Trying to clear debt and save for a house.

autumn2012_2

If you have 10k in savings then why not just clear the debt and pop the money into the savings account that you would have been paying off the CC?

northerner999

This thread is symptomatic of very common issues I see on here.
Someone is in debt, including at least some charging interest, when they have savings which are being kept aside for something important.
They can only get by on credit cards, and "run out" of money at the end of the month.
There are luxuries they cannot live without, or someone insists they deserve.

The reality is these are all issues caused by poor planning, and easily resolved. There's not even any need to lose the luxury of Sky.

1. It is stupid having any debt on an interest-charging credit card when you have £10K in savings. This is eating into your savings. PAY IT OFF INSTANTLY, USING SAVINGS MONEY IF YOU NEED. It is a false economy to be "saving" money, even into a Help To Buy ISA, if you are being charged any interest on a debt. Your 0% cards (are they definitely 0% on SPENDING?) are less of an issue, but must be repaid before bearing interest otherwise you will actually cost yourself money by saving rather than paying off.

2. If overpaying 0% credit cards by £500 still leaves you short, stop spending on them. Pay the minimum, and budget. Use a debit card instead, or take cash out.

3. Sky can be built into an affordable budget, but not one where you are overspending every month. Your husband needs to decide which is most important - balancing the books and saving for a house, or being able to watch whatever football he wants right now.

Not wanting to use your savings to wipe the debt is admirable in many ways, but I think wrong. I think you should treat that as your emergency fund, and be prepared to dip in to wipe out any debt which will charge you interest. Remember that your debt still counts towards mortgage affordability, so having cash in hand for a deposit does not do all that much to improve your options. Going to mortgage brokers without any credit card debts would be a big help to you.
Then, budget, budget, budget. This seems to be where you have been going wrong, judging by the contradiction between your claim to be relying on cards every month and your SOA which suggests you should be fine with plenty left over. This is key - you will only clear the debt if you stop this overspend every month which is just adding to your debt.

Without any debt you can build up savings really quickly, remembering that this is your emergency fund so if you need to fix a car you take it out of this pot rather than adding to a credit card.

jenny+luke

Thanks for all the replies. I don't think anyone has been harsh, I really appreciate you all taking the time to reply and help me.

I totally agree about the sky, I'm not really bothered about tv, my hubby wants the sports and movie package, I'm going to talk to him about it shortly after the kids are in bed, if he wont budge then he can call them (its in his name) and try and haggle a reduction as its a lot of money every month.

yes I do get child benefit but had already added all income together so left it all in the income box.

I cant change to sim only without paying around £800/900, the amount that is for calls/texts etc is £13 per phone but the rest is the amount that we pay for the phones. think we have about 18 months left on contract, hopefully the phones will still be fine so this cost will be reduced to £26 then.

WRT gas and electricity, the company we are with had estimated our readings for ages as the meters are really hard to get to, when we finally gave them actual readings, there was a massive debt, they wanted £220 per month but have accepted £133, I think thats paying around £25 per month off the debt. I need to check and maybe carry on paying them £25 per month but change supplier.

Home insurance is due next month so I will have a look on comparison sites.

I'm working on reducing our food bill, I've started shopping at Aldi and making a shopping list, this has reduced but my husband does have the odd takeaway, this needs to stop.

I'm hoping my husband will be back at work in the next couple of months.

Hair cut cost, hubby has his hair cut once a week as it grows quickly and he likes it short. I have mine cut every 3-4 months and usually get a groupon so thats quite cheap.

I've decided that I'm going to start saving £100 in a separate pot for emergencies such as the car. Dont usually have many things to pay with car so dont budget much for repairs etc but will do.

Its Feb 1st tomorrow so I will be writing down every bit of money that I spend.

Talking about money with my husband is a bit tricky as he feels bad that he's not the 'breadwinner' anymore. This is the first time he's not had his own money and hates it. He says that I moan at him if he spends too much money, but its annoying. He'll go to the shop to get 2 things and spend £20-£30. I guess these things aren't including in my SOA. I'll be tracking everything during Feb so will know where all the money goes.

I thought about paying the debt off with my savings but really dont want to. I've never had 10k before and don't want to make a dent in it. so the plan will be to be really careful and not spend on my cards anymore.

I'm paying around £500 on my cards tomorrow and will be budgeting for food carefully. I have lots of stuff in the freezer so will try and use as much of that as possible in order to pay a bit more off/ or have money to last the month.

I can't wait to get the debt paid off and concentrate on savings.

I think the main thing that I need to do is get my husband on side with my way of thinking. He doesn't even know that I've saved 10k, if he did he would say something like 'great, let go on holiday' in a couple of years when we are ready to buy it will be a nice surprise for him

My husband was told he's not entitled to any benefits as I'm working and earn too much. Shouldn't be too long before he's back, I can't wait

0% still have a while on them, hoping to pay them off asap so shouldn't incur any interest.

I think I've responded to all the comments and thanks once again for taking the time to reply.

