To be worried about this level of debt

[Mammabee20]

Hi! I am just wanting some advice on whether this level of debt is something to worry about or not.

I am currently on maternity with DC 2 and DH is working from home due to COVID-19 so our wages haven’t changed at all. I know we should be lucky and feel grateful about this but I am really panicking.

I have totalled all of our debt and it comes to £17500! That is not including any money we owe family from previous borrowing. We are supposed to be paying my dad back by my DH using his skills to assist with my dads business. We have promised to build and maintain it for 5 years before we start charging.

Looking at all the avenues I cannot afford to not go back to work and full time at that but our outgoings means we can only afford childcare for 2/3 days.

I have done an extensive spreadsheet on Microsoft and the only way it looks like we would be able to clear the debt quickly would be if I returned to work full time for a year and family looked after our children for free for 12 months. My whole wage would go on clearing the debt and nothing else. This Avenue is completely pointless though because it would be highly inappropriate and cheeky to ask family to ask them to look after them for free for 5 days a week with nothing in return..

I hate this I feel sick to my stomach whenever I think of money and my DH is just oblivious even though I’ve told him the figure and I’ve given him the worst case scenario figure which would be including borrowed money from his dad.

For reference our take home is about £2800 and our debts and mortgage payment together is about £1000

So my AIBU is.... am I being unreasonable to be worried about that level of debt or not?

Just wanted to add I found Dave Ramsey on YouTube motivational when we were getting out of debt.

We are due to come to the end of our 2 year fixed term so if I added an extra £17500 would that increase the term or monthly payments?

You will be getting a new deal, so effectively a whole new mortgage, that pays off your old mortgage! This is what we have just done, get the clearscore app and it will tell you what mortgages you will be accepted for and you have the opportunity to add extra borrowing too and you'll get a rough idea on what you're monthly payment will be, we did it all through the independent mortgage broker they put us in touch with, it was a really easy process and we're better off by about £350 per month!

But it's imperative that you then budget your finances so you don't end up back in debt again

Personal and business debt here is £742,000.

Business is currently closed yet vehicle lesses, staff, insurance, rent , PRS, PPL, phones , gas, electric etc all still need paying .
That’s about 40k a month. Invoices from suppliers that are normally 90 day terms still need paying for products we have purchased but can’t sell.

Mortgage is £2,500 a month, am car is £330, other household expenses about £600.
Other half has just been made redundant.

It’s a tad stressful

As others have suggested pop over to the debtfree wanabe board on MSE and the folks on there will help you. They will ask you to do a statement of affairs (soa) and help you with ideas to cut down. They'll also help you with ideas and challenges to make extra money. Also while on the forums have a pootle round the other boards.

forums.moneysavingexpert.com/categories/debt-free-wannabe

There is also the support thread on Mumsnet

www.mumsnet.com/Talk/legal_money_matters/3564254-a-support-thread-for-people-paying-off-debt-2

Then there is the MN £10 a day threads

www.mumsnet.com/Talk/legal_money_matters/3867986-april-10-a-day-thread?msgid=95299051

But whatever you do DO NOT put the debt on your mortgage.

@Couchbettato, I hope you went through either National Debtline, Stepchange, CAB or Christians Against Poverty.

@ElGuardiandenoche we used stepchange. They were very good.

In my country we have something like a live in nanny but it is paid for mostly with bed and board. I think in the UK they are called an au pair. Is this an option? It is usually a student on a gap year or similar and they want an opportunity to travel and improve their language skill, or gain work experience with children for teaching qualifications. You give them a room and feed them, and then I think you also pay them a small amount on top of this for them to have spending money. They will look after your children when you are at work.

If you don't have a spare room right now then maybe things can be reorganised - can children share a room? Can you convert a dining room or similar?

I think the important thing to remember here is that you will have to make some sacrifices in order to clear down this debt. Someone may have to take a second job, you may have to downsize, you may have to sell a car, you may have to swallow your pride and ask your mum for childcare, you may have to give things up etc... but it's all only temporary. The more sacrifices you can make now, the more temporary it will be.

I promise I'm not trying to stick the boot in but you recently had another child and want to move house, yet continued to accrue so much personal debt? I'm so confused. I'm not suggesting you need to be loaded to have a child, but this amount of debt seems enormous to me, then add another child as well?

You need to sit down and work out where all of your money is going each month - account for every single penny. This should help you to see where money can be saved.

Oh, also - why the hell isnt your DH on board? That's really worrying. He is an adult. He should be worried about this. He doesn't need to be stressed out and panicking, but he absolutely should be taking it seriously and talking through options with you.

Give him a kick up the arse.

