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?

I would :

• increase your monthly repayments above the minimum on the credit cards so that you start to chip away at the balance
• consider putting an income protection plan or mortgage protection plan in place if you don’t already have this - to protect you if you do lose your job. ask your financial advisor about this
• make sure to keep moving the balance on 0% transfers until the full credit card debt is repaid

Can I ask why you don't lease a car? It would be more manageable financially and you get to change your car to a newer model every few years so needing repairs unlikely.

I think you have saddled yourselves with a worrying lot of debt for a very long time.

Cars - ok, you need vehicles
Mortgage - ok
Credit Card - no way ok. Even at 0% this is an astounding debt.
Holidays - you are indulging/allowing yourselves holidays that you know you cannot truly afford. I’m assuming they’re all done on credit?

I’d be terrified of losing jobs. I think you’ve got to start saying ‘no’ to yourselves, and soon!

More debt linked to cars, just a different method!

To lease two cars you are looking at combined initial deposits up to probably £8-10k and combined monthly payments of £5-600 assuming only a modest car each and nothing flashier.

Frightening suggestion.

OP has confirmed the holidays went on the CC

You'd be far better heading over to Money Saving Expert Debt Free Wannabbees board rather than seek advice here. There is so much good advice and most importantly inspiration to help you

It is naive to think that level of debt is manageable without taking some massive steps to stop it increasing

You say the mortgage and car loans are manageable but that is only the case because you are accruing debt elsewhere. You could reverse that and say the credit card would be manageable without the car loans.

You’re right, this could be a slippery slope. I would prioritise paying off the credit card debt by increasing the payments by 1500 a month. Don’t leave debts there planning to release equity to cover them
or you risk losing the benefit of owning your home.
You have been living beyond your means but there is time to stop , clear the debts and live comfortably on your income, helping out family when you have the extra available.

You’ve had lots of good advice OP - the biggest thing you need to consider for the future is the plan for your kids.

As others have said, making the assumption they’ll go away to uni, self fund, and not return afterwards to the family home, is quite naive - lots of people now live at home until their late 20s due to the high cost of rent while saving to buy a property. So assuming you will downsize and release equity may not be feasible.

And if you can’t support them to top up loan fees for uni then they might also need to go to a uni near home - in which case they’d also be staying at home.

Assuming you have 4+ kids (hence needing a larger car) who are all teens, if you’re funding pocket money and activities for all of them I can see how that could add up. Do any of them have jobs?

Personally I’d be saying any of them old enough to work should be expected to get part time jobs and use this to fund their social activities and contribute to hobbies. And perhaps also start saving for uni. You’re setting them up to fail if you’re covering everything now and then in a couple of years expecting them to leave home and be totally self sufficient, when they’ve had no grounding for this.

They can also use their jobs to save for driving lessons which they’ll need to cover themselves. Best to get them into this mindset as early as possible.

Finally, is there any scope for either you or your husband to progress at work and get promoted or move roles to get a better salary? Often you can get a decent salary increase just from moving to a different company if you’ve been at your place of work a long while and been promoted internally. If not, another option would be to take on some additional part time work in evenings or weekends to top up your income.

When you can, I would downsize one of the cars to a cheap runaround (but whether that helps your financial situation depends on the nature of the car loans and how you’re tied in) - but I personally would prioritise clearing the CC debt as that’s the one which will really sting you if you run out of 0% options.

I think this is such a great response!

Most people would extend the mortgage to pay for house renovations. So I’d consider whether when you next remortgage including it, if you don’t feel you’ll pay off whilst it’s interest free.

Where do you think your kids will go OP.If you are thinking University then you may get a shock as Uni maintenance barely covers rent and they won’t get the full maintenance on your income anyway. So more expense for you

This x 100. We are in the midst of the university years at the moment and it's eye-wateringly expensive! We had two there at once which was hard. We, like you will, had just the minimum loans which doesn't cover rent, let alone food and bills.

