I have massively fucked up our finances

[Skintorama]

I've just been scooting along with my eyes shut for ages. I bit the bullet and sat down with DH to go through stuff a couple of months back and we were 14k into the credit cards, and paying interest.

We have a 13k bank loan which we took out to clear the last lot of credit card debt, there are still three years on that.

I also have a car loan that was around 14k, I think that's down to 12.5k now, 4.5 years to go. I am looking into selling the car back to the garage next month and buying a cheaper, smaller car (needed a 7 seater for work but don't anymore).

We then took out a new 0% cc and shifted stuff around, so we're not paying any interest now, but having totted up all the balances today we are now £16k into the cards. I know some of that is fees, but it's also that we've managed to piss £800 away over our budget in the last two months, and we have paid the balance of our holiday (£700).

It's completely unsustainable. About 6k of the debt was court fees, and 5k was our kitchen overspend. The rest is just spending.

Help me. Please give me all your best advice and tips. I seem to just be failing miserably at this. We have over 4k a month coming in and I don't understand how we overspend every single month, it's nuts.

So the amount of 'spendable' money each month is £2040 so totally and utterly fixable.

It equates to £470 per week spare.

Start shopping at Aldi - £60pw
Each take out £50 per week for 'pocket money' - £100pw
Petrol (which incidentally you haven't put down as essential, I would!) - £60pw

That leaves £250 per week to pay off your debts - £13,000 in one year.

I know, Wannabe. I think that's half my problem, in my head we are comfortably off and so I just spend without really thinking about it.

I'm a dick.

You definitely need to get things under control. Cut up your credit cards. Right now. Ditto store cards. Ditto anything that makes you think you have money to spend frivolously.

Firstly sit and list down your absolute total income (after tax).
Then list your essential outgoings. Write down everything you spend money on. Keep all your receipts, and check those to what you've listed as spent.
If you have savings, hard as it is, use them to reduce your debt.

With regard to your spending: once you know what your outgoings are meant to be, set a food/emergency contingency weekly budget.
Withdraw this amount weekly. Do NOT spend beyond it. If you are under/within it, put aside the excess. Even if it is a few pennies.

I went from earning £50k p/a to earning £0 when I quit my job to return to studying. When I was earning, I thought nothing of buying a £2.50 coffee at least six times a week, lunch from M&S, Pret etc. at £5 a go, and swanning into Space NK for a £20 treat.

Now, we have a monthly income of £600 out of which we pay mortgage, bills, buy food and clothes. I've got much more savvy about what I will and won't spend money on. I home-make some of my 'beauty treats', and get lots from ebay/charity shops. We often do a supermarket shop late in the evening, when they're reducing things like bread, veg and yogurts. All of which can be shoved in the freezer and taken out to use over the next week or so.

Skint, you've done the maths yourself.

4k comes in each month

Approximately 2k goes out each month in essentials.

So you have 2k a month to pay down your debts. I would be ploughing as much of that 2k as possible into repayments. No McDonalds, no trips, no new clothes.

Actually, thats more than our monthly income.

I agree with whoever said that you need to change your whole outlook. Its very very easy to get into the way of spending, and when there is a good sum coming in its easy to justify. Time to be more frugal and honest with yourself.

I'm sure this is going to sound really mean, but just stop spending!

If you get all you debt in one place, lowest interest rate possible, and pay off as much as you can every month, then you could be clear of it soon.

Cancel all unnecessary direct debits - gym, love film, sky, etc etc.

Take your necessary spending out of your budget (this is mortgage/rent, house insurance etc) and spend as little of the rest as possible. No meals out, no cinema, no new cushions etc.

Depending on your necessary outgoings, you should be able to cut your outgoings right back, focus on getting debt free. It'll be hard, but worth it when you get there!

I think you going to have to set yourselves a budget for food and groceries, and stick to it obsessively.

When I first got myself into the habit of doing this, I got the actual cash out at the start of the week, put it in a jar, and when it was gone it was gone.

When you get into the mind set, it's easier to get rid of the cards and to start cutting down on fuel bills etc, because you've 'bought into' it all.

Best of luck. Facing up to it must be hard. But it's good that you are.

Thank you, all of you.

I'm taking this all on board. I've spreadsheeted all of our income/outgoings and credit card payments. It's totally manageable so long as I can curb the spending, so that's what we'll do.

No non essentials, and maybe a £50 fun budget for taking the kids out etc.

can you extend the mortgage to include the loans then increase the repayments by direct debits/standing order?

I've put 12k on one 0% card and set up a dd for £250pm, so that's 2 years until it's paid.

The rest is on another couple of 0% cards and I'll pay those off as soon as possible. If I can keep our monthly spend down to below £1k (which it should be ffs!) for food, petrol etc, then we are laughing.

It's really helping to just get other people's perspective on this, so thank you all.

You should set up a standing order now for an 1500 to pay off the debts. within Nine months your debt is paid.

The mortgage is fixed for another 2 years, so it would cost us to extend it, I think?

We actually have an endowment maturing in 2 years (60k) but we want to use that to move house (there are 5 of us in a small three bed semi), so I want to get all this paid off before then.

