Am I kidding myself with finances

[Timeforchangeornot]

Need a reality check and don't feel like I can ask ppl in irl.
In summary,
Have a mortgage of £220k (equity £200k). Payments £1200pcm
Joint Car loans 33k
Joint Credit card debt (all on 0%) 30k
Joint Income 98k

The credit card debt is the bit that's bothering me despite being on 0%. We have deliberately made some family decisions which has created this debt. However are we kidding ourselves that this level of debt is manageable?
Long term plan (within the next 5years) to move and release the equity in house.

Just wondering what others think?

IMO it’s absolutely ridiculous to have £30k of credit card debt and £33k of car loans (!).

Given your low mortgage, you should be able to pay these off fairly easily.

You are living beyond your means, and releasing equity might pay off the debt but won’t solve the spending problem.

Without knowing full outgoings it's difficult to say but that's an extreme amount of debt, especially on that joint income.

It is quite a lot, how long does the 0% last? Do you have other big financial commitments like childcare either now or soon to come? That might make the debt more unmanageable but you might be ok if not but I’d look to reduce it by overpaying/ consolidating it if possible

I’d be very uncomfortable with that level of debt - especially the car loans which just seem insane.

That’s crazy imo- your income is good, not amazing, and I wouldn’t carry that amount of debt

I mean. It is what it is, you have it now.

you just have to keep up the payments until it’s paid off. What is there to kid yourself about?

That's my concern. We've never had car loans. Always bought a cheap run around but circumstances have changed. Big family so bigger car needed and a job that now requires commuting. Doesn't feel very comfortable!

My concern I suppose is that we'll keep in this cycle and add kidding ourselves about paying off debt

The debt is one thing but the same level on car loans? Can you not get rid of them? How did the debt come about? It’s all well and good releasing some equity but you need to manage your spending as otherwise you’ll end up in debt again. The only blessing is the credit card is on 0%.

Are you making any substantial repayments or just the minimum?

Why did the car need to cost >£33k?

What are you left with each month? You should be able to knock that debt off pretty fast with your joint income?

Is your £98k before or after tax ?

Most of the 0% on at least 15months but because we only pay the min we shift the balance every time the offer ends.

Before

It's two cars.

I would prioritise paying off that debt. Look at any optional expenditure (holidays, memberships, clubs) and then start building savings. It's probably ok for a while but don't stay there if you can - look at all the threads where a partner loses their job and the worry this causes.

I think it's manageable if you are committed to paying it off and without needing to release equity either, provided your other monthly expenses are not too high

Car loans - these are just what they are and if that's 2 cars between you then not ridiculous and within a fairly average figure at £15k each. Will these actually pay off the cars entirely so you then own them or PCP?

Mortgage - is fine / fair

Credit card - I wouldn't want this on a credit card due to its high value but eg refinancing it onto a personal loan would not be too bad on monthly payments and has the huge advantage of the debt reducing each month and with an end date for you knowing you will have cleared it

Whether or not any of this is sustainable depends on why the £30k credit card debt has racked up, was it one offs or was it spending beyond your means? It is very different if it's something that will regularly get worse or costs that aren't going to crop up again eg private IVF fees, kitchen refit as you had no kitchen

What happens if one of you loses your job OP? Do you have any insurance to cover you? Do you actually have any money in the bank to pay the 0% credit card in full, if this were to happen?

i mean it’s not great but it’s manageable. Could be tricky if one or both lose jobs.

realistically you’ve got debt of 63k against house equity of 200k so you aren’t in negative or anything, it’ll only be a problem if you can’t keep up payments and have to move before you plan to.

I don't think you can afford this. That's not enough money pre tax. Get rid of the pricy cars and knuckle down and actually pay off some of your credit cards. And stop using them for joint decision free money.

Presumably shifting a debt of that size onto a different interest free deal still incurs a fee of average 3-5%. That's still a lot of money to waste! What are your outgoings? In your situation I'd be getting rid of the cars for much cheaper alternatives and reducing my spending

Well you will pay it off won’t you? The car loan and mortgage have payments that have to be made until the date it’s paid off. If you are making regular payments against the 0% credit card you’re paying it off.

or are you talking about being worried you’ll add more debt? That’s obviously not a great idea.

Debt is from
House renovations (not cosmetic, essential to stay in house)
Medical - made decision to pay for medical treatment as NHS not available .
Two holidays - the only luxury but decided that by the time we could afford it our kids would be grown and flown so this was the conscious decision on the future equity of house

What interest are you paying on the car loan and when is your mortgage deal up?

You can’t “get rid” of a car loan. There is a penalty to pay it off early (if OP actually has the money to do so!) and presumably OP actually needs a car, so would simply have to replace it with another one, albeit cheaper it’s a lot of hassle and would have to save a significant amount