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?

All these comments about the kids university rent… if the parents can’t afford it then they will have to stay at home. I’m a widowed parent of two and have told my daughter that if she wants to go uni I will provide for her with the house she already lives in and she’s not going away, there are four unis within a commutable distance. I have no choice in this I have scrimped and saved for us for 8 years now and simply I have to look after myself soon otherwise I will be screwed in old age.

If your DC are nearing uni/leaving home I’d personally be looking to downsize in the near future, both house wise and definitely the cars. Each to their own but I’d rather live more modestly than with the debt over my head

I obviously only know what you have told us here but all of my gut instinct is:

1. Get rid of your cars and swap them for something cheap and functional for £3k each.
2. Sit down together and work out a budget, together, that you’re both agreed on. Every penny goes to your credit card.
3. Throw everything else you can at the credit card debt. Sell anything and everything you can - go through every cupboard, drawer, wardrobe, shed, loft etc.
4. One of you take on a second job - pull pints a couple of nights a week or do Deliveroo.

I’d be aiming for no debt outside of the mortgage and then a rainy day savings pot of, say, £5k.

You aren’t the first and you won’t be the last. Get really serious about this and you’ll soon be out the other side.

Good luck

This has been our plan but didn't know if this in itself was foolish.

I’ve got 2 dc in uni with loans and it costs me over £10000 a year to top them up to the max loan. On your income they will be able to borrow roughly £4.5-£6.5k a year depending on whether they are in or out of London. Very few people live comfortably on £4500 a year - you will need to contribute getting on for £100 a week per child even if the dc are working. If you aren’t going to support them they need to know and they may opt to take their hobby money into savings or plan a year out to work (where? With no public transport and no money for driving lessons), or they may decide not to apply to various cities on expense grounds. I assume you have 4+ dc as you have tipped into big car territory so, like mine, they are likely to overlap. SFE doesn’t gaf how many dc you have at uni at the same time, just how much their parents earn.

You aren’t high enough earners to spend £33000 on cars. It’s 30% of your annual income before you’ve even bought petrol or tyres or tax or servicing. You can get a perfectly decent car for £5-9k. But you might get in a mess with early repayment etc and realistically the cars may be worth less than the debt so you may get into a pickle trying to get out of that one. It’s too much to spend on top of your other expenses. I would seriously look into getting rid of the cars and replacing them with something for around £15k for both. It won’t work if you’ve had too much depreciation though.

Everything you have overspent on you have “had” to buy. I wonder if you have truly hit a run of expensive bad luck or you are just making daft choices. The cars suggest the latter is definitely a factor, even if you have just been unlucky.

Absolutely, that's a totally valid option (as is the student taking a year out to work and save) and entirely understandable in your situation.

However, I am getting the impression that OP moves in circles where DC go away to university, and her DC's friends probably have parents who will be financially supporting them. I don't know how much OP shares with her DC about the family finances, but if they are expecting their parents to support them through university, then the earlier they are told this will not be the case, to allow them to plan accordingly, the better.

OP, people are just judging you now and (probably) stressing you out more with talk of uni etc, because even though you asked for a reality check, your posts are thin on detail, so difficult for us to empathise or advise.
We can’t really say whether the debt is manageable without knowing where your money is going.

On the face of it, I would have said yes is manageable with significant cutbacks. If you’re saying that you can’t cut back, then no, I don’t think it’s manageable.

The OP lives somewhere with no public transport so her dc won’t be able to choose between 4 commutable universities.

You’re ridiculous. Loads of kids from low income families go to uni. Not all families support their kids.

Stop being purposefully horrible to OP, it says more about you than her!

Open Uni?

You didn’t read her posts properly. She has 2 cars, costing £33k in total. Car costs have skyrocketed, that’s hardly her fault. And before you mention it, yes she’s said they need two cars to commute.

The government loan is based on a parental contribution from people who have a mortgage, holidays and two cars.

Low income students get enhanced loans.

Children from low income families are eligible for higher maintenance loans and, often, university bursaries.

Children from families with a household income of nearly £100K are expected to receive financial support from their parents. It leaves them in a worse position than those from low income families if their parents can't or won't support them.

I'm not saying that is a great system, but it's the system we have.

