Drowning in debt

[movesyouveneverseen]

I’m certain AIBU isn’t the right place but I’m hoping to get some real help.

Between my partner and I we have around £100k of debt, equates to around £2,000 a month in repayments each month and does NOT include our mortgage.

We cannot add this to our mortgage and wipe the slate clean so to speak because we have help to buy and so adding extra to the mortgage isn’t allowed.

The debt isn’t being added to, we are paying the required amount for loans and any credit cards are being paid the minimum payment - we are just keeping our heads above water.

I feel like I’m drowning, nobody knows any of this except for my partner and I. I just don’t know what to do and am really hoping for some practical advice.

How on earth did you rack up so much debt? How much equity in your property because that will determine the best course of action.

Has it been frittered living above your means? Or are there things you can sell to start making a dent in the total?

@ScrappyCats yes they have to stay with their lender on whatever hideous variable rate will be at the time. This is exactly what happened to me a few years ago. The debt plan was still ongoing when my fix came to an end and I couldn't find a single person who would remortgage me so I had no choice but to stay put

I know I've already said it but a debt repayment plan really is a last resort for those that can't physically pay anything back. Op if you can keep up your normal repayments that is the much better option as you'll credit rating won't be hit

Has one of you got a gambling addiction?

Another recommendation for Stepchange here. I've been debt free for over 5 years now and don't know what I'd have done without them.

That's none of your business!

I know how it feels. I'm in a similar position. I can afford the repayments each month but when they come to over £2.5k a month it feels such a waste. Ours is living above our means and DH having a spending issue. He's a lot better now but it's been hard over the last 10 years. We have equity in our house but we wouldn't be able to get an additional mortgage due to house not being in a good enough condition.

I also have a spreadsheet with end dates, monthly costs and outstanding balances. I know it's our own fault but I crave the day we're debt free.

Wow! Thank you all. I was worried everyone would judge.

I’ve just got off the phone with Stepchange and they are calling me back in 5 minutes so I could get all the figures for them.

capuk.org/get-help

I can’t recommend CAP highly enough.

No we do not.

Well done, as PPs have said, they are brilliant and you'll finally be able to see the light at the end of the tunnel. Good luck

We have equity but we have help to buy so cannot borrow more via our mortgage.

I never ever imagined I’d be in this position and am deeply embarrassed.

I'm glad you've made the call. The worst thing you can do is bury your head in the sand. For a while I worked in banking, when people ignored their debt it never magically vanished it made things worse. But the bank I worked for anyway were always willing to try and come to a solution with people.

I got into serious debt a few years ago and I genuinely had no idea how/why
when I broke it down it was overspending on credit cards etc by just £300 per month for 5 years when you added interest.
Its not hard to do and hard to get out of.
Good luck op, you have taken the first step by admitting it and writing it all down

Do look at the Dave Ramsey method on Facebook/Google. You see some inspirational stories of clearing debt.

A debt charity (maybe Step Change, I'm not sure) were amazing for a relative that was in your position. She's now debt free which seemed impossible before. The credit card companies wrote off a lot of the debt.

This

For those saying how on earth did you get into so much debt.. does it matter? The situation is what it is. Stepchange were a godsend to me and really helped me turn my life around. You've got this! Good luck!

A plan to repay the debt is one thing.
An understanding of how you got in to the debt is another, as if you don't figure out the root cause you may find yourself in situation again.

Ramsay himself is a bit sus, but the envelope budgeting method has saved my finances (what little there is).

Good on you for making the call. It's not easy. Good luck.

Well done for taking first step op, don’t be embarrassed

I can believe Step Change has saved lives, reading these posts it sounds brilliant

Check out the Debt Free Wannabes in the Money Saving Expert forum. They will also have lots of practical advice.

You need to understand how you got into this position in order to get out of it and stay out of it.

I can't recommend Step Change enough, they literally turned my life around and I am now debt free - apart from a newly acquired mortgage which I would never have had if I hadn't contacted StepChange for help.

It'll be the best decision you make.

Good luck!

Don't be embarrassed, OP. You are probably the one judging yourself more harshly than anyone else. Lots of people get into debt for a whole range of different reasons, and once it starts, it's really easy for it to spiral out of control quite quickly. It's very common for people to be in denial at first and to bury their heads in the sand, but the sooner you're able to seek help, the better.

An experienced debt adviser will have seen it all before. They won't be in the slightest bit shocked or judgemental, they will just want to do what they can to help.

Don't beat yourself up about it, honestly. Learn from it if you can, but remember that, ultimately, it's just money.

Do you know why you're in debt? Just general 'lifestyle creep' and an over reliance on credit, or has there been something like loss of income, period of ill health etc?

How to get out of it depends on how much free money you have. Do you have slack in your budget that means you could pay it off with a few lean years or do you need a more formal solution?

The first step is putting together a comprehensive and sustainable budget, that includes all essentials and a modest amount of discretionary spending, plus an emergency fund as you'll have to be able to do things like replace the washing machine or fix the car without credit.

Then you need to look at what you have available and whether you'll be able to pay it back without an IVA or similar - you haven't said how much spare money you have or what the interest rates are - the risk is that if you only pay the minimum payments and the interest is high, nearly all what you pay goes on interest and it takes years or even decades to pay off.

Have a look at:

www.moneysavingexpert.com/banking/budget-planning/

The other thing that is vital is getting your partner involved. You both need to be on it, no point one of you cutting back to the bare minimum and living on beans, if the other is still buying lunch in Pret every day, or whatever.