How much? A wake up call

Glawster

Hi everyone,
My wife and I were in some debt and worked hard to get our joint finances in order. She is has a small balance left on her credit card and the joint account is still overdrawn, but by paying in what we have been that will be up straight by the end of the year. This was a huge concern for her, but we are nearly there.
However I have paid no concern to my own finances. I have a number of credit cards and a loan, and have been spending freely as there has always been cash available. I know this is stupid, especially with a "head in the sand"attitude, but it is done and led me to where I am today.
I have just created a spreadsheet to see how much I owe, and it is frightening. Truly frightening. Please don't judge too harshly, I can't change what I have done but I am hoping that by recording things here I can slowly get things back on track.
My take home pay is around £2550, of which £1425 goes to the joint account. This covers the mortgage, utilities, food and paying off some of the overdraft. My wife pays in less, but earns less. This leaves me with approx £1000 per months, which should be more than comfortable - however

My debts:
Bank loan with £13932 outstanding - £401.76 per month
MBNA c/c with £12598 balance - min payment £127.25
Barclaycard c/c with £11150 balance - payment last month £240
Barclaycard c/c with £5774 balance - payment last month £135
Overdraft £4500 - monthly interest approx £65

That makes a total of £47954 with min payments of £969.

I have just been sat here trying to work out what to do. I have called Barclaycard and both of those cards are now on 9.9% interest rates for 2 years. This may help on the short term in reducing the minimum payments, but that isn't going to help clear the debt. I called the bank to see if the loan could be increased to include the overdraft, but they said they would decline any application.

I feel so stupid. I should get a pay rise of about £100 per month from the end of this month, but after the minimum payments that is about all I would have to live on for the month, let alone paying anything off towards my overdraft.

I could just go on paying each month until my loan is finished and then roll that into the c/cs, but that is 3 years away. The credit cards themselves have just been shredded, which doesn't really help but made me feel a bit better. Overtime is scarce at work at the moment, but I will put myself forward for any that is going.
Our mortgage deal is up in March - there is plenty of equity in the house, but I am reluctant to take money from there. It might be the only option. I don't especially want to tell my wife until I have a handle on things as she was quite ill when she was in debt, but equally I don't want to keep things from her and it will be pretty obvious anyway once i stop spending any money.

Bit of a vent - sorry

lincs1205

Hi Glawster, Just wanted to pop by and say hi:hello:, first of all your not alone, secondly you're in the right place there are lots of people on here who are more experienced than me. However i know one thing that they will say is to do an SOA - Statement of Affairs this will give people a chance to give you some advice on what you can cut back on. You will get through this. Have a look at the debt free diaries there are lots of inspiring people on there.

autumn2012_2

Well done for helping your wife, have you told her of your own problems? Do a SOA so people can advise of savings. YOU WILL GET THROUGH THIS SO DONT WORRY..

ALIBOBSY

Other than the main bills which you cover in the money you transfer to the main account what do you need to spend on? You can stop spending on things like food out at work, coffees etc and just take stuff from home.

TBH the obvious thing would be to work out the min you need money for out of your share ie petrol basically, and reduce the overdraft repayment to give you enough to cover this only and any lunches take from home/eat at home.

Good Luck the scariest bit is facing up to the totals and you have made that first step.

Ali x

Glawster

Thanks everyone.

I will have a look at the SOA later and see what is what. I am still unsure about telling the wife everything at this stage, so I'm not sure that the SOA will be appropriate.
I've been playing around with my spreadsheet all afternoon, and there isn't much to cheer me up!
I guess simple things first - give up the fags, stop buying coffees and start making my own lunch. And most of all stop going out drinking with friends. Easier said than done, but needs must and tbh it is more of a mindset than anything else.
Other than that there isn't a great deal I have to spend money on. Petrol only costs around £10 per month (motorbike) and the tax/insurance is paid up until next June. Does raise the question of how the hell I got into this position in the first place...

comeandgo

Right, you have £1,000 per month with debt of £48,000 so that means 4 years to pay it off without even spending anything on yourself. Do you have anything to sell? Old mobile phones, or computer games or leather bikers gear? Can you take in a lodger, though your wife would probably notice! Can. You get a part time job with Christmas coming up? Every shop I seem to go in has a notice on the door wanting part time staff.

Are you sure you can't tell your wife, it's not nice having secrets like this from your partner, it puts extra pressure on you which can change the way you interact with her and she will notice the change in you.

tiger_eyes

Glawster wrote: »

Does raise the question of how the hell I got into this position in the first place...

