£46,000 in debt

[Debtfairy]

This is the first time I've written that figure down. I've NC'd as this could be identifying.

We have 3 loans, 3 credit cards and a HP agreement for a sofa. Everything is being managed and we have a mortgage and want to move, so we need to tackle this and get it all paid off quicker than its currently happening. Debt relief order not required so no charities can help.

Basically we have NO idea where the money goes, we only have one salary and maternity allowance coming in due to mat leave with DC1, we shop in Aldi (max £35 a week inc nappies etc)

We have 2 small and economical cars
We don't eat out or go on holiday
We don't go to the pub
We rarely go and spend money
We don't have anything left!

Where does our money go?!

Any tips welcome!

You mention that you need two cars because you're miles away from friends and family - I obviously don't know your full circumstances, but is that really a need, or a nice-to-have? DH and I only have one car, and we live 200 miles away from the rest of our families.

You're miles away from friends and family- but you can't afford to keep two cars!

I guess it depends on your priorities I guess but you don't seem willing to compromise on anything.

Have you tried writing down everything as you spend ?

So you check your bank every day and track stuff, write down every tank of petrol, chocolate bar, raffle ticket and pint of milk. That is how you will find out where the money goes.

Also, you may find it helpful to check out the Debt Free Wannabe on MSE - forums.moneysavingexpert.com/forumdisplay.php?f=76

Good luck!

Why are people suggesting the likes of bankruptcy when she has a house/mortgage and wants to move?

Do you know which debts are your most expensive interest wise? If so, make more than the minimum payments on those.

If your credit rating is good can you transfer as much of your credit card debt onto a 0% interest balance transfer card? MBNA has a 43 month balance transfer offer on at the moment and taking the interest off a bit of the debt will help you. Look into loans with lower interest rates for some of the rest?

£100 a week should be plenty to cover food, travel and general living expenses for 2 adults and a baby. DS (14) and I live on £95 a week, which includes £20 on electric and gas (pre-payment), £20 "pocket money" for both of us, £7 Pilates class for me and £2 a week towards monthly window cleaning, so it definitely is possible.

Obviously my £95 includes food too.

I'm not in debt but as a foster carer am on a very, very limited income.

I think one of your cars will have to go. We live 2 miles from the nearest village and 9 from the nearest town where the children go to school. Nearest public transport is in the village. We had to give up my car, and although occasionally it bothers me, we manage. I was nervous to do it as we have a son with special needs, but it's actually been fine. Just need to be a bit more organised, I buy mostly online and have a supermarket delivery. That in itself saves money as are not tempted by other non essentials in a supermarket. Plan in advance where you need to go and when. It really does relieve a huge financial burden, and that is worth far more than the convenience of having my own vehicle. Also neither of us have smart phone, or phones on contract come to that, just a very basic, bog standard pay as you go. Again the saving of this is worth far more than the convenience of a phone.

What I have learnt though is not to make excuses. "Oh I couldn't possibly do without a car as we are so isolated" - well yes we can, and yes we have. If you need to make savings then you need to make sacrifices. Be honest with yourself at what you can do without is my advise....starting with the 2nd car.

How can you earn a negative amount due to childcare with one child?

Have you actually looked at childcare options and costs? Even if you found something part time, a childminder for 25 hours a week is generally around £100 a week on average. It's usually when you get into multiple children, full time, wraparound and holiday that the costs can occasionally overtake a single wage, if the wage is low.

PurpleTraitor - where do you live?

CM rates in the south east are £8ph as a starting point!

What did you earn before maternity? Have you explored all childcare options, childminders are often cheaper.

Also have you taken account of childcare vouchers on the cost of this? Could you apply for a better paid job? Could your DH?

You need to know exactly what your debt is with each provider and the interest rate. Why isn't the debt going down? You mention cutting things out but are you actually putting the saved money into your debt?

Definitely get yourself on Money Saving Expert. They have spreadsheets you can use to find out exactly where your money is going. And they'll give you pretty ruthless advice on where you can cut back expenses. You aren't the first or last to be in debt hell and they've helped many people out of the other side of it.

Don't forget CC costs start when your child is dropped off, not when you start work. So if you have 1 hour each way travel that's an extra 2 hours of CC. Also CC only operates Mon-Fri in general.

Having said that are you sure there isn't a job fairly local to you whereby the overall costs of working (petrol, work clothes and childcare) make it worthwhile?

Do you have a budget? I know you say £2400 comes in and £2000 goes out but do you actually compare what you spend to the budget you have in your head? If not, you need to get to grips with this. I use YNAB (you need a budget) which is a web based app. They're offering a 34 day free trial at the moment.

YNAB has taught me to actively manage my money as opposed to passively pretend that I'm in control of it because I have a list of what my spending should be. The idea behind YNAB is that every pound has a job, and you can only spend that pound once. If you're still using the credit cards you need to cut them up because otherwise you are trying to spend each pound more than once, and you'll never get ahead.

Here's the link (you need to sign up from a desktop): www.youneedabudget.com

Agree with PP, as you are servicing £900 a month of debt you will have to work. Even if you do evenings/weekends/nights.

I know people who spent years doing three nights a week shelf stacking at Sainsburys when their DC were little, I worked evenings and Saturdays in a Call centre.

Do you have a friend who would share childcare with you so you could each go to work one day?

There are ways around this.

Do you know how you got into so much debt?

