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.

@MarmaladeFatkins
Stepchange can help you lower your payments because they have looked at your outgoings and they can see that you can't afford your debts in full after your priority outgoings. When you work with stepchange your lenders understand this and know that even if they took you to court a similar budget would be drawn up and the court would only order a similar amount - so they accept the reduced payment.

This arrangement is usually informal, agreed between the person and their lender and called a DMP (Debt Management Plan).

An IVA is a more formal arrangement and people should be wary of them because providers can get paid for setting up an IVA so they might recommend one when it's not the best solution for you. Don't take out an IVA without getting a second opinion from the people on the Debt Free Wannabe forum of Money Savibg Expert.

@eveoha Thanks for replying, and I’m really sorry that you were screwed over like that.
As a kid, Dad drummed it into me “ Never to borrow “ ( Apart from mortgage) and at times in my life I have been very poor ( When husband left me to be a single parent)
If I’d have known I could have borrowed and not paid it all back, I would probably have done so-
But I thought all loans were secured against property?
Having been homeless as a teenager, I’d do anything to keep my home. ( have been offered loans lots if times, secured against house, but always declined)
I hope you and your Husband are ok now.. Lots of work for electricians , Hopefully!

Shopping like this is definitely an “ Addiction “
Have suffered it myself-
It is manageable if you treat it like an addiction, the dopamine rush of buying , but it never lasts, and it’s on to the next thing.
Oddly, it doesn’t make you any happier.
I get totally the buying leggings in every colour!
Best of luck!

thanks for the info

@oakleaffy yes it is! I get the "thing" I want and the feeling of happiness quickly wears off. Basically I feel like I'm always looking for the next thing as soon as I've pressed pay now on the screen 🤦‍♀️

I think in the New Year I'll have to address it somehow. Glad you have managed to control it. There is hope!

I am currently in a DMP with Stepchange and it's definitely not a scam. They got in touch with all the companies I owed money to and arranged a plan with them. All interest charges have been frozen for the whole term of the plan. I have paid off over £10k in the last 2 years and have just over a year left now. It has helped so much, I was honestly depressed and suicidal about how much debt I had and how I would ever pay it off as I could barely even cover the minimum monthly payments

when I had a bit of a shopping addiction I found that putting things in the online basket but not hitting the buy button for 24 hours meant I usually didn’t bother actually buying the things.
Maybe worth a go?
I found not going on e-commerce sites at all didn’t work but this did

@Hoppinggreen thanks I'll try that. Just keep them in my basket for a bit! Be less impulsive 😬

Wish list is good too. Go back a few weeks later and see if you think oh I’m fine without it. Usually the case ime although I don’t need to anymore.

@MarshaBradyo thank you. I'll try that too!

There most definitely is hope!
it’s such a fleeting pleasure, and is all down to a dopamine surge in the brain, just like what cocaine and heroin users get.
When you realise it’s chemical, it becomes easier ti say “No, I don’t need it, it won’t make me any happier”
🙂

That’s interesting.
My addiction was to collecting a specific type of antique toy-
I came off facebook groups to do with it, as well. Reading of others collecting made me own addiction worse.
Thrill of the hunt &c.

Well done for facing this. Hopefully stepchange can help with good advice.

There's a (albeit American so different rules and regs) woman called Jordan Page who runs Fun Cheap or Free on YouTube who does a lot of talks on debt management/budgeting etc.

One thing she mentions is a sort of snowball effect on debts. So you put the debts in order of lowest to highest value, then meet the minimum payments on the bigger amounts (obvs take into consideration interest rates), and chuck every additional penny at the smallest debt. It will then be cleared really quickly, so you then tackle the next biggest etc.

As your number of debts balances reduce, the funds available to drop into the next one increase.

The snowball method pays off smallest debt first regardless of interest rates, then second smallest so giving a small win early on and that seems to work best on a psychological level.

the avanlanche method pays off debt with highest interest rate first regardless of the sum of that debt then second highest etc this method works best mathematically as you will pay off a smaller amount in total
it depends on personality type but for most people the snowball has better incentives so marginally works better if you have 10 debts and get that down to seven in 6 months it somehow inspires you better to keep going than paying off half the debt with largest interest rate

to my mind if you owe 100k and a few of the debts are just hundreds rather than thousands I can see getting rid of some relatively small debts first helps you feel you are reducing overall debt, then concentrating on debt with highest interest next
also if you have borrowed from friends or family you might need to pay them first as they can't afford to be without the money for long and you need to maintain decent relationships even if no interest on the other hand if they know situation they maybe prepared to wait until last.

@Chesneyhawkes1 I would recommend you do a CAP course as that will help with the emotional side of why you are spending for very short term happiness as well as budgeting.
You can also give yourself so much money a month for spending whether you buy leggings or lattes is for you to decide but when it's gone it's gone ( decide the sum in advance depending on your income )and it needs to stay in wish list basket until next month even a 24 hour delay will stop some purchases, then turn it into a week then a month

@Cottagecheeseisnotcheese thanks I'll look that up. 2023 will be the year of less spending!!

Speak to the people at Step Change they are a debt advice charity and will help you pick your way through your current debt situation. They do not charge for their services.