Just worked out how much we owe…

[EmbarrassedDebt]

Sat with DH tonight as it’s a week till payday and we have nothing left, so started a spreadsheet for our income and outgoings we are broke like absolutely destitute

In doing this I’ve found out between us we owe

55k’s worth of debt no wonder we have no fucking money

credit cards stand around 17k

cars around 9k on one and 7k on the other (nearly £600 a month on car repayments)

we have 4 loans between us owing 18.5k (seriously didn’t know this)

and other random stuff on finance (shed, tv, sofa)

Dh earns around 40k and I’m on 35k

I literally have no idea what to do but seeing it all down on a spreadsheet make me feel sick.

so far I’ve started a new spreadsheet sheet with the amount owed on each credit card and the interest rate & looking at ways to start paying it down.

I am horrified 😞😞 I’ve been half heartedly for a new job and looking at a second job but now that is something really important on my list of things to do…

please no nasty comments I just needed to get this off my chest and then plan a way out of this mess.

randomly we both have reasonably good credit scores as well I check those tonight as well

I just looked on. moneysuoermarket and found a deal on there for £8 with 4 times the data I currently have, was with 02. May be others even cheaper. But I am saving £13 a month now - I did it the same day I found the deal and it was so easy.

So if you cancel your £120 contracts, keep phones - you can save £100 straight away to start paying off debt.

Consolidation loan saved my life cancelled all netflix etc only have Internet and pay as go phones it's hard to start with but give it a few months you start seeing the difference and manage money better. Every month I write money in and money out lists and the dates of direct debits etc

Hope you find the best solution for you

Yes I will look into the phones as well, they are DH’s contracts…I can’t believe he didn’t do anything with them!!!!!!!

I’d try move to get rid of one car and just get a cheap run around as the second car. And like others have said balance transfer cards. No nasty comments from me, best thing you’ve done is put it all down and work to reduce it

Sneery as fuck.

Well done OP for taking the first step, you now know what you're dealing with and making a plan to tackle it.

I think get cheaper cars firstly
And ensure credit card debt is on 0% deals
And the absolutely blast the most expensive other debts

@Gh12345 we literally only moved a few months ago and are tied in to a 12 month contract, the rent is reasonable as well, around here a 3 bed house is anything from £1200-2k we pay £900 a month

Definitely sell the cars and get a cheaper used car. Cars are such a huge waste of money, they are essentially just an incredibly expensive disposable object that does not retain value.

Longer term I would seriously consider how you view spending. If you don’t have the money, you don’t buy a sofa or a shed. End of. DH and I earn well over twice what you do, have no debts apart from a mortgage small relative to our new income. I hate our couch but I will absolutely not consider buying a new one until we meet our savings goals and have enough in disposable savings to buy it outright. I say this because sometimes I think people think those with nice houses and nice things are living off finance. Some are but not all of us are. We literally had furniture from the street until we had met savings goals and could buy what we wanted outright.

I would definitely get a swap on the cars, even if they're not much cheaper, you wont at least be paying monthly for them, try to ensure you get a car that you own outright. I have never had car finance

The other thing is to try to get some perspective. It is a big debt but you have two fairly reasonable incomes. If you had a mortgage of 200k for example, that would be 4x your debt and you wouldnt be losing any sleep over it. I know its not directly comparable because you would own an asset, but the amount is still way more 'debt' than your current debt and you wouldnt be worried about it

And just with the phones and getting different cars that might not need a monthly payment you're looking at an easy save of a couple of hundred at least even without looking at other stuff. You'll be ok

Have you looked into any debt management plans OP? My husband had an IVA several years ago that helped to sort out and pay off most of his debts.

www.gov.uk/options-for-paying-off-your-debts/debt-management-plans

That will affect credit ratings and OP isnt at that point from what she says.

@EmbarrassedDebt definitely money saving expert’s debt free forum!

You've probably been robbing Peter to pay Paul for years, kicking the can down the road and just teetering on the edge until a combination of inflation and interest/debt repayments finally taking most of your disposable income.

Have a look at:

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

Especially the 'debt spiral'.

At the moment you're probably looking at either a debt management plan or bankruptcy, depending on whether it is possible to cover all your outgoings from your income.

If the £120 of phone contracts is an indication of your spending and budgeting up to now, you might be able to free up enough money to avoid bankruptcy, and pay off the debts via a debt management plan, but if not, bankruptcy might well be the best solution.

You'll pay an affordable amount towards your debt after you've covered all essential expenditure, including those you've probably struggled with up to now, such as repair/replacement of household goods without borrowing, which forces you into budgeting for these things and after 3 years, any outstanding debt is written off.

As well as the above, have a look at:

forums.moneysavingexpert.com/categories/debt-free-wannabe

forums.moneysavingexpert.com/categories/bankruptcy-living-with-it

Good luck

Well done for getting it together.

Put some extra effort into costing your outgoings, not just bills but one off or annual expenses too (new washing machine, Christmas, haircuts).

