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

I would also not recommend extending your mortgage to pay off the debt (assuming you would even pass the criteria) unless
you have 100% addressed how the debts arose or you will end up back where you are but with more mortgage debt on top.

I can see why you're feeling overwhelmed just by looking at the sheer number of debts you have. That's quite a list!

Your budget looks good to me. Is this a new budget? Or have your wages increased? You obviously wouldn't be in debt if you had been on this budget and income all along. I have Ben guilty myself of making up very thorough and reasonable budgets and then loosing track and not sticking to them. Are you sure you're not spending any of the 1500 surplus every month.

For what it's worth, we're on a similar take home income and our monthly mortgage payment is 2.5 times higher than yours. You have good take-home pay, a low mortgage payment and a good surplus every month to tackle debt with so I don't think your situation is completely dire. I would tackle each debt one by one as others have suggested while continuing to pay the minimum on the rest.

This is excellent advice!

Hi OP. Sorry you have found yourself here, money worries can be overwhelmingly stressful.

The advice so far on this thread ranges from excellent to awful. I would post again on the money matters board. The support there is more focused and knowledgeable and dragged me out of a horrible hole once.

For what it's worth I agree with those recommending Dave Ramsey, his approach is solid even if he is a little preachy and out of touch at times. I'd recommend

1. Go through your current outgoings and cut what you really don't need to spend. Be ruthless in sticking to your new monthly budget.

1. Put a nominal amount away for emergencies. Never ever touch it unless dire need strikes that threatens basic living e.g. broken car to get to work, heating repairs.

1. Tackle the debts in turn smallest to largest using the snowball technique. Some do it based on interest rate highest to lowest but others find it really helps keep the momentum going to see things being paid off and out of your life.

The hardest part is sticking to your budget. I keep a spreadsheet and at the start of each day I write down yesterday's spending. I can tell you how much we have left in the budget for the month and what bills are left to go out at any given time and thats in the back of my mind when I'm considering any spending. It's taken a lot of practice to get here but it's a habit that got me out of a payday loan spiral just to cover interest on other debts 10 years ago to no debt other than my mortgage today.

It is doable. Also to add, your whole family need to be with you and pulling together to make it work.

I don't understand this fear of secured debt.

It makes complete financial sense to get rid of high interest debt with a lower fixed rate loan spread over the period of your mortgage.

It's the fear of losing your collateral.

www.ramseysolutions.com/dave-ramsey-7-baby-steps

Read this and then look up Dave Ramsey on YouTube.

It is a large mount but you have a good income. You may need professional help but you could make a good start by start a Debt Snowball.

I'd be calling up all my cards and explaining the difficulties you're having and they may freeze your interest

It does look like you have enough income to meet the payments, so with good budgeting you could sort this. CAP run an excellent budgeting course, also Dave Ramsey on YT is good, albeit a different approach. I do think it makes a difference as to how your debt accrued i.e. overspending on extras/luxuries. You will need to address that before you progress, but definitely doable. Good luck.

if you consolidate and have lower payments the risk to your collateral is reduced as you have more spare cash and hence unlikely to default on your mortgage.

Obviously the caveat has to be to stop spending and don't build up more unsecured debt

Brighter people than me have worked out that you can pay your unsecured debt off in five or six years. However the issue for me is how you got into this position. Can you reverse that? If you’ve got a taste for luxury, can you develop a taste for frugality? If someone has a gambling problem, have then got help with it? And so on.

Well done for facing up to the fact you have a problem and it needs to be dealt with. A lot of people don’t until it’s far too late.

A lot of good recommendations already especially talking to Stepchange. Even if you don’t go forward into a debt management plan it will be good for you to talk it over with them as it will give you someone to talk it through with and they are so so helpful, not judgy, and all decisions are yours.

Now is the time to create a solid plan of how you’re going to tackle it, set a realistic budget, bin off all the unnecessary overspending and get to work at clearing those debts. They are huge and it will be worrying but you have the means to get it under control. As you pay off each one close the account or cut up the card. Do whatever is necessary to stop you from adding more spends on.

Strongly recommend the moneysavingexpert website. It’s full of everything you need including how to set a budget, how to save money, template letters to creditors asking for interest to be stopped etc.

Very best of luck OP, you can do this.

Please please please speak to the debt charities. They are going to at least be able to assure you that you are doing everything you can. This is going to hurt and by knowing 'it's the only way', will help you stick to this new money diet.

Also like a diet, you need some respite. If you have professional help you can have the odd treat within a proper plan, and it's also quantified.

My last piece of advice is change your mindset. This is not going 'without', but more securing your future and should be seen as positive.

Do not pay for any advice! Debt charities do not charge.

Plenty of fat to trim, first and foremost can you sell one or both cars?

seems to be the biggest luxury on your list. save £338 a month - of course depends on what other travel expenses you would then have but £14000 straight into your debt

Cut your gas use, turn the thermostat right down and use jumpers instead, cool your hot water save £35

Mobile phone contract seems high - how many phones is that for? four? bring that down to £10 each, save £27

Get rid of satellite and cable tv £36
Bring groceries down to £400 ( save £200) and stop the hair cuts!(save £20) Do them yourself -

entertainment £150? What is that?

birthdays/christmas £100? that is £1200 a year, with 2 children that is £300 each for birthdays and for Christmas - cut that down to half. Save £50

Looks to me like hundreds of pounds of saving to be had -

yes, get in touch with step change or other debt charity, but there is so much you can do for yourself first

You have plenty of equity, why can't you remortgage to consolidate the 90k. Would then give you a 230k mortgage on a 320k house.