No judgement, but I'm wondering the same! To build up debts of £48k when you have spending money of £1000 a month is a considerable overspend. It might help to think about where the money went - firstly so you can adjust habits in future, and secondly in case you can recover any of it. Did you buy any big-ticket items you could sell? Any ongoing expenses that you could end? Contracts you could cancel and get a partial refund for?

You obviously have a good income, so you have a great opportunity to address this debt. The snowball calculator might help you get a grasp on what to pay off in which order. Remortgaging the house to pay off debts sounds seductive on paper but I suspect paying off the debt over the lifetime of the mortgage term will be more expensive in the long run.

Do you work in an industry where your financial problems could affect your employment? For example if you lost your job and had to apply for new ones, would you be credit-checked? I understand that happens increasingly in some areas of employment. That might need to be factored into your strategy if that is the case.

Wishing you the best of luck with what looks like a tough, but very fixable situation.

rockm87

is this my husband???

dont worry, make sure you put together your SOA http://www.stoozing.com/calculator/soa.php and post it here for us to have a look at, there are some wonderful people here with great advice to get you sorted.

As someone who is sorting their debt and watching my husband go through his DMP and still use credit and get stressed bout money, please talk to your wife. Even if it is once you have a plan to help yourself, you will need her support, you need to look after each other!

welcome and best of luck on your journey!

Glawster

It would be funny (and easier) if you were my wife rockm87! I did broach the subject this evening, without going into full details. She was okay but basically expects that I will sort it out.
There are reasons I don't want to tell her everything and how worried I am, but I don't want to go into that without her knowledge.

Tiger Eyes you hit on one of my worries - about work. It is expected I will be financially solvent, and this debt obviously could have an impact. All the more reason to get on top of things.

I don't have much I can sell at the moment. The motorbike but it is my main transport and I would struggle without it. I only have the one set of gear for it. I have an old mobile phone I will look into recycling tomorrow. I also have a jar of 20p coins and another of 1,2,5 and 10p coins. I reckon that will add up to £50-60.
A lodger is unlikely, we have 2 young kids and very little room. Likewise a part-time job is not an option for various reasons, not least that my current hours and variable and change at very short notice.

I looked at 0% balance transfers earlier. Fluid will give me £5700 limit for 20 months. I am undecided about this. Everything screams at me not to take on further debt. However I could transfer balance the majority of one of my Barclaycards to it and then close that a/c, which would leave me with the same amount of credit as now minus some interest. Or I could transfer to pay off my overdraft and then ask the bank to remove the overdraft limit. It concerns me that I am paying £65 a month in interest on this overdraft and basically not making any impact into it. 20 months of £65 against a 0% balance would remove £1300 I wouldn't otherwise pay.

My mind it frazzled...

tiger_eyes

Glad you were able to tell your wife about your debts in general terms. Apart from the emotional element, it would have been challenging to keep such big spending cuts secret.

Glawster wrote: »

I looked at 0% balance transfers earlier. Fluid will give me £5700 limit for 20 months. I am undecided about this. Everything screams at me not to take on further debt. However I could transfer balance the majority of one of my Barclaycards to it and then close that a/c, which would leave me with the same amount of credit as now minus some interest. Or I could transfer to pay off my overdraft and then ask the bank to remove the overdraft limit. It concerns me that I am paying £65 a month in interest on this overdraft and basically not making any impact into it. 20 months of £65 against a 0% balance would remove £1300 I wouldn't otherwise pay.

It's worth bearing in mind that your bank can withdraw your overdraft at any moment, which could lead to further fees and charges. They may do this if they think you're in financial difficulties, particularly if they think they might not be repaid - if you're currently covering your debts, it's less likely, but still possible. Anecdotally, I've heard some people find it easier to budget with no overdraft because they're not dealing with negative numbers any more. And obviously, financially it's better to pay no interest than to pay fees and charges on an overdraft.

The risk of course is that you repay the overdraft from a 0% credit card ... then rack up the overdraft again, leaving you with more debt than before.

Just a quick thought.

Glawster

I think I'll use the balance transfer to pay off the overdraft, then ask the bank to either remove it or reduce it to £100. I think mentally it will feel like a positive move - I can't remember the last time I wasn't overdrawn. It also worries me that they can withdraw it if they so feel.

I counted up a tub of 20p coins today - turns out there was £41 in there!
I've still got the other coins to go, so there will hopefully be another £20 or so.
o2 Recycle will pay £63 for my old mobile phone as well, so that is over £100 found today, which is amazing really.
I've also been off work this week, and just realised I haven't actually spent any money since Saturday! Well there was an online shop from the joint a/c, but for now I am treating that seperate from my debts.

Is there any way this can be moved to the debt diaries forum? I think it will help me structure my thoughts writing on here, but I don't want to bore anyone else!