50k debt

[MiniChoc]

I'm desperate to be debt free but it seems like a million miles away at the moment.

We're 48k in debt. Don't own a house. Can't even tell you how we came to it really other than a set of stupid mistakes and an expensive wedding

We're using the snowball method so minimum payments on all the credit cards and then throwing everything extra at the one with the highest interest. We have about £1000 a month to throw at it right now. Which means I'm looking at 4 years of living like this to finally get debt free

I swear when it happens I'll never, ever get anything on credit ever again. I can't believe we've been so stupid.

Depending on your careers, could you consider moving to a high paying country such as somewhere in the Middle east (and try to live very modestly over there)? Maybe not such a brilliant time right now but perhaps something to consider in the next 12 months.

Ah, sorry. I'd read your OP wrong. I read it as "just" repaying 1000 a month. Not that ontop of all the mi indium repayments. As you were, and sorry again.

no worries Kitten!

Jeez that is a lot of debt. Honestly, I really echo what people are saying about professional advice and some form of debt management. Yes, it will kill your credit rating for a bit (not that bad a thing, and it's probably shot now anyway), but with debt management you will probably be able to stop interest. That'll allow you to pay off quicker, then rebuild your credit rating slowly afterwards.

Can you try and negotiate lower interest rates or one of the budget programmes (Step up)

I wish we could go bankrupt but OH works in finance so it's not an option

I think you may be able to pay it off quicker than 4 years - more like between 2 and 3.

Minimum payments are often interest plus 1%. As interest is going to be 15%+ a year on credit cards I’m guessing that your minimum payments are about £1k in total?

So you are actually chucking £2k a month at your debts.

Currently a good £500 a month is being swallowed in interest. So £1500 a month off the debts each month. Which would mean about 32 months of payments. But as the balance goes down the interest will. By the end off £2k will be reducing your debts.

The trick is to not pay “minimum payment plus £1000” off your debts as the minimum payment will go down each month. The trick is to pay £2123 (or whatever you can afford) every single month.

What do you mean please? Should I be paying a set amount to the credit cards then, rather than minimum payments?? And pay everything else I've got left over afterwards to the highest interest one? Thanks!

I would get some professional advice. Try StepChange www.stepchange.org or visit your local CAB.

I agree with ShellieEllie, go to Stepchange, I know a few people they helped. They are a free charity and very good at helping people

www.stepchange.org/

Some of the debt needs to be moved to an interest free card. Look at many of your most expensive ones, you can often move 3,4,5 or 6 onto one interest free card, then just set one direct debit to pay that off completely in the allotted time.

There's a small transfer fee, but it's so worth it.

I'd definetly do as others have suggested and post about your situation on moneysavingexpert. Check every bill and every outgoing to see if you can get a cheaper bill, food for example a few simple things can find you £20-50 extra month for payments.

Your OH works in finance yet he can’t help you work out the most economical way to pay off the debt???

The minimum payment is usually the interest plus 1% of the owed amount. So each month it will go down by 1%.

So ignoring the extra £1000 you pay off and making the sums nice and easy - say you owe £50k, interest is 12% p.a or 1% per month - then your first minimum payment will be £1000 - £500 interest and £500 actual payment. So you now owe £49,500. And your next minimum will be £990.

Now the best thing to do would be to pay the minimum payment and then pay that extra bit off the one with the highest interest rate. But constantly re-doing the calculations is hard work so what people usually do is just pay the minimum again. As this happens every month the amount people pay reduces - just a teeny tiny bit - each month and so they stay in debt (and so paying lots of lovely lovely interest to the credit card company) for much longer than if they had paid the £1000 a month that they did in the first month.

In your shoes - unless you are really organised - I would set the minimum amount for each card as a permanent payment, set the extra £1000 for the highest interest one and then every 6 months or so do a review and redirect the extra onto the highest interest one.

The main thing is to keep the total amount you are paying as a fixed figure.

