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

I think if I were in your position there are 2 options I'd look at

1, I'd look to sell then it still leaves you a good bit left towards a deposit, obviously get an agreement in principle first to make sure you would get a mortgage downsizing may be the route to take.

Or

2, See a financial advisor for sound advice who would no doubt have a few options for you, plus they can find the best mortgage deals.

I’m in a similar position. 75k and our take home income is 6k. 15k is loaned from family but the min payments on the rest is £1,800 a month. Our staying afloat amount is 5.6k. We are so stretched and every four months end up having to add a couple of grand back onto debt because paying off 20k a year isn’t affordable.

looks like you’re doing all you can with costs except money into savings for your children is absolute madness. Don’t do it.

you have to target your highest interest paying loan first. I would contact the lender and tell them you’re in trouble and ask them what they can do to support you as the interest is making it impossible for you to get out of debt.

with the extra income. I would put a third into instant access savings and I would put the rest onto your debt. Targeting highest interest one first. I would use the money you’re putting into savings as a safety net not to add to your debt. If you put £600 a month to savings and after 12 months have £7,200 I would put a third of that towards your debts.

good luck

Agree with others in that you should pretend your income doesn’t exist.

Not ideal but I’d maybe pay less into kids savings to clear the debt and then once the debt is clear pay in again but maybe £100 a child. (Depends how old they are though).

NewJeans your cost cutting options could cost the OP more than she would save. Cutting back on insurances is never wise.

Which dent has the highest rate of iinterest?

*debt

I'd also stop saving for the DC and pay the £150 a month back in the family debt until yours in a position to pay more.

Stop saving for your kids right now

Get a grip and stop making excuses. You both got into debt and you have enough income to pay them off. You need to tighten your collective belts, trim the fat. Your husband can exercise at home, you don't need to spend so much on mobile phones or entertaining the kids.
Contact Stepchamge who will help you prioritise your debts

Sell house
Pay debts
Buy smaller house wiith 100k deposit
Kids are small they can share for 5 years

Why on earth are you putting £150/month into savings for the children when you have so much debt that you are paying interest on?! Stop putting that money into savings and use it to pay off the debts.

also:
Birthdays/days out/Christmas/school trips 250

That's £3000 a year you're spending. Separate it out; how much are school trips? How much do you spend on days out? What about birthday and Christmas presents? School trips are essential IMO and I wouldn't cut those out (unless you're paying for expensive trips which I doubt based on their ages?) Days out - you can use club card points or find deals, but limit the budget for these and keep them free/cheap as much as possible. Birthday and Christmas - if you budget, say, £100 per child for each then it's £600 a year. It really shouldn't come to £3k total for all those things.

Avoid Payplan btw; I've heard bad things about them. Stepchange are good, though, and national debt line.

Lastly, at risk of pointing out the obvious, another child would make your financial situation even harder, so do make sure you have contraception sorted.

Kids activities 180

I had missed this. So you're spending more than £2k a year on kids' activities; in addition to school trips and days out? What activities are they doing that cost £60/month per child? You need to cut back on those.

Your kids need financial security more than they need whatever activities they're doing.

You've clearly been living beyond your means.

You have a lot of equity.

Downsize for a few years and get rid of your debt.

You cannot afford that amount of money for your children's savings account.

You could also rethink your food shopping a bit and your kids activities seem steep.

As to your gym membership... that's an excuse. Your GP's physio could help with 'at home' exercises.
Also, your mobile phone contracts seem a bit steep... let the contracts run out then opt for a lower contract.

Birthdays/days out/Christmas/school trips are a moveable feast. Christmas is but a glorified roast dinner. A few modest parcels under the tree will suffice. School trips... are we talking skiing or a day trip to an oxbow lake?

A £90k debt is huge and I do wonder whether downsizing or moving to a cheaper area would be your best bet.
You clearly can't afford to live in your house .

£250 per month for birthday/outings and the £180 kids savings can be brought down. Leave saving for the DCs until the debt is paid off and reduce your outings (your DCs have activities coming out of your monthly budget ready).
Base your main expenses on your husband's salary and use yours to pay off the £90,000 in 48-60 months. It seems like a long time, but as you see the debt reduce, you'll feel better. Also, holidays may need to be put on hold for those years.

Okay, OP, first step is write down every single creditor, the amount you owe them, and the interest rate. Rank these from highest APR to lowest. Make sure you have direct debits for the minimum payment set for all so no accidentally missed payments. Then throw as much as you can at the highest APR debt each month until its gone. Then use the minimum payment you were paying for that to pay the next highest. When something hits zero, call them and get it closed, so no temptation to spend on that again.

This is the weirdest advice I've read on mumsnet

Please don't follow it, OP!

@Seaside1972 please please please talk to a professional debt adviser

Saving £150 a month for your children is absolute nonsense when you're up to your eyes in debt. You don't need £250 a month for birthdays etc. Cut that back to £50 - which is plenty - frees up another £350 a month straight away

Saving for your children is a luxury you can't afford just now. It's un necessary at this stage. Once you're debt free you can put money aside but it shouldn't even be on your expenses list just now

You've got a very healthy income. You need to go over your outgoings & cut back things you don't need

Thanks for all of the posts - overwhelmed by the level of response, so thank you.

A few of you have advised that I should seek professional debt advice - we have already done that and have been advised to just get on with paying it off.

I can see why the gym subscription has generated some comments. DH broke his back when he was 22 and goes to the gym 3-4 times a week to swim and do back strengthening exercises. During covid, he was in a terrible state as he wasn't allowed to go to the gym. I agree that in most other circumstances, the gym would be a luxury, however for him it really is the difference between pain and no pain.

I agree that we should stop the kids savings.

Thank you for your posts - I have found it so helpful

DSis has very similar back problems. She does cope fairly well with a very physical job by doing physio at home herself.

He has tried everything over the last 20 years - massage, acupuncture etc. The only thing that eases the pain is regular exercise

I think £28/month is a really modest amount for something so beneficial to his health.
You can make savings elsewhere and still pay off your debts within a few years.

I think the gym is a really reasonable price for keeping him healthy and pain-free. It would be a really false economy to stop that because if he needed to stop work as a result it would cost an absolute fortune.

Absolutely.

It's one of your smaller monthly outgoings but are you paying too much for your mobile contracts? Look on SimSherpa for better deals. Be realistic about the amount of data you actually need.

Call stepchange right away. One of my patients is a debt expert and he says he regularly gets peoples debt wiped off.