AIBU to think that we can't sort this ourselves without professional help - desperate situation

[phillers]

Morning,

In a terrible situation. Years and years of poor communication and financial mismanagement have led us here. I am broken, ashamed and not sure if this is something that we can ever get out of. Terrified of losing our home

please be kind

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2[b]

Monthly Income Details[/b]
Monthly income after tax................ 4355
Partners monthly income after tax....... 2511
Benefits................................ 0
Other income............................ 250[b]
Total monthly income.................... 7116[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 801
Secured/HP loan repayments.............. 386
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 139
Electricity............................. 98
Gas..................................... 112
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 0
Mobile phone............................ 67
TV Licence.............................. 13
Satellite/Cable TV...................... 36
Internet Services....................... 21
Groceries etc. ......................... 600
Clothing................................ 30
Petrol/diesel........................... 220
Road tax................................ 22
Car Insurance........................... 64
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 120
Medical (prescriptions, dentist etc).... 9
Pet insurance/vet bills................. 28
Buildings insurance..................... 22
Contents insurance...................... 17
Life assurance ......................... 49
Other insurance......................... 9
Presents (birthday, christmas etc)...... 100
Haircuts................................ 20
Entertainment........................... 150
Holiday................................. 0
Emergency fund.......................... 100[b]
Total monthly expenses.................. 3298[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 320000
Shares and bonds........................ 0
Car(s).................................. 14000
Other assets............................ 0[b]
Total Assets............................ 334000[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 140098...(801)......4.11
Hire Purchase (HP) debt ...... 17000....(386)......0[b]
Total secured & HP debts...... 157098....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
updraft loan...................21000.....360.......16.9
updraft loan 2.................8000......210.......18.9
Updraft loan 3.................6500......165.......18.9
overdraft......................2500......80........42
Creation Credit card...........7100......192.......21
very...........................700.......48........50
halifax cc.....................2400......24........0
fluid..........................3600......170.......39
LLoyds.........................3890......132.......8
HSBC loan......................7309......210.......7.9
Lloyds.........................10500.....269.......29
barclaycard platinum...........12600.....258.......4.9
barclaycard....................4960......109.......4.9
natwest........................2000......20........0[b]
Total unsecured debts..........93059.....2247......- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 7,116
Expenses (including HP & secured debts). 3,298
Available for debt repayments........... 3,818
Monthly UNsecured debt repayments....... 2,247[b]
Amount left after debt repayments....... 1,571[/b]

Cards are all cut up. No possibility of us moving to 0% right now as we have too much debt and are seen as high risk

Partner thinks that it's fixable if we budget properly and start on the highest interest debt. I wonder if we need professional help

AIBU to think that this is not fixable by simple budgeting

You you gave approx 1500 a month surplus to throw at 93k debt.

Are you covering interest on everything or just minimum payments because anything I right is useless if your dents are rising by only covering minimum.

Very rough calculation and not allow for anything that isn't on interest only, if you still ridgity to this you can be debt free other than mortgage in 62 months.

Given the fact you've gotten into this situation, I do think that some professional help would be a good idea. Also pets and entertainment are luxuries you cannot afford.

How did you wrack up £93k of unsecured debt?

Why would you lose your home? From the looks of it, you’re paying all of your debt off. As long as you keep paying, you’ll keep chipping away at it and bring it down.

when is your mortgage deal up? If it’s soon then you may end up paying more on your mortgage repayments, but to pay all the monthly payments and still have 1500 a month left over, you’re not in a bad position.

assuming you’re only paying the minimum repayments, I’d round all of them up by 15% minimum, then hammer the higher interest rate ones first to get rid of them asap.

That's not what OP was asking, not do you need to know.

Living way beyond your means has got you here. You seem to have taken out another CC as soon as the last on was maxed out. Banks need to stop allowing this tbh. Cars on finance is another thing, where have the days gone where you just bought an old banger because that’s all you could afford. Everyone has to have the top model, the newest plate nowadays. That’s an eye boggling amount of debt tbh. No answer really except you do need help !

You look like you are paying it off with loads to spare? I would look at taking out a consolidation loan for as much as you can for any higher APR debts to reduce the interest

@Dinojump But it's relevant to know how they got into so much debt. If she or her OH are gamblers or shopoholics or struggle to budget and are not seeking support for that then the likelihood is they'll just keep adding to that total despite best intentions.

If they've had to do a huge amount of building work on their house as a one off for example then that's different and they could work on paying down the debt with budgeting.

It looks like you can afford all your debt repayments so you wouldn't be a candidate for an IVA or other formal solution as it's generally expected that you need to not be able to afford all the monthly payments after essential expenses to qualify.

You could possibly trim a little from your expenses (reduce mobile phone, satellite TV payments etc) but not huge amounts.

