 adults and 2 kids but as Youre trying to save it is. Shop in Aldi of Lidl if they are near or your passing on your way from work. Don’t buy brands. Reduce expensive products like meat

Dont pay for your son’s haircut. I’ve done my three sons and dh gor over 20 years and they now prefer me to the barbers 😁

Seriously reduce that £1600 by going for free walks / playground etc and taking a picnic

Holidays reduce price by camping ( at least for some of the time). Taking the car abroad if you must go overseas and book everything yourself through booking.com or similar. Reserve accom and keep looking to grab a cheaper deal at the same accom when it crops up ( I saved £1800 doing this on one hotel recently )

For a big saving don’t have a holiday. Although that is an obvious one

I would think with most of your costs covered i would think £600 is a lot to live on day to day each month. I have around £200-300 a month for context. So if you feel you could I would be doing £1000 on debt

That is horrendous! Oh my god. I cant believe they lied the whole time about having tenants too. That’s a crazy amount of time to not be able to get in.