Tale of debt woe

Jimmijim

Hello all.

I have a big problem that I've sat on, making worse for a while now. And I hope someone can help.
I've not put everything on here for now, but I hope someone can start me off. This is very difficult.
Can I ask that you go easy on me here. I have a whole host of sorry excuses. They're pretty good, but don't help me. I also realise this is completely my fault, and don't need any more reality checks.

Me and my wife work hard - her part time to look after the baby for a couple of days (still does 33 hrs). We have kids, ranging in age. One is in nursery, not in the paid for age, and the other may well be going to University in a year.
We make about £55,000 a year. I don't have CCJ's or arrears, and my credit is perfect. Sounds good doesn't it.

This is where it unravels. We have a mortgage of about £150,000, at a 'reasonable' rate. I haven't tried reducing it yet, for the reasons you'll see below - I'm worried that they will just look at me now and go "No chance"
I have managed to run up about £20,000 of debt on cards and loans over about 4 years. Not on anything henus - just stupid things. Things I wanted, but nothing I needed. Spending £100 in Waitrose, in addition to the weekly shop, going mad on holiday, that kind of thing. Mainly it was all about consolidating then using the extra, then consolidating. I feel like an idiot saying it. To make it worse, I actually got a reasonable critical illness payout 4 years ago, and I've blown that (some of that went into the house, but I wasn't exactly sensible and paid the mortage or invested it. My health is ok right now, but who knows what could happen. I don't think this incident particularly helped my mindset with money, but excuses are like a***holes eh)
A couple of months ago, I told my wife, who I'd been covering it all up from for years. Obviously, it wasn't a great time, but we thought together we'd got to a point where we could cope.

This month has shown that it's not working that way, and we're about £400 down. We've looked at it from a point of view of taking everything down to to bear bones. I'm getting rid of Luxuries like SKY this month, and we may just be able to eek out being able to pay everything. Also spending - I've literally not used money for anything but petrol to get to work.
I've thought about the cars, but we need them to commute to our jobs, and move the kids about through their various places.

Then i wonder about the uncertainty of this situation - mortgages going up - my eldest going to university - the fact that nothing is likely to change for 5 years or so until these loans are paid off; to mention at this point, both loans were the very lowest APR you can get, so there's no movement there.

How do you actually cope in this situation, and is there any light at the end of the tunnel?

My wife has said that if we have to lose the house (it's not a mansion, it's a 4 bed semi.) then she would completely hold me responsible. How do you cope in that kind of situation, and at what point do you just hold you hands up and give up?

I know people cope on less. We have coped on much, much less, but we've built up such an infrastructure of our lives to support, it now feels almost too much.

Please be kind with your responses, if you've even got this far - trust me, I know where the blame lies.

DawnW

Hi, didn't want to read and run. Why not take a look at the Stepchange website, to get some information about the various options that are available? It is a free service, and you can also speak to someone on the phone if you decide you want to do that. Most people when they first come on here are advised to do a statement of affairs (SOA). There is a link to a template which someone cleverer than me will come along in a minute and post for you. This is a very useful exercise, which will show exactly where your money is going, and you can choose to share on here or not, but will help you decide what to do next or in any discussions you might choose to have with Stepchange.

You don't give much information on your loans but if they are unsecured ones there is little or no chance of losing your house, given that you have now recognised the issue and intend to do something about it rather than it spiralling completely out of control.

Hopefully now you have discussed the situation with your wife, you can move forward making decisions together about finances rather than it fall completely on your shoulders.

Take care xx

On_my_way

You are a partnership, a team and presumably your wife knew that you were living above your means so also is responsible.

With your income, and relatively (a lot of people on here have sorted themselves out with a lot less income and a lot more debt!) low level of debt you will be able to find lots of ways to free up non essential spending and pay those debts off in just a few years.

There are so many tips on this forum, especially about things like how to spend a lot less on the grocery shop etc as those sorts of bills really add up.

You can sort this situation out between you very quickly - so group together as a team and sort things out now before they get worse.

You will be absolutely fine.

Good Luck

Tixy

Hi and welcome to the forum. It takes courage to make that first post.

You mention the risk of losing the house, but it sounds like that is a very long way off from where you are now. Even if you find you cannot manage to keep up with your unsecured debt repayments then there are lots of options available to you before that.

Have you completed a full monthly income & expenditure for yourselves? If not then do consider doing one using this calculator - http://stoozing.com/calculator/soa.php
Its really useful to see how much of a shortfall you have a month, when using it budget for costs that don't happen each month (so car tax put in 1/12 of the annual cost, same with things like presents etc).

If you are feeling brave then consider posting that SoA on here as you may find others have suggestions as to where you could make savings/get things cheaper etc/ find ways to make it all balance.
Once you know that and you are already working on cutting luxuries you should then get to a point that you either can or cannot afford your debt repayments after normal household living costs. If you cannot then at that stage you may want to consider contacting one of the debt advice charities and perhaps considering a DMP (debt management plan) or possibly an IVA.

One step at a time and you will find a way through this.

enjoyyourshoes

Great start talking about it as a family, well done

You need to know where you are financially, this takes effort and time and detailed work. Once you know where you are you will feel empowered.

