Is the situation as bad as I think it is?!

Clockley

Just wanted to write down our situation because I do worry about it a lot of the time!
Brief background- household consists of me (28), husband (29) & 7 month baby.
Husband earns £1910 per month after tax.
I stay at home but have personal income if £260.
Mortgage paid off! House is worth £180,00.
2 years ago husband was self employed and badly injured so couldn't work. Relied on savings, & then lots of credit..
We now have £6000 on Barclaycard cc & took out a loan of £15000 2 years ago with Tesco. The loan doesn't bother me as such, it's £185pm for 10 years. I don't think about it too much. But the credit card is soul destroying. The interest is high (sorry I'm useless & don't know how high!) think about 20%.
We pay £200 pm rather than just minimum payment so I can slowly chip away at it but thought we could consolidate onto the loan.. Wrong! Apparently even though my husband has good credit score & has never defaulted it's showing as too much credit. We don't any more though it's just to consolidate. I'm not any good with money (hence the debt!) and not sure what to do for the best.
We don't want to remortgage. We can afford the repayments it's just I feel like it's going to take forever & I worry so much.
Is it bad? Am I stupid? Thanks for reading!

Reya

No, you're not stupid You're just in the same boat as many many hundreds of other people.

You said in your post that, "I'm not any good with money." Well here's where you start learning how to be good with money! And it starts with knowing exactly what is coming into and what is going out of the house.

Getting pro-active, and actually doing something about it is the best way to feel like you're getting to grips with the situation (even if, initially, it's a bit worse than you realised!) than just sitting and worrying about it all the time.

At the moment, all you can confidently say is that each month you have approximately £2170 coming into the house, and £385 going out of the house on debt repayments. That leaves a whopping £1785 that must be going somewhere, so you need to find out where 'somewhere' is. Since your mortgage is paid off (congrats!), that's a lot of money to be going into a random 'somewhere' hole.

Go to http://www.stoozing.com/calculator/soa.php and fill in all the details. You'll need to dig out past credit card and bank statements (your interest rates will be written on those) and your last four grocery shopping bills (so you can average out your monthly spending there). This shouldn't be filled in as a wishlist ("This is what I'd like to spend") or a guess ("I think we spend this, but I'm not sure" - in that case, check!) but exactly as things are.

When you've finished, use the button to format it for MSE and come back to paste it on this thread. People here are pretty expert in eyeballing these SOAs (Statements of Affairs) and can often spot ways in which you can cut back to help you pay off debts much more quickly than you otherwise might be able to.

There are loads of ways to pare down your everyday outgoings so you can throw more money at that killer credit card and pay it off even faster. So, crack your knuckles and gather ye that paperwork!

Pollygarter

I'm fairly new here but the good people of the wannabe boards have gently shown me that yes it is as bad as I think, and if I don't think now it will get a whole lot worse.

The first suggestion made was get that credit card debt onto a 0% card if you possibly can. There are some offers which don't even charge a fee to do it. Even if they do, it is considerably cheaper than the APR you will be paying. Martin always has a list of the latest best offers but Halifax gave me mine last month and that alone saves me £40 a month.

Then as had been said, look at what you do spend. When I did this exercise truthfully with the budget calculator I could see I spent £700 a month more than my income. That's never going to end well.

Then I looked at what I could cut. I made a budget that gave me some cash to throw at debt. Its quite tough but that's what I want.

Next is the sticky bit. Sticking to it. Teaching your family to stick to it. I'm in that phase now! Getting the kids onside and learning to say no to impulse buying. We are doing OK.

Any other potential sources of cash?

I am selling stuff on eBay. A lot of my silly spends went on clothing and shoes so I have stuff to sell.

And the ship is turning! I had a bad month last month because of unavoidable irregular expenses. But the general direction is good.

And you know what? It gives a wonderful calm feeling to be sorting this out. There's a blogger called Mr Money Moustache who says we should treat all debt as a personal crisis and do whatever we can to get out of that hole asap. You are in a wonderful position of being mortgage free and could build your family a great secure future on that income if you cut your cloth differently. I wish you all the best. There is so much help.and advice here, use it as best you can!

ellesbellesxxx

Great advice here about filling in SOA - often people find keeping a spending diary is illuminating too!

japmis

If you like apps and software, then there's a great tool called "You Need a Budget" (YNAB). It has taught me how to be good with money and achieve my financial goals. (My dad used to ask me if I spent more than I earned and I didn't even know what he was on about!!). I can't recommend YNAB highly enough :beer:

patman99

You say you have looked at re-mortgaging and another loan, but have you looked at 0% interest credit cards ?.
You may not be able to get one with the full £6,000 credit limit on, but even if you can get one with £1,500, transfer £1400 across from the Barclay card, then pay min. payments to Barclay card and enough to the 0% card to clear the balance before the deal expires.

That would save you £280 in interest over 1 year alone.
Rinse and repaet until all your cc debt is on 0% and you will have cleared £6k of your debt without paying as much in interest as you would have done.

andyfromotley

Hi Clockley,

Yes you are stupid!! So am i! So is everyone else who posts on here. (except Sourcrates who was born wise).

However we are all determined to make ourselves un - stupid - ier (?) . So welcome. Great advice above.x

Clockley

Thanks everyone for your responses! I've done a really thorough budget & transferred the majority of the balance onto a 0% card as of today and will set the DD at a fixed amount so the debt will (hopefully) be cleared in 20 months! I've started an emergency fund too - probably be able to put around £40 in that a month so we don't have to rely on credit should something unexpected arrive. Thankfully being mortgage free will mean we can be more secure once this has been paid off thanks again everyone! Feeling less stupid & more determined now!

FatVonD

patman99 wrote: »

You say you have looked at re-mortgaging and another loan, but have you looked at 0% interest credit cards ?.
You may not be able to get one with the full £6,000 credit limit on, but even if you can get one with £1,500, transfer £1400 across from the Barclay card, then pay min. payments to Barclay card and enough to the 0% card to clear the balance before the deal expires.

That would save you £280 in interest over 1 year alone.
Rinse and repaet until all your cc debt is on 0% and you will have cleared £6k of your debt without paying as much in interest as you would have done.

Other way round, pay minimum payments on the 0 percent and throw everything at the Barclaycard!

Clockley

That's what the plan is. I've transferred £4400 to the 0% & will pay minimum on that until I've paid off the Remaining £2000 on the Barclaycard (which I can have paid off by the end of the year. Feel much better about the amount of money we will save in interest now!

ellesbellesxxx

Already that is great progress anything you can sell? I have popped bits on myself on the bay today.. All helps