Tale of debt woe

johnnywyoming

When you are ready to close credit cards, call them and ask how much you have to pay to completely close the card down. I found that by doing so some of my card companies actually waived additional interest charges so the recurring problem would stop... and when I say we cut up our cards I mean it literally, use the biggest pair of scissors that you can find and make it a celebration with your wife! Because... it is a huge reason to celebrate!!

enthusiasticsaver

On your income I would say that £20k of credit card debts should be manageable especially as your mortgage is not huge in comparison to your income. I would suggest you post a SOA and give details of the loans and really sit down with your wife and work out a manageable monthly budget and try to stick to it as much as possible. I would not suggest selling your house as moving comes with its own set of costs. Also just because your son or daughter is going to university this does not mean it will cost you a fortune. Presumably he or she will get a student loan at a much lower rate than you would pay and then will pay it back according to their income in three or four years time.


My suggestion is to get rid of as many of the credit cards as you can - the highest charging one first and ideally moving as much as you can to a 0% one and then just sticking with the one. Close the rest down as they are repaid to avoid falling into the trap of starting to use them again.

nicp60

enjoyyourshoes wrote: »

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

Please think carefully before taking (and offering!) advice like this. Firstly OP has already said that they got into this situation partly by consolidating.
Also under some affordability rules, OP would have to have a household income of around £100k to be offered additional borrowing.
I'd be really careful OP when considering your options. In the long term, by far your best bet is to do what you're doing - cut your cloth accordingly and hunker down for a bit to hammer the debts down.

Best of luck!

judi24

Just wanted to stop by and say good luck on your journey - I feel you are beating yourself up for making less than sensible decisons about money - That needs to stop now!!! I would suggest that very few of us on here got into debt by making sensible decisions so you are in good company! but beating yourself up about it isn't going to help!
By the sounds of it you are far from being in a situation where loosing your house or having to sell and downsize are the only options.


My advice (for what its worth!) is to post and SOA and get the kind folks on here to help identfy areas where you can reduce costs - writing it all down really does help! Then think about budgetting so you can see a plan to move forward as at the moemnt it sounds like you can't see the wood for the trees

Armorica

get a fixed rate on your mortgage if it helps provide you with some certainty

your income level is high enough for the 20k debt to be ok as long as it isn't at completely stupid interest rates

if feasible, try to clear at least one of your credit cards - either through paying down or balance transfer onto one of your other cards. If you don't use your card, you'll find your card issuer is likely to notice you aren't active anymore and send you a helpful 0%/low balance transfer

in_need_of_direction

Don't go looking for problems. Your child may go to uni or they may take a year out to earn some money. You don't know yet. Just get pen and paper, set out what is and pick a starting point. An soa here will help as some incredibly smart people will see savings most of us would be oblivious to. Seriously, worrying about the what ifs will leave you totally drained whereas starting to tackle things will motivate you. As for your wife, I agree with what was said earlier. She benefitted from the extras. Deep down she must have known that you couldn't really afford them. She needs to be part of the fix. Best of luck.

Jimmijim

Thanks guys.
Didn't get the thing done last night as poorly kids until the early hours, but I will in the next few days.

I'm relieved about what you guys said about the house. That's almost the bedrock of us.

When I told my wife, we paid off all the cards, and I'm trying to close them. Easier said than done in some cases, as I found in 2 cases that there was a little bit extra.. Like £7 or something that can turn just keep the thing open. Barclaycard even offered a YEAR interest free on Everything, and to pay my last 6 months interest. That how much money I made them!
We now have two loans (plus the mortgage) at the very lowest market rates.
We're going to work on them, whichever is the most efficient way, then just go without this borrowing in future. I'm honestly no better off than I was before I had CCs(except for a couple of excellent holidays and elaborate xmases.) - note.... These weren't yachting holidays, they were say big barns in Norfolk or Cornwall. I can't imagine the debts if I'd have turned it up further!!

FireWyrm

£55,000 a year is more than enough to live on. If it is a combined salary between the two of you, you will likely be taking home in excess of £36000 a year. On that £20K debt seems large but in terms of this place, it is not all that insurmountable but it will take some nerve and will to overcome it. My debts were at your level several years ago but with diligence, have been halved and should be paid off entirely by late next year.

What is killing you is small outgoings. Overspend on shopping here, extra tank of petrol there, insurance renewal higher than expected and not budgeted for. You need to start a serious budget and I dont just mean on the back of an envelope type calculations. You need to know exactly where every penny is spent from one day to the next.

To that end, you need to run your finances just like you would run business finances, and that means using some sort of software to track spending and budget. The best option I know of is YNAB (you need a budget.com) but an Excel spreadsheet will likely be a vast improvement on your current system. Many people who use this sort of accounting mechanism report astonishing results within the first few months, simply by cutting out those 'unexpected' spends and therefore find that they have more money to throw at debts.

You need to change your mindset as much as save money and this is the way to do that. By actually seeing money spent, you are faced with the issue head-on and you simply cannot ignore it. This sort of zero-based accounting means that you are by definition budgeting to the penny and there is no room to 'forget' transactions. It will help you to manage better and I anticipate positive results if you embrace the system. For example, you will have seen the idea of 'no spend days' on this forum? I dont participate in them simply because this kind of accounting stops you from spending money in a frivolous or unfettered way and therefore, a NSD is pretty much every day as you only spend what you budgeted on the item you anticipated. There is no drip-drop of spending that this sort of challenge is designed to combat because it cannot happen in a well run budget. Generally speaking, I spend money on very few days of the month and almost always it is fully budgeted and anticipated. That is not to say that it doesnt happen to me, but it is incredibly rare and I have resources to cover it.

See what you think of YNAB. There is a free trial for 34 days and the end of the month is fast approaching - a perfect time to start. Simply draw a line under your current situation and start afresh. Watch the videos on the site, learn the system and then implement it and keep implementing it forever more. You will soon find yourself ratcheting out of debt at a rate you didnt think possible.

asparagus1968

well done so far, sounds as if you have had your light bulb moment:)
It's great that you have told your wife the situation, it'll be easier if you can work on this together (plus she will keep an eye on your spending!)it'd be good if you both start a spending diary (a record of everything you spend each day, on paper or an app on phone)
I found taking little achievable steps helped kept me positive.
So, this is what I would do today:
1.get scissors and cut up the cards, make sure you cut through the chip and hologram thingy.
2.ring credit card companies and TELL them you are closing account, how much is the full and final balance
3.think of a way to pay these if not enough readies- anything to sell?




Next time you have a chunk of time:
4.root out all your bank statements/look at them online
5.make a cup of tea (or something else, pref not alcohol though)
6.Fill out the Statement of Affairs as fully and honestly as you can. It took me a couple of weeks adding bits and bobs on as I remember them. Make a list of one offs/ yearly payments too.


Next chunk of time:
7. Go through all your direct debits/standing orders-ask for each one-is it needed or can we do without? can I get it cheaper anywhere else? can I use a cashback site to get a bit of money back?


From all this you make you monthly budget!
There's loads of different ways of using a budget, you and your wife will have to choose which suits you better.
Envelope method
You Need A Budget app
Spending Tracker app etc etc


good luck, there is always light at the end of the tunnel!