Drowning in debt - please help!

orton7

Help, Im at the end of my tether and can't see a way out of our debt problems! We have been living beyond our means for years, but we seem to have reached a crisis point where we can barely pay more than the minimium repayments on our credit cards.

Currently got an overdraft of about £13,000, credit card debts totalling £79,000, a bank loan of around £9.400 and a mortgage of £280,000.

Monthly income after tax - partner £4210
Me (varies as I'm freelance, but averages around £2500
Child benefit £120. Total income £6830

Monthly outgoings as follows

Mortgage £1,444
Council Tax £113
Electricity £60
Gas £60
Water rates £41.33
Telephone & broadband £55
Mobile phone £45
TV licence £11
Sky TV £53.50
Buildings insurance £20.66
Contents insurance £20.66
Life insurance £27.40
Groceries £600
Clothing £150
Petrol £45
Car tax £10
Car Insurance £61.33
Car Mot £10
Car maintenance £45
Travel (commuting to work) £164
Birthdays/christmas £80
Holidays £400
Critical illness policy £46.56
Remortgage £610
Nat west Loan £317.39
Newspapers £40
Union subs £15.16
Endownment policy £23.60
Saving for children £100
Charity donations £16
Children - sports, activities, pocket money etc £150
Minimum credit card repayments £1661
Haircuts £25
Meals out £200
School dinners £46
Which comes to a grand total of around £6715.

We are drowning in debt, and even though our income is higher than average, so are our outgoings! Would be interested in hearing anyone's advice - though clearly meals out would be one of the most obvious ways of cutting back. But it seems that we are in so much debt that another few quid won't make much difference to the total debt.

Burlesque_Babe

orton7 wrote: »

Help, Im at the end of my tether and can't see a way out of our debt problems! We have been living beyond our means for years, but we seem to have reached a crisis point where we can barely pay more than the minimium repayments on our credit cards.

Currently got an overdraft of about £13,000, credit card debts totalling £79,000, a bank loan of around £9.400 and a mortgage of £280,000.

Monthly income after tax - partner £4210
Me (varies as I'm freelance, but averages around £2500
Child benefit £120. Total income £6830

Monthly outgoings as follows

Mortgage £1,444 - any chance you can change deals to get a better rate?
Council Tax £113
Electricity £60 )high combined with gas - worth looking at uswitch.
Gas £60 )
Water rates £41.33 any savings from having a water meter installed?
Telephone & broadband £55 - very high for just a phone/broadband
Mobile phone £45 - can you switch to a lower tariff or PAYG?
TV licence £11
Sky TV £53.50 - swap to freeview if you can
Buildings insurance £20.66 )
Contents insurance £20.66) high combined. have a look at moneysupermarket to get some cheaper prices
Life insurance £27.40
Groceries £600 - OUCH! How many is this for? Two adults could be easily done for £200 a month top whack
Clothing £150 - a lot every month. Try ebay or Tesco/Asda
Petrol £45
Car tax £10
Car Insurance £61.33 - have a look at confused.com to see if it can be done cheaper
Car Mot £10
Car maintenance £45 - over £500 a year, what kind of car do you have, would it be worth looking at something more reliable as you are already saving £120 for the MOT annually
Travel £45 - on top of the petrol?
Birthdays/christmas £80 - that's over £900 per year, i'd stop paying into this and use what you have frugally
Holidays £400 - might have to go I'm afraid
Critical illness policy £46.56
Remortgage £610
Nat west Loan £317.39
Newspapers £40 - stop altogether. Read news online, or see on the TV.
Union subs £15.16
Endownment policy £23.60
Saving for children £100 - what are you saving for? That's £1200 a year, on top of birthdays and Christmas
Charity donations £16 - stop this and do some voluntary work
Children - sports, activities, pocket money etc £150 - that's a lot, how old are the children? could they do cheaper activities?
Minimum credit card repayments £1661 - can you swap to a 0% deal?
Haircuts £25
Meals out £200 - stop, although I think you've realised this one!