Here is a suggestion.

you probably need to 'do things differently' Here is a way of doing a root and branch review and then a sustainable way of DAILY keeping on top of your financial future.

1. Have a clear objective (specific, measurable, achievable, realistic & time-bound)

2.Understand your total annualised costs & savings (to meet your objectives) (i.e. do a budget or similar) & ensure this is LESS than incoming money. (if not do a review to allocate LESS than income)
(DONT forget to include Christmas, Holidays, Birthdays, Savings, clothes etc as well as the boring stuff)

3. Break budget into two part (part one: monthly costs) (part two: 1/4ly ; 1/2LY & annualised bills. This annualised £'s should be divided by 12 to produce a monthly cost to save for these bills. Can do a cash flow to ensure monthly savings pot has enough £ to pay allocated Bills on the estimated months they become due)

4.Produce a monthly reconciliation which has your income LESS all your costs (including the monthly savings described above), Cash withdrawals, monthly DD & SO, cheques cashed, credit card purchases & savings (linked to your objectives). Do this reconciliation daily and ensure you spend LESS than income.

5. If you dont deduct credit card payments off your monthly income then you will not have the £'s to repay and thus end up in DEBT.

5. Put your monthly savings into a high interest account and track allocated savings against costs. Also DONT PAY insurances by monthly credit agreement pay them annually.

6. Get online access for your current and other accounts so you can see your separate reconciliation is accurate and moving monies is less hassle on line

7. Produce Excel docs to assist or do it manually

Jimmijim

Thanks for these. I think i'll post the list of outgoings first. In for a pound and all that.

I feel like a effing idiot, basically. It's ridiculous how much money you can run up ponsing about. I don't even have anything elaborate. Just being comfortable for so many years.

When I say lose the house, I mean more about making a conscious decision to let it go - as in sell up and move to a cheaper house. I know that doesn't match the jeopardy that some are in, but when you work all the time.....

Again thanks. I'll look at this soa now.

jodles16

Didnt want to read and run, well done on that lightbulb moment and makig your first post, try not to be too hard on yourself, remember, you are now taking control and thats important!

The SOA will be really useful as some on the folks are here are amazing! Also check out the Old Style board for lots of hints and tips as well as the challenges threads for some fab ideas!

Good luck!

Jodles

johnnywyoming

Jimmi...

Just so you know, I posted my first post here today as well! Glad I found find this site.

You have already made THE BIG STEP that most people never get to.... you have recognized that you brought on your own situation and by coming here and looking for advice you have taken ownership of your own problem. Welcome to our world. Probably everyone here got into the same type of situation as you, to varying degrees, by acting stupid and impulsively with money. But, I can tell you from my own experience, once you understand your dilemma, make a real budget, and make a workable plan things will get much smoother. Just the idea that you are moving forward will ease the stress significantly in your life.

My wife and I began working on our debt problem about three years ago and things are going very well for us now because we have accomplished some major steps (budget, paid off credit cards, cut-up credit cards, buying nothing except mortgage on credit!). So, stop being hard on yourself... you are on your way! :j

Jimmijim

Thinking about all this info(I'm going to put this into action tonight if we get some time from ill kids) it makes me question the way I think.

I've read through the step change website and read about the DMP's etc (obviously I wouldn't refer to something like that yet, as I'd like to clear it off myself with no hassle), but it's interesting - initially I panicked at losing some of my credit rating (I've never defaulted anything, which makes this situation the more ridiculous)
Then I think, so what if I do? What if I just decide now to run my life on stuff I can afford, and not borrow for it.
I'll update this as it goes on.

Jimmijim

johnnywyoming wrote: »

Jimmi...

Just so you know, I posted my first post here today as well! Glad I found find this site.

You have already made THE BIG STEP that most people never get to.... you have recognized that you brought on your own situation and by coming here and looking for advice you have taken ownership of your own problem. Welcome to our world. Probably everyone here got into the same type of situation as you, to varying degrees, by acting stupid and impulsively with money. But, I can tell you from my own experience, once you understand your dilemma, make a real budget, and make a workable plan things will get much smoother. Just the idea that you are moving forward will ease the stress significantly in your life.

My wife and I began working on our debt problem about three years ago and things are going very well for us now because we have accomplished some major steps (budget, paid off credit cards, cut-up credit cards, buying nothing except mortgage on credit!). So, stop being hard on yourself... you are on your way! :j

Thanks, I'm just glad there are options!
Something I always found ridulously difficult was closing credit cards - physically difficult. You'd pay the sum, then get another bill, and they'd have added a bit more interest, so couldn't close it. Then before you knew it, you were using the flipping thing again. It's a nightmare.

enjoyyourshoes

The cost of moving, selling, hose etc will mount up. Just do your maths before you make such a rash decision
£20K debt is manageable on your joint as long as you know where you are financially.
Just loo at the options for the debt. I am 1st Direct customer and they have launched a 7 year up to £25K loan at 4%, so there are product out there that may meet your needs.
Need to now how much you can afford REALITICALL to put into oan repayment before embarking on that step