will this be ok?

[Tina798]

Hello and Happy new year everyone

DH and I have finally faced up to our massive debt problem. This will be the year when we start to undo the mess we are in. Thankfully we are not at the stage where we are missing payments or anyrhing, however a huge chunk of our income is going on debt every month and this has to change.

I have sat and drawn up a budget including every last thing that we have to pay out. This comes to £2502 per month and includes all house costs - mortgage, insurance , all car costs, all direct debits for phones, insurances as well as minimum debt payments which currently come in at a horrendous £1400 per month. £2502 in total.

Our current take home pay is just over £4900 combined so this means that each month we will have around £2400. Out of this we will need to buy food, pay £35 per week childcare and make some debt over payments depending on what we can afford.

Does this seem doable? I feel very stressed and worried, despite this situation being totally self inflicted.

If £35 per week for childcare isn't a typo, then you should be absolutely fine. Well done for tackling the debt, wish you all the best.

Are you having a laugh?! Of course it’s doable - most people don’t have £2400 disposable income a month. How did you get into debt with such an income ?

If there is no typo you have plenty, an awful lot more than many families but I appreciate it could be a huge drop in what you are used to having available.

You need to think before you spend any money "Do I need this?"

If it's new clothing or household items the answer should be "no"!

sounds easily doable to me. many people are in much worse situation.
good idea to clear debts asap.

and don't overspend again. if you havent got the money, don't buy it.
could you cut back on outgoings, eg get cheaper car.
shop in lidl/aldi, and asda/primark for clothes. replace clothes only if worn out. see it as a challenge you can win. also save the planet.
most people waste such a lot of money on unnecessary stuff. try to be more frugal. don't buy expensive coffee, sandwiches at work.

Yes absolutely do-able. I'm assuming the debt must have built up from before you were earning very reasonable incomes ?

Thanks for the quick replies.

Yes, it's just £35 per week. We are lucky that parents help with after school picks up etc.

I appreciate that we have a good income and that I am overreacting, I am just worried having eventually faced up to our level of debt.

A lot of the debt was accrued when we were earning less and paying out nursery fees etc. We also spent a lot on our wedding, home improvements etc which we couldn't really afford at the time.

We have also been massively guilty of being total morons with our general spending. I am not going to make excuses as this is totally self inflicted. I feel so ashamed.

I have sat and drawn up a budget including every last thing that we have to pay out.

Our current take home pay is just over £4900 combined so this means that each month we will have around £2400. Out of this we will need to buy food, pay £35 per week childcare and make some debt over payments depending on what we can afford.

Your first sentence is at odds with the second one.

You have NOT done a proper budget if you haven't included food or childcare. There are lots of online templates available that will help you complete a full budget, which in turn will help you identify what you are missing off this one (emergency savings for one, I'm sure there will be others); and what you have to overpay debts on a more formal basis, not "depending".

The DC may need new clothes and shoes as they grow, what about their hobbies/activities. What do you usually waste spend money on? Do you need a socialising allowance, what about birthday and Christmas presents?

You do need a major overhaul on what you spend your money on etc.

Best tip is a weekly cash allowance and when it's gone you all go without...

At least you have all the major spends like the wedding out of the way and the very expensive years of high childcare costs behind you so things can hopefully only get better from now on !

That's a huge amount of disposable income. Why are you actually worried about this?

That's a huge disposable income! I don't know how you have ended up in debt/why you are worrying how you will manage?

What size is your debt? You could comfortably chuck another £1000/month at the debt and still be fine

Thanks again for the quick advice. I think much of my anxiety comes from the high debt level. I am ashamed to say that between us we owe in the region of 60K. It's just built up and up over the years and now we have to deal with it.

I have really struggled with anxiety recently and this has been a major trigger for me. I keep reminding myself that we are ok and that we can sort it, but I am worrying a great deal.

I have helped people out of debt in the past. If you're paying high rates of interest in the debt I'd look at credit unions for a debt consolidation loan. If approved, you'll have 1 monthly payment and better mental health from knowing that in X years it'll be paid off.

You need to list the debt in order or highest percentage interest.
Pay the lower amounts just above the minimum payment & throw all you can afford at the higher rate as this is costing more in the long term.
Then when this is paid off put the extra to the next.. this is called snow balling.
Pop over to the debt free thread on this thread there's lots of advice there.

Have you looked at the martin Lewis web site, there's online forums there with loads of advice

Yes, I have signed up, it;s a great site. Really want to sort out this awful mess

If you're paying high rates of interest in the debt I'd look at credit unions for a debt consolidation loan. If approved, you'll have 1 monthly payment and better mental health from knowing that in X years it'll be paid off.

This is only advisable if the reason for the overspending has truly been addressed and dealt with. Otherwise the chances of simply racking up more is frighteningly likely.

Well done Tina978 on taking control. A PP mentioned budget templates. Debt Remedy on Stepchange helps you check you have included all expenditure. You also need to set out a strategy for tackling the various debts. A good way to do this is to use a snowball calculator. There is one on money saving expert. You need to list each debt by size and their interest rate. The snowball calculator helps you work out which debts you need to tackle first. The principle is that you put your spare cash towards the most expensive debt, paying the minimum on all the others. Then when that 1st one is paid, move on to the 2nd most expensive debt. The advantage of this - as opposed to consolidation loans - is that your disposable income will increase and give you a bit more flexibility about your payments.

I agree with Buzzshitbagbobbly about the risks of consolidation loans if the underlying overspending has not been resolved. I don’t think a credit union would give you a loan for £60k anyway. I also think some credit unions want people to save with them before qualifying for a loan.

A lot of credit unions will loan up to £25k so if the OP and her OH took one each that would cover most of it. Glasgow Credit Union (for example) do require you to save, but you set that up at the time.

I do take the point about if there are underlying issues then it can be a terrible idea, however from what the OP said it seemed that they had spent on a lot of big ticket items which were all over with, and they were now looking to start repaying everything. In that situation, it would be preferable to freeze the interest IMO.

Whatever you decide OP, good luck!

Good to see that you have found moneysavingexpert. If you haven't looked at it already, have a look at the money makeover, for a comprehensive guide to setting your budget, and paying back your debt in the most effective way. Also sign up to the weekly email, for ongoing tips on keeping you on the straight and narrow.

www.moneysavingexpert.com/family/money-help/

Have a look at the Meaningful Money podcast and google Dave Ramsey. These resources have helped us get debt free (except mortgage), build up an emergency fund of £6k and a great portfolio of investments in 3.5 years.

You may need to look at ways if bringing in extra income. Have a plan together of how you are going to pay off that debt, realistic and time framed. If you want to get rid of it in say 8 years you could, but no other big purchases or holidays. Cut food and bills.

Factor school uniform Christmas birthdays and unexpected bills into your spending. Also annual bills like car insurance etc. I use a forward planning app to help me so i average out bills etc over the year.

I didn’t use to do this, and was about £15k in debt and never out of my overdraft. It took 2 years, a pay rise and some real control of my finances to sort that out. I now have savings, a mortgage free house and many more options.