Debt advice please help!

[Pleashelp]

So DH has managed to owe 10k on credit cards. We earn a decent salary between us (70k), maybe we have lived beyond our means the past few years but we are now struggling with the repayments. If anybody has been in this situation please help.

Get in touch with StepChange. They changed my life.

How? What did you do?

If you earn well it's not insurmountable, not at all.

First rule, no new debt. So if you can't afford it, don't buy it, no more spending on cards
Make a list of all cards along with the percentage interest you're paying on each one. Prioritise the one with the highest interest rate
Look at 0% deals - if your credit rating is good you will be able to move the balances to other cards

Move as many as you can to 0% deals. Don't only make the minimum repayment, make as much more as you can afford every month. That way the monthly payment will go towards clearing the debt, rather than paying the interest.

Contact Cab Or step change
Sure the Martin Lewis site will have advice.
Cut all the cards up today.
Be honest about what you owe and start to pay it back.
I bet if you speak to them you can reduce your payment

www.stepchange.org/

www.findyourcreditunion.co.uk/

You need a budget that you can stick to. Think about everything Christmas annual bills holidays etc and see how that adds up. Before you start thinking about paying off your debt you need to be living within your means. Then see if you can make the repayments etc. there’s good advice online national debt line but use free advice only not company’s that want to charge you. Also have a look at citizens advice website.

@mumsnet why has my post been hidden? It was just 2 links to stepchange and credit unions to help?

£10k debt on a £70k of salaries is not too significant.

The obvious answers are live within your means, cut back where possible, move debt to reduce interest (0% cards, lower interest loan, add to mortgage if you have one), cut up cards, make and stick to a budget, pay off as much as you can over time. Might take a few years depending on your disposable income.

Did you dh run up £10k of debt without your knowledge? Both of you need to be on top of what the budget is and not to overspend, or allow debt to build up without discussion.

What part do you think you will find the most challenging?

How did he get to have 10k on credit cards would be the place to start.

Next would be can he get a loan or consolidate the debt down?

If you consolidate the debt you absolutely must cut up the cards, don't take on any new credit cards and work out a proper, realistic budget.

Have a look at Moneysaving Expert

www.moneysavingexpert.com/loans/debt-help-plan/

While £10k debt with a £70k income sounds manageable, it depends on how much your other outgoings (mortgage, childcare? etc are) so the first thing you need to do is set out a workable budget that you can stick to while the debt is paid off.

If you still have a good credit rating, you should be able to transfer the balances to 0% deals so your payments go on reducing the debt, not interest. The danger when you're struggling to make the payments is that most of what you pay goes on interest and you can spend years making payments and make little progress.

If you reduce the interest and set up standing orders for a fixed payment above the current minimum, even by a few pounds, this can dramatically shorten the time it takes to pay the debt off.

The other thing to do is reduce your bills and spending where possible, which is easier said than done these days, but you might be able to identify savings to free up money, especially if you're honest about what are essentials and what are extras (eating out, bought lunches, activities etc).

You also say 'DH has managed to owe' so you need to approach this as a team and both of you put the efforts into sorting the problem, cutting back and seeking help to pay the debt off if necessary.

I didn’t know he had spent that much no. He said he felt guilty when I asked him to pop the shops etc!!!! Serious!

I work part time but considering going full time to cover this.

Try looking at balance transfers onto 0% as a first port of call, if possible.

If your budget is too tight then you might have to go onto a debt management plan. I'd only recommend doing this as a last resort. If you can alter your budget so that you can make the payments, do so, becasue once you go onto a DMP its highly likely the cards will become defaulted as you'll have broken the contracted monthly payment which will then negatively affect your credit rating for the next 6 years.

Step change are OK, but it's free and is stretched as a result so you don't always get the best service. I used them once and found it was more stress than it was worth. There are other companies that will charge a (relatively small) fee and I've used one of these too. Whilst it cost a bit more, it was worth it because they took care of everything.

