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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Am I kidding myself with finances

199 replies

Timeforchangeornot · 26/04/2025 20:39

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?

OP posts:
lifemakeover · 26/04/2025 21:13

Is the mortgage £220k on a house worth £420k, or is it £20k on a house worth £220k? I'm guessing the former, but I think people are confused!

What is your total take home and what are you paying on mortgage, car loans (are these loans or HP/PCP?), and credit card(s)?

I agree with PP that shifting your CCs onto a loan will give you a clear end point for paying it off.

meevee · 26/04/2025 21:13

Yes there is. It's called income protection insurance....

they generally don't cover losing your job though @AliBaliBee1234?

shuggles · 26/04/2025 21:13

@Timeforchangeornot Doesn't feel very comfortable!

I don't understand this "comfort" thing. I have done long commutes in an A-segment car. Even an A-segment car should be comfortable.

Original poster
Timeforchangeornot · 26/04/2025 21:14

meevee · 26/04/2025 21:07

It's manageable as your mortgage isn't particularly high. Crazy to borrow 33k for cars though. How did the debt come about, renovations or loving beyond your means?

The renovations were to create an extra bedroom. The only houses with extra bedrooms in our area were 100k more before moving costs so it seemed like the sensible option.
The car thing really annoyed me..we didn't have money in the bank for a car but our car broke, and having only ever had one car we suddenly needed two. So we had to get a loan for a car each and by that point it seemed better to get a car that would live the life of the loan. As I say, perhaps not the best decision but our yearly mileage is very high with family living far away.

OP posts:
outlanderish · 26/04/2025 21:14

My goodness, OP to have 30k on credit card with a joint income of nearly £100k is utterly crazy. The most me and my partner have ever had on CC is £4k and that drove me to nearly rip my hair out. How have you got this much debt?

meevee · 26/04/2025 21:16

The most me and my partner have ever had on CC is £4k and that drove me to nearly rip my hair out.

this is extreme...

Starseeking · 26/04/2025 21:16

if you need a mortgage when you next move, the level of debt will impact how much you are able to borrow.

For the sake of your sanity (as that level of credit card debt is eye-watering on your salaries), I’d take £63k of equity out of the house now, and clear all credit card AND car debts.

Shifting the zero rate cards isn’t actually paying them off, so I’d then cut up all cards and not take out any more.

Money saved from not having to pay the unsecured debt should then be split between overpaying the mortgage and making actual real savings in a separate ringfenced account.

meevee · 26/04/2025 21:19

The OPs total debt is under 300k which wouldn't be a crazy mortgage for an income of 98k..

The important thing @Timeforchangeornot is how you are managing your monthly income

HuskyNew · 26/04/2025 21:20

Yes definitely time for a change.

we have broadly the same income & mortgage but are amassing savings every year

I would not be on comfortable with that level of debt.

meevee · 26/04/2025 21:20

I’d take £63k of equity out of the house now, and clear all credit card AND car debts
But it wouldn't be on 0%?

Original poster
Timeforchangeornot · 26/04/2025 21:20

shuggles · 26/04/2025 21:13

@Timeforchangeornot Doesn't feel very comfortable!

I don't understand this "comfort" thing. I have done long commutes in an A-segment car. Even an A-segment car should be comfortable.

Sorry, you misunderstood. I mean the level of debt is uncomfortable. I care little about what car I drive

OP posts:
Original poster
Timeforchangeornot · 26/04/2025 21:21

lifemakeover · 26/04/2025 21:13

Is the mortgage £220k on a house worth £420k, or is it £20k on a house worth £220k? I'm guessing the former, but I think people are confused!

What is your total take home and what are you paying on mortgage, car loans (are these loans or HP/PCP?), and credit card(s)?

I agree with PP that shifting your CCs onto a loan will give you a clear end point for paying it off.

Yes the mortgage is £220 on a £420k house

OP posts:
MidnightPatrol · 26/04/2025 21:21

meevee · 26/04/2025 21:19

The OPs total debt is under 300k which wouldn't be a crazy mortgage for an income of 98k..

The important thing @Timeforchangeornot is how you are managing your monthly income

£30k on credit cards is rather different to a mortgage…

meevee · 26/04/2025 21:22

But overall debt matters and the fact it's 0% makes a fair bit of difference...

Caterina99 · 26/04/2025 21:22

How much do you bring in per month and what are your expenses? Are you living within your means or accruing more debt?

can you overpay the car loans? When are they due to end?

I’d start saving up so that you have some emergency savings and can also use that money to pay down/pay off the credit card once the zero rate ends

BonBon20 · 26/04/2025 21:23

Well done for sharing OP, this stuff isn’t easy and you’ve been really honest. It also sounds like you’ve thought about incurring these debts and felt like you didn’t have a choice - there are plenty more people out there who get into far worse debt and those who max themselves to the hilt with mortgages etc., so don’t beat yourself up! I managed to get into some debt a while ago despite a good income. The hardest part never seemed to be the “sitting down and working out a budget” part, it was the monthly slog over years of keeping my spending in check whilst paying off things I had bought long long before! Plenty of people will say they simply “don’t understand” how people can get into debt - but we are all different, people forget that.

