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    • dad2twins
    • By dad2twins 12th Mar 17, 3:24 PM
    • 11Posts
    • 32Thanks
    dad2twins
    Our double debt problem!!! Do we need help?
    • #1
    • 12th Mar 17, 3:24 PM
    Our double debt problem!!! Do we need help? 12th Mar 17 at 3:24 PM
    Good afternoon everyone, I would really like some advice, and perhaps perspective, on our current situation.

    My wife and I are 36 & 35. We met at uni in the early 2000's and have stuck together ever since.

    We both pursued careers in teaching after graduating and we were lucky to climb the ladder relatively quickly. We were a very typical 20 something couple with a decent income. We would go on holiday 2-3 times a year. Weekends away were the norm. We would eat out several times a week and meet friends for drinks at weekends etc.New cars every couple of years were also the norm! We made all of the typical mistakes such as maxing our credit cards, consolidating, doing it again, consolidating....... You get the picture i'mm sure.

    We were able to buy our own house in 2006, largely due to my wife receiving some inheritance that we used as a decent deposit. This is the one positive financial decision that we have made! We live in a 3 bed semi and whilst we would like to move on in a few years, we are fine here for now.

    We married in 2013, largely funded by my wife's parents, however we still managed to accrue the best part of 10k wedding debt due honeymoon and a few bits that we paid for. I must add that I regret none of these past experiences. We had a wonderful time together during our twenties and have some fantastic memories. I just wish that we had been more financially careful.

    Fast forward to 2015 and we decided to start a family. We were delighted to find out that we were expecting twins. Our 2 beautiful babies arrived at the end of 2015. This was a turning point for us and made us totally change our lifestyles and attitudes towards money. At this point we were both in loads of debt BUT we were managing it and there were no missed payments etc.

    My wife returned to work in January 2017. She has done brilliantly well at work and is now a Vice Principal of a high school. After much number crunching we decided that It would make sense for me to stay at home and look after the twins. Putting the twins in full time day care would have been both financially and logistically unviable. Our parents are not really able to help out with regular childcare as they have their own commitments. I am currently doing a but of freelance work, earning around £750 per month. I will definitely go back into teaching when the twins are at school.

    We have been living frugally for several months and it's fine. ( see SOA below). We have managed to reduce the debts by a fair amount and we have not added to the debt, or taken our additional borrowing since Dec 2015. We earned quite a bit more at that point, although we never added it up. We didn't make as much progress towards the end of my wifes maternity, however we still managed to keep up with monthly payments.

    We are now trying hard to clear this debt asap. We do have a surplus each month. We are currrently saving this.We will probably pay something off with it in a few months. The surplus also acts as a buffer for my freelance income as there are no guarantees that this will always be there ( athough it probably will, in reality)

    My main question is, due to our debt level, my wife has been looking online to find out about DMP's etc. I really don't want to go down that route as I think that we are actually doing ok. Yes, we owe a lot of money but we are managing to stick to a plan. I have moved balances etc as much as possible. There is one awful card that is 27.9% so we are throwing £600 per month at that card ( about £450 more than minimum) to clear it and reduce interest ( thanks snowball calculator!)

    I have completed the stepchange online debt remedy tool and it tells me that we can afford our current debt level. I have also worked out what would happen if our 0% deals expire. by overpaying we would still be ok, it would just take a little longer.

    I have posted my SOA below, with a few explanatory notes. I have include the Child benefit, however we will most likely lose this soon.


    Household Information[/b]
    Number of adults in household........... 2
    Number of children in household......... 2
    Number of cars owned.................... 2

    Monthly Income Details

    Monthly income after tax................ 750
    Partners monthly income after tax....... 3338
    Benefits................................ 130 for now, at least!
    Other income............................ 0
    Total monthly income.................... 4218


