sickening debts - need to sort this out urgently

[dollarwallow]

Hi,

Long time poster on here but I have NC’d for this one. I have finally summoned the courage to post.

DH and I are in an enormous amount of debt. It consumes me and it’s the first thing I think about in the morning. The debt is all credit cards, loans and an overdrafts. This is on top of our mortgage, which is in itself, quite hefty.

We both carried some personal debt at the start of our relationship but nothing that caused any issue. I unexpectedly fell pregnant with twins. We were delighted but we weren’t really financially ready for a family at that point. I took two years off work and during that time accumulated more debt.
In December 2019 DH was made redundant. He struggled to get a job for 6 months and this again led to the accumulation of more debt. He eventually got a new role that paid slightly more than his previous role, so things were looking up.
At the end of 2020 we found out that we were expecting another DC. This meant another period of maternity and more debt.
In the midst of all of this we were in the middle of a legal dispute linked to a business that we previously ran. I won’t go into any more details on that, however this led to a huge amount of debt for us.
So here we are, in 2024 not quite knowing where to turn. I feel disappointed in myself that I let this happen. Other people will have dealt with similar circumstances to us, without having this amount of debt.
DH has just had a significant promotion, so this provides some light at the end of the tunnel, however it overwhelms me when I think about the scale of what we are tackling.
DH’s new job pay a salary of 90K. He actually starts on 26th Feb, but we have worked out that he will be taking home about £4400.
I have also returned to full time teaching with a salary of 46K. My parents have picked up before and after school childcare for us, which is a massive help. I am currently taking home just shy of £2800. I also do exam marking and tuition which brings in an average of an extra £300 per month.
I have spent most of last week ( half term) reviewing our finances and going over every number. I am just so sickened and overwhelmed.

So our income combined is a few pounds over £7500 take home. I have already cancelled all of the things that we paying for that we didn’t need – Netflix etc. Our fixed costs are…..
Mortgage 1344
Gas/elec 212
C tax 124
Insurances 87
Mobile phones x2 52
Tv licence 13.25
Pet costs 72
Diesel 220
Internet 28
Gym 28 (dh has a spinal condition and exercise is essential)
Kids activities 180
Groceries 500 approx
Union subs X2 58
Birthdays/days out/Christmas/school trips 250
Haircuts 20
Kids savings 150 ( 50 each for each kid)
Clothes 30
So out essential/regular spending is approx. £3370

Our debts are absolutely huge above £90k. This doesn’t include the 10k that owe my parents. We are no longer eligible for 0% balance transfers so some of the debts are interest bearing. Our minimum debt payments are approx. £2280 per month. This makes me sick.
We have reached out to step change and payplan. Both charities have advised against any debt management/IVA etc as we are not in the position where we can’t afford the payments. I have also met with an intendent debt adviser who explained that we need to budget and tackle the debts using the snowball method. We did look into a remortgage but this was declined. We now think that this was a good thing as it would have jeopardised our house security if we fell behind.
We have also considered selling our house and using the equity to pay off the debts, however we would then have to pay high rents and I fear that we would never get on the ladder again, therefore paying rent for the rest of our lives. I think that we have both agreed to forget the remortgage/sell the house options.

To just stay afloat, out total expenditure is £5650. We need to make sure that we use DH’s new income wisely. We will have about £1850 to overpay the debts or to save. We absolutely have to do this otherwise I am scared that we are going to lose everything.
Not really sure what my question is – it just feels good being

Ignore.

How much equity do you have in your house?

OK could you live on your husband's income and throw all of your income at the debts? I'm only splitting it that way for convenience as obviously the debts aren't all yours.

You’d be better off listing each debt here, how much you owe and what the interest is

Then you can get more tailored advice

I do know that on MSE website there are amazing financial sleuths who could help you out

About 200k

If he takes home about £4,400 and outgoings are £3,300 approx (not including repayments) then you can afford to live on his income.

You take home £2800 and your debts are £2280, so you can pay minimum fees plus £80 plus a bit extra from your husband's income.

I've done exam marking and it's a hell of a lot of work for very little money.

So alternatively would you be able to remortgage and pay all that money (as above) into the mortgage? The interest rate would be a lot lower.

If you just use all your remaining income you could pay it off in 3 years surely

This is what I would be doing

starting with the smallest debt first, as when each debt gets paid you’ll feel a giant sense of relief and as if you’re getting somewhere.

living of one wage may be hard, but doing it for a 12 months will give you so much relief and then look again at your debts and reevaluate

you really can’t afford to be saving money monthly for your dc. Keep their activities going instead but stop the savings it’s daft

Yes we could, it just feels like an overwhelming task at the moment

In theory yes, but I don't think that we would obtain a new mortgage as our unsecured debts are so high. I am also nervous about turning unsecured debt into secured debt

Could you not remortgage to swallow the debt? Yes, your monthly payments would go up but it sounds as though you could easily absorb that. The interest rate would be so much lower.

Crossed post! But surely you only need to be nervous if you rack up more debt and surely you've learned your lesson? You need to cut up all credit cards and stick to a budget.

If your minimum monthly debt repayment is £2,280 (i.e. £27,360) on £90k debt, some of it must be at very high rates of interest.

I'm not quite sure why you're saving £1,800 a year for your toddlers if you have such a lot of debt. Similarly £3k on Birthdays/days out/Christmas could surely be shaved a bit?

We were turned down for a remortgage based on our level of debt.

There is no reason for you to try and get a debt repayment plan and not pay what you owe though. It might seem like a long time but 2/3 years will go quickly

So tackle one debt at a time, whilst holding the others at bay. Think of it as one step at a time rather than 36 pay checks

In that case you need to throw every bit of spare income at the repayments. Once you start getting them down you might qualify again for 0% interest.

Stop stressing, with your husband's promotion you're in a great position. All you need to do is plan which ones to focus on.

Never remortgage and turn unsecured debts into debts secured on your home.

It's awful, awful, dangerous and irresponsible advice. I wish people weren't so quick to trot this out.

The op can easily pay off all of the debt in 3-5 years. There's no need for consolidation, remortgage, Stepchange, DMPs or IVA's. They just need to pay it.

i think you’ve had good advice regarding the snowball. You just need to get started with it ASAP you will feel much better when you see it start going down.

Personally I would cut back further on some of your “essentials” to get you into the mindset that you cannot continue to spend as you have been. You can’t afford to give the kids £150 per month when you are £90k down. Or £180 per month on activities for children who would probably be just as happy with trips to the park.

I agree about saving for your toddlers - that's crazy when you owe £90K. Get rid of the debt asap.

You're saving £250 pm for Christmas, birthdays and days out? Your children are very young, aren't they? You could knock that down to £100 per month easily.

Poxy save compared with the rest of your debt but obviously entertainment necessary for kids...

Ditch the TV licence and re-subscribe to Netflix (£4.99 pcm instead of £13.25 pcm). Catch up channels and YouTube are free... That'll save you £100 a year.

Although it seems overwhelming, breathe. You can afford not only to live, cover the basic repayment but also an extra almost £2k per month on getting the balance down.

Agree with pp, throw everything you can at the debt as every penny paid off means you're not paying interest on the interest on it.

It is actually costing you more to put money in savings (for the kids or yourselves) unless the interest you get on the savings is higher than the interest you're paying on the debts.

You've got this 😊

Sorry, I was wrong about catch up. These are the rules:

You need to be covered by a TV Licence to watch TV channels live on any TV service or streaming service - such as ITVX, Channel 4, Amazon Prime Video, Now or Sky Go. You don't need a TV Licence if you only ever watch on demand programmes on any TV service apart from BBC iPlayer*.