Sharing a breakdown of your outgoings might help - even just so others can help point out where you might consider making cuts? But otherwise, I would take a look at I Will Teach You To Be Rich by Remit Sethi (should be a copy in your local library 🙂). It has a great section on debt and how to pay off your debts in a way that’s the most effective and will “snowball” quicker. People make huge mistakes in the way they pay off their debts without even realising they are doing it! You will feel supported by an amazing financial expert.

Good luck - you will get there!

Enthusiasticcarrotgrower · 26/04/2025 21:23

Timeforchangeornot · 26/04/2025 20:52

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

Show quote history

Out of all of that I think the holidays are the unreasonable bit. We just don’t go on fancy holidays because we can’t afford them. And we have a small amount of savings, no debt.

marylou25 · 26/04/2025 21:24

AliBaliBee1234 · 26/04/2025 21:09

Yes there is. It's called income protection insurance....

Show quote history

Income protection is for illness making you unable to work which of course could be an issue, it doesn't cover something like redundancy though.

meevee · 26/04/2025 21:26

Income protection is for illness making you unable to work which of course could be an issue, it doesn't cover something like redundancy though.

You can get policies that cover some unemployment but they are pretty rare and often very £££. Most people take it as you say for illness and it's recommended if self employed. If you have a good sick policy at work you don't need it.

Maya45 · 26/04/2025 21:26

I think that level of debt is not unusual and manageable on your current salary but personally I would aim to reduce it as much as possible as you never know what the future holds. e. g we had around 25k in debt and reducing it to 10k over the last 5 years meant that we weren’t left in such a difficult situation when it came to renewing our mortgage (which obviously went up significantly)

Mum2jenny · 26/04/2025 21:26

£30k on a credit card needs to be managed. Aim to pay more than the minimum each month, ideally a couple of £100s more.
Do not use the credit cards in the meantime.You can do it. Plenty of ppl back in the 1980s had much bigger credit card debts and all eventually did manage to clear them.
But you cannot use any credit until the debts are paid. This is key to clearing your debts.

Original poster
Timeforchangeornot · 26/04/2025 21:28

BonBon20 · 26/04/2025 21:23

Well done for sharing OP, this stuff isn’t easy and you’ve been really honest. It also sounds like you’ve thought about incurring these debts and felt like you didn’t have a choice - there are plenty more people out there who get into far worse debt and those who max themselves to the hilt with mortgages etc., so don’t beat yourself up! I managed to get into some debt a while ago despite a good income. The hardest part never seemed to be the “sitting down and working out a budget” part, it was the monthly slog over years of keeping my spending in check whilst paying off things I had bought long long before! Plenty of people will say they simply “don’t understand” how people can get into debt - but we are all different, people forget that.

Sharing a breakdown of your outgoings might help - even just so others can help point out where you might consider making cuts? But otherwise, I would take a look at I Will Teach You To Be Rich by Remit Sethi (should be a copy in your local library 🙂). It has a great section on debt and how to pay off your debts in a way that’s the most effective and will “snowball” quicker. People make huge mistakes in the way they pay off their debts without even realising they are doing it! You will feel supported by an amazing financial expert.

Good luck - you will get there!

Funny enough I was looking at this book- I'll go and borrow it!
Thank you for your encouragement. I'm frustrated with our situation as we bought this house on the basis of one income and for the first four years we had no debt. Despite me going back to work full time, the perfect storm of mortgage rates ending, car breaking and bills going up,not to mention kids getting older has meant much larger outgoings.

OP posts:
OoohLaLaLa · 26/04/2025 21:28

Be careful with 0% transfers as different lenders charge different rates. You could find yourself adding more to the balance in fees than you’ve actually paid off.

Is the debt equally spread across different cards? Take a look at Martin Lewis snowball approach to taking them out one at a time.

latelydaydreams · 26/04/2025 21:30

Have a look at Dave Ramsey’s Baby Steps. He’s US focused, but his podcasts are fab. He advocates saving an emergency fund for precisely the oven breaking scenario.

Also take a look at YNAB. Revolutionary IMHO and really helps you keep on track.

RedSkyDelights · 26/04/2025 21:30

I think the main worries are
-no savings (I'd suggest building up an emergency pot against something like the boiler breaking)
-only paying minimum off on credit cards. It will take forever. Can you pay more?
-0% credit cards. You can't assume these will last forever. But see previous point. Can you afford to have to move them to a credit card with an interest rate?

I'd sugget looking at the Debt free forums on Money Saving Expert. They generally suggest you complete a SOA (statement of affairs) and people make helpful suggestions about how to get your outgoings down and manage the debt in the most sensible way.