Went through our finances and we're fucked.

The debt really isn't that bad though. The stress & mental health strain is what's feeling this sence of panic

Seriously ?! I’m happy for you that’s great news x
mine is around 7k and it says next year too

That is fantastic- and on top of the £5.50 you’ve made, you’ve also got some money you’ve saved if you’d usually have gone to the shops or bought stuff off Amazon.

Once you’ve got that 5.50 to £10 move it into your bank account and pay it off the council tax debt. It’s a really good feeling if you overpay, even if it’s just £10 to start with!

@MikeRafone

You’re doing maths. And the maths is correct.

The problem is that the maths model is a model assuming no further costs are incurred. It is not real life.

In real life, as one of the other posters points out, the car will need repairs costing £900. If that happens after 11 months of paying off the debt - well, you do the maths.

Take your original assumption, and add in, say, a car payment of 900 at 11 months and a dentist bill of £ 1000 at 14 months. See what happens with the ‘no savings model’ and ‘savings used for new bills’ model.

Savings are only about 5% interest and the the debt is about 30% interest

I've been there. You are using debt to prop up your spend. Very soon you won't be able to borrow more.

You need to move out of London. We moved from the SE to Northumberland and are now managing to make our lives work.

The stress of having no money to eat and pay the bills meant moving was the easiest option.

You have all my sympathy, life can be very hard.

Anactor

if I did the maths, even if you borrowed again you will have saved interest. Compound interest is a time value concept, therefore paying the debt off quicker and then borrowing again will be the same. https://www.moneysavingexpert.com/savings/pay-off-debts/

With compound interest, paying the credit card debts weekly or even daily as the money from side hustles will reduce interest & debt simultaneously and quicker.

If for example OP makes £4,50 yesterday, and £5.50 today then £11.50 tomorrow. By paying those amounts of the credit card as they come in or once a week, not only does the money reduce the debt, it reduces the interest being paid from that day. If you wait until the monthly date, the interest for £21.50 will have been added - doesn’t sound like much money- but if is compounded daily it all adds up.

also paying weekly and monthly will increase your credit score https://www.experian.com/blogs/ask-experian/is-it-better-to-pay-credit-card-weekly-or-monthly/

The banks set up monthly mortgage repayments long before monthly pay was the norm, for a reason - it makes them more money in interest.

Apart from that the op is selling dh car and they’re going to use 1 car. This will bring in cash and reduce outgoings.

One way to build up some small savings is to use the ‘Save the Change’ option (if your bank offers it) on debit card spending. Whatever the sum, the difference between it and the nearest £ goes into a savings pot. Spend £3.85, and 15p goes into the savings account. Most of us would never bother to save such small amounts, but I’ve done it for a while and never miss it.

Chase offer 1% cashback on all spending, not a lot but it does add up also you can have different "pots" so you can have 1 for groceries, 1 for fuel etc...

Also to cut down on shopping - buy a few extra veg and freeze a portion of each meal - if not two - one night a week is then cook free and everyone gets a choice.

If you are cooking a stew for 5 you may as well cook for 6/7/8

@MikeRafone you are correct mathematically and if someone can do this it is the best way but getting in debt is often due to impulses and psychological reasons and so is getting out of debt, so having to borrow again could trigger more spending as having to go back into debt makes previous efforts seem useless. This is why Dave Ramsay and step change encourage building a small emergency fund of £500-£1000 whilst still making minimum payments before tackling the debts
This is why when paying off debt the avalanche method ( paying off debt with highest interest) is best mathematically and will be cheaper in the long run but in actual fact the snowball method( paying off smallest debt first) works best for most people as the psychological boost so getting even one debt down to zero works as an incentive
personal I think a blend works best if you have a few small debts of a few hundred pounds each just clearing them is a big boost, but as soon as you have done that there is no point in clearing slowly a 3000 debt at 20% before a £3800 debt at 28%
Sometimes you may need to pay a 0% sum back first as you borrowed short term from a friend or family member and they need it back urgently
if the OP has just made £11 on vinted and her MOT is due in 3 weeks there is no point in using it to pay off debt then putting it back on credit card in 3 weeks
I think OP needs to reduce expectations around Christmas so it costs as little as possible ring relatives now about no gift exchanges speak to her kids use last years decor, use a tiny bit of each weeks food budget to buy one item to put away for Christmas food ( wwith dire threats if a soul touches them)

I would also suggest speaking to kids about money, say no takeaways no eating out unless a birthday no wasting food, no new clothes until christmas and no tech upgrades

You are not fucked. Trust me. You can get out of this.

