Am I overthinking this?

[mollyzex]

Hi Everyone.

Before I start I will say that I am a person who worries about everything. I am a catastrophizer! We have been getting to grips with our finances and I am stressing over how much of our money goes out each month.

We are currently in the middle of paying off a lot of debt, hence the high debt payments, however this will come to an end in 3 years.

Here is our situation.

mortgage 726
secured loan 498
loans/credit card payments 900
council tax 148
gas/elec 248
water 30
phone/internet 37
Sky 39
Mobile phones ( X4) 89
Food 400
Car 385
insurances 127
car fuel 120
kids clubs 80
prescriptions 18
TV licence 14
pet costs 56
gym 27

TOTAL - 3942 :(

We both work full time with a joint take home pay of £5100. I feel mega stressed having written this all down. Am I overthinking this?

They have a mortgage on the house which means a bank owns a percentage of it and the car is on finance so they don’t technically own it… people spending a massive amount on a posh car then worrying about it astound me!

Yes very much so. I can't live like that anymore. The reason that the payments are high is that we consolidated some of into a big loan. that accounts for £570 of the £900. Still awful I know.

I think that I hold a lot shame over the debt. I don't know anyone else with this level of debt and that is quite a lonely feeling.

That's quite harsh. You are entitled to your point of view but I think that you comment comes across as very unkind.

Get over to the Money Saving Expert forums, especially the debt free wannabe.

Anxiety can be awful but there is an awful lot you could be doing about your situation. If you were doing it I think you'd feel a lot less anxious.

Best of luck.

Just because you don’t know them, doesn’t meant there aren’t 100000s of people in your position. You will be fine, you have a payment plan, just stick to it. Also, having been in that position myself, as you have a bit of cash for treats, don’t feel guilt about doing things as a one off. As I said before we paid ours off in 2yrs and the debt was because of exactly the reasons yours was (mostly house repairs etc). The little treats kept us going, and we appreciated them more. We now have no debt, overpaying the mortgage and have good savings. It’s only a few years in the grand scheme of things!!

Pay off the debt quicker. You're saving £12000 a year with your budget, which is some peoples wage. If the payments are stressing you, pay them off quicker

I'm going against the grain here and I'm going to say DON'T increase the debt payments, unless you've added up all of your yearly expenses and made sure that you are saving for them first. Christmas, birthdays, school costs, clothes, subscriptions, haircuts, vets bills, car maintenance, house repairs, trips and holidays. These irregular expenses are often what get people into debt in the fists place and stop them from getting out of it. They don't happen monthly, so we just ignore them until they happen and then there is no money for them. So make sure you have a plan for these, then you can think about increasing debt payments if there is anything else. (And think about giving YNAB a go, it has changed my life!)

Thank you. I definitely need to factor in those costs.

You wouldn't know who else had the same amount of debt, they probably won't have told you! Shame isn't a helpful emotion, it saps your energy and motivation. You have a plan, you're working towards it - you are doing great!

You have more income than outgoings which is great. Why not make sure you have an emergency fund, factor in rising costs, and then pay off the smallest debt.

By seeing your debt decrease you may then decide to pay more of it off, until you just have the mortgage. Then you might add more to pensions and other investments, whilst chipping away at the mortgage.

Go over to Debt Free Diaries on MSE, you'll get loads of support on there and probably find it really inspiring.

Are you paying down the higher interest rate debts? Throw as much money at those ones as you can. The debt will go down quicker and so will your anxiety. (sorry if covered already, just skimmed the posts)

Good luck!

You need to address how you got into so much debt to avoid it happening again.

you have any savings?

Where do you live that your water is 30with 4 people??? …guessing from phone costs

Yes but only about 3k. Definitely something that we need to work on

South staff water we pay £30ish a month

Which loan has the highest interest rate? Start paying that one off more quickly, even if it is only a small amount each month, and you will save a lot of interest.

Make one small positive step like that, and it will help you start to feel better and a bit more in control of the situation.

If the debt is reducing each month then stay focused and try not to panic.

Track your total debt/net worth each month so you can't kid yourself by paying down one card and spending on another or spending your savings but only counting card debt. For example you could track your balances /worth on the last day of each month taking into account card balances, savings and current accounts.

Have you managed to keep any cards on 0% balance transfers. If you say pay £1000 but most of it is interest it is important to know and track that. Any extra you can pay is of course not being swallowed by interest so can make a big difference.

