Well here goes...in need of advice re debt repayments & financial products.

[flakeyfinancials]

I NC because Im about to bare all financials in the hope someone can see just what I should be doing first.

DH and I have always had c/c debts. They have crept up. Our approach is pay them off reasonably bit by bit as we need to live a little too, admittedly we enjoy a nice standard of living. DH works extremely hard has done v well. I am a SAHP. I feel he continues to earn good money yet we are not looking after it all properly.

Basics:

Mortgage - Northern Rock SVR 4.9. Bought at height so our property despite being in a so call desirable area has remained the same price. Current LTV is 87% but also have a secured loan linked to mortgage.

Credit Cards just under 20k - across 6 accounts. 1 account clear has a low interest rate transfer offer (for the life of the balance). 0% balance transfers available for about 5k. We pay above the minimum payments on the three largest.

Cars - DH has a car through work but he still sacrifices additional salary. I have just got a new car on contract hire (24 months)

After this we pay the usual bills which I've just looked at to check we have best deals on - about to change house contents insurance and car insurance.

We have an allowance of about £300 each. I use mine to fund studying p/t

We have one UK holiday booked for next year. Younger child in nursery part time - costs about £400 per month

We have no savings for us or the children. I have a small pension pot lying dormant from prior employment of 10 years (so not much) DH has a good pension scheme at his work. We do have another property that we rent out (can't change mortgage at the minute due to LTV as prices came down) but we dont profit and see this as a nest egg for future (its on repayment)

1. So the lack of progress consolidating out debts is causing me a bit of anxiety. I dont feel our money is working for us. Im acutely aware that I am completely dependant on DH, though I know in the future I can get well paid work through an agency because of my prior experience or if anything happened.... should we just do balance transfers and up payments or get a consolidating loan (have one approved)

2. Have a bonus due - should we pay this against mortgage and get the LTV down to 85% to access a better mortgage deal - seen one for us at 3.19% But then the secured loan would need to be paid off using a low rate credit card as when you transfer the mortgage out they put interest rate up on it.

3)Im worried about lack of class 3 contributions no pension or savings

All these choices have reasons but it is what it is - I dont know how to move forward but know what we do doesn't work. We will need to move house at some point.

Before you consider option 1) you have to go through your entire income/outgoings budget very, very carefully, be ruthless about distinguishing essentials vs luxuries, and set up a cast-iron way to monitor your actual spending down to the last penny. No short-cuts. Understand exactly where it is going. I say this because, if you consolidate debts, the very last thing you can afford to do subsequently is keep falling back on the credit cards because you're still overspending. Disaster if you do.

2. Any spare cash you can generate either from your budget, earnings or bonus should go towards paying off the most expensive debt first. A 4.9% mortgage is therefore probably not the priority. Your credit cards will be costing you considerably more.

3. There's little point putting money into savings earning 2% or 3% when you have high debts. If you qualify for a pension scheme at work, take advantage, but otherwise the same applies. The exception would be to keep a small buffer fund of a few hundred in an easy access account for emergencies (because you're now committing to not using the credit cards any more)

Finally... with respect, I think you need a change of attitude. I note that you mentioned working hard, 'living a little' and a nice standard of living fairly close together. We all deserve treats for working hard but if you're £20k in debt and it's still creeping up you're having too many of them.....

Thank you cognito its depressing but yes we can see examples of where we have allowed spending to just trickle away the last few months. Generally speaking, extra trips to shop to buy wine and treats that we shouldnt be having anyway. Probably had a couple of extra trips this years that we shouldnt have done.

We both as bad, though the sense of guilt I feel when I see how stressed out DH is gets me down.

I think we need to get some accounts actually closed and not just cutting the card up.

If you approach this positively and as a team effort you should be able to get a real sense of accomplishment out of getting in control of your spending. It's also a really good way to de-stress when you can point to the debts gradually decreasing and the interest payments going the same way.

There should always be room in life for a few treats but you can make that part of the challenge and a reward for hitting various milestones instead of something you do without thinking. Cooking the pizza at home instead of picking up the phone for a delivery.... one nice bottle of wine on a Saturday instead of several during the week.

Share the responsibility and ditch the guilt.

That is all relevant, dominoes last week, wine last night when it's supposed to be a weekend only thing...

DH has said to help by making sure there is nice things for packed lunches that will stop him spending in subway etc...he admits he does this so I just need to get him to define nie things. We have a £100 per week shopping budget as still buying wipes and nappies.

