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

In a sense it doesn't look like you need professional help, as you have £3,818 to pay per month towards your unsecured debt, would be able to clear it in a few years and can simply use the debt avalanche method.
BUT is that budget realistic? It would surely be a drastic change in lifestyle? £30 on clothes per month, zero on holidays, £150 for entertainment, £20 on hair, that would be fine for my family, but we are used to being poor... scrimping is a real life skill in itself! I fear that if you and your husband go too extreme from your current standard of living it won't be sustainable, and could end up in a worse position, like a crash diet.
As other posters have said I think you should have a look at what you could sell like the second car, simplify your life, and seek a professional to give options to lower the interest payments. If I was in your position I would increase monthly budget to something I knew I could live with indefinitely, and pay back debt at a slower rate over a longer period. Good luck! Also try not to beat yourselves up over the situation, many many people get into debt

It's a good job you've realised now OP 💐. Scorched earth lifestyle for you now then 🙂. (Saw that somewhere and it sounds like it could be true for you) but with £7000/mo at least you have debt paying capability!!!

The first step is to look back and see exactly what you have been spending it on. Until you know how you got to where you are, the likelihood of you being able to stop spending in your old patterns is much reduced.
Get out all your credit card and bank statements for the last 6 months and itemise exactly where all your money has been going. Then add it up and divide into a monthly amount - only then can you set realistic targets moving forwards

Speak to a debt adviser and maybe try to consolidate

Look into “irresponsible lending” and find an online template to send to your credit card/loan companies, subsequent companies should not have kept lending to you when you had already racked up a large amount of debt. You can get a refund of interest and charged + 8% compensation. You can use any refunds to bring down the debts, most companies will simply offset it against the debt anyway but could get a few thousand from each you win. You can do it alone, very easy, just find the emails for each lender, if you need help PM me.

That's what I was thinking

It's not a great situation, and I think it's understandable that you feel anxious, but it's in no way unmanageable. You've got a good amount of money coming in and some flexibility with outgoings. Take a deep breath and try not to panic. This is fixable.

CAn either of you do another job and use that just for debts ?

Absolutely pointless comment

OP, it is good that you can acknowledge that you have just lived far beyond your means. Now you need to be ruthless in order to get rid of the debt as quickly as possible.

It is good that you want to address this, and make sure that you use this to talk to your DC about money (depending on their ages obviously).

We were brought up that if you couldn't afford it you don't have it. You don't get into debt to buy things that you want, you save money until you can afford them.

That is how I am bringing my DC up as I don't want them to get into a life of debt.

Yes I think your issue isn’t how to solve it because with your monthly income that should be a fairly easy approach although getting a prodessional to do the sorting might be prudent.

your problem is that without addressing exactly how you got there in the first place it could easily happen again

Ok then that’s your first step. You need to really sit down and work out your spending plan/budget by month for the year. BE REALISTIC. And account for every penny (this includes personal spends and the things that are ‘unexpected’ or irregular expenses and savings for emergencies. (For example, you don’t need to set aside money every month for gifts… use that money to pay down debt, then in November plan a little less on debt (but still making the minimums and more for Christmas presents).

No expenses should be unexpected, things like home repairs and replacements of things may not be known of ahead of time but you know that they will happen so plan for them.

Then you need to sit down at least weekly (ideally every day) to make sure you are executing your spending plan. I know it sounds strange but fairly soon it becomes habitual. Make sure you and your DH sit down at least monthly to go over and adjust as needed.

Pretty soon you’ll be reading up on personal finance, you’ll be getting dopamine hits from paying things off and meeting goals. You’re going to find the thrill of a balanced budget at the end of the month.

Advanced stages of financial fitness is helping others, a bit smugness about your accomplishments, and panic about retirement savings.

OK, so now change your focus to spending all your spare money on reducing your debt. If you actually NEED something, make a game of seeing how cheaply you can get it.

IMO, the hardest part of this is probably facing the reality of it. You've written it all down, you're talking about it - for me this was the hardest part. The relief helped me think a little more clearly.

Some good advice on her about debt consolidation - definitely look into this as an option.

Paying minimum on all debts and cleaning the highest interest first will help you see improvements soon.

Also be realistic with your budget - it's not going to be possible to go from spending how you have been to spending absolutely nothing - dont set yourself up to fail. Kids still need new shoes, clothes etc.

Try to keep yourself busy - sell some of your unwanted stuff online and use that money towards smallest or highest interest debt to see some movement on it.

And well done for facing it. It's not too late to deal with it - start now and in a few years you'll be done (and have excess cash again)...the time will pass anyway, you may as well use it wisely.

Your mobile, TV & internet, and food amounts seem far too high so there’s is room to trim further. Also recommend getting proper advice, not of the mumsnet kind.