I think you're being very naive or assume other people are to say we have NO idea where money goes!
It seems daft to have bought a sofa on credit when you obviously already had major debts.
I don't mean to be harsh but I think the first step is being honest with yourselves - what were the 3 loans for and what have we got to show for it?
That aside you need to focus on a way ahead- don't sell the sofa as you'll regret it but do get rid of one of the cars. As others have said focus on the highest interest debt first, switch to 0% and go from there.
Write a list of everything you spend so you know exactly where the money goes, and at the same time write a list of days outs/ treats etc which can be done for free i.e. Picnic in the park, feeding the ducks. This is do you don't spend your whole time feeling deprived just because you can't spend!
Use Tesco points or John Lewis vouchers etc for free coffee, pizza express.

At least you've recognised you have a 'big' problem and need to address it.

Good luck

Nearly "don't sell the sofa as you'll regret it "

I dunno. I'm having visions of a £2000 sofa which could be replaced with a £200 one. If that's the case then there's a chunk of debt OP could pay off right there.

also worth looking at what you can ebay - sorry if you've heard that a 100 times - but I have been amazed at what I could sell on there. For the time it takes to list and post - hardly any - it's so worth it.

If you have any equity in your house, I'd consider looking at ways of raising money from it to pay off your debts. Shelve the idea of moving at the moment if you are thinking of moving to a more expensive house or area.
Contact an independent mortgage advisor to assess whether your current mortgage is the best one for you. Maybe you could change to another company on a two (or three or five) year cheaper fixed rate deal? Then remortgage again when the fixed rate is due to go to the higher rate.

We had a similar issue recently.

Do you have any equity on your house? We saw an independent financial adviser who advised us to remortgage and add all our debts onto the mortgage (we had enough equity to cover it).

Doing it this way means you can cut up the credit cards and all the repayments come out all at once- ie when you pay the mortgage.

You must be strict though- get rid of the cards and do not take out any further loans.

I wholeheartedly second YNAB for budgeting!

I started using it in January after years of being in debt and thinking 'where did that money actually go?' every month.

I've always tracked my spending using a spreadsheet, but what I hadn't appreciated was that I was merely documenting my spending retrospectively instead of actively planning how I was going to use my money in the future. YNAB made a world of difference to me as it allows you to account for those annual or quarterly expenses (such as car tax, parking permits, etc) which always used to catch me by surprise and blow my monthly plans out of the water.

YNAB covers all of this, and you can track your net worth, so even while you're still in debt, you can see your net worth increasing as you pay it off. It also helps you to manage credit cards while you're also spending on them so you can see what it's actually costing you to use them.

I also agree with PP who said the key is being honest with yourselves - before I took control of my finances and was in denial about my debt, it was very easy to take on more debt (my thinking was 'well, it's going to take ages to pay off anyway, so a couple of extra £1000s for a holiday won't make much difference'). Now I only spend what I actually have.

I would aim to focus any extra funds on the debt with the highest interest rate first, and move as much as you can to 0% interest credit cards. I also refinanced a personal loan I had with my bank after six months of taking it out for the exact same product with a lower rate, which helped. Paying heaps in interest is so disheartening as it feels like one step forward and two steps back.

I'm absolutely willing to work (have done since I was 14) but DD is 6 months old and EBF at the moment, she was also severely premature so is only actually 12 weeks old in terms of development - so it's not physically possible for me to work now. I take on board about the car, but I cannot lose that, it's the ONLY 'luxury' I have, and it was bought with cash, not credit. It'd be worth £1,500 to sell and that's not worth the angst of not being able to get out and see friends and family, and we have no public transport nearby.

I earn minimum wage but miles away from home, so fuel costs £50 a week plus childcare is pushing £800 a month. So it's pretty much zero point in me returning to work, I have been sorting old clothes, DVDs and books to sell and suggested to DH we do a car boot. We do have £55k equity in our house but can't apply for additional borrowing as we don't meet affordability whilst on mat leave.

I'll go onto MSE and take a look. And we're going to write down every penny we spend this week

Dont add to the mortgage it may seem easier but it usually costs so much mire in the long run.

Get a evening job like the other suggestions, transfer to a int free card like mbna etc.

There are loads of good suggestions on this thread.

Are you able to get a bank loan for the whole amount of all your other debts to pay them off? Then you only have to pay one loan back instead of multiple ones. We did this when we had loads of credit card debts totalling abour £8,000 less than yours as we were barely repaying anything after the minimum payments - we didn't have a house either or anything we could guarantee it against. The interest was cutdown from 14-18% depending on the card to 7% and we had an agreed end date where we'd be debt free which was a big relief. Once we'd paid back a third we renegotiated and that cut the interest to 3%. It's been 3 years but we've finally made our last loan payment but if we'd kept on as we were we'd have been paying back about £400 more a month for about 8 years longer.

We also ploughed any extra money like bonuses into the loan to pay it off faster. The only thing we had to do was cancel all credit cards so we don't have one at the moment - this wasn't a bad thing for us though.

Debt it's the upkeep of the car, not the fact it was cheap/wouldn't sell for much now etc.

That is a lot of debt that you need to work hard to get down. I don't think you're quite there yet (not willing to give up the car for example) and finding excuses to not go back to work. I know you said your dd was prem but people only used to get 12 weeks.

I'm not saying it's wrong by the way! Just I don't think you're ready for the sacrifice.

Are you still using the cc?