Help... in debt and can't see a way out!

[Freespirit211]

First time poster so please bare with me if I don't do things the "mumsnet way". My husband and I owe £4,700 on a credit card. We have two small children and one average income. Really struggling to see how to get out of this. We are paying a lot of interest on the credit card. I would like my husband to apply for another card so we can do a balance transfer but I know it's unlikely we'll get a credit limit big enough. Our credit limit was only £1,750 on the current card when we took it out but they've gradually increased that. It's been an expensive time after having our second child a year ago but I just want this debt gone. It's like a huge cloud ruining everything very grateful for any help or advice. Thank you.

There is always Hope. You have taken the first step, acknowledging that there is a problem. Now you need a plan to fix the problem.

Watch this, it is very American but what they do in the US works equally well in the UK.

Start by making sure your Four Walls are paid for every month.

The Four Walls

1. Food
2. Light & Heat
3. Roof over your head
4. Essential clothing and transport

m.youtube.com/watch?v=3_RX4gT20EM

Are you still spending on the card? If you can manage monthly outgoings without doing so, you should be able to get the balance frozen so that you pay back the debt as well as accrued interest. A charity like Stepchange or Christians Against Poverty would be able to help you budget and negotiate repayments.

What has changed since having your second child? Did your DH have to change jobs? What small steps can you make to put you back onto the budget you had planned before you started trying for your second child?

If managed carefully another card wouldn't be a bad idea. You could transfer a portion of your debt into a 0% offer (depends how good your credit score is) but keep paying what you are now off the rest. That way more of its going on clearing the debt not just serviceing interest.

However if you think there's even a slight change you will be tempted to borrow more it's not worth it. Imagine yourself at the most skint you've been but with some of your credit limit available (because some debt has moved to new card). Would you have the will power not to use it?

You can take out more than one balance transfer card. Money Saving Expert can show you the ones with the longest 0%.

Get a spreadsheet going with all (and I mean every penny) of your spend written down for each month and you'll automatically start to cut back on your spend.

Renegotiate some of your direct debits. If you have sky, threaten to leave and you'll be offered a much better deal. We are currently paying £5 per month for our sky subscription. Broadband will always offer you a better deal than their advertised rates if you ask.

You'll soon start to make a dent in your debt.

Sit down and really look at what you are spending money on. Make sure the four walls are being paid. Then look at consumer debts (credit cards, car loan).

Are you currently paying minimum payment on all debts? Sure they may call you but if you have not got the money you can't pay them back right now. They are an unsecured loan so their risk. If you can, pay the minimum payment so that you are not in breach of the terms.

Create a cash flow plan - you need to be telling your money where it is going. Budget may be a nasty word, cash flow plan is much nicer but is the same thing. You need to see where the money is being spent and allocating it in categories.

No takeaways, no eating out, no cinema, no sky sports, no premier league football matches, no theatre, no concerts, none of that stuff... plenty of time for that when you are not broke. For now you need to concentrate on your family, keeping a roof over your head and the wolves away from your door.

You CAN do this. It WILL be painful. It DOES take time (can be several years). You have taken the first step, now you need to make a plan and follow it step by step.

This information is all brilliant. I need time to look into all of these things your suggesting. I negotiated on all of our direct debits back in March so that's done. We can afford to pay just over the minimum payment, but then we'll have a month where we've got to attend a family wedding or things like that and that sets us back again. We don't live near family so transport and accommodation are always an issue financially. If I could get it all on 0% cards, at least we'd be clearing some debt rather than by and large just paying interest. I want nice memories for my kids. I want to be able to take them to Disneyland, that is my dream. Feels like I'll never get there.

I've had severe anxiety for the past year and sometimes just feel like I'm drowning.

Thank you everyone.

Can I ask, we are a family of 4. DC are 3 and 1. How much do you realistically think we should spend a month (after bills), if we really get on top of our budgeting?

Pop over to the money saving expert website. There are some amazing forums on there that will really help. They have simple suggestions such as at the end of everyday, round your bank account down and put the spare bit into your credit card. I.e. if you have £51.64 in your bank put the 64p into your credit card / savings etc. It really adds up and you don't usually miss it too much. They have great tips on cheap eating etc etc. Get obsessed with it

We can afford to pay just over the minimum payment

Good. Put things on minimum and aim to change behaviour - no using credit cards ever again.

