advice please on how best to manage debt

aymara_2

Hi
I have just finished uni (mature student) and I am moving 400 miles to start a new job in September.

The plan was for me to rent a little cottage for a few months to ensure I was happy in the new area while my partner stayed at home. Then if I liked it we were going to put my house on the market and buy down there. The current mortgage is in my name only but he had lived with me for 7 years and we were going to buy jointly when we moved.

I knew he had some debt and thought it was a few thousand on some credit cards and a loan totalling around 8k. But I found out last week he owes a whopping 22.5k. 7.7k on a loan, 13.3k on credit cards and 1.5k overdraft.

He's not a gambler or anything like that. He is just rubbish with money and had dug himself into a hole he couldn't get out of. I get it that debt can suck you in then your forever stuck in a cycle of paying it then having to use the cc that month in his case for fuel for work. His attitude to money and debt is obviously an issue and we have discussed this and he knows sacrifices have to made to tackle this.

I looked at his cc to see if we could do 0% balance transfers etc and we can but only for 9 months which worried me.

I thought the better option would be to take out a 15k loan at 5.9% pay off his overdraft and the majority of his cards. I took out a 0% for 33 months barclaycard to transfer the rest of the cc debt onto. Then his two cc can be cancelled. We can clear the 0% by the time the deal is up and then add this payment to the loan and overpay it. The loan he had would remain running as it's a low interest rate with 3.5 years left. I thought I had it planned we could be rid of this in 5 years.

But then I read the advice on the forum never to take loans out to consolidate debt so is my plan a bad one?

The extra in the loan is for me to get a new roof. My roof is utterly knackered and I was going to offer a reduction on the sale price however now I think we won't get a mortgage and will have to rent my house out I need to put it on to do that. I would normally have started saving for this but as i will be ploughing everything into paying off debt that won't be an option. Withh the extra debt we won't be able to run two properties like we were going to and I do not want to sell my house and step off the market if I can't buy somewhere else so would rather rent it out.

Am I doing the wrong thing financially in how I have managed this so far? Would I of been best risking shuffling the debt between the existing cards?

Any advice would be really appreciated Thanks

tlc678910

I think your plan sounds good but it does sound a little like your plan (rather than theirs) perhaps? The debt sounds like it has come from general overspending of income and is he actually ready to cut back this overspending and then cut back a lot more than that - to pay it back?

If he is totally on board he could decide to take the loan and close the cards that he pays off so they are not run up again. I would leave him to pay off the remainder of his debt too even if you subsidise him by perhaps buying the groceries/ paying bills or not charging him rent. It could put a strain on your relationship if as well as the pressure of debt feelings start to run high like "why are you buying a takeaway when I am carrying your debt" etc.

If you need to borrow for your move or roof you could keep this separate as your responsibility. This way if you do find in future that you will be buying your next property on your own mortgage again (or if you do decide financially or because of location you are not on the same page and decide to split) your finances are separate and things are more straightforward. If you carried his debt on your card and you split you would have to ensure it was always paid or else it would affect your credit and chance of getting another mortgage.

I don't mean this to sound negative as if I think these issues would cause any relationship difficulties but actually I mean the opposite - I would advise that you don't take over but encourage your partner to take control of their own debt and make their own choices like the adult they are. You in turn keep your finances independent until you feel you are financially compatible.

Good luck with whatever you decide.

Giraffeseeker

I agree with tlc, I wouldn't take on his debt, because it will then legally become your debt, and even if he pays you back as promised, in the mean time it will affect you ability to get a mortgage or other credit if you need it.

Worse case scenario is that you split up and he just washes his hands of it, leaving you with his debt to repay.

Finally, if you make it easy for him by taking on his debt, he will get into debt again. I know this from experience - my large debts were paid off through house sale post-divorce and a few years later I had ran them up again (see my sig). This time I am doing it myself and the hard way and I know I have changed my money habits.

Have a look with him at his finances, work out a plan - snowball, or maybe use stepchange/payplan - but don't take them on in your name.