Has it escalated by him not paying more than minimum each month? Is he still using the card? Stepchange et al can negotiate an interest freeze and repayment plan but you need to address the overspending and budget.

Don't panic! You've got a decent income so should be able to get on top of it.

1. Work out ALL outgoings, make a careful budget to see how much you have spare each month to make repayments (and an emergency fund if poss)
2. Shred the cards. No new debt.
3. Depending on the interest look for 0% deals on MSE
4. Get savvy with meal planning, reducing heating costs, frugal Xmas etc

Who is your credit card with? If they offer loans, ask can you convert it to a loan?

If not, transfer it to a 0% card to at least get 6 months no interest

If neither option available, then calculate how much you need to pay monthly to repaid as if i were a 5 year loan etc.

Never use it again

Do you ever use credit cards?

I owe twice that much and earn £45k. Get everything transferred onto 0% finance cards as a starting off point. Get an app that you can plug your numbers in and see how a 'snowball' might help.

StepChange is good - but it really depends on what 'struggling' means to you. Struggling to afford heat, council tax and mortgage? OK. Struggling because it's Christmas coming up then no. Whatever they do for you will default your payments and make it infinitely harder to change your mortgage rate, for example.

I went to StepChange when I was struggling and they basically told me as a family of 5 with about £150 left over after all bills they wouldn't recommend getting an IVA which is what they do.

As others have said look at 0% transfer offers on other cards or low interest debt consolidation loan. If you take a credit card option do not bloody spend any more, cut it up if you have to then set the payments at an affordable level. If you get a loan you can work out how many years to pay it over and then the payment amount is set.
If you use Experian or clearscore they will often be able to tell you which loans and credit cards you are likely to get approved on based on your credit score

I don't understand how it would be a struggle to manage it, but I suppose it depends on your outgoings. I know people who earn less, owe more and are managing.

You should in theory be easily able to consolidate the debt and pay it off.

There's another option, but it was probably more attractive when the interest rates were much lower. Depending on whether you own your property and what the interest rates are on the cards and your credit score, you could look at remortgaging for some debt consolidation. £10k isn't too much and that way you avoid the defaults, plus your monthly payments may turn out lower although you may end up paying more in the long term. I'm a mortgage advisor and we do this a lot. You'd obviously need to speak to a mortgage advisor first and they'll make a suitable recommendation. But again, only if you can't work out a budget first.

Then cut the cards up!

if the credit card debt has been built up of "popping to the shops" everyday living type expenses, then the most important thing you can do is to work out a budget that is realistic and that you both commit to stick to. If you're habitually spending more than you earn, then there is no point trying to address the debt, without sorting that first.

MSE Debt Free wannabe forum is great at helping people with coming up with budgets, or you could post your incomings/outgoings on here if you don't mind sharing.

Cut the cards up and contact stepchange as suggested. You also need to go through all of the charges with your DH to see where he’s spending money and why, hopefully seeing it all laid out like that will the first step for him realising he can’t bang so much on credit.

sit down and first work out your income and then your outgoings for bills, transport and food

then look, as other have suggested at getting debt onto % interest, cut up credit cards so you can't use them.

then look at changing habits, 3 weeks is all it takes to change a habit. Taking coffee with you to work, taking a pack up lunch with you instead of purchasing something whilst at work. Food shopping budget to make sure you're not overspending in the supermarket and wasting food.

There is a poster on the money section of the boards who has paid off £20000 debt in around 8/9 months - take a look at the advise she/he was given for clearing debt

I really don’t think that’s too big a deal, I guess it depends what it was spent on and what your outgoings are. We have a similar amount of debt (mainly through house repairs etc) and our income is a fraction of yours but it’s all on 0% cards we shift around and we pay off £200 a month of it. However, we’re not adding to it either and it’s gradually going down and that’s the main thing. There’s absolutely nothing wrong with debt if you manage it correctly.