1. ANYTHING that you are paying interest on, credit cards or loans, negotiate a payment plan and freeze interest. Get a breathing space order if needed.

2. Take a hard look at your expenses - cut out anything you can - think that this is only for a while! Once you are debt free you can buy nice stuff again, and sensibly so you don't get in debt. It's not permanent.

3. Sell your car(s), and buy a cheaper car with the money you get - you can buy cars cheaper if you buy it from a car owner selling it direct. I used to pay £320 a month for hire purchase, then during covid I bought a car for £400, yes £400, and it's still running three years later. Yes it's old, but no repairs, I keep it up to date with servicing, MOT etc and have driven all over the UK in this car - Yes my kids don't like the car, but it serves a purpose of getting us from A to B and I am quietly happy at how little I paid for it and how long it's run with no troubles.

It's hard but you DEFINITELY can do it!

Go to Citizen's Advice for debt counselling & debt cancelling.

If you really struggle then I think going back to basics with cash in spending wallets really helps, when it’s physically there you budget far better than just putting it on a card

Car payments? Sell snazzy car / get out of arrangement and buy old banger.

Christmas soon coming? R u kidding?

Absolutely under no circumstances get into an IVA. Call your creditors first and explain you’re going to be forced into an IVA if they don’t freeze your interest. if you enter an IVA then your creditors will only get a small percentage of what you actually owe them so they won’t want you to do that, and so will freeze your interest.

I was sold an IVA 3.5 years ago, when I come out of it in December next year, I’ll have to declare to every single person that I ever have to deal with for credit (even phone contracts/ car insurance etc) that I’ve had an IVA. They will try to sell you the dream that you’re debt free and it’s wiped from your record but legally you have to declare it for the rest of your life. Worst decision I’ve ever made. Please call StepChange for free advice before you do anything!

I don't think that debt is unusual. I have more as a single person with take home of 3k a month.
Look up the debt snowball paying off method.pay the small ones first. It's what I'm doing. And I had been head in sand but want to do shared ownership and brokers haven't said impossible.on higher than your debt level.
If not In payment plans already try not to..as if not and keep paying min and maybe a bit extra it will come down.
There are 2 of you so divide debt by 2 and it is a very common amount of debt.. just unfortunately there seem to be a lot of very well off people and comparing to those is soul destroying. Def not alone in situ

It is so hard to face up to this but you've taken the first step. It's painful, but well done for stepping up (I also bury my head in the sand). One tip: my kids (who are younger than yours) are ace at selling stuff on Vinted and Ebay. Make quite a bit of money selling on their unwanted stuff and get a cut if they sell our stuff. Is this something your kids could do?

If your husband is training as a PC most police forces offer debt advice through the police federation or professional standards department. Forces don’t like to see officers in debt as it runs the risk of corruption like being paid for information and the like

Wait why did you "bury your head in the sand" for years?

I haven’t read the whole thread, so not sure if it’s been mentioned; but there may be a charity that can help you.
I know for horticulture (my field) there is Perennial, who will help sort things out. My parents had to use them after DWP ballsed up tax credits and wanted a huge repayment.
they also helped other people find grants etc…
As I’m not 100% sure on your work (childcare?) this Link might help!
good luck

@MikeRafone

With the example of additional costs I’ve given, and the interest rates you’d suggested, you’d actually end up with roughly the same amount of money in the bank.

Why? Because you’re using the savings (low interest rate) to avoid going further into debt on that eye watering CC high interest rate loan. Yes, you pay off the CC sooner with your model, but not soon enough to catch up on the slow but steady savings.

As someone points out up thread, debt is often due to impulse buys and psychological reasons (like wanting to give the kids great Christmas presents).

In plan A (Put it on the credit card and keep throwing as much as you can towards the debt), you’ll pay the debt off faster. But, you’ll still be in an ‘financial emergencies can be solved by credit cards’ mindset, because that’s what you’ve been doing.