YNAB is a good tool and well worth the money.

-taff

I wouldn't put yourself in debt to clear anyone elses debts off.

There is always the possibility that he will just get himelf and therefore you in debt again.
If he hadn't told you how much he owed and you live together, then there's something wrong there.

Help him to make his own plan for managing his debt, but don't do it all for him, otherwise you are just solving the problem for him, and acting like his mother, not his partner.

Puddylove

I agree with Taff (though it pains me ) - don't take on any one else's debt.

Firstly - what if he can't pay you back, becomes sick or unemployed, or you split and he refuses to pay?

Secondly - I think he has to be motivated to sort it out for himself - if you make it easy there are no negative consequences so he could just run up more debt.

Thirdly - I'd be a bit concerned as to why you didn't know about his financial situation - you've been together 7 years, and plan to buy a house but didn't know the full position? Transparency is needed for trust, I think.

Fourthly - renting a house - usually a minimum of 6 months short lease tenancy, plus 1 month's notice so you could be tied into the cottage for a while.

And finally - support him by being his girlfriend/partner not by taking over his finance problems like a parent might - which would lead to resentment on both sides.

aymara_2

Thanks for the replies.

The loan would be joint not just in my name.

Lots of points I need to consider.

I don't think he realised how much he owed. He pays the minimum payment plus £20 each month then didnt give it another thought. He had paid 1000s in interest he didn't even have to pay as he had the option to shuffle if he wanted to and he just didn't understand it. He didn't understand it would effect a mortgage offer either. When I looked at his statement he had been paying £40 pet month ppi without realising it.

This had happened before unfortunately which is why I think he ignored the level of debt and got himself into a mess.

I can't go through this again so the deal was he cancelled his credit cards and overdraft then had his wages paid into my bank account and I would pay all the bills etc then we split whats left and placed it into our own accounts.

But I need to think about what was said above and how that could be treating him like a child and the effect it would have on our relationship.

It does seem different to last time as this time he acknowledged it's an issue that's getting out of control that he need to do something about

ETA it would be s holiday cottage on a winter let so know minimum terms just a reduced monthly rent

aymara_2

Sorry just wanted to add I would be helping him pay it not just paying it all for him.

Puddylove

You'd still be liable for his debts on a joint loan if he didn't pay. And having his bank card/wages is no security if you do take on his debts; he can change that back tomorrow leaving you stuck.

He's the one with the debts, yet you're the one shouldering responsibility, posting on here, managing his money. And not for the first time?

Be careful.

aymara_2

Yeah he's just useless with money and just can't get his head around figures at all.

He's come into the bank with me twice for appointments to discuss it all and it goes right over his head.

I do think this time the lifestyle change will happen and the overspending stop.

I have been thinking after what you said of doing it differently. I could take out money for the roof separately and put an amount on the 0% deal I would be happy to be left with if worst came to worst and then help him to either put the rest onto a 0% deal or a 6.9% for life deal he's being offered.

Redundancy etc is not an issue. His redundancy would clear the debts and he has very good sickness benefits

Puddylove

I'd suggest you only take on as much of his debt as you are able and prepared to pay entirely by yourself.

You don't seem to have savings (for the roof). Are you sure you can afford to help him out at all?

Does he even want you to? Feigned helplessness can be a useful tool to avoid taking responsibility for things you don't want to deal with. And abdicating control by handing it all over for you to worry about isn't a solution (nor is it really fair on you).

I speak with some experience as my ex did the same to me - I took on extra work, got free accommodation for us by taking a grim promotion, helped him budget, paid for things for us as gifts etc. The reality was he enjoyed spending money, but didn't enjoy managing it, so tried to make it my job.

redcard

aymara wrote: »

Yeah he's just useless with money and just can't get his head around figures at all.

He's come into the bank with me twice for appointments to discuss it all and it goes right over his head.

I do think this time the lifestyle change will happen and the overspending stop.

This does not reconcile.

He is still useless with money and is making no effort to understand relatively simple concepts, yet you think he has had a lightbulb moment.

Bizarre.