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?

Goodness, I can't grasp how you've downplayed the lying as trying to protect you. But anyway, do you know where all the debt is? Can it be consolidated, eg one credit card put on a different credit card with an interest free period over x months that you can pay?

That sounds like a great start.

Please don’t put the debt on your house or get another consolidated loan only to run up cards again. You can use this as a great time to get your finances in total order and start as a base towards paying off the mortgage and building pensions and investments when the debt is gone.

I had to get in debt to buy my ex out of our home years ago and MSE kept me sane. Learning to budget, be frugal and to side hustle helped me clear the debt and go on to save and clear the mortgage.

Everyone is very different in how they treat this, but I went hardcore and sold my childhood Lego, uni textbooks, got a second job, did a boot fair, used coupons on my food shopping and cut down on that as much as possible. It might not work for everyone but if it works for you, doing a no spend challenge and decluttering and selling/ returning new unused items can make a big difference. Even if you only do it for 3 months or until x debt is clear.

Also don’t be afraid to say we have enough stuff let’s skip the Christmas presents this year for adults . Martin Lewis did a great speech on this and it makes Christmas so much less stressful if you don’t need to worry about so much.

Well done op for adding all up

And great saving cancelling what don't need. That's £3k a year saved

Def don't put on mortgage /take out equity

That's insane advice !!

Firstly, I am so sorry - you must be still reeling from the shock of this news. No judgement here. I agree with your mum - you can work through this together. But you will need a plan. Listen to Dave Ramsey on YouTube. Read (or listen for free on YouTube) to his boom “The Total Money Makeover - 7 baby steps.” Honestly, it works. It’s simple, but not easy. We owed €90k a year ago (house renovation) and currently owe €58k. We aim to be debt free in 20 months. I’m budgeting to zero. We both work full time and we have three children. It’s tight but do-able. You can do this. The very best of luck x

Hopefully if you both tackle this debt together, view it as a challenge then you’ll ultimately change your spending habits, alter your perception of credit cards (I’d cut them up) and after the debt has been paid - you’ll then behave differently with money.

remortgaging will not change your view and spending habits, as you’ve learnt with consolidation loans in the past

All too easily done. If you are working in London (other cities are available) with a stiffish commute plus lugging a laptop the idea of bringing in your own lunch will be unappealing. Add to that most of the city offices I have worked in don't have tea/coffee making facilities so you are forced out into coffee shops etc.

The only advice I can give you without repeating what others have said about not adding to your mortgage, is this:

1. Look at debts that will be paid of shortly and clear those.
2. Snowball those payments into the next biggest debt that is costing you available cash (like overdrafts - these are expensive and the money comes out of your debit account. Clear this to free up more cash to pay credit accounts)
3. Speak to your credit card companies about closing your account. They will potentially offer you a lower interest rate on the proviso that the account it closed at the end of repayments. Overpaying these will shorten the lifespan of the agreement so you pay less interest overall.
4. Keep snowballing payments into the next debt.
5. Cancel any holidays and non-essentials.
6. Create a spreadsheet and keep it updated.
7. Treat yourself once a month to a takeaway or something, but stop spending money on drinking/restaurants.
8. If you have kids, do more free/cheap things and less expensive things.
9. Cancel any gym memberships that you may not use fully. Don't have David Lloyd memberships when a smaller gym may be £125 per month cheaper.

Good luck. Give it 6 months of this and see where you are. The time will still pass regardless of whether you do this or not, but at least you'll be in a better position.

Watch some of the Dave Ramsay videos and follow the method - it's alluded to here in quite a few messages.

So the budget has been drawn up!

it’s a bit of a monster!!

But we’ve learnt a lot about our spending and the mistakes that we’ve been making for years.

There is good news though….. we are definitely in a position to clear the debt. I expected go find that we were in a massive monthly deficit, however we have more than enough to pay the debt quickly. Our outrageous spending has stripped away any spare cash. We’ve learnt that our spending is the issue and not the debt- the debt is the symptom!

@Inahole that's good news. Now once you've cleared everything start saving, have an account for holidays, Christmas etc. then you can pay everything immediately.

Now that sounds very positive. Is your DH and DC on board with the plan, even if it means fewer treats for a while?