The university funding situation is definitely very difficult for families who on paper have s good income but have a lot of expenses and/or debt.

i think the adage of paying off debt before savings is wrong. If it’s 0% debt you should ideally have 6 months expenses in easy access account or similar to cover any unforeseen expenses. Without this you end up having to make poor decisions and when unexpected costs arise because you have no buffer. 6 month expenses for you is 40k which is massive again hinting you’re living well outside your budget.

You have been staggeringly naive about uni costs.
Depending on their ages you could have
more than o e at uni at once. Of course they may not go at all.
Your income is what determines their loans.

OP which decade was that when you went to Uni? You do know its 2025 now and the costs for uni are through the roof?

I loathe when people say "I never had any help from my parents", ok that might be true but the fact your actually in so much debt that you can't help them will most probably mean they come out with huge amounts of debt and so the cycle continues. And what about things like driving lessons? Are you going to be able to help with them? Due to the cost here, there was no way my daughter could of paid for those out of her part time job hours.

Agree. I've done the sums for my daughter and even with the full loans, its going to cost me about £450 a month. And I don't think op will be eligible for full loans

My parents never paid anything for my uni costs-just got loans and supported myself...

When did you go to university!?

I think you are in for a nasty shock. We have been paying £300 a month (x2 children at once) for the last year for food/bill as the minimum loan doesn't cover it all, plus rental costs (£560 each child) to keep the houses over the summer. There has been a month at the end of each term where we have had to cover their rent again as the termly loan didn't cover it.

I was in a similar position to you, we had around £50k debt, combination of credit cards and loans, the interest was insane. We decided to take equity out of the house, we had £150k on a £450k house so took £50k and cleared everything.

We earn slighly more than you, household income £110k but in doing so we have gained £1700 a month even though our mortgage has gone up £500.

We now have separate savings for everything, got rid of all the credit cards and are overpaying the mortgage to try and claw some equity back. We only have a £1k or so in savings but will now start to build that up.

I cannot tell you the feeling of relief of having no debt. We have just switched our kids rooms around and it has felt so good paying for their furniture/decor etc with our own money. Six months ago it would have all gone on the credit card.

Good luck with it all

OP just needs to pay off her credit card and car debt before she wastes time worrying about university costs. Honestly.

She does. But she needs to make a plan for doing this and acknowledge that university costs are coming and not budgeted for currently. Rather than letting the debt tick along as she is currently doing.
And, as it's likely money is tight, she needs to prepare her DC so they can get part time jobs (if they don't already have them) and start saving, rather than it being a huge shock at the last minute.

Yeah stop sleeping at night. That’ll help 😂😂😂

The good news is your earning enough to clear this debt.
Two years of strict budgeting without holidays will hopeful be enough to clear it.
Best of luck.

You need to snowball the debt

Step 1 - stop spending on credit cards. Cut them up and live within your means

Step 2 - work out a budget and work out how much extra you can commit towards debt repayment. You need to allow yourself a reasonable living costs and savings budget and fun money in order to break the cycle of relying on credit cards but make a realistic budget and stick to it. Pay a standing order to a savings account like it is a bill.

Step 3 - put debt into highest order of interest. If you are able to overpay then hit the highest interest rate item first and make additional payments (which you have budgeted for). If you can't overpay loans which charge interest then set up regular savers where you can save e.g 250 a month at 6% for 12 months and at the end of the 12months pay a lump sum off the credit card.

Step 4 - whenever a debt is repaid add the money you were using to repay that debt and apply it to the next debt e.g if a loan finished that cost £250 a month then pay £250 a month off the credit card

The most important thing is to stop using cards and actually make a plan to repay them and break the cycle.

One of you needs to get a promotion, or take a second job, or cane the overtime.

a 4 hour weekend job will earn you £160 a month.

Checking you are paying the lowest bills can save £££. Canx subscriptions, cut down on clubs.

Say no to meals out and any extra expense.

Snow ball, change your DD to standing orders so you pay more each month.

Sell anything you can, and don’t buy stuff you don’t need.

Check out secondhand sales. Use rewards, like Tesco club points.

Watch your electricity consumption

can you show us your outstanding debts and bills, we might be able to help.