Being brave and facing up to reality

Newlyweds_3

Hi all,

I've read so many of these posts and am inspired by some of the stories and your determination to get debt-free. Any advice or inspiration you can give us right now would be enormously beneficial.

In short, my husband and I are recently married and now we're no longer saving for the wedding we're facing a reality we've chosen to hide from in the last year or so - our debt.

For numerous reasons, some of which can be officially classed as emergency, others can only be classed as greed and impatience, we've let ourselves run up a vast amount of debt on credit cards. We're both horrified by this and it's been a stern wake-up call for us and we're determined to get rid of this as soon as possible so that we can begin to save for the nicer things in life, rather than doing what we usually do - have the nicer things in life and just don't pay for them there and then.

In short, between us we've got the following (as I type this I'm truly mortified):
Credit card 1 £7,000
Credit card 2 £6,000
Credit card 3 £5,500
Credit card 4 £5,200
Total £23,700

We've made a start and juggled a couple of them onto 0% balance transfers with direct debits to pay off the min payment on those each month. All our extra cash will then be thrown at the two with the highest interest rates to reduce that as much as possible.

We've thought about opting for an interest-only mortgage for a year, in order to use that extra cash to throw at our debts, before reverting back to repayment. This could reduce our debt by an additional £5000 in a year.

Any ideas on what we can do to make this work? At present, we're paying a whopping £700 a month just on repayments... anything that we can to make this situation, entirely our own fault, we know, more manageable would be gratefully received.

With thanks,
Mr and Mrs

BeautyandtheBeast_3

Hi and congratulations! you need to complete an SOA and then post it on here and peopl can help guide you xxxxxx

Fortheloveofmoney

Welcome! You're in the right place.

I'm a Newlywed too so congratulations!!!

What your suggesting is called snowballing. Check out the snowball calculator to see what debts you should pay off first. It will also help you calculate how much extra you're going to pay in mortgage interest by going interest only for a while.

It should help you make an informed decision.

http://www.whatsthecost.com/snowball.aspx

Also if you'd like some help on ways of cutting back then complete a SOA which can be found at the top of this forum. People will take a look and give you some ideas of where more money for debt busting can come from.

Good luck x

pania

Hey and welldone for facing up to the mounting problem. Can I please please advise against turning your mortgage interest only. 2 reasons for this.
1) With the market as it is at the moment you need to maintain your equity in your property. At the moment you are balancing the potential fall in value of your house with the amount you are paying off each month. Depending on the size/type/marketability of your property the net loss could far outstrip the 5k you would pay off your debt.
2) Yes, you could pay 5k off your debt. However the cost of the amount that you havent paid off your mortgage spread over the mortgage term, determined by your interest rate could cost you double this, maybe more in interest over the mortgage term. I was a mortgage advisor but have been out of the game for a few months. Please seek proper professional advice before taking this course of action.
Also, and this is meant in a helpful manner. What lessons would be learnt simply by switching the money from mortgage to credit? a little bit of pain really reinforces the lesson of paying debt off (believe me I know I started at 42k!) have a read through of the suggestions here, the extra money making tips, the debt will come down rapido, along with your mortgage!!