When is the family wedding - is there time to save up for the cost? See how cheaply you can do it - work out realistic costs for travel and accommodation (staying with other family, low cost hotel, only going for some of the wedding not all of it). Other people need to recognise that you are broke and can't be spending out a lot.

Emergencies happen, so you need to create a buffer. Around £1000 is a starting buffer, which may sound daunting right now but can be achieved. Look at ways to increase income and reduce outgoings.

It is very hard to give any figure for what a family should be spending. It will vary a lot. Your children are young so you have cost of things like nappies but don't have much in terms of cost of activities/outings as at their age they are happy to go to the park, woods, playground, toddler group, a train ride (they usually travel free), going on a bus (their travel is usually free). Meeting up with friends.

I want to be able to take them to Disneyland, that is my dream.
Setting a goal is good. Not sure that one is realistic right now but as a long term goal it's fine... you just need to realise that it is several years down the road. For now you want to set small goals, so you can feel that you are achieving something.

Goal 1: Having a roof over your head, food in your belly, electric - gas - water - internet - all on, clothing and transport.

Goal 2: Current on all debt repayment plans... keeping the wolves from your door. The wolves are still circling but they are now trying to blow your door in and taking your possessions.

Goal 3: A starter emergency fund. Your grandparents saved for a rainy day... they knew it was going to rain. You know it will rain, you need to save for that. Tyre goes on the car, washing machine springs a leak, child throws their shoe in the pond, child cuts their siblings hair. Life happens... things happen which we often cover by going in to debt (using a credit card) which is a habit that you need to get out of, by having money.

Goal 4: Spend money... real money. Not tap the plastic card. Stick to a budget, allocate a certain amount of money and have it as CASH so you spend what you have, not spend more than what you have.

Good categories for using cash are: Clothes & Shoes, Food (especially things like lunch whilst out/at work) and drink - I was spending over £40 a month at Starbucks on coffee... when you stop using the phone app/card and start paying cash, you FEEL the cost of that coffee!

If you're paying over the minimum then that's a great start, slowly but surely your making headway. Now you need to focus your efforts. If you have debt in several places make a list of what you owe and what interest rate. Move what you can to lower rate then concentrate on clearing the one with highest interest. Just pay the minimum on the rest and when one debt is clear, move on to the next.

I also found that having several bank accounts help with keeping to budget. I have one that my pay gos into and bills go out, then a separate one for my everyday spending. I made a budget of what I can afford, then set up a standing order to transfer in a weekly allowance. I also have a separate savings account for each source of additional spending eg. Christmas, days out, DS birthday etc, each has its own standing order so money is automatically saved throughout the year. Really helps even out the ups and downs.

So much excellent information here. I need to work on budgeting. I like the idea of doing it with actual cash. My husband struggles with budgeting. Don't get me wrong, he's no big spender even remotely but when I've tried in the past, he'll forget to make a note of what he's spent so I find it impossible. Are there any apps that he and I can use where we can both log out spends from our phone but onto the same thing (if that makes sense - struggling to explain what I've imagined in my head 😂).

YY to working on budgeting. If your DH finds it hard, can you give him a set amount of (budgeted affordable) cash to spend and when it's gone it's gone without having to do all the tedious writing down of all purchases.

You say he isn't a big spender but regular little purchases can add up. If he spends a fiver a day (and some people spend a lot more) on lunch/drinks etc while at work, that's a hundred pounds a month and enough to derail a tight budget.

barbara that's a great idea. I'm going through all our finances today and coming up with an action plan. Wish me luck

Can you get an evening or weekend job - stacking shelves or Avon?

Really makes a difference

I've just got a second job 3 hours a week and it pays £100 a month

I would love nothing more than an evening job but my husband works away for months on end and our family live in a different county so childcare is a huge issue for me.

Have you thought about doing leaflet distribution? The pays not great but you can fit it around your schedule. If the 3yo is in nursery you could probably take the 1yo with you if they'll sleep in the pushchair.

Have a look at YNAB (You Need A Budget) - desktop budget and app. First 30-odd days free to try. It's a workable money budgeting program as well as an app which aims to prevent the "surprise costs" sending you back to square one.

That's a fabulous idea!😊