Please help me sort my finances!!!! AIBU to withdraw money from private pension to pay off credit card.

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I’d really appreciate no judgement here, but help to get back on our feet. DH and I have had a string of bad luck resulting in multiple unexpected bills which have led to the situation we are now in and I would really appreciate some advice on getting out of it… finances listed below:

Help to buy ISA: £28,000
Current account: £200
Credit card: -£2500
Loan from family member: -£2,500

I have a private pension that I have paid £4,000 into, which now has a value of just over £5,000. Should I take the money out of this and pay off some debt?

Im 38 years old and feel embarrassed by the mess we are in. Please help.

You definitely need a budget and a clear idea of all your expenses. There's a board on here called money matters which is full of helpful people, so asking there for advice is also a good idea.

Firstly, do not panic. I was left with huge debts to pay alone after I left my Ex.

Go through your bank statement/credit card statements line by line. Mark them as essential/possible/luxury
Cancel subscriptions to all luxury items, including TV subs.
Then review the possibles.

See if you can get utilities cheaper by switching providers.

Go through food bills and cut out any luxury items. For me, this included meat, because that was more expensive than veg/pasta. Yes, I was very boring with food for a few years but baked potato's, pasta and rice is very cheap to live off. No alcohol or soft drinks as they quickly add up.

See how much you can put aside to pay off CC debt first. Speak to them and ask if they could freeze interest as you are struggling.

Budgets sound scary but they're not. You need to be honest about your spending. At one point I only paid in cash. It was a visual reminder of how much I had so it made me think twice for all expenditure, even chewing gum!!

I would not touch the ISA and as others have stated, there may be a pension restriction.

I am now debt free, so it takes time but is possible. Work together and reduce the higher interest items first. I would suggest consolidation but don't think it would help in this instance.

Personally I wouldnt " live off the credit card"

£200 is 100 per week which should be adequate if you get paid end of the month

Go through cupboards and freezer and check if you gave any points to use up on supermarket eg Nectar
Meal plan and work out fuel
Push haircuts/ socialising back
No coffees etc

Essentially most unexpected expenses are not that unexpected so once the debt is paid back build up a 3-6 month emergency fund

Its a bit cheeky to borrow off others when you have 28K

Pay off the credit card first. To find the money for that: *temporarily stop saving into your LISA,
*stop/reduce all non essential/luxury spending (clothes, nails, hair, makeup, tv/gym subscriptions, coffee, eating out, takeaways, any and all impulse shopping, days out, non essential travel),
*reduce your spending on food (cook from scratch, don't buy any ready made meals or snacks, no alcohol, meal plan, eat less meat, don't waste anything, eat leftovers, have a few cheap meals like beans on toast or jacket potatos a week),
*sell your unwanted possessions on vinted/ebay

Once the credit card is paid off, pay off the family loan.

Once the family loan is paid off, save at least £1k as an emergency fund in an easy access high interest acount so that you don't need to rely on credit again for any future unexpected bills

Then only at that point do you start saving in your Lisa and enjoying the non essential wants/luxuries again. And alongside that increase your emergency fund to 3 to 6 months of your essential bills.

You can withdraw from the help to buy or LISA.
If you’re spending on a credit card and also paying interest on a balance it might make sense.

first work out how much you need for what is often called "bare bones" budget,
rent, council tax, utilities, food and transport to work and insurance.and minimum payments on cc.
Hopefully this is below your combined income
you can try a couple of no spend months where you buy nothing extra to the above
no subscriptions no eating out no takeaways days out no new clothes etc, sell anything you no longer need or want via vinted ebay etc, depending on your work could either of you get a few extra hours work a shift one evening at a pub or similar you can probably pay down the £2500 cc quite quickly, then pay your family back, then build a small emergency fund then go back to paying into your private pension and ISA

Budgets are useless unless you know EXACTLY what you're spending. I would go through all expenditure over the last calendar year and categorise it all. You can't set a budget without doing this first. People always forget about the irregular spending (presents, new tyres, gutter repairs etc.) until they start doing this. This irregular spending can cost an extra few hundred a month without you realising. I would say priority is to get that credit card paid off as soon as you can as if you're paying interest, the debt will snowball. I wouldn't pay another penny into your ISA until you've paid off credit card debt, then what is owed to family member

I don’t think you can simply withdraw from a private pension so its moot?

Weigh up interest vs penalty for accessing the funds

Is that from Christmas? I.e. the credit card?

What clothes horses problems said

Sounds like she has experience, with a username like that!

All of this. But have you tried applying for a 0% (or at least cheaper than full rate) credit card? Have you missed payments? Use the MSE eligibility checker and see. Definitely worth applying.

