Credit cards and overdrafts

[MillieDalt]

Looking for some advice and maybe even some reassurance? DH and I are trying hard to get our finances in order but it's a real struggle.

We bought a house last year that we are trying to do up within our means. We are on a medium income between us (approx £45k) we live in the South East and I work part time but we still require childcare. Our DC are 7 and 15. So we have the obvious expenses children bring.

We have reduced every bill we can, have savings pots for everything big expenditure we can think of and take money out in cash so we don't overspend on food and fuel. We have a car loan until next year and a credit card of about £5k as well as overdrafts on hubbys and joint account. We have some other savings but it is tied up in an account we would pay a penalty on if we were to withdraw the money. In an emergency we could and would have enough to pay off the debts. We just about manage every month but it's extremely tight and causes us a lot of stress. Obviously we want to pay our debts off, but should this be causing us so much stress or should I recognise the fact that it's probably going to take a couple of years to get straight and that until then extras and treats are going to be a no go?

Why can't you work full-time? That seems the obvious way to bring in some extra money.

Well the obvious question is how much does the debt cost you - so the monthly interest on the card, the overdraft fees and car loan interest. If the penalty on the savings is less, then you'll be better off using the savings to pay off the debts and then however much you pay towards the debt at the moment chuck into savings to replenish.

Otherwise I think you just have to suck it up, as long as you are getting the debt down. If the car loan will be paid off next year will that make life easier, so you've got a year of frugality but then you can relax a little.

Are you prioritising where you pay back to so.highest interest first? Can you switch you cc to lower interest? Can you borrow any extra on the mortgage or take a payment holiday (assuming this is your lowest interest debt) and clear some other things quickly?
I'd say whether you accept the debt and the payment plan depends on if you are actually clearing it and if you can really live on this budget for a few more yrs.

Depends if the savings interest is more than the penalties/interest on the debts as no point saving if you have debts that cost more. Have you worked out which would be the most cost effective?

I work 30 hours anyway and after several years being extremely unhappy at work I only recently changed jobs to one where I'm much happier. I guess that perhaps that's what I have to recognise that's the compromise!

Thanks that's really helpful and something I need to check, the credit card is 0% but the payments for £5k are fairly substantial with our smallish budget. Our other debt probably needs looking at..