Interest rates are currently really low

What was/is your plan to pay off the debt ?

What is your plan if the interest rates increase ?

Fair play on you for acknowledging that it was partly due to reckless spending. I hope the wedding was good😅. I'd feel sick every time I thought of it in your position.

Money saving expert threads are both brutal and weirdly supportive. I've not been in debt but find them interesting. People on the threads often seem to become almost evangelical about paying their debts off. You will find a lot of people in the same position as you too.

It's great that you both have jobs and even though it's going to be a grind it sound like you can do it.

Would your jobs transport to another cheaper part of the country?

Have you asked your parents or grandparents for help? You could offer to do it all legally? If they have savings then they won't be earning much interest at the moment.

I presume you have tried and tried again to consolidate your loans and to renegotiate the rates.

If you aren't already then might it be worth doubling down on the frugal living and literally trying to save every last penny possible.

MSE has all the tips. Even throwing and extra £100 a month would make a difference.

Good luck. I hope you manage to pay it all off quickly.

You can do it!

You've realised the situation you're in, and are taking advice/steps to sort it.

It's going to be the best feeling ever when you clear the first debt and release more disposable income to Chuck at the next highest interest-charging.

@Gtugccbjb OH is in financial software which is not actually finance. but counts as the finance industry in terms of bankruptcy. But thanks

Will contact Stepchange.

I've joined moneysavingexpert.

@Mumoftwoyoungkids that's really helpful, thanks. What we tend to do is get to the last day of the month and literally whatever is left we throw at the highest interest card. So anywhere between £900-£1100 depending on how frugal we've been.

@Beeep I wish we could move, or had relatives to ask, but no chance. We're stuck in London outskirts paying 2k a month in rent, council tax, gas electric and water on a 2 bed house

Yove had some great advise already the only thing I would add is do you have anything you cal sell? A car? Sell it for cash and buy a 1k run around? Just bringing it down a chunk to give u some breathing space. Then ebay all smaller things and anything you make one ebay clear some debt. Use cashback sites and once you have a bit in your account move to your bank and then onto a card. Ask for money for Xmas and birthday and pretend your saving up for soemthibg random like a spa day. Lie and say you've been. Stash away stash the cash and pay off some debt.

Could you move somewhere cheaper? If you are key workers you will find a job. You don’t need to pay £2k a month in rent if it is just two of you.

Well done on going to CItizen Advice, they use stepchange for debt advice, so hopefully if you contact stepchange you’ll get further consistent advice on your debt.

Snowballing is sound practice

When did you last check your credit score?

Have you looked at consolidation loans recently?

Theres a soft search on Martin Lewis site that shouldn't effect your credit score loans calculator search

I agree to the paying a set amount off. Set up standing orders to credit cards for £1 over the minimum payment (or whatever you can afford) then cancel the direct debit (if you have one).

If you know how much you’re paying every month it’ll be easier to deal with.

I’ve always done this.

How is the debt split? Whose name is each debt in? That will make a difference if you are looking for debt solutions. They'll be looking at which debts the individuals have, not jointly. If a lot of it is in your name only you could ease the pressure by going bankrupt. That will just leave your husband's debt to repay. A joint debt will only be wiped out entirely if you both go bankrupt tho.

Bear in mind that with bankruptcy you would still need to make payments to the bankruptcy estate for three years - and they will take ALL your spare income for that time. It would be better to manage this yourself to be honest.

You won't get an unsecured loan for £50k.

The issue you're going to have with stepchange is that you actually can afford your payments AND have money to spare - you aren't actually insolvent on an income/expenditure basis. Lenders have no reason to accept any offers from you at this point.

Your best bet is to explore one of the snowballing techniques.

At this point it really doesn't matter what your spent the money on, does it! Good luck - I think you can sort it out but you'll have to accept it will be hard work for a couple of years.

Hey, how did you get on with repaying your debt off?