Otherwise up your income and cut your expenses to the absolute bone. Can you do something like cleaning or babysitting?

Money Saving Expert.

Are you less than full time?

Download the MSE budget planner. It is a spreadsheet that you enter all your income and expenses onto and it shows you have much money you need each month. You need to sit down with all your bank and card statements to see where your money is going.

Cut out all unnecessary items, only buy what you need. See if you can save any money on any bills or food shopping.

No luxuries, you may not buy these anyway, but that does include tv subs, coffee, lunches out, takeaways, expensive hobbies, nails, hair etc.

Assuming that the family member is not charging you interest, you need to clear the credit card first.

When the card is clear, cut it up. Live within your means

also commit to putting every penny of your pay rise after tax towards the debt then to building an emergency fund

£300 rise after tax and NI is just over £200 a mont you will clear cc in ayear even without any money from elsewhere double that to £400 a month by selling stuff and generally not buying stuff and it will take ust over 6 months

I looked at withdrawing from a pension and it was a 47% charge so that was a no. My budget is all my expenses on an excel sheet, at the top all my incomings and then I know what I need. I have 2 current accounts, 1 for bills that I put my wages into to cover direct debits then another for spending which I transfer my leftover into and that’s what I use to live.

I've been where you are and it is doable but hard work. Speak to citizens advice for definite

go to the debt free wannabe forum page on the money saving expert website. You can fill out an SoA (statement of affairs) which lists all your incomings, outgoings and debts. People there are very helpful, but be warned they are brutal!

No.

you can’t anyway, so it doesn’t matter whether you want to.

if the family member isn’t pressing for the money back then don’t panic about that for the moment.

An income of £1500 a month, so you are part time OP. Can you increase your hours?

For a budget, go through every payment you make each month, rent/mortgage, council tax, utilities, insurance, car payment, travel etc.

Scrap anything optional, such as gym membership, nails, pay TV, other subscriptions, coffees and meals out.
Look at your food bills. Two of you should be able to eat comfortably on £70 a week. Switch to own brand, cook from scratch, avoid takeaways, ready meals and alcohol. Switch your broadband and mobile contracts to reduce costs.

Focus on clearing your credit card first and then your loan from a family member. £5k is not a lot if you both put some effort in.

We need to know a lot more about your finances to help you. The first being, how long does that £200 need to last and what bills will need to be paid during that time?

Cut every single thing you can and pay it off. It.wont even take that long.
I went without buying anything for myself except basic toothpaste and shampoo for a couple of years after my ex H.left. It's doable and you get used to it.

£1500 take home equates to about 32 hours at minimum wage ( I have allowed for tax and NI deductions) it is 18K net and about 20K gross

As all previous poster have said you really need to understand where every penny is spent. I used to have a notebook where I wrote everything down. You also need dh to commit to this. And every day (yes every single day) you both have to sit down and look at what has been spent.

Don't be horrible to each other about £3 spent on emergency chocolate at the garage, but do noticec it, and recognise that it wasn't necessary.

Don't allow your pay rise to make either of you feel relaxed about your finances, see it as an opportunity to get things back on an even keel and to get ahead of the game.

When you are doing your budget calculations use your take-home pay and the lowest amount that dh is paid. That is your bottom line - you need your normal monthly living costs to come within that amount. Even if that means living on baked potatoes and beans. Learn the price of everything. I bought a carrot at the supermarket (had to weigh and price it as using self-scanner). It was 12p. I bought an apple and it was 65p. So carrots for snacks, not apples. Certainly not grapes at £3.25!!!

After one month of a rigorous approach you will know how much you can put towards paying off your debt. (credit card first). As soon as you start to pay it down you will immediately feel better. You you will be able to look ahead and be confident about the timescale for when you can be debt free and on a positive track towards saving.

Unexpected cost are just that - unexpected, but the often appear every month. I should have had £100 excess every month, but almost every month something accounted for most of that.

You are doing the right thing to sort your finances out now, before they get out of control and you feel overwhelmed. When I was in a similar situation I paid £160 per month to my debt, £20 to my family, and £20 to savings. If you could do similar, in 15 months you would have cleared the debt, you'd have started to pay back your family member (and could subsequently clear the debt [£160 + £20] within another year. Plus you would have £540 in savings - a good head start to a proper debt free life.

The key thing here is that you and dh are on the same page and adopt the same approach, so you're not the one worrying and making savings while he is spending on unnecessary things.

1. Stop spending
2. Work out a budget
3. Stick to it
4. Increase income, you need a second job
5. What can you sell? Car boot? Vinted? eBay?
6. When you have paid off your debt increase pension/ISA contributions