Start with the debt with the highest interest rate, make the minimums on all the others, and pay all spare off that, then when that's gone, move on to the next one. Etc etc. Maybe pay off some of the smaller debts sooner for some instant wins and simpler administration. Also, as you clear credit cards, ask/look out for existing customer balance transfer offers, to reduce the interest paid.

You appear to have a good surplus above the minimums, so a few months of really tight budgeting and hardcore debt repayment and it might start to look a little brighter. £90k at £4k pm means you can pay your debt off in around 2 years, obviously it will be longer due to interest, but if you do manage some balance transfers, you could be out of debt in under 5 years, which is less than any formal solution like an IVA.

When does the HP (car finance?) end and will you be able to keep on running your existing cars without taking out further credit?

Thing is if you are paying the minimum each month on CC, then you are not paying anything off of the debt, you are chipping at the interest and then the next month what you owe has actually gone up… it’s a vicious circle!

Don’t be so silly about the pets and entertainment, you’re implying that only people with a great credit rating should be allowed . Nobody is going to give away a pet to pay more off credit cards! 🙄

If you have £1.5k to throw at it, you could either pay off a couple of low balance cards so you see the psychological benefit of owing fewer people. The other (more financially beneficial way) would be to continue paying the minimum amount on everything except the debt with the highest interest rate. Pay that until it’s finished, then start on the next highest rate until they are all paid down.

The beauty of doing that is once you’ve paid the highest one, you have your monthly minimum payment plus the £1.5k, so the next card is paid off more quickly.

If you can get free professional advice, eg from CAP or Step Change, I’d go for it or use Money Saving Experts forums, the folk on there are amazing. I absolutely wouldn’t pay for professional advice, that’s good money after bad when there’s already so many resources out there.

I recommend following The Dave Ramsey Money Makeover - it's very good indeed.

I think that the rules have changed now in the UK so that the minimum payment has to pay the interst and reduce the debt a little. For my cards this is definitely the case. I pay 1% of the balance off plus any interest. I agree that paying just the minimums is an issue though

Two adults and two children should not be costing £150 a week in groceries. Cut this down to £100 a week, then you'll have another £200 a month

Entertainment? You haven't specified whether this is trips, TV packages etc. See if this can be brought down to £100 a month by cancelling subscriptions, a few less trips out etc

Mobile for you and DH is £33 each a month. Time to get a cheaper contract/SIM only/pester your phone company for a cheaper deal. Aim for £25 each

Saved you £265ish a month off the bat.

Then try paying off the higher API plans off first and moving some to 0% for 36 month plans

This boils down to - are your monthly repayments covering the interest? You can't be in a situation where your unsecured debt is increasing each month because your repayments don't cover it. If this is the case then I'd get professional help to try and restructure the debt.

Fundamentally your situation is not so bad, don't panic.

Use the surplus you have, plus any other money you manage to trim here and there to pay off the highest rate debt

You need proper advice. Have you contacted Stepchange?

I rarely suggest this but in this situation with high repayments out but reasonable equity I would remortgage to £210,000 and pay everything off except the cars. And keep the cards cut up- apart from one each with say a £3k limit for emergencies

Any other options will cost you far more than say 6 % and many of these cards will be costing 20 to 30% at the moment. That should bring your payments out back to around£2000 including cars .

I'm really shocked that banks kept on issuing credit cards to you, someone should have put a stop to that before it got to this point. I agree that getting some free advice would be helpful for you.

Look at both the Debt Snowball or Debt avalanche plans. Pick one and commit to it. There are some good resources online.

Pay off the highest interest first - Very and Overdraft and the work down from there.

Do you have anything to show for the £93k that’s been spent? Sell it and use it against the debts.

Two cars - sell and buy cheaper cars and use the profit to pay off debts.

You have an extra £1.5k a month to throw at this. You are absolutely not in a desperate or dire situation.

I always get shouted down for suggesting this, but someone else beat me to it....... if you can add any u secured debt to your mortgage then I would definitely do that.

The rate will almost certainly be lower and psychologically you will feel much more in control.

You can then keep hackin away at any remaining unsecured debts until just the mortgage is left.

Do you need to spend £600 per month on groceries? You could also move onto a sim-only plan for your phones (I’m on an unlimited data, calls and texts plan for £20pcm). And I’d cancel the satellite once your contract expires, use Freeview and prime/YouTube.

I’d also see whether you genuinely need two cars. You might if you live very rurally, but most people could manage with one, it would just be less convenient. I’d also cut back on birthday presents and holidays until this debt is cleared - you don’t need to spend £1200 per year on two children, but that is what you have budgeted. Tell adult family members you are skint and will be doing home-made gifts this year (bake something).

christ Total unsecured debts..........93,059
can you re mortgage?

You get 7k a month after tax. Your mortgage is 800 and other basic living expenses low. I don’t feel sorry for you at all

I am not asking for anyone to feel sorry for me? I was just asking for advice