my debt confession

[Kaththetwat]

Hi Everyone

I have been a member before but not posted for many years. I am not sure what I am looking for from this post, however I feel like I need to 'come clean' about the terrible financial situation that we are in, as we aren't telling anyone in RL.

we are both mid 40's, 2 dc's, nice home, 2 cars etc. We have both done well in our jobs and we earn well over 100k combined. Despite this, we are in an absolute shit load of debt. Before I go on - this is not a sob story and the debt is completely unacceptable. We have both been absolute f**king idiots, living way above our means and never being willing to wait for anything. I am embarrassed, disgusted and disappointed at us. Dh feels that same.

I had a mini stroke at christmas and this made us re-evaluate things. Thankfully I am ok now and my income wasn't impacted, however if things had been different then we would have been in an absolute catastrophic financial mire. This can't go on and since the start of the year, things have been different. It's only now that I can really face up to the mess we are in.

I expect that I will get lots of negative comments - that's ok. I think I deserve it.

So between us, we owe just over 100K, on top of the mortgage. It's disgusing, shameful and totally avoidable. No excuses. About 40% of it is linked to home improvements, but even these were wants and non needs.

The rest has been built up by both of us spending freely on credit cards, taking consolidation loans and repeating the cycle etc. This has gone on for years without us really taking stock. Fast forward to 2023 and here we are - 100k in debt and not quite sure how we got here! I have cried and cried but now is the time to put on my BG pants and get on with it.

We don't want to remortgage the house and we are not eligible for any type of debt management as despite the debt being astronimical, we can afford the payments.

So now we have to sort it out. For the first time in our married life we have sat down and actually looked at doing a budget. Not something that either of us found easy as it was like shining a spot light on our past financial inadequacy.

Our joint take home pay is just shy of 7K per month.

We pay £2200 for our mortgage and regular bills - this includes things like our mobile phones, internet. Basically every direct debit that we pay.

We spend about £500-600 per month on food, although we both accept that this could be reduced

Our debt payments are 2k per month - sickeningly ridiculous amount of money. It's all loans and credit cards. At least the loans are a fixed payment with a definite end date.

dh's car costs him £376 per month for the lease - this is tied in for another 18 months. My car was included in the debt amount as we took a loan for it.

What's even more embarrasing is that we shold have almost 2K left for saving etc - we don't as we have just spent spent spent everything. God knows how much we have spent on holidays. Totally ridiculuous.

So I have confessed all and it feels like a weight has been lifted. I now need to find a way to stop the self flaggelation and get on with it.

I would like to talk to my parents about it ( they aren't in a position to help but they are generally supportive) but dh is adamant that it's private, so I have to respect this.

I can't help but wonder how many others are in a similar position. I want to reiterate that am not looking for sympathy and I agree with everyone who tells me what a twat I have been.

Ring Step Change, they will be able to help you come up with a plan.

Hi,

I have done their online debt remedy however we are not really eligible as despite our debts being high, we can afford the repayments.

It’s good that you can manage the repayments and eventually the debt will go. Can you afford to over pay a bit to reduce the interest? You have obviously over spent in the past and now need to repay it. What did you spend the money on? You need to work out a plan so you don’t get into debt again.

Debt free section of Martin Lewis's site is really good.

firstly ditch the shame - it is what it is. No point dwelling on it. Loads of people overspend and despite what some posters will inevitably say it’s not a moral failing.

secondly there’s load of practical advice out there. When I was in debt in my early 30s I used the snowball method. Pick off the debts one by one. Allow yourself a brief celebration of the individual successes.

it was a slog at the time but it is well in the past. I don’t even think about it now.

I'm not sure what you're asking for.
You seem to be quite harsh on yourself for having overspent. Lots of us do, it's easily done.
However, it seems that you have now met it head on, devised a payment plan and can afford those repayments with a comfortable buffer on top.
Ease up on yourself and resolve to keep to more of a budget going forward.

We spent it on everything. Absolutely everything - clothes, holidays, things for the kids, cars, bikes, stuff for the house. You name it, we bought it. I am going to see I can sell some stuff

@Kaththetwat don't mean to be rude but @Makewayforsummer gave good advice, even though you have done the online bit, you can still contact them to go through your finances in detail and they will help you. There are other places, Christians against poverty, called something like that, who offer similar advice and support. That is the best, solid move, that you can make right now.

You will get through it, I think you know what needs to be done in terms of making savings, not spending, clearing out and selling stuff to pay off the debt. Obviously prioritise paying off the stuff with the highest interest rates first.

Look at some of the diaries on money saving expert - there's people on there with debts this size that they've managed to pay off whilst still having a good life.