Your situation is very similar to mine op.
We have combined take home income of £5200.
Monthly expenses are £3400 .
We are currently repaying £1600 per month towards credit cards debt .
Our debts are now circa £8k which accrued due to a number of factors and we weren't always in such a strong financial position prior to 2021, which didn't help. Since then I've committed to repaying £1600 a month for the next 6 months which should make us debt free. I have developed a strategy to pay off the highest interest credit card first so for example :
Credit card 1 with 39% interest rate gets £1400 per month

Credit card 2 with 26% interest rate gets £100 per month until credit card 1 has been fully repaid -hence the £1400 from above will then be used to pay this credit card quicker

Credit card 3 with 20% interest rate gets £100 per month until credit card 2 gets fully repaid - same logic as above

Try not to feel ashamed - the positive is that you've recognised that there is a problem and you're tackling it! 3 years sounds like a long way ahead but it isn't realty so please stay focused and keep at it ! You have a very healthy joint income and you will be able to enjoy it once you've repaid your debts .

Phrase your post another way and let’s assume you’ll save the £1k you have left over a month…

’In three years time I’ll have paid off all my debt and have saved £36k in that time too, but I’m really anxious’

A very tone deaf and very privileged thread.

I agree - concentrate on the debt with the highest interest rate first.

Do you just have one car, and I assume it is on finance? You are paying £4,620 a year on that. Perhaps you could sell it and buy a cheaper one. That would also then reduce your insurance costs.

The PP suggesting better budgeting and small scale saving is absolutely ‘on the money’. There’s no point paying any extra £1k per month towards debts if you’re just going to have to borrow again the next time a big expense comes up.

Work out every regular annual expense you have - including birthdays, Christmas, school uniforms for kids, haircuts etc and save a set amount each month into a pot for them. Only after this is done do you truly know what you have spare per month. And it won’t be anything like as much as you think.

This.

Plus, have you had advice about your debt and reduced the interest as much as possible, ie by a formal arrangement or by transferring the loans and credit cards to as low an interest rate as possible?

Where are you with your mortgage, is it likely to increase with rising interest rates before you're out of debt?

Hopefully 3 years will fly by and you'll feel far more comfortable when you're debt free, then you'll be able to pay your mortgage down, save more so you can do things like replace the car without borrowing, save more for the long term/retirement/loss of income, and also live a little more freely too.

Moneysaving Expert should be your go to for anything financial, you can get help with setting a comprehensive budget, check for better interest rates on your debt and get hints on saving money on other purchases, because every pound saved on an essential bill is an extra pound you can use to pay off debt.

www.moneysavingexpert.com/banking/budget-planning/

Also, this financial flowchart is useful to help guide you along the way, both now and in the future when you're debt free:

ukpersonal.finance/flowchart/

From the costs you've listed, as well as seeing if you can pay less interest, I'd say that you might be able to spend less on mobile phones and TV related things - do you actually need a TV licence and do you get enough out of Sky to pay £39 a month - you can get a lot of the content on Now TV for far less and there's always deals on the subscription.

For example Entertainment is normally £9.99 a month, but I'm just coming to the end of a deal where I'm paying £2.99 a month for 6 months - I'm going to finish watching This England this weekend, cancel it and switch to Netflix for a while. Now TV are also offering me 3 months of movies for £15, which is less than half price - we've had Now TV on and off for years and never paid anywhere near full price, you can just cancel it with a click or two on the website and they nearly always offer a deal to stay.

Finally where is the 'spare' £1150 pm going? If it's on essentials like some of those things mentioned by @AltheaVestr1t then you probably can't do a lot about it, but anything that goes on mindless spending or things like coffees/lunches/eating out, try and reign this in and send more to your debts, or if the interest cost is low, use to boost your savings.

Hi OP! A lot of people here are assuming that everything outside your fixed costs gets saved but you haven't listed anything for miscellaneous expenses and I know that I couldn't live life spending only on the stuff you've listed here, especially with kids in the mix. As you have 3k in savings currently then you likely aren't saving £1200 a month right?

If I were you I would concentrate on saving as much as you can for now and pay lump sums off the debt when you can. You still need to live life a little too though and things look manageable so it's not too bad! Once you have that debt paid off in a few years you'll be in a great position!

You could save £750pm and still throw another £250 at the debt
That's more than half my wage!