You should be getting NI credits for being a SAHP, so I think the lack of Class 3 contributions is a red herring. Check here. www.hmrc.gov.uk/ni/intro/credits.htm

Even if your husband is earning too much for CB, you should still be claiming to get your NI, even if he then has to pay it back via his tax.

But that's long term. Short term you need to have a reality check. I'm not saying this to make you feel guilty, or feel worse, but you shouldn't be worrying about lack of progress in consolidating debt, you should worrying about doing whatever it takes to pay it back.

20k in credit card debt, plus an extra loan on your residential mortgage which only has 13% equity (what does it have once the loan is taken into account? 10%? 5%? and a rental house that is worth less than you paid for it and doesn't make a profit? How long can you pay the mortgage on it if you have a void? Plus no savings and you say you will "need" to move house at some point?

It isn't going to happen. The new mortgage rules are strict, and you have a shedload of debt, only one of you working, dependents, and a history of overspending. You also have a new car, holidays, it seems routine for your husband to buy an overpriced lunch and for regular treats.

Your situation is one dodgy tenant or a brief spell of unemployment away from utter disaster. You don't need to feel guilty - you got here together and you can get out of it together, but it's going to need some serious effort. Cutting out the odd mid-week pizza or your husband agreeing not to buy an overpriced sandwich every day if his packed lunches are nice enough isn't going to be enough.

There are debt threads on here and there is also excellent advice over at the MSE forum - they have a specific forum for debt. Chin up. Good luck.

))))))) Consolidation Loans ((((((
Lock the repayments on your cards and they will go away faster than you realise
have a look at my spreadsheets here
www.mumsnet.com/Talk/legal_money_matters/1987219-SPREADSHEETS-for-Debt-Control-Budgeting-Mortgages-etc

Even if your husband is earning too much for CB, you should still be claiming to get your NI, even if he then has to pay it back via his tax.

HR at DH's work advised to opt out as it was complicated to claim back that way - he already has a complicated tax return to do. I hav read that link and will give them call. It looks like I may need to try and claim some credits retrospectively but I dont know if you can do this. I know I can still pay for the gap if need be.

You are right about the reality check MsRInky as Cogito said as much too. It's like well all the bills are paid and we have two nice cars, it easy to just to enjoy the disposable month on month. An example is we ordered a new bed for DS (needed) and then Ive looked at all accounts again and started talking about it all...but I'm still well I'l just get those curtains (not needed) I cant have the can I NO!

mrsrinky what do you think would be enough? Just be straight its ok. I need to 'reset' my finanical compass me thinks. Though Im quite confident about our tenant situation.

ohhelp - you right, we can afford the monthly payments so we never feel like we struggling though the debt is there and not getting smaller. I can be quite good a doing NSD and cooking budget from scratch. Its eating out, kids clothes, weekends breaks, extra holidays - all this has to go.

Talkinpeace - I have spent time this am looking at those spreadsheets and read a good dose of MSE to get into my head about how we just lining their pockes basically. We have been succseful in doing this with three cards hence capacity offered for balance transfers on 0% - I need to get all current apr's listed against balanaces an work out if transfer fees are worth it.

I need to make a decision about this soon

I have £3500 WWYD -

Option A

1. pay off chunk of residential mortgage = LTV 85% can get cheaper mortgage (fixed rate 3.19 or 2 years) savings of £200 x 24 = £4800 - no application fee.

2. BUT this means the secured loan (an old together mortgage from Northern Rock) of 7k needs to be moved as when you seperate the interest rates goes up from 4.5 to 6% +. I could use a money transfer deal from MINT card to pay this. Leaving me with 7k on a MINT card. My thinking is this is more flexible to manage and as MSE says

"Borrow £10,000 at 7% over three years and the interest cost is £1,100. Borrow the same over 10 years, and it's £3,900." MSE

There is a feeling of wanting to get away from NRAM and be on board with a mainstream lender, building up more of a profile with them for when we do want to move.

Option B

Pay the £3500 off residential mortgage to get LTV to 90% which includes the secured loan which would stay in place and become part of the new mortgage deal. New mortagae (fixed 3.9 for 2 years) savings of £100 x 24 = £2400 - £499 application fee.

Option C

Use it to pay a chunk off Credit Card debt and leave mortgage where it is with NRAM at 4.79%

Oh and mouse price value next doors house (recently sold) at 10k more than what it values ours at. Our value is what they actually sold for. The house are identical in fittings and decor - they are relatively new, new builds so very samey.