Reckless but not an idiot.

Cut the food budget to £400 a month. Got through your other bills and see if you can cancel anything or get the cost reduced.
Give each of you a set amount for spends (£250?) and plow the rest into over paying the debt.

You are in a lucky position that you could clear that relatively quickly.

Very similar position over here. Especially with the debt consolidation, running up further credit cards cycle.

We broke the cycle by getting a Monzo account. We transfered all our debts to the lowest possible loans or balance transfers.

Then we use our main Natwest accounts for all things that are non negotiable direct debits (loan repayment DD, phone bill, internet, mortgage and council tax etc). Each month we leave the amount needed to cover this in our old accounts and then the rest of our money is transfered to the Monzo. We each keep £200 for our own things. I’m not sure if you’ve used Monzo so forgive me if I’m being irritating.

In Monzo you can make lots of saving pots. So we have one for our monthly food budget, one we add a little to each month for if our car needs new tyres etc, one for expenses for our cat, one for school stuff, one for holidays, one for Christmas and birthday gifts etc. work out how much you need each month for that. Be kind to yourself here, if it’s unrealistic you won’t do it. Then the rest of your money can be used to pay off debt. And you feel so much more in control.

look into snowballing debt, which will show you some ideas on what order to pat it off. rememeber that with debt you start off paying a little each month vut with each debt you can conpletely pay off youll have more for the next debt as the money that was paying interest can now pay off the next debt.

This.

Snowball affect is a very good idea as you can tangibly see debts diminishing.

Hey lovely - you're not a twat. We are also covering around £1.2k in debt payments a month, plus a mortgage on top. Yes we have the income to cover it but it's such a horrible waste of money isn't it. Plus I am self employed so live in fear of not having enough work to cover the bills. We have no buffer!

So I guess if you're a twat, I am too. We can be in it together. No judgement here. There will be loads of others twats coming to kick you when you're down, I'll leave it to them.

The thing that struck me about your post is you say you spend £2200 on mortgage and bills, plus £500-600 on food (which TBH isn't crazy these days for a busy family of 4), and then £2000 on debt leaving you £2k to 'play with'. I wonder if that's the problem. £2k is a huge amount of spare cash each month in theory, but have you really, really costed out all your true expenses? I did this recently (and then lost it all when my cloud files didn't sync - that's another story) and was very careful to include absolutely everything - so kids school lunches, kids activities including those school trips that crop up etc, all the subscriptions that you might be paying for by regular card payment not DD so don't immediately notice on your statements. You need to go back through a few months of statements and look carefully at everything to spot where you money goes. Once I'd done that we really only had about 30% of what I thought as 'fun money'. It helped me understand how we were overspending.

What's your plan now? Are you going to consolidate or do a snowball? I did look into snowball and it does look like a good way to go but haven't actually put it in to practise!

@Kaththetwat - selling stuff is a good idea. I sold a load of stuff on Vinted recently. Didn't make loads of money but made me feel a bit better!

I'm surprised they won't help you because you can afford the debt but it is what it is. Move what you can to the lowest interest instrument and they make minimum payments on everything and overpay the ones with the highest interest rate. Tighten your belts for a few years and as you pay each one off cut up the card and cancel the agreement.

I think the advice @hairdresserbreakup is also very good. I bet there is money going out of your account you are just not aware of. I recently did a forensic analysis (almost) of my monthly outgoings and was surprised at how much the little bits here and there added up. A lot were charitable donations (trussel trust, air ambulance, hospice lottery etc) and a lot were TV subscriptions (Now, Netflix and Prime). I think also you need to have a savings account. I know it seems counterintuitive to save when you have debts but if a large repair bill for a car came up or you needed to replace the boiler say, the last thing you want to do is add to the debt to replace or repair.

My advice is for you to work out your real life annual spending on absolutely everything that’s necessary. Mortgage, credit card minimum payments, loans utilities etc. Include annual payments such as for insurance or TV licence, car servicing etc. round everything up to the nearest £5. Once you have an annual amount, divide by 12. That’s how much you have to put into a household account each month. Set up a transfer into this account from your current account to cover the monthly cost. Do NOT use this account for anything else. For food, withdraw a set amount each week in cash - £150 will be plenty - and use this cash for all your food / household shopping. Any money left over from the cash at the end of the week can be used for take away - think local chippy rather than Chinese banquet!
Then from your current account, allocate a feasible amount to each of you for personal spending. This is to cover clothes, coffees, subscriptions to Mumsnet etc.
Look at what’s left. Eg £1000. Use this to pay extra off your highest interest CC first. Once that’s paid off, pay off the next highest etc. what you have to be is absolutely ruthless. You’re not in a position to borrow any more money. Cut up the credit cards, get someone to change the passwords on the accounts and not tell you the new password so you can’t be tempted.
At the same time, create a spreadsheet showing all your debt and add to it monthly to show you how quickly your debt is coming down. The sense of achievement here can’t be beaten and will be a good motivator. You can do this!