    Monthly Expense Details

    Mortgage................................ 494
    Secured/HP loan repayments.............. 185
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 150
    Electricity............................. 90 dual fuel with first utility
    Gas..................................... 0
    Oil..................................... 0
    Water rates............................. 32 spread over 10 month
    Telephone (land line)................... 0
    Mobile phone............................ 35 2 sim only deals
    TV Licence.............................. 12
    Satellite/Cable TV...................... 0
    Internet Services....................... 12
    Groceries etc. ......................... 300 includes nappies!
    Clothing................................ 100 this varies
    Petrol/diesel........................... 80
    Road tax................................ 20
    Car Insurance........................... 50
    Car maintenance (including MOT)......... 0
    Car parking............................. 10
    Other travel............................ 0
    Childcare/nursery....................... 20 I pay a few quid each week for baby groups etc
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 29.5
    Contents insurance...................... 0
    Life assurance ......................... 30.5
    Other insurance......................... 22.99 We pay this for cover our kitchen appliances
    Presents (birthday, christmas etc)...... 50
    Haircuts................................ 0
    Entertainment........................... 100 we try to have one meal out each month and a cinema trip
    Holiday................................. 50 We might go to devon in summer
    Emergency fund.......................... 0 - forgot to do this. This should be £2500
    Total monthly expenses.................. 1872.99



    Assets

    Cash.................................... 0
    House value (Gross)..................... 200000
    Shares and bonds........................ 0
    Car(s).................................. 9000
    Other assets............................ 0
    Total Assets............................ 209000



    Secured & HP Debts

    Description....................Debt......Monthly.. .APR
    Mortgage...................... 98000....(494)......0
    Hire Purchase (HP) debt ...... 10000....(185)......0
    Total secured & HP debts...... 108000....-.........-


    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    credit card 1..................15400.....300.......0
    loan (consolidation)...........15000.....304.......4.5
    SOFA FINANCE...................1200......25........0
    ITG credit card................2000......40........0
    halifax CC.....................7650......150.......0
    barclaycard....................9750......200...... .0
    credit card ( wife)............4370......600.......27.9 - includes a big over payment due to interest
    Total unsecured debts..........55370.....1619......-
    I hate this figure but it will be less soon.


    Monthly Budget Summary

    Total monthly income.................... 4,218
    Expenses (including HP & secured debts). 1,872.99
    Available for debt repayments........... 2,345.01
    Monthly UNsecured debt repayments....... 1,619
    Amount left after debt repayments....... 726.01
    - currently going into savings ( £615 last month due to MOT)

    Personal Balance Sheet Summary
    Total assets (things you own)........... 209,000
    Total HP & Secured debt................. -108,000
    Total Unsecured debt.................... -55,370
    Net Assets.............................. 45,630



    Are we doing ok? I am an optimistic person and I feel thankful that I have a lovely wife, 2 healthy babies and a comfortable home. I am sure that there are many people who would swap with me, debts included. I am also grateful that we have been able to take control of this debt, before it controlled us.

    Based on all of this, would a DMP be necessary, or do we just continue as we are. We would like to move house when the debts are gone, or at least sub 10K so I wouldn't want to do anything that damaged our credit score.

    Any comments or advice welcome
Page 2
    • January2015
    • By January2015 12th Mar 17, 9:25 PM
    • 1,757 Posts
    • 4,746 Thanks
    January2015
    It was a typo! It should have said that consolidation HASN'T worked for us before. I really don't want to go down that road again.
    Originally posted by dad2twins
    Thanks for clarifying

    As a seasoned consolidator who eventually learnt the lesson far too late, I'm glad you've realised consolidating doesn't work.

    Good luck with your debt free journey
    DFW Nerd No. 1484 LBM 07/01/15 Debt was £95k I'm driving it down
    £1k emergency fund (member #84) £1k/£1k
    Xmas 2017 £1 p/day challenge No. 20 - £420/£730
    Make £10 p/day Feb £74.31, Mar £664.37 Apr £40
    • enthusiasticsaver
    • By enthusiasticsaver 12th Mar 17, 10:58 PM
    • 4,661 Posts
    • 8,822 Thanks
    enthusiasticsaver
    Thanks for your post. I will look at the council tax again. I may have put the wrong amount on the SOA form. I think that the figure I put might be over 10 months.

    Yes, it does include contents cover. I don't know the amounts for each element so I just put one figure in.

    I take your point about the applicance insurance. I just worry that the day I cancel it is the day that oven, dishwasher, washing machine and freezer pack up



    I also think that we can do this without DMP.
    Originally posted by dad2twins
    The likelihood of all appliances going wrong at the same time is minimal. How much have you already paid on it and have you claimed?
    4 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • mark88man
    • By mark88man 12th Mar 17, 11:28 PM
    • 3,051 Posts
    • 6,410 Thanks
    mark88man
    Thanks for all of the posts this afternoon/evening. It's good to get different takes on our situation.