Kids in bed in a few minutes so money talk with hubby. He seems really keen to save and not have debt when we talk about it, that soon changes when he wants a takeaway or to nip to the shop. guess these expenses that are low add up over the month. wish me luck talking to him.

jenny+luke

northerner999 wrote: »

This thread is symptomatic of very common issues I see on here.
Someone is in debt, including at least some charging interest, when they have savings which are being kept aside for something important.
They can only get by on credit cards, and "run out" of money at the end of the month.
There are luxuries they cannot live without, or someone insists they deserve.

The reality is these are all issues caused by poor planning, and easily resolved. There's not even any need to lose the luxury of Sky.

1. It is stupid having any debt on an interest-charging credit card when you have £10K in savings. This is eating into your savings. PAY IT OFF INSTANTLY, USING SAVINGS MONEY IF YOU NEED. It is a false economy to be "saving" money, even into a Help To Buy ISA, if you are being charged any interest on a debt. Your 0% cards (are they definitely 0% on SPENDING?) are less of an issue, but must be repaid before bearing interest otherwise you will actually cost yourself money by saving rather than paying off.

2. If overpaying 0% credit cards by £500 still leaves you short, stop spending on them. Pay the minimum, and budget. Use a debit card instead, or take cash out.

3. Sky can be built into an affordable budget, but not one where you are overspending every month. Your husband needs to decide which is most important - balancing the books and saving for a house, or being able to watch whatever football he wants right now.

Not wanting to use your savings to wipe the debt is admirable in many ways, but I think wrong. I think you should treat that as your emergency fund, and be prepared to dip in to wipe out any debt which will charge you interest. Remember that your debt still counts towards mortgage affordability, so having cash in hand for a deposit does not do all that much to improve your options. Going to mortgage brokers without any credit card debts would be a big help to you.
Then, budget, budget, budget. This seems to be where you have been going wrong, judging by the contradiction between your claim to be relying on cards every month and your SOA which suggests you should be fine with plenty left over. This is key - you will only clear the debt if you stop this overspend every month which is just adding to your debt.

Without any debt you can build up savings really quickly, remembering that this is your emergency fund so if you need to fix a car you take it out of this pot rather than adding to a credit card.

thank you, I think we were typing at the same time as didn't see your reply until I submitted my post.

I'm paying off the card with interest tomorrow, it only £100 so that one will be done. Like I said I really want to keep my savings, but if I can't clear the cards in the next 4/5 months then I will pay it all off instead.

I feel really motivated to get them clear ASAP and know that with my husband on board it will be fine.

Tomorrow morning I'm not working, so plan on spending a couple of hours checking everything that we pay, making a food budget and meal planning for the week, hopefully using lots of stuff that we already have.

thanks for your message.

asparagus1968

Join topcashback.co.uk and go to there comparison site for insurances- I've just got £40,000 contents cover for £82 ,for the year, with £21 cashback payable in a couple of months


Hope the chat with hubby is going well,and he at least is going to ring sky and haggle!


good luck

asparagus1968

oh, once you have paid off the credit cards, close the accounts of at least two of them. The third can be for emergencies only until you build your emergency fund.

crazy_cat_lady

I think that the most important thing is that you track your spends, as you are planning to. I wonder if your husband would feel any different if he saw the 'little bits' of spending actually written down? It's a real eye opener.
In terms of him being off work at the moment, I'm in a similar situation in that my hubby has been off work sick (since September) and isn't bringing anything other than ssp home at the moment. I'm lucky in that he's on side with me and my budgeting, but I'm afraid whether he likes it or not he doesn't get to say what the budget is spent on. He has his Sky sports so we find the money for that, but he doesn't drink. He has his season ticket for the football but doesn't get takeaways any more. I'm not draconian but he has realised that there has to be compromise until the situation changes.
Good luck, and don't give up trying to talk to him about it.

When_the_going_gets_tough

Op on your husbands illness - if he is employed and was earning over about £115 per week he should be getting SSP for the first 28 weeks of his illness. Then if he was paying NI for the last couple of years he could claim CESA even though you earn. The rules are complex but if you could give a little more info about his situation posters may be able to help. Best wishes

Jon_B_2

I think you need to change your SOA from 2 adults and 3 kids to 1 adult and 4 kids. Cause that's about the maturity level of your other half right now.

For what it's worth, you don't have £10k in savings. You have £7.8k net, so you might as well pay off those credit cards. It's better to have £7.8k in the bank instead of £10k and over £2k of credit card debt IMO.

BTW - does anybody notice that in well over 80% of SOA's posted on this forum that there is always a common theme of a really high Sky TV bill and expensive mobile phone contracts???

sourcrates

Hi,

I'm sorry to say this, but this is a bit of a non post really.

You could easily solve your problem as you have the cash available to pay it off.
To avoid getting into debt again, it's a simple case of budgeting correctly, and living within your means, not that difficult to do.
Really, you should just pay it off, take some of the budget advice you've been given, then add a large dollop of common sense, and bobs your uncle !!