Wife just admitted she's in debt... not sure on best action

majorstare

My wife has just admitted to me she is in debt to the sum of £7,000.

This is split between..
3x store cards totaling £1800
HSBC Flexi Loan £1559
Persoanl loan £2763
The remainder on an overdraft.

She has visted her bank today and looked at consolidating the debts to [EMAIL="£117@60months"]£117@60months[/EMAIL] or [EMAIL="£136@48months"]£136@48months[/EMAIL], APR's at 18.9%. Luckily she hasnt signed anything.

Her total income is £1,033/month.
Direct debits £452.54 (inclues paying minimum amounts on loans/cards etc)
Still to come out of this money is food/fuel/living.

She has admited she is addicted to buying "stuff" - clothes etc.

I pay 100% of the bills for the house (mortgage/utilities etc).

Iam unsure what to tell her to do next?..... please help

Marisco

Hi Major, I'm unsure of the problem here??? If her income is £1,033 and you pay all the bills, then she has ample income to cover her debts. Or am I missing something?:o

Butti

Hi,
Sorry to hear about your situation.
Your wife needs to work on identifying why she needs to buy 'stuff' and what hole in her life/ self esteem this 'stuff' is filling. This will require a bit of thinking, maybe a bit of writing down and possibly counselling.
Well done to her on not consolidating as that won't deal with the underlying problem.

If you and her can find out what the APRs are on each debt you need to do a budget and basically throw all your money at the highest APR and pay minimums on the others. As you pay the first one off you snowball that sum on to the next one.

There is a guide on here. I think it is one of the stickies.

B

GeorgeUK

Hi majorstore.

I'm glad she felt able to tell you. Now you just need to make her take charge of this and get things back on track. There a few things she could try but i would advise that you support and advise her rather than taking control - this way she will hopefully learn some good spending habits.

She says she is addicted to buying stuff - does this mean that there are things she can sell on ebay?
I would advise that she keep a spending diary so that she can see where all her money is going. If you total up that alot of people spend about £2k a year on lates, these small things add up quite fast.

I would get her to look at her credit file (free at experian if you cancel within 30 days). Hopefully there are no surprises on there. If she has some cards with a nil balance on there that she hasn't used for a while, she could try phoning them to see if she could get a balance transfer offer as an existing customer.

I'm not sure if she would be able to get another credit car (sounds crazy i know), but if she were able to get say a virgin card she would be able to transfer the higher APR debt over to it adn be on 0% for about 15 months. The monthly minimum payment is also only 1% i believe. This would allow her to throw more at the higher APR debts. Once she clears a card she could then try to get a balance transfer offer as an existing customer (0% for 6-9 months or a low interest for life of balance offer).

majorstare

I admit it does look like she should clear the debts based on income/outcome.

However, as i pay all the bills, my wife pays for - food, her own car/fuel and looking after 2x children (food/clothing/child car/after school club etc).

She currently has no money, bank will not give her any money unless she consolidates the loans or till she gets paid.

I have given her some cash for the next week.

The buying problem is, she got in debt and buys things to cheer herself up.

Butti

So Major she needs to go back to things that make her feel good other than buying things. These are the things she needs to bring into her life to replace the spending.

B

Watalie

majorstare wrote: »

I admit it does look like she should clear the debts based on income/outcome.

However, as i pay all the bills, my wife pays for - food, her own car/fuel and looking after 2x children (food/clothing/child car/after school club etc).

She currently has no money, bank will not give her any money unless she consolidates the loans or till she gets paid.

I have given her some cash for the next week.

The buying problem is, she got in debt and buys things to cheer herself up.

So you don't pay all the bills then?

She pays for the Food for everyone... her own car & fuel and everything for the Children?

Can you not help her out?

Why is she so unhappy?

shebrett

Hey Major - you're kind of just giving the basics here so you'll need to give some more info in order for people to help you out. Start with putting up your wife's SOA and you'll also need to decide if you want to help her clear the debt or if she is going to have to do it by herself. It's also a matter of what she is realistically going to do in future, will she really turn around and start saving or is she still shopping to feel better?

Hope that helps, get some numbers up there, people around here are very helpful for this sort of thing.

SJ1

I am a bit confused as to why you don't consolidate your earnings and deal with it together. You talk about it as if it's her problem but surely it is both of you in this together. I think that would help her feel better too, she needs support right now - lots of it.

My husband and I put everything in together, if there is a problem we talk it through. I am also amazed she has coped with what she has been paying for - my monthly food bill is £400 for four of us and petrol costs a bomb, after schools clubs cost me about £200 a term and that is for only one child.

Don't be too hard on her - she has crossed the first major bridge by telling you. Please understand how hard that was for her.

Good luck.

SJ

Jinx

I think a huge hug for being brave enough to tell you.... Followed by a frank discussion on family finances with the hankies ready, its a very emotive issue...

serious_saver

I imagine it's taken sometime for her to get into debt and she was probably, at least partly, unhappy because she didn't know how to tell you about it - leading to a cycle of spending to cheer herself up. Now that it's in the open hopefully she will start to feel a bit better and spend less anyway.

It sounds as though you could both easily get this under control by moderating your spending patterns. I think that sitting down and carefully budgeting together is the way forward. If she has been secretly shopping then bring it out into the open. Set yourselves an allowance each to spend on spoiling yourselves/being frivalous/buying that handbag or takeaway every now and then. If you do it as well (to some degree) she will feel supported and probably make more effort to cut her spending.

I'm glad to hear that you're communicating with each other and that she has made a step in the right direction by telling you.

Good luck