Do you have enough coming in to cover outgoings and debt repayments? If not is it close enough to cover with a reasonable 2nd job?

You may be able to get that paid off bt hard work and snowballing. But it'd be food to know if it doesn't look doable and you need a more formal resolution.

Do go to money saving expert debt forum, best place for this type of thing.

The fact that you both have good credit scores means you may be able to get 0% credit cards? Also definitely look at selling cars and buying cheaper to free up a little. There are people all over the country in the same boat so try not to stress. Once you get stuck into saving and paying off it can be enjoyable to a certain extent - get a spreadsheet!

Of course if you can get a lot of the debt onto zero/low interest cards and pay it off while still be able to pay all your bills, buy food etc, you might be able to avoid a formal solution, but the problem is that if you can't get low interest deals, you can struggle on for years, paying thousands in interest without making significant progress, only to throw the towel in some years later, when you could have done this far earlier and then got back on your feet much quicker.

Yup

paid off £20k in 4 years with their support. Love the ML website. Forums AND the advice.

you’ve got this OP. You have done the hardest part, facing up to it, then The Reckoning Up. Now it’s just watching those numbers edge closer and closer.

i now have savings. It’s an Amazing feeling.

Dave Ramsay uses snowball method you pay the minimum on all debts and then anything left over goes to the smallest debt so if you have 10 debts
of varying amounts from 1-10K you try and work on getting rid of the 1k debt first
obviously your cars are a fixed amount but the various other loans may not be
the avalanche method works in a similar way but starts with debt with highest interest rate this works best mathematically and will save interest payments in the long run but psychologically it appears the snowball method works best as it is more motiviating and you see results quicker

so if you have £1500 to pay off debts with each month and all the fixed and minimums come to £1100, you use the £400 left to repay the £1000 debt so in 2 ½ months you have repaid 1 debt then you use that £400 to start reducing balance on next smallest loan

you could also try zero balanced budgeting where every pound you earn is accounted for so by the end of the month your income and expenditure are exactly equal.
some of that expenditure includes savings ( money set aside for annual bills ( MOT insurance car tax, christmas at approx 1/12) etc you should probably also build a small emergency fund at the same time as paying down debt
you know that your cars will at some point need new tyres brake pads oil changes so this is not an unexpected expense and should be budgeted for just like basic house maintenance a clothing allowance for you and your DH etc

You've taken an important first step in working out what you owe.
A couple of things stand out. Your mobile phone bill is huge. Mine is £6 a month and more than adequate. Can you shop around for cheaper home and car insurance? Do you have subscriptions you can cancel? Consolidating your debts into a low interest loan might be a good idea. I did this with credit card debts. I got a low interest loan, paid off the credit cards with it and cut the cards up. The loan is paid off now and it's much easier when you don't have multiple debts to keep on top of. Good luck. Small changes can make a massive difference. My income was about a third of your combined income. I know how tough it is.

You have made a good first step.

Firstly stop buying things, well obviously not food you need that but stop buying on credit or replacing things that are functioning.

Secondly what can you cancel, if you have multiple streaming services reduce to one.

Sorry if it seems unhelpful now, but you need to learn to live within your means. There are so many things I’d love to buy, holidays I’d love to go on etc, but I just don’t earn enough to pay for it, and I just accept that. I have a credit card for purchase protection but I have always paid it off in full every month. I have never had a loan other than my mortgage. I didn’t own a car until I could buy one outright. My bank balance goes up a small amount every month so I know I spend less than I earn.

I do think a lot of people believe they are entitled to have all the things they feel they deserve to have. Not saying this is your situation OP, but I do have friends who don’t give it a second thought if they want a new sofa or an expensive holiday. They just spend spend spend. They are always in debt but this seems to be what they consider “normal” and they seem to think everyone else lives this way and that I’m odd for not doing the same.

Good luck sorting out the debt but do also look into ways of living within your means in the long term.

Cheap credit. And it was always going to be cheap forever and there was never any downside to five year PCP car financing or massive LTV mortgage offers.

Just put it on the card, baby. It’s all good.

Stepchange.

Free to use.

Your credit rating will take a hit but all interest is frozen by creditors and you can pay it all off quicker.

They are amazing, so helpful

Third look at transferring balances to 0% cards
Then for the remainder identify the highest interest to prioritise repayment

Lastly look at increasing income. A shift in your local pub on a Saturday for instance not only increases money but means you can't spend money!

I've been debt counselling for years, with determination you can do it!

Sweetheart. It is a shock when you sit down and work out how much is going out on debt. I remember the put of the stomach sick feel.

There are some great threads on here. Look in the credit crunch/ cost of living and debt boards. People are really welcoming, knowledgeable and non judgemental. When you are 3 years in and watching friends insta posting and you can't join them the people on the threads here will hold your hand and get you through.

You have done the hardest bit - sitting down and recognising you have to do something. Having your do on board is a huge step. You can do this.