Very tricky finances- need some advice/reassurance/anything really!!

[teaandbiscitz]

Morning,

I have been awake most of the night thinking about our financial position. It’s on my mind constantly.
We both work full time as teachers with senior roles. We are a family of 4 with 2 DC’s, both early teens. We live in a fairly modest house, but in a part of the country that isn’t cheap.

We have found ourselves in a very difficult set of financial circumstances and I feel that it is all I am thinking about. I can’t go into massive detail, however early last year we were involved in a legal dispute that ended up with us incurring massive legal fees. We are where we are with this and we have accepted the decision, however it left us with a massive amount of money to pay. It was money that we didn’t have.

At that point we were paying off some debt from house renovations, however our money situation was fine and we were doing ok.

I feel as though we are not in a situation where were are just working working working to get out of this situation. On top of our day jobs, we are both doing private tuition and exam marking. We have cancelled all non-essential spends such as our Sky Package, amazon etc. Mobile phones are on sim only and our only holiday has been a week in my in laws holiday home in Devon ( for free!!)
Re-mortgaging isn’t an option as we failed on affordability, and in reality, we don’t want to put our house at risk.

This situation will ease in 2.5 years when some of the debt will be paid off, but that feels like an age away.

Here is our current situation
My income (net) – 2819
DH income (net) – 4049
Income from tutoring/marking etc – 450 on average
Total net income - £7318

Mortgage- £1476 this is fixed for 3 more years
Council tax - £146
Gas and elec (dual) - £195
Water - £34
House insurance – 38
Life insurance - £48
TV licence - £14 ( I think?)
Internet and phone - £27
4 X sim only deals - £48
Food -£600 – this is something that I try to control as much as I can
Christmas/birthdays - £100 – this goes into a Monzo account. Not sure if we have got this right though
Petrol - £160. This is for my ‘old’ car. DH has salari sacrifice car.
Pet costs - £60. This includes insurance, food etc
Union fees - £65 – this is for both of us
National trust - £15 We use this A LOT
Clothes/uniform/haircuts/prescriptions - £100 – again this goes into Monzo. Might not be enough
Fun - £150 – we try to do a couple of ‘fun’ things each month. I think I would go mad if we didn’t
Total - £3291 – just to survive

Debts
We have tried to structure the debt to make it as cheap as possible. It is spread across loans and credit cards. We try to shift the cards to 0% when we need to, however this is becoming more and more difficult.
Our monthly debt payments come to £2400. This sickens me, however I have to remind myself that It’s only going to be for 3ish years.
So….
Total living costs + debts
3291 + 2400 = £5691. This feels like a scary amount of money to have to find each month.
I know that this means that we have surplus, but I am conscious that this is partly due to the extra work that we are doing. I also worry that things will continue to get more expensive for the next 3 years.

DH thinks that I am overthinking it all and we just need to get on with it and not think too much about the big numbers.

I guess I am just looking for people comments/suggestions/reassurance!!

so you have
Total net income - £7318

and total outgoings of - £5691

which leaves you 1,627 to play with?

and you're worried about.... what exactly?

The constant increase in the price of everything. One or both of us burning out. The fact that we are having to work in the evenings to make extra money. Just everything really

Looking at your fingers, if you stopped the extra work would you only be £450 worse off a month?

I know, and I do appreciate that this is mostly due to me just worrying constantly. It just feels totally outrageous that we are paying out £2400 a month on debts. Nobody else in the world that I know is in this situation.

I think you are overthinking it. It it what it is. You seem savvy with your money. Just look for the light at the end of the tunnel.

Seriously? You are really very well fixed financially. That is an excellent amount of disposable income every month to cushion against rising costs. You are wise to be careful and budget but honestly, you don't need to be anxious. A huge number of double income families currently are running into debt every single month just to cover the basics. You are very far from that.

Tbh to me you look to be in an OK position.

But how much is the debt and how long will you be paying it for? Would it be cheaper to remortgage? Do you have other savings?

Hi
It's huge. I would rather not say how much but it's more than my first flat cost in 2002!!

We are working on a 3 year plan to clear it.

We aren't able to remortgage - we failed on affordability as we owe so much We also don't really want to put our house at risk

You have a lot left over every month. Can you not increase the debt repayments so they clear more quickly. I vividly remember the month I cleared all my debts. I couldn't believe how much money was in my account and stayed in it and was all mine.

Can you increase repayment by an extra £500 to 1k per month (with flexibility if COL rockets again) to speed up the process?

OP I completely understand why you feel like you do, as it sounds like you went through something really difficult and now you have a huge financial price pay. Subjectively it's really shit. But objectively you're still very financially solvent despite the debts.

