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

Definitely follow Dave Ramsey and watch some of his reels on Facebook/Instagram. It will be really helpful to you x

You have a good salary so the debt can be paid down. It’ll take time but it can be done. However, overspending can be a symptom of wanting to have what you want now, which makes the prospect of paying debt for years daunting. Don’t be put off!

I think going to a CAP course on money management and budgeting would be really helpful. Managing money is all in the mind and it’s important to be shown the tools so you can develop the skills to succeed in this area. You don’t want to find yourself back here in 10 years’ time.

You can do this OP.

You have strong monthly income and plenty left over to pay your debts.

First challenge- stop buying anything. Stick to your budget plus don't buy anything you don't 100% need. This will feel dreadful at first but it will get better and better. It can actually be fun.

Look at YNAB. it does cost an annual fee but you will benefit immensely. You can search mn for many of us discussing it.

Look at snowball method of paying debt:

The budget nerds get really excited about debt:

Keep at it OP. You will be surprised at how you can turn things around.

All the calculations around how long it will take OP to pay of this debt are only viable if all unnecessary spending stops now. We have no idea if that’s likely since we don’t know how she accrued this level of debt in the first place.

If more debt is piled onto the existing £93k then obviously it will be a lot longer than the 2/3/4 years people optimistically (in my opinion) seem to think it will take.

If OP or her DH has a spending or gambling addiction for example then that needs to be addressed. It’s not as simple as ‘look at Money Saving Expert, tighten your belts and start repaying the debt’.

OP could already have been given that same advice when she was £50k, £60k or £80k in debt and it was all to no avail as the root cause of overspending has not been addressed.

Definitely relevant how the debt was accrued. If it was, say, buying a jet ski that can be sold on to reduce the debt, that's pertinent information. If it's on restaurants, bars, holidays, etc. through keeping up with a group of friends, and the OP ultimately has nothing to show for it, that's pertinent information.

if you're putting money aside each month to an emergency fund, why isn't the fund that's built up listed as an asset?
Phones madly expensive - keep the ones you have when the contract ends and get a cheap SIM only deal - I get unlimited text & minutes +more data than I ever need for £6

Without doubt, in your situation I would be seeking professional advice. There is almost certain to be something you can do (e.g. by consolidating the debt) to get the higher APRs out of the equation. Whether remortgaging or a consolidation loan or something else entirely is the right course for you is something an expert will be able to help with. But your situation certainly doesn't look irretrievable with some sensible financial management. Good luck!

You can definitely reduce your outgoings in places. For example you spend £600 a month on groceries. I spend £200 at most for one extra child (I don't have a choice my income is 6k a month less then you. No judgment I am just highlighting how other people have to live / manage on). You could also swap your phone contracts to cheap SIM only ones when they run out. Also I'd get rid of the 2nd car. Cars are expensive.

I do think you can reduce your spending further and have several grand a month to be paying off the debt and I would do that as a priority. But I would get some financial advice if you are paying high interest on the debt. Focus on paying off the high interest debt first. You should be able to chip away at it.

You done the first biggest step ... Admitting there's a problem with your debts and writing it all down to organise.
Psychologically speaking paying off any smaller debts straight off and having one less creditor to deal with would be good.
Fastest way is starting with the highest interest debt - that won't necessarily be the highest APR, you want to pay off the one that adds the most interest every month, then work your way down.

Aside from that see where the savings can come from- changing cars, budget food shopping, free days out for family fun etc. Put all that extra into the debt every month
Good luck OP, it's bloody stressful and wish you the best

That’s fucked. I would consolidate and remortgage and never use debt to purchase anything again.

Try using the snowball calculator here

https://www.lemonfool.co.uk/financecalculators/snowball-calculator.php it shows you exactly what payments to make each month (you can obviously chose to switch it up a little and end up paying a bit more interest take a little longer)

Yes 93k is a lot, but you can pay 3818 per month off your debts (inc min payments) based on your budget

From the snowball calculator, if you paid the full 3.8k towards your debts, all of your unsecured debt would be cleared by March 2026 that's 29 months

If you kept a 300 buffer, and paid 3.5k then it would be paid off by June 2026 (32 months)

I personally wouldn't consolidate or add to a mortgage, as there is clearly a spending issue, paying these debts off slow and steady and sticking to a budget should help change your spending patterns rather than spreading the debt over longer and potentially getting more unsecured credit

You can do this! From the figures it's fairly easy but you have to tackle the root cause of the spending 💪

I don't think you're in the terrible mess you think you are! Ok yes, huge amount of debt but you're paying your bills, have a small emergency fund, budget for entertainment, presents AND there's £1500 a month surplus. I would imagine it's all those 'bitty' payments which are stressing you out and also the fact that you're in a vulnerable position - a job loss or something along those lines would leave you in a pickle.

But you can't focus on that and instead just focus on throwing whatever you have at some of those debts. I think if you could consolidate some into one payment you'll start to feel better too.

So you're basically in a very messy situation but also in a very good position to deal with it!

I'd contact debt charities. They can help you make a plan and move forward.

That is alot of debt OP but seems manageable. I would take advise into consolidating your debts. My issue would be that you have accumulated these debts so without an accepted life style change they will continue to grow as something most see as a luxury you may consider a need. Or something most save up for you want immediately.

If I was advising someone I would say consider reducing down to one car. Is this possible?

You pay £386 per month in HP. Are all of the items necessary or can they be returned?

Phone contacts can be stopped and move to pay as you go.

£36 a month on TV is unnecessary, get free view.