Got me checking on other property. We are going to put the rent up. I has not been increase in 5 years and is below market indicators accoring to Zoopla.

Also checked on it's value it has according to Zoopla gone up 6% in the last 12 months. It is in a good price bracket, 2 bed starter home but is in a 'slow' area for property.

The property is not in negative equity but has very little due to the slow recover. At one point it was valued at 15k than what is currently worth.

I think in two years we may be abel to switch this onto a better mortgage deal when the principle has decreased and the value risen to get a more favourable LTV.

thanks btw. and thanks if you have followed my huge post with all them figures. I tried to talk to my DM and she hasnt got a clue really.

Always pay off the highest interest rate first : payday lenders then overdrafts then credit cards then unsecured loans and then mortgage

Zoopla figures are bilge as they exclude over 10% of sales. Ignore them.

Talkin I have put each credti card account through the spreadsheet and worked out the fixed payments for each one. One account I thought was ok I was under paying by £35 per month - no wonder I was getting now where. I have worked out high interest rate cards to go over to balance transfers deals.

We have two very large overdrafts - arranged total £7500 we pay 100 per month in account fees and interest.

Should we really be paying these off first - we seem to need to pay more off credit cards.

Ive looked into 'finding a better deal' section on NRAM site. They are actively trying to assist customers in paying early or moving mortgages elsewhere. A lot of small name lenders come up that could offer us a better deal even at 90% LTV. We can still save £170 on the principle mortgage (exc other loan part of the original mortgage) even with Barclays.

But your credit rating with all the cards and O/D is dire : you'll never get the headline rate

hit the highest interest first : if you can swap cards down to zeros, do that and then whump the overdraft and then whump the cards and then whump the mortgage

think of it in terms of interest not paid each month and the logic becomes clear

Is your second mortgage BTL or consent to let? You would normally have to have at least 75% LTV for BTL, so I wouldn't be over-optimistic about the likelihood of remortgaging to a better rate in a couple of years. The principle paid off on a repayment mortgage is depressingly small in the first decade or so, and there is no guarantee at all that values will rise further. Will putting the rent up risk you losing your tenants? You don't have a buffer for if they decide to move on and you have a gap.

You said you wanted it straight, so here it is: You don't have enough money for notional investments like a second property when you are mired in debt which is increasing steadily. Another £7.5k in overdrafts on top of the credit cards? You have no hope at all of remortgaging either property in the current climate with this amount of revolving (ie. no end point) debt.

I don't know anything about buying shiny new cars on contract hire, but I know you can't afford it. Can you cancel? Unless you are extremely rural (by which I mean less than one bus a day) a second car for a SAHP is a massive luxury, and you can't afford it.

You're getting bogged down in whether you can remortgage to save a % off your mortgage, as if this is the reason why you are broke. It isn't - it's because you pay £1200 a year just to maintain your overdrafts and god only knows how much in CC interest. You need to cut back dramatically and get rid of the CC, the overdraft and the loan before you are in any position to think about renegotiating your mortgage. Use that £3.5k to cut down your highest interest rate debt asap. Otherwise you are fiddling whilst Rome burns.

I know it's an old chestnut on here to say that anyone who is in the higher rate tax bracket is well off, and they are, compared to the overwhelming majority. But only if they don't convince themselves that they are rich and then spend more than they have coming in!

A lifestyle of second properties, two shiny new cars, regular weekends away as well as holidays, new clothes, regular eating out, with £100 on shopping even though lots of meals are eaten outside the home...This is the lifestyle of someone who has a lot more money than you do. You have to stop telling yourself that you deserve this stuff, or that everyone lives like this and that as long as you can service the minimum payments it's OK. It isn't. You've got a really serious amount of debt. Sorry.

talkinpeace yes Im beginningt o see the interest thing - Im showing DH this thread btw. I'll go through it all again.

MsRinky I hear you, with a heavy heart I know you are right. Just to explain about the other property. I feel quite deflated by your post because I know you are right. These are bad habit, never taught financial sense etc, always lived hand to mouth BUT I can say that for my early twenties maybe but not for recent years....I am showing DH this thread whne he is not tired and in the mood to chat.

That was our residential property, we got that on a BTL and have had a tennent in there for nearly 10 years. They are a relation. They do a lot of maintaining the property for us and we dont have to worry about it being trashed so to speak.

