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

A lot of people seem to be focusing on how you are going to pay this debt off, which is understandable, but with an 'on paper' surplus of £1.5k that is very doable. However, as a couple of people have touched on, to really get control of your situation and be able to stick to this 'on paper' budget, you need to understand how you got here in the first place.

You need to document your actual spending over the last few months. If you have built up debt, then you don't have a surplus, you have a deficit. Start by writing up a list of what you spend on, then go through all of the 'non essentials' and come up with a plan of how you are going to avoid spending these. Non essentials are different for everyone and you need to understand what yours are. I used to work in debt recovery when I was younger and I spent a lot of time setting repayment plans for people. They would always say they would give up smoking to pay off their debt, but I knew they wouldn't. No one does. So if I included that in the repayment plan it would just fail and they would be in a worse position. Be realistic about what you can give up and come up with plans on how you will avoid spending on the things you can give up.

For instance, if you end up paying for takeaways because you are too tired to cook, that decision is hard to control in the minute when you are tired and the kids are hungry. I think saving money or paying off debt is different when you have a lot of money coming in. It takes a different mindset. It is harder to deny yourself things when you have a lot of money coming in as it seems reasonable.

Don't beat yourself up about how you got here. It is not heathly and it is not helpful., but understanding it will help you avoid it in the future.

Best of luck.

If you racked up the debt on 'stuff' rather than 'experiences' can you have a ruthless clear out and sell on Vinted/Facebook marketplace? Do you really need 2 cars?

Looking at what you have put in your OP, you should be ok, you have £1500ish left over? Is this spent at the end of the month or are you saving ? Throw this at your debts each month, the quicker you pay, the better your credit rating will be and you will be able to move to 0%.

You do need to budget, tightly, as in live like paupers and you will be able to do it, cancel all of your TV subs, no entertainment money, very limited Christmas and birthdays and any savings you have need to pay off your debts. Can you manage with one car? If so get rid of the second one, you can sell it back to a dealership and they will pay your finance off and gibe you the difference in value if your car is half decent, again spare money to pay some debt off.

You could consider and IVA, but this will destroy your credit rating for a very long time, but it would clear some debt down, so it depends on which you would prefer.

The PP who asked why you were in debt has a really good point, as this will determine the advice you get - as it is what will need to change to get you out of debt and keep you out of debt.

How da f*ck you get that much debt! Your income is very healthy and your mortgage small!!!

Ofc you can pay it off you’ve got £1500 a month spare after paying off the unsecured debt. It’ll take time but doable.

I think it is do-able. One issue is how long you have that 4.4% mortgage for, as if you have to remortgage on a higher rate that could take up a big chunk of the spare money.

You need to cut out all the luxuries, reduce your discretionary spend as much as possible and go cold turkey for at least a couple of years to make inroads into the unsecured debt. The good news is the 93K of unsecured debt must have bought you a hell of a lot of stuff, so you won't be needing anything new for a few years.

Have you considered selling your cars? Do you need 2? Buy one runabout (or 2). You can get a half decent runabout for about £1500. Buy 2, gain £11000 to pay of more than 10% of your unsecured debt?

I would try and consolidate all the unsecured debt into one, possible by remortgage or lower interest rate bank loan secured against the house, you are probably paying ridiculous amounts of high interest every month and getting nowhere.

You've had lots of practical advice but I wanted to add - debt is a financial problem, not a moral weakness. Don't feel shame. It's not useful and it'll just grind you down. You acknowledge the situation you're in and you're going to get out of it. You'll get there.

Your statement of affairs looks like it is from a monney saving forum, have you asked the same question there? Snowballing would be useful for your credit card debt, unless you look at why and what you spent the money on, then it wont stop it happening again. Look at the debt free diaries and debt free challenges for ideas.

Thanksfully we are fixed for 4 more years.

You do have enough income to sort this out without outside help but I don’t think you should.

One or both of you are obviously very bad with money which is why you’re in this mess and that’s not just going to go away.

One or both of you may lose your jobs which will also mean you get less income.

You may also separate.

I would go to someone like stepchange and take out a debt consolidation loan.

The interest you’ll be paying on each of your debts must be extortionate.

Going through a special company will freeze the interest and allow you to try and get back on top of things.

I would also work out how you came to be in this situation.

I agree with the PP.

Do you actually need 2 cars or does 1 spend most of its time on the drive?

If one of you is WFH or works locally, then there’s no need for 2 cars.

