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

oh And £250 per month on birthdays/school trips is bonkers! That’s another £200 instantly.

It will be quicker than 3 years to pay off as presumably some of the £2280 is repayment? Also - as you pay off the debt the amount of interest you pay will go down (fast if you target the highest interest ones) (and faster still if you start becoming eligible for 0% deals).

If you could throw everything at the debt and not pay any interest at all then it would only take you 21 months to get debt free. That is Xmas 2025!

Obviously you can’t do this but you can limit the interest you pay by getting the nasty high interest ones paid off first.

Also - absolutely bomb proof contraception (we use two methods) and don’t set up any new businesses until you are out of debt.

I'm really confused - there's something I'm not seeing here. So you have money left over each month, and you can make the debt repayments with that. So surely you just make sure you pay extra off to those debts with the highest interest, and then you also say it can be paid off in 3 years.

Can someone explain this to me? Why is this so awful? I mean clearly don't do it again, get it under control, and you wont be having nice holidays and a new car for 3 years ... but? What am I missing?

I was about to post this.

Kids get gifts from everyone these days. When in financial crisis, you could cut this right down.

Each child, 1-2 gifts. Max £40 for birthday, same for Christmas

Wait. Are you budgeting £250 a month for this? Or per year?

Have you got an emergency fund?
For the moment don’t worry about saving for your children, you can do that when you are debt free.
This is a really good article about snowballing, lining up the highest %APR debts first and paying those first (whilst still paying minimum payment on the others) to get the biggest interest payments down first

https://www.moneysavingexpert.com/news/2022/02/if-you-can-t-afford-to-clear-your-credit-card-in-full-and-you-re/

The snowball method worked extremely well for me some years ago.

Have you contacted the individual creditors that you owe to see if you can come up with a payment plan which you stick to, but won’t have high interest rates each month. I worked for an Insolvency Practitioner and that’s what we did before anything else. It will probably take a few years.

You sound like a spendaholic if I’m honest, when I opened this thread I expected somebody on ~£25k a year, not 100k. If you have no debts then spend away, but you do, so it’s time to cut back. As PP said you can get rid of this in 3 years quite easily so what actually is the issue?

If you cannot get any new credit at 0%, then once you have made all of the minimum payments, plough the spare cash into the debt which is costing you the most - the one that has the highest interest or fees. Make sure you check this each month because it may change over time as you reduce each total.

The total amount of your debt might seem scary, and I fully understand the stress it causes (been there!), but with your combined salaries of £136K you are really not in such a bad position! Keep a rational perspective in mind.

You may well be able to get better mobile and internet deals that you've listed, mine are both significantly cheaper.

You don't need to be saving for the kids while you are in this debt, so reclaim that £150 per month now. You could also take whatever you have already saved and use that towards the debt. The debt will be paid off sooner and with your high salaries you'll be able to rebuild the kids savings easily after the debt is clear.

You can surely cut down the £250 per month on birthdays/days out/school trips - spend on school trips, minimal birthday gifts and commit to a year of free activities only.

It's not "essential" to save £150 a month for your kids when you're in so much debt. Up your payments by £150 and top up the kids savings once you're out of debt.

Snowball. Once you have paid off one CC they may well start offering you better BT rates as they presume you are a money cash cow. Prove them wrong. Chuck everything at it and have it paid off in under 4 years. Then you’ll be rich.

I’ve given up alcohol for a year, that seems just as hard to me. It’s all about a mindset and having the resolve to see it through.

List your debts and % rate and max limit on that card. You can still play the CC game however, it will be harder.

Live off DHs income, stop saving for the dc & cut back on birthdays/days out. Throw everything you can at the debt for a year and you will be amazed by the impact.

You’re still 100k afloat if you have 200k equity in your house so there is a light at the end of the 4 year tunnel.

1.Your mobiles are expensive. You could do the SIM only on a cheap mobile and pay about £8 x 2.
2.You shouldn't be saving for your 3 DC when you are paying interest on debts. I'd stop that immediately. You can't afford it.

1. You could cut back on DC activities. Pick cheaper activities like Brownies/Cubs. After school football club.
2. Your DH can exercise without going to gym. See YouTube clips for free.
3. Trim money off food by cutting out snacks like crisps and biscuits.
4. Cut back on birthday and Xmas gifts.
5. Tutoring is more lucrative than exam marking. Try to do more tutoring.
6. Cut up all except one credit card. Keep one with less interest.
7. You should have plenty to pay off debt at end of each month.

