Found out we’re in huge debt.

[Inahole]

Hi,

in a state of shock right now. 4 days ago I found out that we are £100k in debt not including our mortgage.

Ive noticed that DH has not been himself for about 3 months- constantly tired, appearing stressed and losing weight. He’s prone to a bit of anxiety and depression and takes medication.

wevd been married 15 years. We have a mortgage, 2 kids, 2 cars and appears to be a nice life.he’s a lovely guy who would do anything for me and the kids

I knew we had done debt and that it was ‘a lot’. I knew it worries him but also thought it was under control and totally manageable.

dh earns about 97k. I earn 25k so our income is decent.

he broke down on Thursday and admitted how much we owe. I am shocked, angry, devestated etc etc

he confessed that it’s become harder to manage and he’s missed some payments/paid late. Our mortgage is totally up to date thankfully.

he’s a wreck. Crying, shaking and telling me that he’s let us down. I’ve been through everything and I can see that it’s been spent on life stuff abs nothing dodgy- gambling etc . I know that he has no dirty secrets other than the debt amount!!

my close friend colleague thinks I need to leave him and start afresh away from the debt. My mum thinks that it’s my problem too and it’s not something to end our marriage over.

any advice?

The position of whether wives are liable for their husband's debt is complicated by whether you are staying together, divorcing or one of you dies. My husband had lots of debts, I kept myself financially separate from him, we didn't divorce and he died, so I was liable for none of his debts, although debts over a certain amount can be taken out of the estate (his were minor by then and written off by the companies concerned).

If you stay together, then if they are in his name then you aren't going to be pursued yourself, and you can keep your own credit record good, especially if the mortgage is paid and up to date.

It's more complex if you divorce as debt can be included on the matrimonal balance-sheet.

Joint debts in both names are the worst as you are both then liable.

This is why you need good advice from the debt experts, go to one of the charities recommended, as they know the law on these things.

100K sounds a lot, but if you are in a debt spiral, say paying £100 for a loan one month, then the loan rate changes to £400 a month payment, it's easy in a CoL crisis to go from 'just about able to pay debt' to 'totally impossible'. I bet that over 15 years, a good 1/4 to 1/3 of this is simply bad debt management and not outgoings. Again, seek professionals who know this sector for up to date help.

I would also say that I didn't investigate as much as I should have done when my husband said he was 'taking care' of the finances. I realise now that was a huge mistake- but that's not necessarily fatal to the marriage, but from now on it needs to be total transparency and working a team to get this sorted, so that together you climb out of debt. We did and I thought it wouldn't be possible, but it was. I also admit that I had some of my own debt, I had about £15k when I added it up, I'd been swanning along using my overdraft and carrying what I thought was a 'little' debt on a couple of credit cards and half a loan and when I added it up I was astonished. So, it is easy not to truly recognise the scale of a debt, and be in denial about how much it all is together. This is why you need to be extremely explicit with each other and yourselves- pay for credit checks that show everything, on each of you, so you see exactly what has been taken out, where, who is liable, both of your debts (perhaps you have some too) and then you know the truth- you can rebuild from that point.

That was £15k 15 years ago, it could easily be £25k now on this and that.

Good luck, OP, you can do this!

These are all fixable OP, they’re not fixed costs but unfortunately going forwards means no more holidays, home improvements or little luxuries if you want to get out of debt.

Slightly off topic but my son higher education loans are charged at 7.8% interest now. We can get a loan at lower interest and pay it off when we feel like it, unlike a student loan. So we're lending him the money.

My other son went to buy a car interest payments eye watering he's borrowed from the bank so no balloon payments after three years.

I don't know what credit cards interest are but suspect @Inahole is being shafted

He needs counselling so he can manage his spending. Go to citizens advice about what to do or employ a financial adviser. If you have money in your house, access it via remortgage. Once your monthly bills are under control, overpay the debt that has the highest interest rate first.

Create a budget. Go through it every week. I don't have debt but I have lots of bills etc. I use a spreadsheet, it works really well and can be adjusted.

It may take 12m to feel comfy with your situ but with £125k of joint income, you will get through this and be avid savers at the end of it, so a little tightening of belts now will be worth it.

By the way, don't leave this with your DH, he is making himself ill. It's a joint responsibility, so take on your fair share of the responsibility.

Best of luck.

I dont think student loans are the same ; they are paid back before tax and only a proportion of the income ; some never pay it back and get written off so may not be good idea to fund education via personal loan than student loan ;I watched Martin Lewis video on this

The poorly paid may never pay it back but if your prospects are a six figure salary then the compound interest at 7.8% is a bad investment.

Yes that is true indeed; but what about the loan repaid before tax so tax savings ; does that not negate the interest ? I am asking because we will be taking student loan for my daughter next month and based on Martin Lewis advice ; the course she will be doing hopefully will land her in high income category as well

Yes, of course I was rude to you.