I’m probably going to disagree with most in here, based in what my sister did. They had several credit cards and a car loan. They came to the end of their fixed term mortgage and remortgaged to the higher amount to consolidate the debt. Yes she and my BIL then had a slightly longer mortgage but the amount was far less than the debts where the interest rates were going up. She had been so worried about the lack of disposable income that she wasn’t sleeping and none of us had money we could lend them.
If you do this though, cut the credit cards up or keep one for an emergency only .

What has changed between now and when you did the financial planning before you decided to get pregnant?

Have you looked at credit cards with 0% deals? If you can get one, transfer your debts asap so at least you are paying the balance, not just the interest.

Go through all DC's clothes and toys and sell everything they have outgrown (declutter the rest if your home and likewise Ebay what you can).

Can you & DH explore flexible working options with your employers. Working from home will save money on commuting costs and you won't need childcare for the hours you aren't commuting. Could you/DH work some of your hours in the evening so that the other parent is at home with children and perhaps you can gain an extra day at home with the children.

Do you have family nearby? You say it would be highly inappropriate and cheeky to ask family to look after them for free for 5 days a week with nothing in return.. Although 5 days might be a bit too much of an ask, many grandparents would want to have 1 day a week with their grandchildren and wouldn't expect or want payment for this. To say they'd get "nothing in return" is inaccurate as many would see forming a bond with their grandkids as the "return" on this.

@Couchbettato, I'm pleased to hear they were able to help you. All the best with your debt free journey.

Please, please don't take debt advice from random people on the Internet..

Please contact Stepchange.

Don't secure it against your house unless you understand why you got into debt and you're both on board to change, otherwise you just clear the debt and then 3 years later have another 17k racked up.

I honestly despair people giving or taking legal, financial, business advice from obviously well meaning strangers. Might as well just ask someone at a bus stop.

That’s a huge amount of money and if you already had debt before extending the family then adding to the financial pressure and childcare costs wasn’t going to help whatsoever.

I’d go back full time before dropping to the lower maternity pay and clear the debt as quickly as possible. Given the state of everything currently there will be job losses and increased prices and taxes I’d imagine which will put more pressure on.

Imstillskanking Au pairs aren’t meant to be used for full time childcare; usually light housework, school runs and a couple of nights giving kids their tea and babysitting if parents go out/back late. Most of them come here to study languages, so the expectation is that they are in college and get bed and board for the above, they are not nannies on the cheap.

Have you looked into a debt management plan? I did one when I had £15k of debt. They worked with my creditors to freeze the interest so I only paid off the actual debt. I only paid the minimum each month, and it took me five years.

I think you would be better talking to step change and getting advice from MSE OP.

I think you need at least 3 years to pay off that sort of debt - as it’s been said, if credit card transfer to 0% interest deal

If family don’t want the money back, wait to pay that back when you can in the future or not at all, it can come off inheritance if relevant

Also try not to drive yourself mad right now - who knows what’s going to happen

You’re definitely better off putting this query on the MSE forums.

You don’t get the judgemental “you’re in HOW much debt!?!?!?” comments like you do on here and people are better at talking through the debt step by step and are generally more supportive/have been through it themselves.

Contact a charity called Stepchange. They don't charge you anything and they will help you deal with this in the best way.

I'm 90% positive that a DRO isn't an option if you own a house, but then I've only ever done debt work with people who are tenants.

0% credit cards are a great option, as long as you don't end up spending on them.

Increasing the mortgage to cover debt makes financial sense on paper, but again is only really going to help if you don't get into debt again.

I agree that it looks as though you could pay more off the debts. Throw the most money at the one with the highest interest rate, as that is the one that is costing the most. Then work your way through the others, always prioritising the one with the highest rate each time.

Once you've paid off the first one, and the money you were paying on that is added to what you're paying on the next most expensive, you'll find that the rate at which each debt goes down really accelerates.

But I think you also need to take a look at your finances generally. Write down/put on a spreadsheet/whatever works best for you every penny you've spent in the last month or so. Keep receipts if you can't remember what small transactions were for. You can't manage your money well unless you know where it is going!

Once you know where it's going, you can start making economies. Shop around for utilities using comparison sites for everything that is a regular expense, do that same when any contracts (eg phone, broadband) and insurances are up for renewal. Have a good look at those regular outgoings? Are there things you could do without? If so, cancel them.

You have a good income and your mortgage payments aren't massive. You should be able to pay off a good chunk of that debt quite quickly. An extra £200 a month off that debt would make a big difference.

You've massively under calculated the cost of a nanny. I paid £1000 a month, when you include tax etc, for 2 days/week.

We are due to come to the end of our 2 year fixed term so if I added an extra £17500 would that increase the term or monthly payments?

your mortgage lender will ask why do you want it? Then take one look at your finances and decline to extend the loan.