Which comes to a grand total of nearly £6550.

We are drowning in debt, and even though our income is higher than average, so are our outgoings! Would be interested in hearing anyone's advice - though clearly meals out would be one of the most obvious ways of cutting back. But it seems that we are in so much debt that another few quid won't make much difference to the total debt.

welcome - that's a really good, clear SOA. I've put a few thoughts against some of your outoings, there will be lots of others along with help soon. To be honest, this looks like a case of living beyond means, and there are some really hefty swipes that very easily and pretty painlessly could be taken to improve your monthly situation.

ltm07

Just a few quid can make all the difference. Go to www.whatsthecost.com & put in all your debts,along with your APR's & payments. Can you not cut down on Sky? If you cancel Sky completely you still get the free to air channels through your dish. Meals out £200? If you went out for a meal together once a month you could shave £150 off this. Newspapers £40. We have stopped buying newspapers,saving us £6.04 a week. You can read most newspapers online nowadays. Failing that if you are buying a national & local newspaper can one of these go? Cutting out on a few luxuries for the time being will help you get out of debt so much quicker than you think. We have cut our DFD by 3 months already through the advice on people on here. Good luck.

cattie1

there are a few things that a lot of people are going to point out here
£200 on meals out is extortionate, maybe limit yourselv to a takeaway once a month and some dvds or something?
your gas and electric seems quite high-could you change companies?
also could you change your mob contract?
cancel sky and the newspapers.
and £80 a month towards xmas is extortionate too!

orton7

keren29 wrote: »

welcome - that's a really good, clear SOA. I've put a few thoughts against some of your outoings, there will be lots of others along with help soon. To be honest, this looks like a case of living beyond means, and there are some really hefty swipes that very easily and pretty painlessly could be taken to improve your monthly situation.

Thanks for your comments. Re the mortgage, we've just switched to a two year 5.25% fix, the best deal we could come across, so no savings to be made there. I agree that eating out is an extravagence we can't afford, so will be cutting those out from now on. The £80 I've budgeted for presents isn't just for Christmas, but for presents throughout the year. My kids are aged six and eight, and between them must get invited to 40 birthday parties a year, which all adds up - ie i probably spend about £7 per present, which comes to about £280 a year alone on childrens birthday presents (not including my own!). And I've got a big family who are all pretty generous, so it's difficult not to reciprocate and be equally generous back, even though we can't afford it.
Newspapers will definitely be cancelled, but I daren't switch broadband again, as I had an utter ightmare earlier this year and ended up broadband-less for three months. Can't face that stress again, as I really need the internet at home for work. My other half would have hysterics if I suggested cancelling Sky, so I would prefer to make savings elsewhere.

Food budget at £600 for four ridiculous I agree. Those Ocado deliveries will have to stop. I'm off to Aldi to see if it's as great as everyone says it is.

And I'll check out Uswiich as suggested, though did use them a couple of years ago which is why I'm with Powergen now. They were the cheapest at the time, but probably better available now.

Living in central London, house and contents insurance is astronomical and that's the best deal I can get. Similarly car insurance is high, because we don't have off street parking. But it's nothing flash, just a bog standard estate which recently broke down and cost us £800 to get fixed. Aagh!

slowlyfading

Firstly, hello! :hello:
well done for posting - the meals out are obviously a luxury and will have to stop for a while. As for the child savings - you are lending to put into a savings account. Stop this, even for a year and you could pay off a lot. Also, stop the charity donations for now. As for the newspapers, read online. there are lots of things to make cut backs, dont worry x

orton7

Hi, thanks for your advice. I am kind of loathe to stop saving for the kids, but I can see that it doesn't make sense to have money in an account earning less interest than we are probably forking out on credit cards. But it seems like stealing from them - the savings accounts were opened for the kids by my mum when they were babies, and it's not just the £100 a month I'm saving for them - their grandparents give them money for their chrismtas and birthdays which I put into the account for them, so I really don't feel it's mine to raid. But I could stop the monthly standing orders from us until we get ourselves sorted out - which could take years, given our level of debt.

