Are we really in debt? YES WE ARE

tolip

Hello Everyone

I have been reading these forums for a few months now, and really convicing myself that I dont have a debt problem, how silly.

Like most people we live really from pay cheque to pay cheque and we sat down to add our debts up.

Halifax One Credit Card £5,000
Halifax NSPCC Credit Card £5,900
MBNA Credit Card £10,600
Amex Credit Card £13,400
Virgin Credit Card £5,300
Egg Loan £7,900

Overdraft £5,500
Smile Loan £8,900
Amber Loan £12,400
Secured Loan £28,000

Total Debt £102,900

Shocked, well we certainly were.

We always moved the debt around, so it all on balance of life rates with the credit cards, they were zero when the balance was moved to the card and the cards are cut up so no spending on them. However we only ever make the min monthly payment. The loans are around 6.5% so about the best rates going. But its been like this for the last 3 years and we are getting no where.

Like most couples the debt causes difficulties, we are embarassed that we owe so much money.

Married with one child, my wife gave up her job to look after our child, so we have been on one income.

I do have a very good job and take home £5300 a month after tax, its because my take home salary is good that we have never noticed the debt, what I mean is that we always make the min payments to the credit cards, but we are skint in the middle of the month.

We are considering a remortgage on our house, about £150k equity, to clear off the debt, then overpay the mortgage.

We have vowed only to have one credit card and have already cancelled all the store cards, M & S, NEXT, etc etc.

Our entire focus is that if we cannot afford to make a purchase on our switch card then we dont make the purchase.

Has anyone else remortgaged their home to clear their debts? did you stick to your plan and stay debt free?

Would you advise clearing the loans with a remortgage of try and stick with them as they have only another 2 years to run? Or simply clear the lot?

We never thought of ourselves being in debt, but we actually are and if we dont change things our child will suffer in later years as the current debt rises.

Your feedback is welcome, thank you

hypno06

Hi, with only 2 years to go on the loans I think it would be the wrong idea to remortgage these.

Personally (and it is only my opinion) I would suggest putting the debts and their APRs etc into the snowball calculator on https://www.whatsthecost.com and seeing what comes out. you may be pleasantly surprised.

With a remortgage you are turning unsecured debt (which most of yours is) into secured debt, and if anything were to happen jobwise that meant you could not sustain this level of income, then you could lose your home.

Also, although it seems like a good idea to reduce the monthly payment, in reality you are increasing the total amount paid over the term of the loan.

Give snowballing a look. Get a DFD from that, and have a play with it. Then at least you have something to base a comparison with if you decide to get remortgage figures.

Let us know what you decide. If it helps, put up a proper SOA (see Southernscouser's sticky, above) and we will see if we can help with any suggestions.

It is a big debt, but many of us have had them and are living to tell the tale!

GirlRacer_2

I must admit that I have quite a bit of equity in my home, but would never remortgage to pay off unsecured debts. Would worry more if my home was at risk. Don't know what the other think.

How about positing up your statement of affairs and seeing if anyone can make some suggestions to help you cut back and concentrate on paying off these debts. If you read southerscousers thred on the first page that'll show you how its done.

sammy115

One of the things you need to think about before you even consider going down this route is what you are spending your money on, on a monthly basis. How did you end up in this much debt? It isn't the monthly payments that are making you skint, its the spending and until you address this issue there is no point whatsoever in even considering consolidating your debts.

I am sure there will be someone on here who has done exactly what you are suggesting and paid off their debts and not spent on the CC's. But they will have learnt the self control needed to live totally within their means.

It isn't easy when you have lived a comfortable life, buying what you want, when you want having to cut down. We feel like skinflints a lot of the time, but it becomes a habit and we are now begining to see the difference.

A detailed income and expenditure SOA would be useful.

spud30

I have around £300k equity in my house, but wouldnt remortgage.

I feel that we have to go through the struggle to pay it off, in order to remember never get into debt again. Call it teaching myself a hard lesson.

We have consolidated several times in the past, but always ended up in more debt than we started with.

Mozette

Before you make any changes to your debt, find out where your money is going and keep a spending diary of evey single penny you spend - can be suprising to see how much goes on what, and some areas to cut back may seem obvious.
The snowball calculater, which people above have linked to is brilliant (or perhaps I need to get out more :rotfl: on the cheap of course!) and it may be that you can get debt free far more painlessly than you may imagine.
All the best with it.

immoral_angeluk

Are you able to pay them at the moment? What are the minimum payments on them?
Remortgaging and consolidation aren't really a good idea as you're turning unsecured debt into secured and then if it all goes wrong you face losing your house.

chevalier

well done for posting, and for realising now that something has got to change. As you say your OH earns a good wage, so you should be able to turn this around if you are focussed.

You sound like you have paid off some debt already, as you mention paying off store cards etc. So you know you can do it if your really want to! As others have said the snowball calculator may show you that your debt free date isn't as far away as you think.

Also think carefully if you are saving any money at the moment. Unless the interest you are getting is higher than your highest rate APR debt, then you are borrowing money expensively to save cheaply. Is this a good idea?

You mention you gave up work to be a stay at home mum. Was your previous career one you could do from home, or do part time? It would help your finances as you know you can just about cover things from your OH pay, so what you earn less child care could go straight to overpaying the debt. Or if you worked when OH is home, then no child care so more to the debt. Remember doing an extra job doesn't have to be for long (depending on how well paid it is).

best of luck
chev

tolip

Wow I cannot believe the response.

Hypno06, yes I should have read the sticky, I am doint it now and will repost. Also doing the Snowball Calc.

I honestly thank you for your genuine comments.


GirlRacer, you are right regarding a remortgage, it is moving unsecured debt to secured and risking our home, sometimes out of sight (in the mortgage) is out of mind! But you are correct.

Sammy115, yes I should have read sticky and posted a SOA, am working on it now, and you are correct in what you say about feeling like skinflits. We started this week. My wife has been writing everything down, also raiding the house for old stuff to sell. We were shopping and i picked up the cardboard case for 6 bottles of wine, as per normal, and she went mad at me! its hard to change our habits, but we must in order to pay this debt.

Mozette, the snowball calc ( and I have only just started it) is amazing, I was totally unsure how to prioritise our debt, I was guessing and grasping at straws, hence remortgage.

immoral_angelUK, yes we are able to meet the debts, but we are skint in the middle of month. As someone else said, its overspending is the problem

Chevalier, we paid off an Argos card, what were we doing with that? and then cancelled it and all the other junk store cards we had, previously we would have just put them in a drawer, but then convinced ourself to buy on them as we could avail of 60 days interest free or some other gimmick, this time we called the companies and cancelled them. Even that feels better.

My wife worked for an airline, so not really able to return to that, but you are right another job would even allow us to use her money as day to day money.

All you comments are appreciated, I cannot believe people have taken the time to reply, I even feel I have a clearer vision now regarding the remortgage and the snowball calc (which i will finalise) gives us a definate plan.

Will post SOA later today or tomorrow

Thank You

TTMCMschine

I'd suspected you were a pilot tolip - was your wife a stewardess ;)

whatatwit

Well done for posting.

As you have said, cutting back on the shopping will prove to be moneysaving. Having worked all week, it's so easy to wander around the supermarket and throw comfort food into the trolley.
Maybe try doing the shop over the internet, there is no rush and your wife can then decide what is necessary and what is 'luxury' it would also make meal planning so much easier.
You don't have to have the stuff delivered, just print off the final list and then stick to it when you visit the supermarket. (you may find some better offers)