I'm heading to bed now but I really do appreciate the comments this eve. Even the wake up call ones about uni. Call me naive (or just someone who moves in circles where uni costs are not discussed!) but I genuinely hadn't factored in me contributing to this.
Having spent the evening looking at budget again I think there is more room for paying off debt than I thought.. next job is to sit down with DH and make a plan.
Finance books recommended are on my library list.

Thank you hive mind, for the sympathetic ear but also for the tough love comments!

Did you not consider that they might need financial support while racking up huge debt.

Yes I did read her posts. Most people commute. I commute. What’s your point? You can only commute in a car that costs £15K? She can’t afford it. I can’t afford it either which is why when I replaced my car less than a year ago I gave myself a budget of £8K, which is still quite a lot of money.

I would not pay off unsecured debt by releasing equity. You are essentially risking your home to pay off credit cards/car loans.

Have you made a plan to pay the debt off or are you just paying minimums? I think the debt is high but your income is reasonable. Are the car loans due to be paid off any time soon and what is the plan going forward to replace the cars?

If you only pay minimums you will not be clearing it any time soon. Also are you paying balance transfer fees each time? How long have you had this debt?

OP, very brave of you to post on MN where an household earning almost six figures ‘isn’t that much’ despite much of the country being willing to snap your hand off to swap places!

You’ve had some really sound advice and I’m sure you’ll move forward and find solutions.

Honestly, I think it’s fine while you can afford it but sounds like your tight each month so yes I do think your kidding yourselves that this is manageable because emergencies come up and you have no wiggle room.

If I were in your situation I’d have a big push to find some extra money, I’ve just had a big clear out on Vinted and the amount of stuff I never considered selling and had just been gathering dust for years earned me £1000 this month.

I also actually have a million little things that I do each month to maximise my money. But if you can have a no spend month, and have a clear out of anything your not using, even get some additional hours at work/temporary weekend job. Just to get a couple of grand in to a savings account so that you have an emergency fund that’s not just using your credit card. That can eventually go on your credit cards but I would really recommend doing what you can to get a small pot of money.

You could easily downsize the cars OP. Sell them, you may even get a little back (I did when I sold a car still on finance once) and just get something secondhand much cheaper, that alone will make a difference and give you more each month to pay towards the credit cards. How much are your monthly car payments?

Also there’s an expectation that someone in your joint income will pay towards the cost of university. Your kids will not be entitled to the full loan. So all well and good thinking it’s up to them but it’s not, you have a responsibility to support

Yes but all of our other friends of similar Income have just got the kids to take out loans

I presume your friends of a similar income don't have such levels of debt though and were able to give them money to top it up.

I know a few people who were very surprised when their kids went to university that they couldn't just 'get student loans' to pay for everything. My eldest went to a pretty cheap university but their halls of residence was still £5000 for the year and the minimum loan (which you will get on that salary) was something like £4290 . That's without paying a penny for food, travel, books etc

You do hear of parents saying they didn't give their kids a penny, but when you dig deeper, it turns out they actually got the full loan of £9000+ which is plenty to live on if you go to a city with cheaper living expenses. You won't get that on your household salary though.

You have expenses of 6.5k but i thought I read up thread your mortgage is only 1.2k so you need to look at how you’re spending 5.3k per month. That seems a massive amount if none of it is going on childcare or CC debt etc. presumably some is going on the cars? But it seems you’re living massively outside your means. On similar amount we’re saving at least 1k pm across voluntary pension payments, holidays and investments.

When our first child went to university we gave about £600 per month, we have an income similar to yours, when both were studying this doubled for a couple of years. They also both had jobs but due to courses etc, weren’t able to earn enough to live off with their minimum loan and what they earned so we topped it up.

Personally I would never take an unsecured debt and secure it on my house. It puts you in a worse position if things go wrong plus it gives you an excellent opportunity to run up more debt on those credit cards.

Get yourself to money saving expert forum and a debt free wannabe diary, get a budget and pay off the debt. Side hustle, do over time, declutter and sell and make cut backs to get some extra to pay things off quicker.

Use this as a springboard to work out plans for how you are going to pay for bigger events in the future, do you want to clear the debt and increase retirement savings or put extra money aside for uni, driving lessons, a big holiday when the kids are older or whatever.

I was in a financial mess a while ago and it took a few years to clear it all, but I learnt a lot from it and got in a much better place than I would have been if I kept in the credit cards minimum payment and instant gratification type circle I was in.