auntie_brenda

orton7 wrote: »

Mortgage £1,444
Council Tax £113
Electricity £60 check on uswitch & use quidco.
Gas £60 check on uswitch & use quidco.
Water rates £41.33 this is high - are you on a meter? You can elect to go on 1 and change back after a year if paying more.
Telephone & broadband £55 check on this site for best deals.
Mobile phone £45 can you cut this back?
TV licence £11
Sky TV £53.50 ditch it! The basic channels are all you can afford.
Buildings insurance £20.66 when renewing check out quidco.
Contents insurance £20.66 when renewing check out quidco.
Life insurance £27.40
Groceries £600 as others said, this is v high. Meal plan, check out old style board, buy a slow cooker.
Clothing £150 you can at least 1/2 this.
Petrol £45
Car tax £10
Car Insurance £61.33 you are paying an awful lot to do what - 600 miles a month? can you do without a car, or downgrade to cheaper one with cheaper insurance?
Car Mot £10
Car maintenance £45
Travel £45
Birthdays/christmas £80 1/2 this!
Holidays £400 this has to go - you really need to sort out your priorities. You can have a v cheap & v good holiday on about 15% of this.
Critical illness policy £46.56
Remortgage £610
Nat west Loan £317.39
Newspapers £40 read on line, or look out for special subs offers if you buy quality papers. I have a sub for the Times costing £2 a week.
Union subs £15.16
Endownment policy £23.60
Saving for children £100 you can't afford this. Basically, you are borrowing money at the highest rate to service this. Cancel it - make a note of how much you 'owe' them, then repay when all other debts are cleared.
Charity donations £16 ditto
Children - sports, activities, pocket money etc £150 again, you can't afford this. The children should be aware of your financial situation - if not tell them & ask them to pick an activity each.
Minimum credit card repayments £1661
Haircuts £25
Meals out £200 as other have said, this has to stop if you are serious about getting out of the mess you are in.

Which comes to a grand total of nearly £6550.

We are drowning in debt, and even though our income is higher than average, so are our outgoings! Would be interested in hearing anyone's advice - though clearly meals out would be one of the most obvious ways of cutting back. But it seems that we are in so much debt that another few quid won't make much difference to the total debt £200 a month is NOT a few quid!!!!!! .

I'm with the others on this - see above. However, a real big plus is that you have a fabulous income so can really, really make inroads into the debt. You can easily cut £750 or more off monthly outgoings - if you are serious about wanting to do this.

Good luck!

oramgepekoe

If you live in central London could you manage without a car?

orton7

oramgepekoe wrote: »

If you live in central London could you manage without a car?

probably yes! I'm sure it would cost us much less to just take a taxi when necessary, given the hideous cost of insurance, plus petrol, repairs etc. I'll broach the subject with my other half. He's not madly into cars anyway, so it might be one way of cutting back on unncessary expenditure.

CLAPTON

I think you might find it better to think about setting out a realistic plan to tackle the debts rather than just look at a few items.

So your (non mortgage) debts are about over 100,000

So appoaches :

are your joint incomes likely to rise significantly?

do you have any endowment policies or saving products that can be sold or will pay out over the next few years?

do you have any other savings (putting aside the kids money for now)?

How much is the house worth?

Depending upon the above and assuming that you have no real get out of jail cards then you need to think about reducing your spending by at least 12,000 a year to make any indent into the debts.

so thats about 1,000 a month:

holidays have to go : £400
savings for kids : £100
reduce groceries saving :£300
reduce meals out saving £100
reduce cloths saving £50
cut out newspapers save £40

totals 990

In my view it has to be as drastic as that ..unless there any hidden get out of jail cards elsewhere.