A few people have commented on there being some fat in your budget to trim. I didn't suggest cutting it - because I think that will be the breathing space to let you stick to cutting back. Given the debt you've run up it's obviously already a big drop from what you've been spending.

I'd make sure that your budget is really liveable so that you don't end up dipping back in to the credit cards. This is a lot of debt and it's going to take you several years to clear - it needs to be achievable. Crash diets are very hard to maintain and the same is true of financial diets. It has to be sustainable.

If you get to month end abd you've not used all your budget then great, whack it on a debt. But you're not facing bankruptcy or an IVA yet.

I'd say you can do this. Looking at your list, that £250 a month for entertainment and Christmas and birthday presents could surely go, on a temporary basis, especially if you're keeping your streaming services and a decent amount for food. If ever there was a time to make your own entertainment...

As everyone has pointed out, this is eminently doable. However how you got into this situation is actually really pertinent to how this will play out.

Your budget has plenty of slack in it. If you were really serious about getting rid of this debt you would cut your costs more.

If you consolidate your debt and extend your mortgage, I suspect you'll end up in the same situation again. Yes credit cards can be cut up, but they can be very easily replaced. I don't actually blame the lenders at all, at the end of the day we all have a level of personal responsibility and accountability for our actions. Yes it's nice to have nice things, but if you can't afford them then you have to make your peace with that.

You haven't been forthright on this thread and I do worry if you are being completely honest with yourselves. If you aren't, then you will end up back where you started.

If you consolidate your debt and extend your mortgage, I suspect you'll end up in the same situation again.

That's what I think too. You need to get used to doing things a bit differently, OP.

Well in that case, that's something to aim for. Be debt free apart from the mortgage before you need to remortgage, in case your payment goes up.

Which should be doable as on paper you have nearly £4k pm to throw at the debts, even without cutting back on expenses, as long as you can stop spending.

It also takes remortgaging off the table, as you simply can't give up your current low rate.

Thanks for everyones comments. I am at work but have been reading them - it's just difficult to respond to each one.

I appreciate each and every comment. We definitely have some things to discuss this evening. I am feeling more positive that we can actually tackle this. I am going to play around with snowball calculators tonight

Op

its is very doable to manage your situation going forward - the sooner you do it the better so that in four years when your mortgage is up for renewal you do not have to go with a high rate lender.

seek advice from step-change or a similar organisation - then you can breathe again and start looking forward to the future!

Generally speaking that’s what usually happens. I wish I had access to a post made by someone on the financial boards I mentioned in one of comments.

She made the analogy of digging yourself a hole in the dirt…. So you dig a hole in the dirt and haul the dirt away. Now you want to fill in that hole, so you dig another hole to get some dirt. You fill in the first hole, but find yourself with a second hole. You can dig a third hole to fill the second, but soon you find yourself with a 3rd, 4th, and 5th hole.

At some point you need to stop digging holes and go to the garden center and get some more dirt.

dirt = money
hauled away dirt = spending
holes = debt
garden center = budget or additional income.

Absolutely doable. Add unsecured debt to mortgage and pay it off pdq. Then overpay on your mortgage equivalent to debt repayments or stick in high interest account that you can't touch for a couple of years.
Stop spending and you'll clear it easily with that income.

The good news is you seem to earn enough to cover both your day to day expenses and pay down your debt.

I would echo the advice of others - you need outside hlep to understand how this happened and how to prevent it happening again - you spent £93K more than you earn. That is a huge amount. If you don't address how that happened it will happen again.

You are able to service the debt so you aren't (yet) in a crisis.

You could clear the debt with Very in one month if you paid minimum on the others so do it, especially as it has an obscene 50% APR so will grow big fast if you don't. Getting that line off the spreadsheet will make you instantly feel more in control.

Then use the calculators I linked in https://www.mumsnet.com/talk/money-matters/went-through-our-finances-and-were-fucked?reply=128879638 to figure out which debt is costing the most interest every year and focus on overpaying that. Then the next one, and the next one.

Thar thread I linked to is also full of great advice about how to sell stuff (e.g. on Vinted) and cut back your spending.

I pay less than £20 a month on my mobile. I know people on very tight budgets who don't have a phone contract at all, they just use the internet, WhatsApp & FB messenger for communicating.

You also don't need satellite/cable TV. I once read some excellent advice that you should only pay for one streaming service at a time for whatever you are currently watching. When you have finished, you cancel the sub and only then start paying for another service you want to watch. Although I think you could certainly manage with just Freeview.

If pet is a luxury they can't afford, should they abandon the poor animal? They have surplus of 1500 every month, they can afford the pet they have.