As others have said well done for facing it.

I'd tackle the Very account in month 1 (thiat is instantly one off your list) then the remainder towards your overdraft. By the end of month two you'll be close to paying your overdraft off, and you'll have an additional £130 per month to put towards your payments. Over the next 2 months pay off the Fluid account. Now you have £1,800 per month.

Over the next 6 months you could pay off the Lloyds account - that's a big one. And it gives you another £250 per month to pay off the next in line - the Creation one would take 4 months. So by the end of next year - Christmas 2024 you could have reduced your debt by a whopping £24,000 and going into 2025 you'd have something like £2,300 per month to start tackling the updraft loans. That's going to take less than 18 months...

You can do this!

You can absolutely do this if you're both determined.

I think you'd be wise to include a small amount in the budget for fun stuff. You'll struggle to get through the next 4 or so years without a holiday or a night out.

There are areas in your budget you can trim - entertainment, tv packages, phone etc. maybe you cut back on those and put the difference into separate account for holiday?

Use cashback sites to maximise your spending. Convert Tesco or nectar points into eurotunnel tickets.

It's all about priority and commitment to stick to your agreed strategy.

Remember Martin Lewis’s best and most effective advice. You have to pay a minimum on each card you have debt on. Just pay the minimum and all your excess money goes on the one with the highest interest. Get that paid off first, then go to the next highest.

@phillers - how much equity do you have in your house. Could you add the £90k to your mortgage as it sems like you have plenty of disposable income to make the monthly payment. I know rates are a bit higher now but they are still a lot lower than credit card rates?

Just took another look at your numbers and you seem to have lots of capacity, even with the 90k added you are around 70% LTV. I would definitely look at this as an option - all you can do is apply, if they say no you are no worse off than now.

The elephant in the room is that your monthly expenses aren’t what you say they are.

if you were only spending £3,200 per month you’d not have gotten into debt in the first place.

so that seems to be more of an aspiration, a newly formed budgeting target.

there is a behavioural element here that needs to be addressed. Has the behaviour stopped that led to the debt?

until the behaviours have changed you probably can’t stick to your new budget. For that reason alone I’d get step change involved. That might be kick up the bottom needed

Do not consolidate these, especially not into your mortgage. If you don't address the root cause of getting into debt, you'll be back here in another few years with a bigger mortgage and no wiggle room.

First off, is your SOA honest? Do you have £1500 left every month the day before payday? If not, you need to address this first. Where is the rest of the money going and what has run the debt up? If it's birthdays, sports equipment, one off memberships etc, these need including in the SOA. If it's takeaways, coffees and treats, you'll need a change in mindset and lifestyle and you all need to be onboard with it. Go through your bank statements for the last few months and be very honest. Then do a few months with no non-essential spending. Don't take bank cards out and turn off Applepay/google pay.

When paying off debt, financially its obviously better to pay off the highest interest card/loan first. However, psychologically it can sometimes be better to pay the lowest balances first as then you've got less payments out to manage and you feel the achievement. Just make sure you cancel the cards as soon as they're paid off!

1. Ring your creditors and ask them to freeze the interest.
2. Forward plan. So in previous years you have given presents at Christmas to everyone and anyone- knock that on the head. Christmas food- it's a Sunday dinner FGS.
3. Save for once a year expenses like MOT.
4. Sell clothes and toys as soon as your youngest grows out of them.
5. See if you get all the benefits you're entitled to.
6. Diarise renewals like insurances so that you can shop for the cheapest deals and don't just auto renew with your current insurances etc.
7. Look at water meters if you're on water rates.
8. See if you can pay council tax over 12 months instead of the usual 10. It won't make a saving but will spread the repayments a bit thinner.
9. Is there anything you can claim the tax back on?
10. Look at renting out - storage space, driveway rooms.

Ah, so this is your plan for the future rather than your current real spending. Have you done real spend as well?

And if this is the plan, what's your plan for that spare £1500 a month - why isn't that going into emergency fund and debt repayment?

I don't have time to read the thread but we have a similar income/outgoings to you minus the debt. V similar house/car too.

For now - ignore how to budget and save £50 here or there. Seek decent financial advice via a professional - the money they charge will be worth it in the long run. Don't use one from the investment scheme type outfits - find one that specialises in debt advice.

Agree the two of you to face this head on.

Any way either of you could get a promotion - do it. Financial advisor may suggest re-mortgaging and using a lump sum to pay off debts - do that too.

Anything you can sell, do it. I've just spoken about this with my husband, again due to the similarities. We both feel physically sick at the thought of having debts and repayments like this - you're going to keep drowning until you get ahead of it, but I'm sure you will.