We put that on BTL as it was quicker than selling and we had a tenant ready to move in. We bought our current house which is now and has been for a while out residential. We did this for ease of move so we werent tied to selling and could move quicker and yes thought it would be good to retain that property where we are from (another region) in case things didnt work out. Its kind of just styed there being repaid every month. We never intentially took on another 'investment second property' IYSWIM. But maybe ill thought out.

One other thing I notice: your a SAHP, but you spend £400/month on nursery fees. Can you cut back (completely?) this expense? Unless those hours are essential for some reason, it seems like a luxury.

Yes to what the others are saying: forget remortgaging. Identify which debt has the highest APR. Put minimum payments onto everything else, and all spare cash goes to the most expensive debt. Get rid of it. Then put all that money towards whatever is now the most expensive debt.

Cut back the takeaways, coffees out, weekend breaks etc etc etc.

Any yes to closing the accounts when the debt is cleared.

Oh, I am an accidental landlord too, I know how easy it was to get into that position! Please don't think I am blaming you, I have a lot of sympathy for your position.

We had no financial sense at all in our twenties, but more by luck than judgement didn't get ourselves in too much of a hole. Then I had a bit of an epiphany, and went proper hardcore for a couple of years until we had paid everything bar the mortgage off and built up a buffer. No kids though, so it was only ourselves were were depriving, which must be easier.

Talk to your husband when you have a good moment. Give him time to let stuff sink in and make a plan together.

And thank you for taking the tough love from me so well! I really do wish you all the best. I've said stuff to you that I keep trying and failing to say to one of my friends who is struggling, and the way you have reacted has given me a nudge to try to reach out to her again, even though she doesn't want to acknowledge it.

Im sorry but i think I have jut hit rock bottom here. Having a few tears...

Im about to start my final year of studying. The nursery hours are to enable me to do that. Ive managed without previously. No family nearby I/we have our kids 24/7 no visitors or visits where there are kids to play with and extra pairs of eyes IYKWIM.

I cannot defer as I am on transission fees, it would be triple cost almost to do the same again at a later date. Yes I am retraining for second career, it will co-inside with DD stating school. Nursery fees will ease up middle of next year.

I've just spoke to DH about getting the new car, which is the practical family car and he is adamant that I should have it.

To put into context out of DH's take home salary we pay

22% mortgage
20% debts inc bank fees (this includes the new fixed payments)
7% new car payment inc insurance
8% Nursery fees
5% Non essentials (sky and gym)
10% Utilities (have lumped in dental insurance there too)
10% Food and petrol
15% Disposable - this include spending money for DH and I, Kids clothes & activities. roughly save about 100 towards holidays.

Oh msRinky crossed posts - it has took so long to do bath time - I started that earlier and have come back.

Do tell you friend as soon as you can see a gap to do so. - tell her about how you were reading about this women online....

You see we are not in dange of going under as it were but It's criminal how much DH earns, how hard he works and we are not enjoying more of it because of the debt.

New cars are for those without debt.
Get out of the deal as quickly and cheaply as you can and buy a 6 year old workhorse.
Contract hire includes the killer depreciation on a new car. I'll consider it after my mortgage finishes - not before.

Nursery hours for studying : I get your point about the lack of family - I've never ever had unpaid help
so I worked in the evening when the kids were small
then I worked when they were at school / free nursery

gym : ok, keep - as being fit will help keep you sane
sky : does not compute in my life - there's enough on freeview for any sane person

Clothes : no new clothes till overdraft gone - get used to charity shops and hand me downs
learn to be frugal on days out

go teetotal 4 days a week and no more than one outside catered meal per month

it sounds harsh BUT two years of really pulling your horns in and you'll crack the bulk of it
and by the time the kids are old enough to properly remember, life will be better

it will be OK but you have to be bloody minded about wanting to be debt free when your children are older

Thanks again talkinpeace

I'm about the car but not anything else- I can do all those I have done so before falling off the wagon. At least I enjoy it and can see where my money is.

The depreciation won't apply as it is on rental agreement 24 months - had it back, i dont need to bother about its value/selling on/part ex. Obviouslt need to look after it and be mindful if agreed milage.

Study I have done that until now but the work got very heavy last year and this next year will need more hours.

I think we enjoy giving our kids are certain standard of living we never saw as children and thought we would never achieve as adults for ourselves either - bein caught up in this has led to at times a complet lack of planning and judgement. We should have £'s saved for them.

flakey
Very few people have savings when kids are small - I certainly did not.
Don't worry about that.
Focus your energy on bashing the debts downward.
When they are gone you'll have lots of readies for savings and fun stuff.