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 agree with this. Consolidate the debt in to your mortgage, or get a second mortgage on the property. Overpay as much as you can each month to eat in to it.

Speak with a proper independent financial advisor or debt counsellor if you think it's useful.

The absolute most important thing to do though is to spend time analysing how you got in to this situation so you know how to not let it happen again.

As PP have said, that is a hell of a lot of unsecured debt. As the cars are on finance already, I can only presume that a lot of it went on home improvements, so I would suggest you need to focus not only on clearing the old debt, but plan in advance for any major expenditure you may need to spend over the next 5-10 years.

I deal with some residential estates where there are blocks of flats, etc, that everyone pays service charges to. It's a similar scenario to running your home. There are day to day expenditures that you have to pay as you go - light and heat, water, mortgage, etc, but there are longer term things to plan and budget for, so you can pay for it out of saved money, rather than borrowed money, so new windows, a new boiler, new kitchen, new bathroom, new car, etc.

Service charges on flats include a contribution towards that future expenditure, so you should (if finances allow) start considering putting some money aside in to that "future" pot too.

Consolidating the current debt in to one manageable (and likely much cheaper) debt is your starting point.

By your logic, should op give up their pet?

Your money leftover after all your expenses is bigger than my monthly income.

Your husband is right. You can definitely sort this out.

What your really need to sort out is why you've managed to get into this level of debt, and ensure that you deal with that.

I would recommend calling Stepchange debt charity. They are fantastic and really helpful without feeling judged. They will look at your situation and advise the best way forward, even if that is just carrying on how you are and looking at expenditure. They can advise on stopping interest and charges etc… too if relevant.

OP wasn’t asking you to feel sorry for her. She was asking for advice.

You got a few debts with really big interest there. Make a plan to pay those first with the nearly 2000 of un used cash you got a month. As example the one from LLOYDS it will take you about 8 months but no more interest after that.
If you put 2000 a month that is 24.000 a year. In less that years you will be clean.

Check all the loans conditions and overpay as much as you can in monthly lumps starting for the biggers ones.

Imagine you can overpaid 10% without penalty in the big one you ow around 20.000. Do that one month, other one other month etc and with the rest of the money get rid of the credit cards and the small one may be another option.

I would rather the first because you are paying a lot in interest there.

In less than 4 years you will be clean of debts I wanted to write

Good luck OP. You can do it.

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.

We do that now - we were just throwing away about £50 a month. I research and 'hoard' dramas, then switch streaming services when I've got a stockpile of three or four I want to watch.

Sorry, I was replying to @NetZeroZealot there.

@ScribblingPixie has articulated what I was trying to say much better!

Why do you have all of those loans?

Also watch a lot on iPlayer that you wouldn't think of. For example they often have good films on, and they change quite often.

On the internet thing - some young people I know are able to manage with the free WiFi you get in libraries, at stations, in cafes, etc ... although on balance I think internet is an essential not a luxury these days.

I’m quoting this one @phillers so it doesn’t get lost in the mix. Cutting a budget to the bone backfires if it means you end up in a binge situation later on.

This is going to be a marathon vs. a sprint

Given your mortgage, monthly income and basic expenses on the face of it you have got a well balanced lifestyle and should have loads of surplus at the end of the month, even with generous personal spending for holidays etc.

So where has the money gone? It takes a bit of time and effort to spend £90k - holidays? gambling? an addiction to collectable trainers?

Shopping addiction is an addiction like any other. Have you looked for support for that, as well as for managing your debts?

I agree we should have loads of money. No gambling etc, just years and years of overspending, holidays, disorganisation. To be honest I am also baffled as to how we got here, but we are here and I can't change that.

If your budget actually is as written, you're not in a deparate situation at all. But check all your figures again - some don't seem to add up. For example, you say you're putting £100/month into an emergency fund but don't list one your assets.

Not much advice to offer except to ask if you have seen My Frugal Year on Instagram. It is a lady called Clare Seal and she shared her journey out of debt. She also also written a book and shares some great ideas.

That's what I think we need to be saving. Up until now we have just spent spent spent with no real thought. I am ashamed to admit that, but it's the truth

I'd first ask if they actually watch the BBC and/or live TV, because if they don't they don't need a TV licence, saving £13 pm

Of their phone/internet/TV services, if they wanted to cut down:

Mobile phone............................ 67 Could probably more than half this. I pay £7 a month for 15 GB data (and unlimited texts and calls) from ID mobile. Look on Moneysaving Expert Cheap SIM only deals advice

TV Licence.............................. 13 - see above

Satellite/Cable TV...................... 36 - if you stick to one or two of Prime, Netflix, Now TV, Disney, Paramount etc, you could get this for about £20 pm. You can always get a deal on Now TV, we've had it on and off for years and never paid more than a fiver a month.

Internet Services....................... 21 - this is actually a good price, but make sure you switch again when your deal runs out.

So £137 pm could come down to about £70 pm, so a bit extra to pay off the debts.

Although, the stated budget isn't too bad. Especially considering that they could overpay all their debts and have a reasonable amount of fun money. But unless you literally have more money than you know what to do with, it's always worth checking if you can reduce expenses a little.

Then there's just the matter of tackling the spending that's caused the debt to accumulate in the first place.

I agree with PP if you can add to your mortgage at no more than 5.5% to consolidate the debt then do it, but this is only helpful if you change your old bad habits going forward.
If not scrimp every penny off your budget and pay off the worst rate first, with minimum on the others, then keep on going....
Then,

With that level of income, you need to plan a year of savings in case one of you loses a job/illness etc, max out your ISA allowances, and only THEN set aside money for holiday/clothes etc.

It is perfectly doable, but as a pp asked how did you get here, and what are you willing to do differently to ensure it does not happen again?

In your outgoings you don’t have anything for any things apart from a small amount for clothes and a small amount for entertainment.

personally I would look to consolidate the debt (talk to a debt charity there may be a way of taking a lower interest secured loan to consolidate it all). And of the £1500 you have left I would pay £800 towards the debt £200 a month towards an emergency fund and £500 to increase your entertainment/petty cash pot. Your kids are presumably growing and will need new/second hand clothes and school uniform?

If you don’t plan semi feasibly for a budget you can stick to month to month then it will feel impossible. I think as well you’ll feel better having less creditors and just consolidating to 1.

This isn't true.

I put £6000 on a credit card in 2009 and made only the minimum payments and put nothing new on the card.

It's down to £30 now and will clear by xmas

I have 4 kids and live on much less than half what you have.
Be frugal. Eat pasta. Pay off your debts.

@phillers ok the good news is it isn't gambling or a catastrophically failed business venture. The bad thing is you still don't seeem to have a handle on how this debt built up quite so badly or more accurately why you didn't notice until it got this bad. You spent £93k more than you earnt - that is a lot of extra meals out, new shoes and nights in the pub. That is a hell of a lifestyle creep issue. That money could have been put in your pension or used to half your mortgage debt.

I think you should get some professional advice to fully understand how it happened and how to stop it happening again.