You’ll also have extended your repayment period twice, which can easily make people think they’re never really going to pay this card off, so why not use it for the kids Christmas presents?

In Plan B (Build up savings as well as paying off the card) you’ll hopefully learn that you can meet emergencies without going into debt. Yes, your savings will have been almost used up at one point - but that’s what they’re for.

The credit card payments will have taken exactly the time you originally planned, so that also will encourage you that any remaining debts are equally solvable.

And finally, in Plan A you need to decide to repurpose all your previous card payments to a saving plan. Frankly, most people don’t. They decide they’ ve now got £300 extra to spend. In Plan B there’s a good chance that savings direct debit will just keep rolling…

It’s psychological - the right decision often depends on being honest with yourself and deciding which method is going to not just get you out of debt, but keep you there. If you decide the only real solution is cold turkey on the credit cards and to develop a savings habit, Plan B is more expensive in the short term, but might be cheaper in the long term.

Because you’ve learnt how to live within your income. Which is hard.

From experience you’ve done the hard bit and admitted the problem.
Just focus on stop over spending and see if you can consolidate the debt and move forward. This is from someone who had £28k worth of debt and recovered.
you can get over this x

This comment is nothing short of unhelpful and insensitive. Whilst it may be that the average income is £1,950 the reality is someone on a 2K a month could be better off financially than someone earning 4K a month based on their outgoings vs expenses.

The undertone of your comment being that their are people worse off that earn significantly less doesn't negate the fact that OP is having financial difficulties.

OP, I'm sure after doing a budget you have considered any ways that you can reduce your expenses. I would suggest that you get some guidance and advice from Step Change debt charity or the National Debt helpline. I don't know if they can help but certainly worth getting in touch to see how they can help.

You will find a way out of this.

(Dont shoot me on spelljng or grammer errors )

1st and foremost like some other mumsneters have said take a breath take a step back this isn't lost it is douable, speaking as a daughter of a chronic spender and having been left in financial poop by a builder but in a far better place now luckily.

Others are right specialist mortgage brokers can help get mortgages and you may only need to get yourself in a slightly better position. Mine is absolutely amazing I have known her help in some really difficult circumstances and she used to run the mortgage team of a major national bank nationally so knows her stuff

Looking at your spreadsheet there are a number of outgoings but you actually need to look at everything as a big picture not just debt or main outgoings. I am more than happy to help with a few pointers.

Part of it is to track your monthly,weekly and any daily spend but know exactly what is spare aftee everything including a realistic food budget, what is a need or a want, a need is necessary a want is can i afford it. You need a budget spread sheet for this which is easy to set up in excell I have one as habit and helped my friend set hers up.
Another is can you consolidate any of the debts at all? money saving expert can actually do a soft search on loans /0% credit cards without affecting your credit rating.
make sure you cut up any credit cards or store cards
Can you sell a car if you have 2 and manage or even if you have 1 can you sell and look at a cheaper run around rather than paying monthly bills on a car. Our cars are are 15 and 11 years old would love to get rid of 15yr old one as costs in Road Tax and yearly MOT but never get new credit just before a mortgage which ours will be up for renewal soon and a car loan is a big commitment and needs to always be factored in on other expenses including future
do you use cash back apps for online necessary purchases
do you use bank accounts like santander which give money back on certain bills, have you looked into a chase account to get 1% back on purchases these add up when doing things like a weekly shop.
Do you make lunches for school and work ? For example My DC have packed lunches every day in it is a piece of fruit, a kinder bar, sandwich, mini pepperamie, actimel, and pack of mini cheddar packet this comes out average £2.80 per lunch box the aldi versions of some of these are even cheaper than the branded versions. They take a water bottle which costs nothing other than you monthly water bill occasionally my DS 12 will mix it up with a salad but cost wise no affect
Look to ensure you meal plan each week so no food waste get the kids involved in choosing and if old enough cooking as helps then to keep to a meal plan

Look at 2nd income earnings with freelance from home.

definitely sell on Vinted as well as buy on Vinted I do both and you can get some really good stiff either 2nd hand or brand new.

Hope this helps as the debt isn't that large and being stricter with yourself in 12 -24 maths I reckon you could pay it off