I know you said you don't want to remortgage, but if your current lender would give you more, then surely that has to be worth considering? The interest rate on the repayments would be less than many of your other debts and you'd be able to pay off much quicker. Plus you'd be dealing with fewer individual debts, which must feel very overwhelming. I'm guessing you wouldn't be able to get a new mortgage with your other debts, but your current lender may extend, if you have a good amount of equity in the property.

When you pay off your debts, you can overpay the mortgage by the same amount you've been used to paying on CCs etc to bring it back down again.

Selling stuff also a good idea. But in the first instance, only sell things you genuinely don't use/need - no point selling something if you need to replace it in a year or so - that's likely to cost you more all in.

A lot of people have been in your situation and worse, you can totally clear that debt and will be delighted with yourself. It will take time but thank God you now have time, and I’m very happy to hear your health is good!

From your very brief breakdown above I have worked out the essential outgoings total £5716

2200 (mortgage and bills)
600 (food)
2000 (current debt)
376 (car for DH)
5176

If you are taking home roughly 7k between you this leaves you with £1824 left between you for the month. I would limit this to £1000 a month (which is still a hell of a lot of just spends/fun money) and chuck the extra £824 a month at the lowest debt using the snowball affect. This is roughly 10k extra a year clearing the current debts that you are already paying.

i think you need to get some expert advice, just because you can afford to service your debt doesn't mean you are going about it the correct way, sounds like you need a specialist to help you with the plan, they are there not to try get debt written of,. Your post comes across as smart and articulate , sounds like your being sensible now and know you have to sort it out, so I'm sure you know its all to do with what to pay when and interest rates applied, often getting a short 6 months break can give you the time to get a sum saved to then pay off the highest interest charging rates sooner. You say you don't want to re-mortgage home but that may not be the smart solution , and maybe get yourselves some income protection policy insurance in place- yes just what you don't want to hear pay more out!!

I absolutely loved the snowballing method! The little successes felt like a huge pat on the back and the positive reinforcement you just don’t get often enough.

Don’t remortgage, this is never good advice as losing your home won’t help.

You need to be aware of absolutely everything you spend, monthly bills are easy to work out, but the annual bills are much harder to track down.

You then need either an account with pots, or three current accounts, maybe four.
one for monthly direct debits
one for annual bills
one for food
one for fun, with a very tiny amount in it.

A savings account is also needed for inevitable bigger unexpected bill, like a new boiler or new tyres.

you may or may not decide to have a very small amount of personal spends each

and then start snowballing, pay off as much as you can of the highest interest rate card, and as soon as that has gone, move to the next highest and so on

a spreadsheet updated daily can be very motivating

good luck

We have £70k worth of debt, all on interest only and our repayments are £1.5k a month. Our income is higher than yours but it’s still annoying. Stop being so hard on yourself.

first, understand it. List it all, including interest rates
do the same with outgoings
look at what you can cut back, cut it back
But not so much you have a terrible life - budget for some treats too

get it on interest only if it isn’t already, that way you’re actually repaying capital. Look up the snowball method, it works. Best of luck.

We have a similar set up. Different reason - but we were spending all £7K a month. Income reduced (planned) to £3.5K a month and we realised how much we had just frittered away. Soo much money. It makes me weep.

We went through everything.

Worked out the regular bills/DDs Our "DDs" Including how much we wanted to pay into savings

Worked out the annual but not monthly bills (insurance/car tax/services/music fees etc - and then took that annual cost and divided into 12 equal amounts called "Bills"

Worked out how much we had left - which were our day to day "spends".

We both get paid into Barclays and that is where all the "DD"'s go from and savings transfers from
Then everything else transferred into Monzo savings account (3% ish).

Every Monday our £200 *Spends" is moved into the current account (you can do a scheduled withdrawal) for that week's spending. That is for all incidentals/food/nieces/nephews/ toiletries/small DIY stuff birthdays etc. Week 2/3/4 money is still earning interest until it is automatically moved over.

The monthly "bills" amount also sits in the Monzo savings account so that when the car tax needs paying/insurance needs renewing the money is there ready.

It is very easy to use, very visible. You can set up more than one savings account on monzo (one instant access and various 1 days access pots).