WWYD to tackle this

[Jibberly]

Hi folks

for reasons that I went go into, we have about 75k worth of debt that we want to destroy ASAP. Thankfully we have a small mortgage and no childcare fees. Remortgaging is not an option.I have cut everything back to the wire and we’re prepared to make big changes to our lifestyle to get this sorted ASAP

together we take home just shy of £6400 per month

mortgate and all essential bills is around £1300

im going to meal plan and try to keep food to £110 per week( family of 4)

ive opened a monzo account and will transfer £250 n there each month for unforeseen expenses and emergencies.

This makes £1990 to pay out and £4400 available for debt payments

how muck would you allocate to the debt? I think I’m also just looking for reassurance that we can do this as the big number is scaring the shit out of me x

Ffs

What’s the issue?

Have you looked at consolidating them at all? I know you said no to mortgage.

Where is the debt? Prioritise those with the highest interest first.

I think your calculations are tight for a family of 4. Could you pay £3k per month? That would give you wiggle room on family spends but you'd be pretty much clear in just over 2 years.

How has the debt come about? You need to ensure that you don't start the same spending patterns again.

Why wouldn't you remortgage? Far lower interest rates and you could massively overpay and be debt/mortgage free much faster.

We have very similar net income and outgoings to do and we easily save 2k a month while spending all around us and not watching our money at all.

Do you have savings? If not I would build a savings pot of approx 5k and then put as much as you can towards the debt, at least 3-3.5k a month if you can.

My thoughts exactly 😒

You'll likely struggle to keep all groceries to £110 pw unless you're prepared to live on quite a basic diet (own brands, little meat/fish, basic seasonal veg, little extras like drinks, snacks, limited toiletries, cleaning products etc) although it might be doable if you're good cooks and flexible about what you buy and eat.

I also think that £250 pm may not be enough unforeseen expenses and emergencies unless you've already accounted for all annual and irregular expenses like Christmas, car insurance, school uniforms and other essential clothing/footwear, servicing etc, activities, replacement of white goods and any days out etc. Unless you're really going to go in hard with a basic lifestyle?

Depending on the interest you're paying, your plan could have you out of debt in well under 2 years, but it will be a hard 2 years that requires commitment from the whole household.

Have you done what you can to minimise interest? Have you read up about the snowballing method, where you pay the minimums on all debts, then throw all spare money towards the debt with the highest rate until it's paid off, then you move on to the next one and so on?

But don't forget that it doesn't have to be all or nothing. Obviously you need to get a handle on this to avoid dragging it out over a long time, but you do have the luxury of a large disposable income, which gives you the flexibility to be a little more relaxed about the process, either by allowing a small amount of non essential spending each month, or rewarding yourselves every so often.

Obviously you need to get a handle on this to avoid dragging it out over a long time, but you do have the luxury of a large disposable income, which gives you the flexibility to be a little more relaxed about the process, either by allowing a small amount of non essential spending each month, or rewarding yourselves every so often.

I agree with this and this is the route I would go. I'd probably keep at least £200 a month for spending. Depends how determined and disciplined you are too though.

First of all you need to work out ALL your expenses - it’s no good saying ‘we’re going to annihilate the debt’ and paying it off so aggressively that when an emergency hits (boiler, car, illness) you don’t have a back-up except going back into debt. And you need to account properly for things you spend on each year (Christmas, birthdays, days out, haircuts & clothes, school trips, bike maintenance, etc etc) that don’t fit into your ‘monthly bills’ category.

I’d also up your grocery spend if I were you, unless you live on close to this amount anyway.

Have a look at YNAB. It’s great for this type of budgeting and debt repayment.

If it were me I’d get as much interest free credit as possible. Lots of credit cards doing two years atm.

pile everything on there. Divide the total by 24 (or however long the credit is) and repay each month. If you have the self control you could pay a set amount each month and put the rest in premium bonds or an interest bearing account, and pay off at the end.

if not, I agree that remortgaging is probably the best solution as it will be lowest interest rate.

@Jibberly At least £3k (Ideally 3.5k) off the debt, like others I think you have underestimated your expenses.

Target the money at the debt with the highest interest and make minimum payment on the others. £3000 x £12 = £36,000 so if you can do 2 years of debt management (lowest interest) and tightening your belts you can then look at relaxing a little but also building up savings.

you also need to look at why did you build up this debt, it didn’t happen overnight. Unless you address this you will likely find yourselves back in debt.

Don't consolidate and absolutely don't add it to your mortgage
That's the easy way out and if you do this you will very likely end up in this position again.
Make drastic lifestyle changes and throw everything you have at the debt
You're in the very fortunate position of having a very good monthly household income so it will go down fast
Imagine the life you can have without debt

Totally agree with this and so would Money Saving Expert. They never recommend consolidating or even taking a loan until you know exactly where every penny goes, and you have stopped over spending.