Please help me get out of this vicious circle

LoisLane16

Hi all,

Please forgive the long and convoluted post, but I need to get some advice to follow for the rest of my life!

My husband and I have been together for 14 years. In that time, I have gone to him twice, confessing approx £15-18k of credit card & overdraft debt, built up over a period of 4-ish years each time, meaning we are overspending by around £4k a year. And it's not on anything particular, it's just everyday life - going out, trips, groceries, things that we should be saving each month for.

I am now at a point where I need to confess once again. I feel sick, and what's worse is that because his wages have dropped by £500 a month since December (company-wide overtime ban), our debt has increased a lot in that time, to the point that it looks like we are going to be rejected for buying a house we have had our eye on for a year. We were accepted back in Nov, but there were land registry issues, and the AIP expired.

The first 2 times, we got a consolidation loan of £15k, closing all cards except one, which was kept for emergencies, and I now see that was stupid and naive, as that's where the debt started building up again. This time, I don't know yet how to tackle the debt, but I have the option of trying to repay it, or adding it onto our not-huge mortgage, which is due for remortgage now, then removing the OD totally and closing every card, so that there is literally no ability to overspend.

Another issue for me, is that my husband is not good with numbers, and has a horrendous memory, and so the household finance reins always fall to me, and I am clearly not capable of having them!

What I want to know, from those who have been there, is how to end this ridiculous cycle? How did you do it? What tools did you put in place to help you learn how not to overspend?

Thanks so so so much in advance x

Karonher

If you have details of of what the money has been spent on, you could post a statement of affairs and see where cuts can be made. By doing that you could go to your husband with a plan - you would know what you would be spending each month, and also how much extra could go towards repayment.

As your husband is not getting overtime could he get part time work, or could you take on extra work, or look for work if you are not employed?

LoisLane16

Thanks Karonher. Is there a link to a good SOA I can fill in & post?

As for work, I'm thinking he could do with finding a new job, there are always jobs going in his industry with lots of overtime available....

Bobarella

Lois
How did he react the other 2 times when you broke the news? Do you think he will be supportive again? It's horrible when you have that must confess feeling. Maybe the best approach is filling in your SOA and then sitting him down and trying to show how you can tackle it rather than just telling him about the debt? Good to have a plan of attack.
I do sympathise, it sounds like your husband is giving you all the responsibility but not checking in with you as to how things are going.

A realistic budget is going to be the only way forward though. Really hope you can sort it out.

Bob

japmis

Here's the link!

http://stoozing.com/calculator/soa.php

sourcrates

Hi,
The consolidation loan story is a familiar one to me, and to numerous folk on this forum, most have found out the hard way consolidation loans do not work, as the temptation to spend again is always there.

Turning unsecured debt into secured debt, by remortgaging isn't always the wisest move either, you need to think very carefully before you do this.

Before you do anything else, you need to address the issue of overspending, because if you cant get the basics right, then it will be rinse and repeat again, lots of folk on here have great budgeting advice, and i`m sure they will offer it to you gladly, but you need to understand where and why you are overspending, rectify the cause, and live within your available budget.

You may then find you can mange the debt without adding it to your mortgage.

LoisLane16

OK, *takes a deep breath* here it is:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2100
Partners monthly income after tax....... 715
Benefits................................ 192.4
Other income............................ 0
Total monthly income.................... 3007.4

Monthly Expense Details
Mortgage................................ 610.3
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 108
Electricity............................. 35
Gas..................................... 40
Oil..................................... 0
Water rates............................. 23
Telephone (land line)................... 23
Mobile phone............................ 105
TV Licence.............................. 12.12
Satellite/Cable TV...................... 53
Internet Services....................... 7.5
Groceries etc. ......................... 450
Clothing................................ 50
Petrol/diesel........................... 50
Road tax................................ 15.75
Car Insurance........................... 32
Car maintenance (including MOT)......... 50
Car parking............................. 40
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 88
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 22
Contents insurance...................... 15
Life assurance ......................... 55
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 20
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 0
Mortgage protection..................... 23.32
Lottery................................. 10
Bank account fee........................ 17
OD fees & charges....................... 70
Endowment............................... 66.3
Windows................................. 4.5
School dinners.......................... 24
Activities.............................. 30
Total monthly expenses.................. 2369.79


