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!!

I know it's not a race to the bottom, but you do realise that the benefit cap (the highest amount a non-working person without recognised disability can get in benefits) outside of London is only £208 more than the amount you are left with after all expenses? Those people are trying to pay all their rent, expenses, food, utilities, etc., out of that.

You are fine. You really are. You need to just plug away at your debt. Use some of that £1627 for it.

@teaandbiscitz I kind of do know how you feel as we had similar after a business liquidation caused by a distributor not paying and then a personal tax bill knock on effect - it felt for several years like a very hard slog back and with nothing to show for it at all. It is quite hard if you haven't been in this position to understand that it's difficult to not feel bitter and keep mentally linking the two every time you have debt payments- especially if you work hard . I found after around 15 months and the debt coming down that it gradually assumed less importance in my head.it certainly was an expensive lesson I learnt in business and subsequently we changed how we ran things to not be in that position again. If anyone wants to understand the kind of pitfalls that can happen in business by the way - Rachael Elnaughs book about business disasters , including hers with Red letter Days is a very informative read.

I wish you well OP- build up £12k emergency fund and then make sure you do get a holiday every year- even if it's Eurocamp- you deserve it!!

You do sound over concerned, sorry, I understand the large bill worries you, but even with everything you pay, including the debt, you have over £1000 a month left. Even if you stopped all the tutoring because it was too much, you'd still have over a £1000 left every month. So you're saving with your budget another £12000 a year. You're really not struggling. In 2.5yrs you'll have your debt paid off, and savings of £30,000........