10. I don't wish to be mean but you have more/will have more coming in than going out so what are you doing with the rest of the money? 11. Personally I'd remortgage house and release £50k to repay debt. I'd not release anymore because unless you make the changes you'll just let it build up again. 12. You probably don't like saying no to your DC. Things like non uniform day, Pudsey day, sponsored events, are not expensive but all add up especially with 3DC. Pocket money, things like Easter Eggs, days out etc have not been mentioned but I bet you do give these to your DC. You need to include absolutely everything on a spreadsheet. 13. I hope your DH is on board too. Starting a new job can be expensive he needs to take sandwiches not eat out or meal deals, or coffees out with colleagues. 14. Little things make a difference. So water bottles with tap water, no isotonic drinks after sport. Take a coffee to go in a travel cup when you go out, don't buy drinks out. 15. Try to sell off anything you don't use eg DC clothes that no longer fit. Stop buying new clothes. Instead buy from Facebook marketplace or Vinted. 16. No holiday this year.

Whatever you have saved for the kids I would take now and throw it at the debt. They do not need it now and you definitely do (even just for piece of mind) once your out of debt you can save more for them and get it back to what it was.

I don't understand why you are worrying. You have £1850 'spare' each month. Thats more than some people even make a month.
Rather than saving, I'd be paying the debts off. Yes, no one likes to pay back debt, but you have no choice.
Your position isn't as bad as you think it is, you still can afford to do most things and still be a home owner.

I'd stop saving for the kids temporarily, just save their birthday money and Christmas money. Also over 100 pounds on mobiles seems excessive, switch as soon as you're able. That would be an extra 200 you can pay each month

Money saving expert has a great debt free wannabe board and there will be no judgement. They will give you ideas on how you can realistically manage your budget.

You should focus on paying the debt with the highest interest rate first and then work through the others. Also if you have a few smaller debts that you could easily clear psychologically this may help you too to see the number of debts reduce.

Honestly a few years and you will have this sorted.

I've just noticed you spend £250 pcm on birthday/Xmas/days out. Each DC only has 1 birthday so 3 x £50 is £150 per year. £100 x 3 for Xmas £300. You can do birthdays/Xmas for DC for less than £500 combined. This is what you need to do for a few years. It will not hurt your DC. Young DC don't need lots of money spent on them. If you saved back £50 pcm it should cover all birthday/Xmas costs. You can.put that £200 off of your debt. You'd save so much interest. Days out can be free. Take DC to the park, building a den in the forest, free museums. Organise a play date. Take kids on bike/scooter rides. These are all free activities. A treat for them could be an ice cream when you get home from a tub from the supermarket. You are living way beyond your means. Your DC will pay the price if you don't get it under control. Be firm start by cutting back on birthdays/Xmas and days out. I've got 2 DGS's and for Xmas I buy my DD, SiL and DGS an annual pass to The Wild Place/zoo. This means my DD and SiL can take them often. I know they go over half terms and school holidays but also sometimes over a weekend. You could ask for gifts like this for yourself and DC for your birthdays.

Mobile phones x2 52 sim only for x2 phones would save you £30

Birthdays/days out/Christmas/school trips 250 drop this to £50 and you’ve saved £230

Kids savings 150 ( 50 each for each kid) drop this to zero and you’ve saved £380 per month

that’s £13,680 over 3 years

I think you need to just go really hard at this for a year or so. If you live off your income only and put all of your dhs into the debt you should be in a position in a years time where you can get 0% interest again or remortgage to get the cost of the debt down. Then you could move to living off just dhs wage and the debt would be gone in a couple of years. It won't be easy but it's very do-able, you just need to adjust you attitude to essentials and maybe view it as a short term challenge.

I have been there OP and it is sickening.

My debts came from overspending in my youth and whilst I never missed a payment the debts were racking up!

I sat down August 2021 and totalled it all up. £35,555. Absolutely horrifying as a single parent on a salary of about £35000.

Since that date I have thrown everything I have at it and as of today I am left with £7867 which is a loan at 4% and due to end in September 2025.

I am now able to not be so frugal and I have just paid for a holiday for April out of my own money! It feels so good to know that I have cleared around £28k of debt, I am comfortable with my loan repayments and I still have money left to treat my son.

Once this debt is cleared I’ll also have another £450 a month to start saving. It does feel good OP and I wish you all the best.

Debt free boards on money saving expert are really useful.
Chip away, one at a time.
Lots of luck.

@grafittiartist from my experience of the boards on MSE they'll be a lot less polite and tolerant of someone complaining about debt when they have so much income free to put towards paying it off.

I think this is more about the OP's reaction to not, possibly not coping, maybe there's other stuff we don't know about, rather than being in a desperate situation.

You can recover from this.
As a pp said list the debts including APR% and the date any 0% deals end.
Pay the minimum of each debt monthly
Target the additional cash you have at the debt with the highest APR%.
Try to maximise the amount you can target each month at the debt.
Keep a spreadsheet and focus on the achievements as you reduce the debt.
Monitor your credit rating so once you become eligible get a 0% credit card and transfer some debt.