I know these things are all relative, but do you think £25,000 unsecured debt is a lot?

[tomtom1999xx]

We’re both on average salaries, 1 adult dc still living at home, don’t do much in terms of fancy nights out or holidays, but we’ve managed to get ourselves into this amount of debt. Part of it ( £8000 ) was for a car but the rest I just don’t know, it’s just topping up our income I think.
Does it seem scarily high?
We are able to make all the monthly payments so we’re not in trouble or anything, I just though at this age I’d be financially better off. ( I’m early 50’s )
Any advice on budgets ( & sticking to them! ) greatly appreciated.

Yes I think that's alot especially with nothing really to show for most of it.

Keep track of everything you are spending. Especially the little amounts here and there as they can mount up.

We are in a similar position regarding the debt and manageable repayments but have decided to get it down to 0. I've set up a spreadsheet which shows that paying it back at £560 a month we will be cleared in 4 year - my aim is now to reduce another year off that, so any spare money is going towards it (even just deciding against buying a takeaway - the £10 saved is going straight off the credit card) seeing the spreadsheet numbers reducing is becoming addictive.

Are you just making minimum payments? Or do you have a plan for paying it off? It could easily become an unmanageable amount.

Yes it’s very high especially as you are just spending it on living. This means you are already living well beyond your means and you need to find £25K to pay back.

Have you transferred as much as possible to zero interest rate credit cards?

Yes that seems a lot with no big spend causing it.
You are living well beyond your means and need to either cut back on spending or earn more.

QforCucumber
Yes, we’re doing a similar thing now, written down everything we owe & how much we can afford to pay each month ( most of our debt is credit cards & an overdraft )

NeverTwerkNaked we are paying more than the minimum payments, & according to my plan, we’ll be debt free in 3 years. < fingers crossed > it’s just crept up on us over the years, but seeing as it’s now around the 25k mark we really need to take control.

Depends why you have it.

Cheaper than adding £25k to a mortgage for us for as quick repayment option for an extension

I once built a house on credit cards- was about £125 k

It is worrying as you are living beyond your means and apart from the car, have little idea what you have done with the money.
I think you need to keep a record of what you are spending your money on and then look at how to reduce your expenditure - entertainment, phones, sky tv, clothes, coffees on the way to work etc - cut back on all but the essentials. Change utility suppliers? Shop for better deals when insurance policies need to be renewed?

I think there is a really useful budget thread with spreadsheets on here from Talkinpeace?

Yes especially if you cannot fully account for it and it is increasing.

I know this is going to sound crazy, but I honestly think a lot of it is overspending on the supermarket shop. I spend too much on food I know I do, & this is where I really need to get more disciplined.
I know I haven’t racked up £17,000 debt just on food, but I’d say a good £5000 of it is.
I need to have a weekly food budget & just stick to it.

Thank you all for replying & I will check out the other thread.

Thanks again

You need to go through the statements and find out exactly how it was spent.

You need to go through the statements and find out exactly how it was spent.

My advice would be to analyse all your household finances over the past 12 months, on all bank and credit card accounts. It's only when you can clearly see where your money is going that you can start to take control. If you can download your transactions on each account, you can easily tabulate/analyse your ins' and outs' on a spreadsheet or download them into book-keeping software like the free vt cash book. When you see the figures in black and white, it'll be the kick up the bum you need to start making cuts. You need to know exactly how much you've spent on groceries, eating out, daily coffees, spotify, phone contracts, fuel, insurances, gifts/presents, etc so that you are shocked into action. It's often the small regular amounts that you don't notice which add up and which are the easiest to stop.

Cut up the credit cards and don't use them until they are paid off. This is manageable if you start going in the right direction, or get interest stopped. The repayments must be mostly interest, you need to pay more off or you are just wasting that huge amount of money each month. Martin Lewis website or stepchange money advice. Maybe cheaper to have a loan, really tighten your belt for a few months, you will notice the difference and be able to live on your income.

Use only cash, and standing orders/direct debit for bills. It will open your eyes. You can make a plan with the bank and get reduced interest but it will affect credit rating. Pay highest interest rate items first. Have an account for neccessary spending, bills housing cost etc. Keep these seperate as soon as you are paid, never overspend it.
Transfer cash to personal accounts for daily spends, try to underspend. Work out how much for food and clothes, a lot less than you think (£50 per person) if you meal plan and cook. Do one big shop with a list and no topping up, use the freezer. Cut everything. When you eventually have spare cash save it and think about pensions.

I think that is a huge amount of money in your circumstances. Given your age have you made provision for your retirement?

Credit cards cut up.

From now on it’s cash only.

Regarding retirement, I have a small company pension, plus we should have a good 5 or 6 ‘debt free’ years to save a fair bit.

Thanks again.

Do you have a house or assets to protect? For that amount with nothing to show for it, I would consider insolvency.

You need the Moneysavingexpert money makeover. Go through it and do everything that is relevant.

Minimise expenses, transfer to interest free credit cards if you can, maximise income, look for discounts on your normal spending, but check that you understand the difference between needs and wants if you think a lot of the debt has been run up by just day to day living. Also check if you can reclaim any PPI but be quick as the ability to do this ends in 3 months time.

Ok we have been like this recently - we were up to 35k unsecured.

I think like you was topping up living but also as self employed some months it has been no pay - then its 2k added straight away. So juggling basically.

We recently had some changes and a lump sum or two came along and helped out - but we still have 8k on loan and 13k on cc but with a pay it down plan.

I have had to watch shopping and found that even though you can't get deals on mark downs online shopping can help as you plan better and it controls impulse better - also makes it easier to keep basics in. In the past to kick start things we have had store cupboard weeks and months where we stuck to planning meals around what was in the cupboards/fridge etc. It eased us into more frugal shopping afterwards.

It also depends on other things - our mort is around 100k on a 400k house so plenty of equity when you look at the overall picture

Back in another life (it feels) I spent time working in an insolvency practice. This would've been circa 2007. The highest individual debt I ever encountered was to a single, disabled and non-working woman to the tune of around £80,000 made mostly of store cards. The highest couples and working debt was around £250,000.

Is it a good measure? Yes in some ways. Look at it as a percentage of your income, how long would it take to payoff if you gave 100% of your salary to it can be an eye opener!

I don't believe £25k is particularly high for a couple but it is also a millstone for you unless you're ultra high earners. I'd strongly recommend you look at paying the debt off faster than you are. Minimum payments only amount to monetary servitude. You will both need to be on board though. If you agree to find £50 more a month so must your husband, don't end up in a situation where one of you is basically scrimping and saving and the other continues on a life of luxury.

Is the £8,000 secured against the car or a personal loan?

Given your age I think I would be inclined to create a "plan to retirement". Look at your pension projections and assess any shortfalls you can foresee. Essentially work out how fast you need to repay the debts to get rid of the interest charges and sink the funds that would've been interest into your pension pots. It may be worth seeking professional advice for all this, especially if your mortgage is not yet paid off.

Its more the fact that you were using it just on living that worries me. The amount is a lot but I can envisage scenarios where it might have been a sound decision.

It's good you have a plan and have it curbed. Definitely agree you should go through budgets and spending with a fine toothed comb, both of you. There will almost certainly be easy savings to be made.

It is far too much, and is an indicator of poor thinking and disorganisation.

But I suppose if you're drifting along, and don't see a problem.......