What are the child expenses of £120 a month? Are they necessary?

You cannot afford £100 per month on presents, that is £1200 a year a small budget for each DC a year and stop the rest altogether.

Entertainment £150 per month, that needs to be stopped whilst paying off debt is prioritised.

Not being an expert, from these figures I think you can do it but it wont be quick, and the snowball method is your friend. You can def scale back those groceries, we are a family of 3 and get EVERYTHING household out of 500/mo max - food, takeaways, cleaning products,dog food for 2 dogs and toiletries.... Bulk buy! Put everyone on the same shampoo and conditioner and buy 5l tubs etc

I think I'd be tempted to sell the house settle all debt which would leave you with a good deposit still and start again but that's just because it would really stress me out. I do.tgunk it's possible to sort out over time though.
I would probably seek some professional advice because you may be able to consolidate it all in some way. Good luck with it.

Surely if you throw your "spare" £1500/month at your £93k debt, then you'll have paid it off in 93/1.5=62 months -so just a bit over 5 years? Presumably quite a bit quicker than that, as the monthly debt servicing amount will drop as you pay it off, so you can pay more off the capital of the debts each month?

You might need help with managing your attitudes towards money etc, as you've obviously made bad decisions in the past, but you've done a budget with a reasonable amount of slack in it, and can pay down your debt by a big chunk monthly, so I think the mechanics of paying it off are simple enough - you just need to stick to your budget and accept that there isn't money available for frivolous spends. I suspect that will mean adjusting your lifestyle quite significantly.

I'm not really sure what "help" you want?

With £1,500 spare every month I feel like I’m completely missing something other than the fact you’ve made a mess of your finances but now you’re sorting it out and still have spare cash left over?

Anyway. No options to overpay? Tackle the biggest APRs first maybe. Otherwise loads you can do with that £1,500 to make the overall picture much better.

OP is unlikely to get a personal loan as a bank won’t want to take on the risk of this other debt with other creditors.

Happened to me. A DMP saved my sanity.

I don't disagree with remortgaging in general however the reality is that even if you declare it as being for consolidation you might struggle with not just this amount of debt but with so many debts. It's worth investigating but I'd look for a very good broker and only do it if you are absolutely sure you have the discipline to keep overpaying it.

Without remortgaging, I would start with the highest interest debt. According to your table that's Very, then the overdraft (also good to clear these as they don't look good on credit file)

So it looks something like this (I'm doing this quickly so there will be a bit of variation here, I'm not doing full calcs to work out the exact monthly interest being added)

Month 1: Very £700 (additional 652), Overdraft £928 (additional £848)

Month 2: Your excess in now £1548 (as you cleared Very). Overdraft should be around £1600ish, so you will be able to clear this completely once you include the £80 normal payment

Month 3: Excess now 1500+48+80 = £1628. Time to tackle Fluid. It gets £1628+170 = £1798

Month 4 = same again. That's Fluid cleared, plus possibly a little spare to throw at Lloyds

Month 5: excess is now £1798. Time to tackle a big one, Lloyds. It's going to get a payment of £1798 + the usual 269 = 2067. It'll be gone in 4-5 months as you will have paid a little off in months 1-4 already

Once Lloyds (bigger one) is clear then you've got £2067 spare. The next month you throw that all at the Creation credit card. Given you will have already made some payments to it in months 1-9 it will have reduced a little from the 7100, so you'll probably get rid of it in 3 months.

So by the end of year 1 you should be able to get rid of:
Very (£700)
Overdraft (£2500)
Fluid (£3600)
Lloyds (£10500)
Creation (£7100)

That's £24,400 cleared totally in year 1, roughly. Plus the others will have reduced a bit

Now you go in to year 2. But now you've got £1500+£48(Very payment)+£80 (overdraft payment)+£170 (Fluid payment)+£269(Lloyds)+£192(creation) = £2259 spare to throw at debts.

If your updraft loans have front loaded interest (pretty common) then you should find that as you get close to the end of those you can ask for a settlement so you might not have to pay quite as much as the current balance. But you'll get through the first one (number 3) in about 2 months given you'll have made the regular payments for a year. Then you've got £2424 spare. Updraft 2 is done in 3 months tops.

You can see how this goes from there. You don't have to stick that order exactly, for example you might find it mentally better to wipe out a few smaller ones next before tackling updraft 1 even though it's a higher rate. That's ok within reason as you need to find the motivation to keep going.

More than 4 weeks in a month - your maths is broken.

This is totally achievable OP. But as already said above I think you need to be honest with yourselves about how the debt arose and address that, then cut even more from your budget and channel that extra money to debt repayment.
if it were me I’d try and start with small but high interest and try and get those paid off asap. You could have 3 or 4 crossed off your list by Christmas and that would feel great!
Then snowball the payments from those debts plus the excess in your budget into the next one.
with a bit of trimming from your monthly spends you could easily put over 20k extra a year to paying off those debts (and that doesn’t even include selling a car) You could be debt free in 3 or 4 years. It will be tough and you will need to stay focused but it is more than achievable.
good luck, you will feel amazing when you get to the other side.

They’re like drug dealers

The thing is you need to understand if you are really spending what you list above. If you really are now I assume you’ve already made big changes vs when you accrued the debt. If this is just a plan you need to actually do it for a while and strictly track your spending to check it’s achievable

Can you point me to the line in the OP where she is asking for us to feel sorry for her? It’s just that I’ve read it multiple times and I still can’t find it.. 🤷‍♀️