But if you really do have 'more than enough to clear the debt quickly' that means you can still afford a few nice things, just not as many as before.

How long do you think it will take?

Good luck!

Well done on doing the budget. Make sure you both check the budget every month. I would set aside a time slot, put it in the calendar so it doesn’t get forgotten or overlooked.

That’s so strange- we have literally just had the conversation!

I'd also suggest trying to get together a small amount of savings to cover unexpected things (car repairs, broken appliance). It will mean you won't have to add to your debt to fix those things. Doesn't have to be a lot (we have a couple of thousand in our emergency fund but it built up slowly), however we can now afford to pay for emergency things without adding to our debt (and I've cut up the credit cards).

Great positivity there OP. So glad you both sat down together and are working on this. Your DH must be so relieved to finally get it off his chest. You will never bury your head in the sand with money again either!!

I set aside Friday every week to open the post, then I action or file. I have two small filing cabinets, a stash of clear plastic folders which I label. Husband is a bugger for opening post and leaving it lying around. If I Spot it I put it straight into the in tray. I file once a month.

I check my credit card weekly on the app. just in case and my accounts. I keep as much as I can in the savings accounts where I earn interest, transferring when my current account gets low.

I also carry at least £100 in cash, for bits and pieces.

You're doing well @Inahole

I was awake at 4am today thinking about the budget!! We’re officially starting next payday but we’re not spending anything at all that’s not essential between now and then!

I think that it’s going to take us a few months to iron out any issues etc.

we’ve Cut our household bills to the absolute bone. I’ve cancelled unnecessary insurances such as the dishwasher- if it breaks we will just wash up in the sink until we can afford to buy a new one outright!

Our total monthly income is £6992 take home and I’ve gotten our bills down to just over £1800. This doesn’t include food or car fuel.

I’ve allocated £500 for food but would like to reduce that if possible, and 200 petrol.

that means that we can live for £2500pcm

our contractual debt payments are £2140 so £4640 covers everything.

this means that we should have about £2300 left to overpay the debt/save/have cheap fun

im still very very stressed and worried, but having a plan has helped !

Well done.
Use the money you don’t spend this month to put in an instant access savings account and use this for the unexpected things. I’d aim for about 2-3 k in here for emergencies.

No point saving unless the interest you get outweighs the interest you're paying, which seems unlikely when you've got so much debt (apart from setting aside a buffer for breakdowns/unexpected bill).

I would like an emergency fund

So depending on how comprehensive your budget is OP (car repairs, insurance, other essential costs that aren't regular monthly bills), you could be paying around £4k a month off your debt? Which could mean you're out of debt in 2-3 years depending on how much your interest costs.

With such a large monthly income, I'm not sure you need an emergency fund tbh as you can just pay for fluctuations in essential costs as they arise - buy your insurance in full rather than paying monthly as it's very expensive that way. Then you just overpay the debt by a smaller amount that month.

Obviously the high debt and missed payments will have an impact, but it's probably worth both of you applying for a 0% balance transfer offer every six months to reduce the interest you pay.

Then just concentrate on picking the debts off one at a time, starting with the highest interest rate and when you pay one off, move onto the next one.

For all the other credit cards, pay the minimum payment plus £1 each month. This removes the minimum payment marker from your credit file, which will help with acceptance for 0% offers.

I also think you can afford to have a little celebration or treat every time you pay a debt off. Not too spendy, but something like a takeaway or a bottle of fizz (cava or cremant, not champagne, obviously) would be a nice thing to do.

I don't really understand the drama here.

You say you own 100k, on a 125k income.

Surely that's just like someone on 35k buying a 30k car and putting it on finance.

Why can't you just pay it off like a car loan?

What arw you doing with 125k a year?

You can just overspend 100k.

That's nonsense.

With the greatest of respect, I’m trying hard to get things under control here. I don’t really understand why you posted that

I definitely think you need an emergency fund - it's all about the mentality. Yes, the most sensible thing on paper would be to pay off debt at a higher interest rate rather than keeping money in savings, but I generally assume that most people who have high levels of debt don't do the most sensible thing, which is why they've got themselves into a mess!

You don't want to be getting into the mentality of dipping into your credit again for this and that IMO - build up an emergency fund for exactly that, emergencies. And that can include the dishwasher breaking!

Good luck OP.