    To be honest, my initial goal isn't even to be debt free. If we owed 10-20k then I probably wouldn't have posted on here. I DO wan't it all paid off but I will be happier to get it right down to a more manageable level.

    I think that the only real option for us is to carry on doing what we are doing now, that being, paying as much off as possible each month, keeping spending in check and not using any form of credit at all. I have actually got used to not using credit cards. It would feel strange to go back to that type of spending now.
    Originally posted by dad2twins
    You need to get to zero, he says hypocritically. Its a long slog and it gets boring, but the odd relapse is OK so long as you dont eat the whole cake.

    I so wish I was there, but my OH had to stop working and we have had to tighten up even further just to break even. You go and look on the thrifty boards and you will get a whole different attitude about the happiness of being debt free. I think you can do it, and while the kids are young enough to get away.

    I wouldn't be happy with getting most of the way out of the hole. I think you should go for £0 K. Then you can breathe easy
    Things happen for a reason. Often the reason is we are stupid & make bad decisions.
    Weight 2/15 125.7 Kg : 31/12/16 - 105.5Kg : Targets - 100Kg by 3/17 then 200lb by 31/12/17
    1/17: CC:7524@0% - Car Loan:14K@3.4% - Mort:156K@2.9% - Savings:1k@4.5%
    Decrease in Total Debt for 2016 - £13.4K
    • moneyfacts
    • By moneyfacts 13th Mar 17, 6:42 AM
    • 67 Posts
    • 117 Thanks
    moneyfacts
    You ask if your situation is ok ? In short, it's not because you have £55,000 in unsecure debt. You have spent all this money you haven't earnt.

    But I suppose, given you don't regret it, it's all fine as wasting your money on debt payments each month for living a trendy life is worth it.

    Your attitude towards money is most concerning. Your debts are clearly manageable given your income.

    But this is classic millennial behaviour, 'the I want it now because I deserve it and need to look wealthy'. Who benefits? Fat cat bankers and CEOs.

    You have been taken for a ride by these corporations. imagine what their income is and all you do is add to it each month.

    The fact that you look back with no regrets means you are so much more likely to be here again, you have a longer journey than you think.
    • dad2twins
    • By dad2twins 13th Mar 17, 7:14 AM
    • 11 Posts
    • 32 Thanks
    dad2twins
    That's harsh money facts. I have never said that I don't regret the financial choices that we have previously made. What I did say was that I don't regret the experiences. I have lots of happy memories and that helps me when I am feeling crappy about this situation that we are in now. Dwelling on the past and feeling regretful is it going to get me any further forward. We have already made some major steps forward in terms of looking at our budgets and scaling back our lifestyle significantly.

    I came on here for practical support and advice regarding Our situation, not to be berated, we have made some mistakes, we know that. What we're trying to do now is out things right.
    • enjoyyourshoes
    • By enjoyyourshoes 13th Mar 17, 7:33 AM
    • 736 Posts
    • 911 Thanks
    enjoyyourshoes
    It will be the little things (Fagd, mags, booze, lotto , latte, kids treats that will add up.

    Need to know where you are financially daily, the way to do this is :-

    1. Accrue monthly for all none monthly bills/SO/DD

    2. Reconcile bank account daily with ALL monthly costs/accruals and daily spends

    3. Stop the drip drip spending (jointly need to agree longer term objectives) make sure they are SMART

    4. Reduce costs on SOA- clothing and entertaining.

    Throw what you can and the kitchen sink at any OD (charges interest are eye watering) then highest CC, then calculate repayment required by CC at 0% to pay off by end of term and set up DD/SO to cover this with CC co.

    Once paid off start saving before you spend.

    Consider NEEDS and WANTS, ditch WANTS (get agreement with Wife to do same !!)

    Set up Regular savings account with highest interest you can get and start benefiting from compound interest and not a slave to it.
    Debt is a symptom, solve the problem.
    • enthusiasticsaver
    • By enthusiasticsaver 13th Mar 17, 8:55 AM
    • 4,661 Posts
    • 8,822 Thanks
    enthusiasticsaver
    Thanks for all of the posts this afternoon/evening. It's good to get different takes on our situation.

