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.

I'm another encouraging you to go to the Debt Free Wannabe forum on Money Saving Expert website. Read other people's diaries for inspiration, start your own for lots of advice on where to start and how to keep going when it gets tough.

Definitely speak to Stepchange or CAP as well. If you are coping with the repayments at the moment and not increasing the debt athen whilst an IVA or bunkruptcy might be necessary they should be the last resort. It's worth getting the advice and being brutally honest on how this debt came to be, so you can find a way out. Good luck OP.

Citizens Advice will be able to go through your finances with you and they will liase with your debtors to agree repayment once you give permission
They were very kind and non judgemental when I had problems a few years ago( debt frozen and currently paying £2 per month
Do contact them to start the ball rolling

Glad it wasn’t just me, either!
It’s like hearing a heroin user saying
” I’m now drug free, I've been through a painful detox, so now I’m drug free, I’m celebrating with a smoke of heroin”

@movesyouveneverseen also, if you haven't have a look on the money saving expert debt forums. Lots of people in the same boat. I second the good advice others have given above re citizens' advice, stepchange, money advice service etc.

Like others have said PLEASE CALL STEPCHANGE , I had to help a friend with the same issues, we called stepchange together and wow they really stepped in and helped, they asked for disclosure of debts and payments, they contacted all my friends creditors and amassed the debt then agreed a payment plan for her at a much lower interest rate.
It will take my friend several years to clear it all but she’s now drowning in worry anymore and her mental health is so much better.
She sleeps at night now,she admitted she’d not slept for ages before this.

So glad you've taken the first huge step to dealing with your debt

Yes CAP and Stepchange are all good options. It's a very good thing you're paying off and not adding to the debt, that is itself an achievement. It terms of behaviour change, so you don't accumulate debt again, I'd highly recommend reading Dave Ramsey's Total Money Makeover. He also has a podcast which is worth a listen. He's very conservative American, and has some funny (imo) views on things other than getting out of debt, but when he sticks to that, his advice is spot on.

We are very aware of how we got here and it wasn’t overnight and most definitely not a luxury holiday, fancy car and handbags!! I’d have something to sell then.

Three lots of SMP, COVID had an impact (my partner is self employed), over spending definitely played a part though - the spreadsheet we have is like it’s on steroids so we can see where every single penny goes. Our situation is now ‘stable’ and we are in a position that we won’t be able to get on to debt like this again once we put a sensible repayment plan (whether it’s ourselves or with someone like Stepchange) together. We did have our head in the sand for sure, but now we have full amounts written down as well monthly payments things are very clear.

We pretty much come out even after our debts and then all additional outgoings like food shopping, gas and electricity etc.

I feel such a relief being able to ‘talk’ to others about it all, I really appreciate all of your comments.

on the back of this thread, I have just phoned step change. they are reducing my monthly payments from £450 to £100. waiting for call from accountants to finalise. I'm a home owner with equity and a decent wage so don't qualify for charity. it's a private agreement

I am hyperventilating a bit. it feels like a scam? why is it so easy? why are they so eager?? am I going to regret this?? please talk me down (or tell me to cancel!!)

totally relate...my debt has not been due to extravagance. but gradual over spending over YEARS. I earn a good wage NOW but only in the last 5 years and I have debt built up from over 10 years of being a single parent to 2 kids. I was on the edge of managing but my energy bill tripled and everything else increased as well, needed a new roof, dishwasher, washing machine, added to mortgage and on and on....

Look up Dave Ramsey and Snowball method. It’s the best way.

I was pretty surprised by that as well.

I'm really glad you've called Step Change - that is a brilliant first step and they will be able to give you loads of good advice.

If you decide not to go for a consolidation option one approach which can work well if you're currently managing to make the repayments is:

1/ Speak to each credit card / loan and fix the monthly payment at the rate it was this month (otherwise they auto-reduce payments and it takes longer). Cut up the cards and make sure you can't spend any more on finance at all.
2/ Look at your spreadsheet, find the card/loan with the highest rate of interest
3/ Sit down with your partner and work out a really detailed plan to pay that loan/card off as soon as possible - literally a really intense short challenge period. You might need to think about selling things you own / getting a second job or overtime / live really frugally for a few months. Basically pull out all the stops over a short period of time to clear it.
4/ As soon as the most expensive debt is cleared identify the second highest interest payment and call the provider. Ask them to increase the monthly payments by the amount you were paying on the first loan/card that is now paid off.
5/ Give yourselves a months breathing space and then repeat from step 1. This time it'll be easier because you've already upped the payments.
6/ As soon as you've paid of loan/card 2 move onto loan/card 3 etc etc.

Good luck! It'll take a long time to clear 100k but you can do it.

If you are covering your payment amounts at the moment, have you had a look at snowballing?
debtcamel.co.uk/debt-options/guide-to-snowballing/

What does step change do enter you into a iva?

Be proud of yourself for starting to address it! It’s an exciting time paying down debts and seeing an end date. Your debt free day will be the best feeling.

I can’t advise on who to see re debt management, but I’d there a side hustle you could do for some extra money? I have a friend who makes wreaths and sells them at Easter/Christmas/autumn etc. Someone else I know sells Avon. My husband is really good at power point presentations, he’ll put one together for a fee. I’ve bought and sold vintage homewear before alongside my normal job, but have no time now I’ve got kids.
We had work issues during covid and just about got by. It’s surprising how much you can save by cutting back. £5 mobile deals, basic tv packages, went through my wardrobe and sold anything decent that I’m never going to wear again, rediscovered old items that I haven’t worn in ages.
Best of luck, and well done for reaching out.

You are very brave OP. Hope you feel encouraged. You can do this!

Agree. Fix the credit card repayments at this months figure. You’ll start chipping away at capital as well as interest.

im doing this with mine at present. Minimum payment a while ago was £135. So I set up a standing order to pay £135 for the foreseeable. When I can I’m also paying off bigger chunks.

but the standing order trick works.

The best advice as others have said is to see a debt counselling service. That is a huge amount of debt

This is not insurmountable! You’re asking for help and you will fix it. It happens, I came off Maternity leave with 5k of debt. Paid off now. But it’s hard because you go back to being paid but you then have a child and childcare to pay for.

Consider anything you can cut down on or cancel. Is there anything you can sell, even to cut one of the debts down? Any opportunity for you or DH to see if there is a bar with a couple of shifts available each week? I know you have three kids but it might help a bit.

Such a great thread, the more people who talk about debt, the less people will bury their heads in the sand.

Good luck with it all @movesyouveneverseen and also anyone else who has read this and decided to take action.

Be kind to yourself and well done for dealing with it.

But she’s not debt free is she,having now got a new car on finance 🤷‍♀️

I was 20K in debt. Barely managing even the min payment on credit card repayments. I was in a very, very dark place living on 22p a day, stealing tea bags/loo rolls from the office. Newspaper in my holey shoes, paper towels from the work loos as sanitary protection. I eventually contacted CAP. From that day my life changed. The relief was incredible.
In 2014 I became debt free (took nearly 5 years). In 2021 I got a mortgage. Looking back to where I was in 2009, I never would have dreamed that would happen.

CAP not only did the practical stuff, they did the emotional stuff too.
I have not been overdrawn once since 2009.