Assets
Cash.................................... 0
House value (Gross)..................... 190000
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 191000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 79000....(610.3)....4.7
Total secured & HP debts...... 79000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Nationwide loan................3322......302.3.....7.5
Barclaycard....................8500......233.4.....17.5
Natwest CC.....................2575......61.19.....16.9
Lloyds CC......................5900......176.6.....25.5

Bobarella

Hi Lois

Is that council tax spread over 10 or 12 months? That can help a little bit if not.
£450 for groceries is a little on the high side. Do you cook from scratch most of the time or end up using ready meals/takeaways? Do you shop in one of the big supermarket s or could you change to Aldi or Lidl?

£105 on mobiles is high. How us that broken down? I'm guessing that's for both of you, could you go onto cheaper PAYG deals?

£100 a month on presents seems quite a lot too if you are not saving for an emergency fund.

Ouch that £70 on bank fees is definately excessive why so high?

Bob

LoisLane16

Not sure if this is better:
Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget Summary Amount(£)
Total monthly income 3,007.4
Monthly expenses (incl. HP & secured loans) 2,369.79
Available for debt repayments 637.61
UNsecured debt repayments 773.49
Amount short for making debt repayments -135.88

Personal Balance Sheet Summary Amount(£)
Total Assets (things you own) 191,000
Total Secured & HP Debt -79,000
Total Unsecured Debt -20,297
Net Assets 91,703

Household Information

Number of adults in household 2
Number of children in household 3
Number of cars owned 1

Income, Expense, Debt & Asset Details
Income Amount(£)
Monthly income after tax 2100
Partners monthly income 715
Benefits 192.4
Other income 0
Total monthly income 3007.4

Expenses Amount(£)
Mortgage 610.3
Secured/HP loan payments 0
Rent 0
Management charge (leasehold property) 0
Council tax 108
Electricity 35
Gas 40
Oil 0
Water Rates 23
Telephone (land line) 23
Mobile phone 105
TV Licence 12.12
Satellite/Cable TV 53
Internet services 7.5
Groceries etc. 450
Clothing 50
Petrol/diesel 50
Road tax 15.75
Car Insurance 32
Car maintenance (including MOT) 50
Car Parking 40
Other travel 0
Childcare/nursery 0
Other child related expenses 88
Medical (prescriptions, dentists, opticians etc.) 20
Pet Insurance/Vet bills 0
Buildings Insurance 22
Contents Insurance 15
Life Assurance 55
Other Insurance 0
Presents (birthday, christmas etc.) 100
Haircuts 20
Entertainment 100
Holiday 0
Emergency Fund 0
Mortgage protection 23.32
Lottery 10
Bank account fee 17
OD fees & charges 70
Endowment 66.3
Windows 4.5
School dinners 24
Activities 30
Total monthly expenses 2369.79

Secured & HP Debt Description Debt(£) Monthly(£) APR(%)
Mortgage 79000 (610.3) 4.7
Secured & HP Debt totals 79000 - -

Unsecured Debt Description Debt(£) Monthly(£) APR(%)
Nationwide loan 3322 302.3 7.5
Barclaycard 8500 233.4 17.5
Natwest CC 2575 61.19 16.9
Lloyds CC 5900 176.6 25.5
Unsecured Debt totals 20297 773.49 -

Asset Description Value (£)
Cash 0
House Value (Gross) 190000
Shares and bonds 0
Car(s) 1000
Other assets (e.g. endowments, jewellery etc) 0
Total Assets 191000

LoisLane16

Thanks for the reply Bobarella, just off to bath the kids, then I'll be back x

Bobarella

If you are only short £135 a month I'd definately be looking for any small cut backs that would help. Ditching those mobiles plus the grocery bill being reduced could do that for you. So there is hope!