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?

This is quite an old fashioned idea. Where it’s available, post 2007 financial crisis, it is extremely expensive and limited in its benefits. I gave it up years ago and even then it was phenomenally expensive, not something for OP to spend out on when she has so much debt

I follow martin Lewis so I'm trying the snowball approach. I've opted for the 0% fee for a smaller 0% interest term.

Are you both paying into pensions?

I think on nearly 100k you should be in a better financial position. Is it likely your teens will go to Uni?

I would suggest you have to tighten your belts now..there must be scope to overpay credit cards, set up a dd on your payday and just live within the amount that is left

@AquaPeer it's odd, it's mentioned on here all the time but like you say often prohibitively expensive and not common in the real world. There are a lot of older MNs so maybe that why it comes up so much?

Honestly, this is a lot. We have a higher take home, cars bought outright (albeit a bigger mortgage and still paying for nursery) and I'm stressing about the 4k we have on credit cards right now! What's your plan for paying it all off?!

The car loans aren’t a big deal IMO. But that combined with the CC debt is a lot.

So our budget looks something like this
Income - £6561
Expenses - £6524
That is accounting for every last dime! And is accurate according to bank statements. So, whilst we are meeting every bill and responsibility there's no wiggle room. We could try and cut food bill. The only other area we could cut is kids pocket money and activities but they're not exorbitant and they'll be leaving home in a couple of years so figure that when they go, we can start overpaying then (assuming they leave!)

@Timeforchangeornot does that include paying credit card debt

There isn’t a lot you can do, except live from hand to mouth for 5 years.

Once the credit card is cleared, get rid of it forever, some people can't manage them. -30,000 makes you one of those people.

I got rid of mine years ago.

You're not alone, many people are in this situation with the COL and general life expenses.

I honestly think when it comes to insurance people on here say things they don’t know anything about all the time. Lots of insurance myths

Yes. One of the payments is way more than the min and will pay off the card in 24months which is the term of 0%. The rest are on minimum payments.

I disagree. It won’t be a flash car, but I’ve been looking at cars for my daughter and there are olenty of slightly older, smaller cars with low mileage for that money. You could even go to one of those car supermarkets and get a newly new small car for 6k which, even for two cars, is less than half the 30k the op is paying.

I’ve just had a really Quick Look on eBay and both of these cars have less than 35000 miles on them and less than 3k

https://www.ebay.co.uk/itm/286504342931?mkcid=16&mkevt=1&mkrid=711-127632-2357-0&ssspo=ObJfwp7rSMS&sssrc=4429486&ssuid=aW4bYYyHQly&var=&widget_ver=artemis&media=COPY

https://www.ebay.co.uk/itm/306271053644?mkcid=16&mkevt=1&mkrid=711-127632-2357-0&ssspo=4h72ghf-r0w&sssrc=4429486&ssuid=aW4bYYyHQly&var=&widget_ver=artemis&media=COPY

Make sure you can pay off the zero % card when it comes due, keep an eye on other debt, you do have a big income but be careful.

Can you break down the £6,524?

We know £1,200 is mortgage.

Say another £1,000 bills.

That’s £4,324 still unaccounted for.

How do you plan on paying off that debt before 0% expires?

I agree with the PP that said you need to get to the bottom of your spending if you plan to release equity.

It’s really easy for debt to get out of hand - you’re not the first and you won’t be the last. I know, I ran up over £30k on credit cards and loans in my 20s as I got trapped in a debt cycle. It only started to go down when I started to make different choices.

In your shoes, I’d start watching m every penny super carefully and see how quickly you can get your credit card shifted - you’ll feel much better for it.

I’ve carried on the habits I built clearing my debt like shopping around, calculating grocery price per kg/g/item to find the best deal, nearly always buying second hand or in a sale, etc. We did a whole house renovation a few years ago and I reduce our costs loads - we saved about £10k just on our bathroom!

I would completely tighten up your belt and live incredibly frugally for the next couple of year and plough all money into the debts. The teenagers shouldnt be expensive as no child care is needed.

Its definately doable. Our joint income is the same and we have 3 teenagers. I have overpayed the mortgage off and have also put away substantial savings.

If I had this debt I would take drastic action. This means no coffees out and about, packed lunches, aldis for food, no new clothes, teenagers can get after school jobs for money if they want designer gear etc etc. Cancel streaming subscriptions, cancel any gym memberships, no new phone contracts (ID mobile do a great sim only deal for £8 per month). No holidays either. You have no money and everything should be going into these debts to get rid of them.

Edited as missed out a word

As you’ve got good equity, why don’t you release enough to pay off your debts? your mortgage payments will be higher but probably no more than you need to pay now? Car finance agreements are usually a higher percentage than mortgage payments so in the long run you might save money there too? I’m not an expert though you would have to do the maths x

I wouldn't be wanted to drive a Yaris on a long commute - it's tiny. Focus- sized 4ish year old cars are £15k now and bigger family cars cost £££.

Personally I would have added the home renovations onto the mortgage - not sure if you can do it in retrospect.

What about uni costs? Do you have those coming up soon? I can sympathise as its so expensive with teens!!

Hi op, considering you are worried about the credit card debt being a slippery slope then I think you should pause the over payment on the credit card and instead build up an emergency fund of £500-£1000. This will cover the oven breaking, a larger than expected car repair. Things you simply have to fix. This is commonly called a baby emergency fund and it used by people in credit card debt to avoid adding more to the cards.

also come join us here https://www.mumsnet.com/talk/cost_of_living/5290390-is-your-march-miserly-or-munificent-join-the-frugaleers-sharing-news-and-tips?page=1 we’re a really nice group all trying to battle the cost of living and in my case my spendthriftyness!

That level of debt would keep me awake at night.
spending 33k on two cars when you had no savings and cc debt suggests poor financial planning and so I really think you need to see a debt advisor for proper advice. We have two cars. We have an hours commute each. The combined cost of our cars was 17k.

Does that budget account for absolutely everything including expenses that aren't every month? And irregular but known expenses such as Christmas?

If you are expecting your children to go to university, bear in mind that they won't be eligible for more than minimum maintenance loans with your income. So are you expecting them to work first and save up first or are you going to support them financially (e.g. many parents pay for accommodation)? University has been a more expensive stage for us than any other barring the hefty pre-free hour childcare bills.

Do the DC have jobs now? I'd think about what you pay for them to do and what they could fund themselves.

Throw everything at that debt. Make yourself a budget - review all of your outgoings, set a budget for yourself and stick to it, chuck money and the debt and you’ll be surprised how quickly you can attack it especially as you’re good earners.

Is University a possibility for the teens... have you accounted for the parental contribution as they would only get minimum loands

I'm far from a financial expert so I'm open to correction.

I'd have thought that it would be better to save some money each month instead of paying extra off a 0% debt. That way you would have access to it in an emergency but could pay it off in a lump sum if the emergency never comes.