I hope this doesn't come across as patronising but could you consider a short course of CBT to help you deal with the fallout emotionally? You should be able to self-refer to your local talking therapies service.

I don’t understand why you’re so stressed. You have excellent income, even without the extra work, and you can more than afford your current fixed expenses with some leftover. You’re fine. Do you have anxiety? In general? Maybe look for things to help if you do. This is your mind going overboard when it doesn’t need to.

I would go back to the debt companies and ask for a better payment plan if possible, but if you have that much leftover, then you are fine. I always think you are okay if you feel you could cover the bare essentials on one income and the rest is extra. But seriously, you are overthinking it. If you are that worried, then using your remaining amount towards savings and also payments to life insurance and critical cover should put your mind at ease.

It comes across that you still have a lot of unresolved emotion around the legal issue and subsequent fall out. Financially you are both in good stead and making progress with clearing this debt. From what you have set out here this situation doesn’t warrant the level of distress you are portraying. Can you gain acceptance though some counselling so that you can let this go and put your energy into looking forward rather than backwards?

It is what it is but I would be putting all of what is left at the end of the month towards those debts every single month to get them cleared as fast as possible. Then you can ease back a bit with the extra work when you owe less. Try and be positive because you're a long way away from needing to consider bankruptcy as an option because that is just awful.

Ah I see! Could a specialist broker help? It’s worth looking!

In fairness I would be stressed if debt payments on top of mortgage were almost the same as my monthly salary. BUT overall you are in a good position and have money left over at the end of the month. Plus as teachers you are lucky to get good sick pay if anything does happen. Hopefully the debt has added value to your house which you would get back if you ever needed to sell 😊

On the outgoings listed, you have around £1600 not accounted for.
Where is that going?
On the face of it, you seem to be ok, but the situation is obviously causing you a great deal of distress.
I think you need to account for the rest of your income, and then look at dividing any surpluses between topping up those accounts you think you may be short on, and increasing the rate you pay off the debt on the hight interest baring account.

I think it's the fact that we literally have nothing to show for it. We also don't discuss it with people outside of our parents, as we are embarrassed. I think that people would be absolutely horrified to see how much we owe. I don't know anyone in this situation.

Pay off the most expensive debts first - throw everything at the debt and clear it as quickly as you can

What are you doing with the spare 1.6k per month? It doesn’t make sense to do nothing with it if you have debts - you could overpay to clear them quicker or have a nice holiday!

I have been trying to build up a savings buffer - it gives me massive reassurance. I am also conscious that our boiler is likely to go bang and that my 14 year old car is on it's last legs. We need to be able to pay for these things outright when they become due

So you owe around £87,000 ? in debts, but you have a ' spare ' £1600 a month ?
surely you would want to put that to the debts each month - that would be £19.000 a year !!!
and would reduce the planned 3 year period.

and if for some unexpected reason you couldn't pay the extra £1600 one month, then it's not the end of the world.

On a very positive note, in 3 years time you will have £2400 to help your teens at University.

Perhaps I've missed it in your OP, but is the reason your salary is so much lower than your DH's if you are both senior teachers? I understand his net pay will also have the salary sacrifice taken into account too so he'd earn a few hundred more net without this. Are you part-time? If so, is there any opportunity to move to full-time?

I feel for you OP. Good luck. Its miserable but worth it and you can plan (save up for!) a wonderful holiday when you are debt free!

Sorry don't get the problem. Even with your large debt your incomings are exceeding your outgoings.

OP I think PPs are right in saying you are overthinking this and need to have some acceptance.

You say you don’t know anyone else in this situation - but that eg your family don’t know you are in this situation! You won’t be the only one; it’s just that people don’t talk about it.

Your income is fine; you are paying down the debt. Teachers are always in demand so if either of you lose your job, you’ll be able to find another. If you do start to feel burnt out by the extra work, there will be school holidays and you can recover. You have all your bases covered so need to accept that!

Hello I understand your concerns regarding your debts but unfortunately I think your post is a little "tone deaf".

There are many people struggling to keep their heating on and feed themselves and their families.

You have more disposable income left each month than many people are surviving on to pay everything!

If you are seriously concerned about the ongoing problem with your debts there are charities such as Step Change you can contact who will help you with budgeting......although I fear they will advise you that your financial position is currently very healthy.

It appears your debts, although huge, according to you, are affordable in your current circumstances. You must stop comparing your situation to clearly more wealthy friends and neighbours.....I'm sure many of them have their own financial concerns but it's all relative and not something they choose to discuss with you.

You do seem to be overly anxious about your situation so as others have said maybe approach your GP and ask for help with learning some coping strategies to deal with this.

I hope you find the help you need and you are able to recognise the relatively privileged position, financially, you are actually in.