£12k over 2 years would require monthly payments of £500 to pay off, wouldn't it?

I just need to not be a dick about spending, really.

And on paper, we could afford it.

The trouble is, this almost certainly wasn't true at the time - you just have a certain threshold of acceptable debt (which we all do) and it seemed to roughly fit within that. 'Under 10 grand' seems to be what you're comfortable with - I understand why, with your level of income, but you now need to challenge that mindset.

Unless you were completely ripped off on your car loan you should have paid off more than you think - worth getting an up-to-date statement as you need to take a very cold, hard look at all your debt and particularly in the approach to money that got you here. TravelinColour is right, most people who consolidate debt end up taking on more.

I would definitely get over to the Dealing With Debt board and do a full Statement of Affairs.

Don't forget as well about the inevitable irregular/non-monthly expenditure. Often they can drive a coach and horses through a tight monthly budget with no give in it. And then it seems like it's not worth budgeting at all. I use a budgeting / accounts application called You Need A Budget. The site is well worth a look even if you don't decide to go with the app, I think you would get a lot out of understanding the method.

If your DH is more thrifty, you might want to put him in charge of the finances. If he isn't - well, don't feel like you got yourself here all on your own. You probably both need to sit down and think hard about your attitude to money.

Well done on facing up to the problem, that's the hardest bit. You can turn this around with a bit of discipline.

Stop putting yourself down. It has happened, you have realised and now you are in the frame of mind to deal with it.

I am similar to you and we are dealing with it. As you and others have identified, it's a matter of stopping the frittering. Part of mine is psychological - I have depression and a tough few years within the family led to me cultivating a 'sod-it' mentality where spending was concerned. The other issue is having the stacks of available credit so you can get into the habit of a few treats on top each month. Do cut the cards.

The absolute best place to start is putting an honest SOA on Moneysavingexpert on the Debt Free Wannabe board and go from there. It goes from being this huge grind to a satisfying challenge and the boards on there are very helpful.

We will sort this out! I am sick of living in piles of crap without any money to do what I really, really want. So, life overhaul. I know it is my fault we are in the situation, but I am absolutely prepared to work hard to change it too.

Good luck. We also have the frugaleers thread on here too, do join!

duh, of course 4 years, my brain is not engaged today, clearly

(you can see where it goes so wrong now, can't you....)

Thanks for all your links tribpot. I will check them out too.

Thank you! Will check out all those links.

My 'sod it' mentality comes from years of poverty in the past. I used to be really frugal and careful, and when we started earning lots it was like I flicked a switch in my brain to 'spend'.

Try only using cash - not credit or debit cards. Look up Dave Ramsey on YouTube for his step program which includes a cash based envelope system. You don't need to watch the videos, just listen while you sort out stuff to sell! It's not a unique idea to him but he has some quotes that gave me a push in the right direction to save more of our income.

The summer will be hard as you have the kids to entertain so plan ahead for cheap DIY fun. Painting, free museums and local events, park/beach with picnic etc.

Look for kids club at the cinema. Our local is £1 per child and 1 accompanying adult goes free. Or rent a DVD and make a big fuss over it- kids design posters for the "cinema".make popcorn etc.

DO NOT totally deprive yourselves or else you risk binge spending but looking for ways to do things cheaper - like movie at home instead of cinema, baking a basic cake together instead of going to the coffee shop for a treat etc.

Also, make sure you are claiming everything back on your tax return from childminding- % of water, elec etc. 10% wear and tear etc.

Consider some meals like these a few times a week:

www.cheap-family-recipes.org.uk/
agirlcalledjack.com/tag/budget-recipes/

Easily done!

£400 is over our total monthly food budget. There must be room for savings in your top ups. It isn't just what food you are throwing away it is the types of food you buy.

If you buy ready meals start cooking meals from scratch
Use in season foods
Use cheaper cuts of meat
Not for everyone but when fruit and vege are in seaon then make chutneys and jams. We have jars of onion marmalade, saville marmalde, marinaded olives, oven dried tomatoes, mango chutney, piccalilli, red currant jam, gooseberry jam, apple puree lemon cordial. All things that are really easy to make but are expensive to buy. Mangos are just coming into season - £10 for four trays in Rusholme on friday. That is enough for about 20 - 30 jars.

Get a notebook and write every penny you both spend down throughout the month.

Also remove the savings from your salary the minute they come in. Then they can't be touched. Have only the remaining salary in ur current account so you can see it going down throughout the month.

Do not use those credit cards.

Put all his overtime money straight to paying off the highest interest bill. Not into the pot first.

Forgot to add we were in a similar position a few years back. By next may it will all be paid off.

As was said by someone else don't not do things just find a cheaper way to do it.

DP has only been working again a few months, and it is so tempting to spend money "to make up for all the times we couldnt" so I can see why this has happened. Dont be hard on yourself and dont be too restrictive.

Take picnics along on days out instead of buying food out, meal plan and try to make cheaper meals, have one night a week where you have some treats, but try to keep costs down on the others.