You deserved it for repeatedly banging your judgemental drum and snidely suggesting that the OP’s husband has addiction problems or something equally unfortunate, when it’s more likely a simple case of poor financial management which can be solved with a little education and support.

When I was a law student and then a trainee solicitor, I did a few years of p/t pro bono work with organisations such as the CAB (as it was known back then) and the reasons for clients accumulating large debt are many and varied.

Well presumably you've been living above your means too. You can't blame it on him alone. Set up a spreadsheet, income and outgoings. Log it all for a few months then anything that's not essential throw at the credit card spending. £97 k is a nice income but it's not Kardashian's level by any means so forget the luxuries for a while op.

It probably seems absolutely awful now. But you need a plan. Once you have a realistic payment plan things will seem better. It’s not worth ending a marriage over.
could you move in to a house with a smaller mortgage ? Could you consolidate all debt for one payment ? You need to speak to the companies you owe money to and explain the situation sometimes they can withhold interest rates etc.
try and cut back on day to day costs- no holidays abroad/ less takeaways and expensive family days out etc.

100K sounds a lot, but if you are in a debt spiral, say paying £100 for a loan one month, then the loan rate changes to £400 a month payment, it's easy in a CoL crisis to go from 'just about able to pay debt' to 'totally impossible'. I bet that over 15 years, a good 1/4 to 1/3 of this is simply bad debt management and not outgoings. Again, seek professionals who know this sector for up to date help.

I think it is often a mix of lifestyle and bad debt management.

Living to the edge of your income, making minimum payments is okay until one thing blows over the house of (credit) cards. It could be something quite trivial, a small extra expense, but if all lines of credit are already maxed out there is nowhere to turn. A minimum payment gets missed, an extra fee gets applied plus a demand for instant payment. Result misery.

The way out of it is for a year to cut expenditure to the bone. No holidays, no takeaways, no gym memberships, no subscriptions etc etc etc. Stop every lifestyle spending which can be stopped. Use this time to start to build some headroom between income and outgoings.

You both need to be onboard with this. No point one of you going without to bail out the canoe if the other is still splashing into the canoe.

If your debt payments can be brought under control within that year, plan a modest treat for the end of that year.

This isnt the end of the world but it is the end of a world. From now on you are both responsible for household finances. No looking away, no thoughtless spending, no hiding the finances or hiding from the finances.

Big day today- were both off work so we’re going to sit down and do a budget together! I’ll update later

Another tip. Consider a budgeting app like YNAB. It is free for a month but does cost a small amount after that - I find it saves more than it costs. You can link it to most bank accounts via truelayer to track spending so the task doesn't become too onerous. And budget properly including loan/debt repayments and projected pay off dates. You can share access so you can both have a full grasp of what us going on.

The barefoot investor is a good read with sensible advice on money management and debt reduction.
Good luck

any advice?

You are tackling it together, I would guess but the day of to sit down and sort a budget - thats a great first step. Keep tackling this together as equals, don't you take over or dh retract from this. Treat it as a joint challenge, but doing so you are looking at it positivily rather than in a negative light which will make it far easy to resolve.

https://www.citizensadvice.org.uk/debt-and-money/budgeting1/work-out-your-budget/

this is a great budget planner that the Citizen advice staff use to help those that have approached them for help. You can put in your money spending in annual 4 weekly or weekly or monthly and at the end it works it all out as a monthly figure regardless.

Keep things simple, knock off products on direct debit and standing order that you don't need.

Start with the biggest interest debt first and concentrate on that particular debt first whilst keeping all the other debts paid. Throw any extra on the biggest interest debt and watch it reduce.

Remember to make a proper budget . You had lots of advice here regarding no holidays no take outs etc . Personally I think you probably don’t need that and that amount of restrictions will only lead to more spending as soon as you finish this debt . You have good enough wages that you can consolidate all the debt and make it affordable . Then create a greats budget and make sure you don’t start additional debt by keeping within that . As an example we have a holiday and days out treat budget that we adhere too , around 8 k a year . If we decide we need more we budget for more from our normal
budjet without needing to get credit etc .
You will be ok

So we’ve got the grand total … slightly more than I though…,£106,416. But at least we know.

We’ve just cancelled a ton of stuff that comes out our bank that’s non- essential such as sky TV and subscriptions. This alone frees up £260 😯

next job is to look at income and outgoings to see how we need to play this

That's a brilliant start.

I keep meaning to cancel the warranty on my dishwasher but so convinced that it will stop working the minute I do (I know, conspiracy theory)

Sending positive vibes to you and your DH

Well done you are making progress, another day closer to this all being paid.

Love this for you! I follow The Budget Mom (on YouTube/her own website) for her methodology of Budget by Paycheck (she paid off approx 80k of debt as a single mum). Good luck w/ your spending plan…

Great progress. Best of luck.

Well done OP. Get all your info together and see how much money you can throw at the debt and still survive, and get Stepchange to help you.

It will be a lean few years, and I would never trust DH with the finances again, but you can get through this.

You're both going to have to be ruthless, so no holidays or new cars.