    To be honest, my initial goal isn't even to be debt free. If we owed 10-20k then I probably wouldn't have posted on here. I DO wan't it all paid off but I will be happier to get it right down to a more manageable level.

    I think that the only real option for us is to carry on doing what we are doing now, that being, paying as much off as possible each month, keeping spending in check and not using any form of credit at all. I have actually got used to not using credit cards. It would feel strange to go back to that type of spending now.
    Originally posted by dad2twins
    Interesting that you have an acceptable limit of £20k unsecured debt. I think you need to watch this as a bit of a sign of complacency which is very common in particular with high earners. I would say your goal of using no credit is a better one as at least then you know you are living within your income. What you need to be wary of as a seasoned consolidator is you don't get down to your acceptable level then loosen the purse strings and go back to your old ways in spending. Your twins will cost you more as they get older and although you may also have returned to work it is all too easy to be sucked into, we need a new car or new house or a holiday. I would aim to be debt free then save for big items. That way you are in control.
    4 weeks to go until early retirement in December . Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • warby68
    • By warby68 13th Mar 17, 9:16 AM
    • 852 Posts
    • 8,954 Thanks
    warby68
    OP, whilst your debt looks managable I do think you need to take advantage of your current situation where your mortgage is modest and your twins are tiny and relatively cheap to bring up and really hammer your debt down.

    Whilst your debt level is serviceable its still a very high risk position to be in- you are incredibly vulnerable to bumps in the income earning road. I think you might need to explore further your attitude to risk - the fact you were comfortable starting your family (where there is great potential for income to be interrupted and other stumbling blocks encountered) whilst carrying all this debt and that you'd still be relaxed with £20k do suggest you are not exactly risk averse. Really think about how you would manage a major health issue or reduced income.

    You've got where you are without having to wait or contribute to very much (not meant unkindly) so far - £10k wedding debt when you didn't actually pay for the wedding is a fair bit lol and no saving up for a deposit. I guess it just strikes me that you might still have a way to go in adjusting your mindset for the long term. What will you do when you haven't changed a car or gone on an exotic holiday for 12m? Hopefully your gorgeous twins will be the motivation but it might also be hard for you when a bit of time has passed so keep refreshing your goals and aims as you go
    • dad2twins
    • By dad2twins 13th Mar 17, 9:31 AM
    • 11 Posts
    • 32 Thanks
    dad2twins
    Thanks for the posts this morning. I said that my initial goal was not to be totally free, however ultimate goal is to be! I was thinking in terms of stress levels. At the moment our balance worries me as, like many have said, it makes us very vulnerable. I fully intend to continue to pay off the debt until it is gone BUT I know that I will more comfortable and less worried when the balance has reduced significantly

    In terms of changing my mindset, I think that we have already done this. We are actually quite happy living more frugally and although we enjoyed our twenties, we are not missing the exotic holidays or weekend city breaks. These are things that we can do again, in the future when the kids are older and we can afford it

    The issue of whether or not we should have started a family is one that we discussed at length. We both felt that whilst it was not ideal, we didn't want to run the risk of waiting until we were in late thirties, only to find that there were difficulties conceiving. I don't regret that decision There are no plans for any more babies!
    • kelpie35
    • By kelpie35 13th Mar 17, 10:17 AM
    • 1,521 Posts
    • 4,834 Thanks
    kelpie35
    I think you come across as a very responsible adult, and you should be proud of that.

    It is so nice to see people taking responsibility for their debts rather than going down the route of someone else taking on that responsibility.

    I can only wish you, your wife and the twins all the best. You are a determined young man and you will get to your goals very soon.

    Take care.
    • mark88man
    • By mark88man 14th Mar 17, 12:36 PM
    • 3,051 Posts
    • 6,410 Thanks
    mark88man
    yes sorry if it came across like I was beating you up - I was beating myself up - and if any blows missed and hit you then I'm glad you're taking it in good spirit
    Things happen for a reason. Often the reason is we are stupid & make bad decisions.
    Weight 2/15 125.7 Kg : 31/12/16 - 105.5Kg : Targets - 100Kg by 3/17 then 200lb by 31/12/17
    1/17: CC:7524@0% - Car Loan:14K@3.4% - Mort:156K@2.9% - Savings:1k@4.5%
    Decrease in Total Debt for 2016 - £13.4K
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