You’ve got to move that debt to low or zero interest that’s the first thing. Are you sure you can’t get a 0% card?

If not, then a loan is an option but you can’t miss payments.

I’d also look into downsizing if you could with the house?
Or remortgaging and then you can put that debt into the house to make it more manageaable.

So moving the debt to

• mortgage
• lower interest

Is first. Then you can pay off over time.

Get some free advice from a registered debt advice service.

They are free and can offer various ways to help. Often these are run locally - The Salvation Army run some, some Offices of Fair Trading - Google and find one by you but don’t go to one that charges a fee.

There maybe an option to write to the people you owe non priority debts to and get them to reduce or hold the interest for a period of time to help get you on top of things abit.

Drop everything you don’t need such as entertainment channels, days out.

Try to sell things on market place you don’t use and put the money towards your debts straight away.

Drop a brand when shopping - shops own only.

Try to use the cash stuffing method if you think it will help to budget - google it.

Make sure you service your priority debts - mortgage and anything borrowed against your home / government owing def. Council tax / gas / electric.

But definitely ask for free debt or budgeting advice. You are far from the only one in this situation.

Lots of sound advice on this thread but are you really being honest to yourselves? I say this as I can see on paper you have £1500 left over each month but you also have an overdraft of £2500 which you could/ would easily & quickly clear if you had £1500 left over each month.

Plus if you had £1500 left over each month this would have been accumulating each month …… so I would suggest you also look as to why this isn’t the case to date & what this is being spent on. If you base your recovery plan on this but it’s not really there, you’ll get into a worse position.

I do think you need support with this as you have a good income but it would appear a spending habit as well and all habits are difficult to break but not impossible. Good luck, I hope you do well in reducing the debt.

@StatisticallyChallenged this is exactly what I would do and very good advice.

You have some really good advice on here from people.

Speak to step change

Look at Meaningful Money, and listen to the podcasts on how to get out of debt.

Look at Dave Ramsey and how to get out of debt.

Pick your method once you’ve explored the above, stick to it and make your self accountable.

Cut back where you can on food, utilities and your other spending etc. I’m not going to question your current amount of expenses, but sometimes you can cut back further if you shop around.

Use YNAB to log everything.

You CAN do this. You have the means, you have accepted the position you are in and are willingly to put the effort in.

Get yourself over to Money Saving Expert.com's debt free wannabes forum, and also call stepchange. You need to look at all options to get the interest frozen even if that's bad for your credit score I think, as the interest on that lot will be enormous. But that means making sure your mortgage is set up and stable. StepChange will be a good set of people to call, or Christian's Against Poverty.

I'm also going to repost this excellent advice. OP if you only take one piece of advice from this thread then make it this one. There's also some possible savings in your monthly spend. Can you try to get your food bills down from £600 per month, can you reduce subscriptions and entertainment, presents only for the kids? Is there anything that you don't use that you can sell? It may seem daunting but making a plan and sticking to it is achievable and as each debt is paid off, you should feel very relieved.

I recommend these people - https://www.stepchange.org/

You do need to make some massive lifestyle adjustments and it is a short sharp shock that you need.

You might be able to re-mortgage the house to clear off all the debts, as the mortgage interest rate would be lower than the credit cards, but you should take professional advice on that.

Your budget should include essentials that you absolutely cannot exist without.

Cancel the sky tv and any other tv packages.

Get basic SIM only deals when your mobile contracts end

£150 a month on entertainment? You can't afford "entertainment" with that much debt

£100 a month emergency fund - you can't afford to save with that much debt.

Clothing - only buy when something falls apart

Kids clubs - they can't go if you can't afford them.

Credit card - never ever get them again.

You only accrue this much debt when you live beyond your means (assuming no gambling addiction etc).

It is a simple fact that you really can't afford luxuries and the nice things in life if you can't afford it. There are a lot of people out there who have had to tighten their belts and make cut backs.

Things like Sky tv aren't a necessity they are a luxury that not everyone can afford.

I saw somebody once build up £40K worth of debt. Their parent bailed them out to stop them going bankrupt. They then built up another £40K of debt and did go bankrupt and that included the loan from the parent. It was shocking.

The core income vs monthly expenses section is fine enough.

1. What is the hire purchase? Cars? Can you close that out and just buy a cheap 2nd hand car?
2. Credit card debts. If you can't do a balance transfer to get onto a cheaper rate, then 2step plan of action: a. Pay off some low balance cards, so it psychologically reduces the number of cards you owe on. B. Start paying down the highest interest rate cards, even if it means you reduce monthly savings a bit or squeeze on some monthly entertainment non-mandatory expenses for a few months

It’s an awful lot of debt but luckily, you both earn well and have excess money once your bills and basic debt repayments are made - lots don’t have that. I would list them in priority order and use the excess money to clear the top one then move on down. You can also shave some off your monthly expenses quite easily. Lots of free help out there but they do tend to be busy so you may have to wait for an appointment.

Council tax - are payments spread over 10 months or 12 - some Councils will allow you to change to paying over 12 so that would be £116/month instead of £139 so an extra £23/month to pay extra off one of the debts.

If you stay at 10 months on those months you don't pay Council tax use the extra £139 x 2 to pay extra off one of your debts.

It's peanuts I know but to quote a well know phrase "every little helps"