Debt is making me ill...........

Beautiful-Moose

I honestly believe my money situation is making me ill. I have developed IBS in the last 18 months, am having more mood swings more often, feel alone and depressed more often even though I am in a very loving relationship with my bf of 4 years.

I feel like my debt is now officially out of control and I need to take action ASAP.

Barclaycard - £14,500 (I pay £350 a month towards this)
Natwest - £2000 (I pay £50 towards this)
Homebase Store Card - £179 (12 months interest free payment plan so we pay £25 a month)
First Direct Loan -£12,000 (I pay £243 a month for this) This was to purchase a new car and to clear off my overdraft and I gave £1k to my boyfriend to clear his overdraft too. I still have £2500 sitting in a savings account as an emergency fund.

After I pay out for rent and bills I have about £200 a month for myself if that. There is always a birthday/anniversary/wedding/baby that I need to pay out for so I would say I get one treat a month - this month I "treated" myself to a new pair of jeans as mine now have holes in the leg area that are too big to hide.
My boyfriend isn't great with money either but he is battling with his own cards and debts so he can't help me. Every month we are scrapping through to the next pay day and I am fed up of living like this. We have cut down on things like nights out with friends and take-aways, eating out, gigs, taking lunch to work 4/5 days a week (we get £1 lunch on a Monday through O2 Priority), we are inviting people round to our flat more instead of going out to keep costs down. I am already thinking of excuses to get out of going to a friends birthday this weekend as I don't really have the money for it but I work with her so makes it twice as hard.

3 of my best friends have just paid to go to Las Vegas to celebrate we are all turning 30 over the next 12 months and I had to decline the offer of going with them as I have no money to go which is gutting as Vegas is on my bucket list.

Their holiday was the lightbulb moment I needed to start sorting my money out. I don't want to be forever denying myself of nice things because I have no money. I am so angry at myself for getting in to this position :mad:

Me and my BF turn 30 next year and we want to start thinking about having kids sooner rather than later but I don't want to bring a child in to the world while we are in such a bad financial position. We can't bring a child up in a 1 bed flat so we would need to move and right now we can't afford to be paying anymore in rent/bills etc. Marriage seems like a distant dream/waste of money right now too.

I have seen on these forums people talk about declaring themselves Bankrupt and starting again, or going on a DMP. I need some advice as to what the hell I do next! I need to sort myself out.

Helvetica_Van_Buren

Welcome to the forum - you'll find lots of useful advice and motivation here.

You (with or without your partner) need to work out where your money is going. Why have you needed so many loans? You don't need to answer that on this forum but at least answer it to yourself.

If you would like more advice from this community the starting point is to fill in a Statement of Affairs (SOA) and post the results here. Here's a link to it:

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

- the more honest you are with it, the more you will get out of it.

If your debt situation is so bad then bankruptcy may be the only option though this is usually the last resort, not the first. It's not a get-out-of-jail free card; it comes with its own responsibilities and consequences and will only ever be a temporary fix until you work out how and why you ended up this situation in the first place.

HelleBelle

Hi,
I'm not great on the advice as just starting out on my own journey. But I wanted to say that you're in the right place. Everyone here is so supportive. Once you take stock of the situation and work out a plan, you'll start to feel loads better. You can do it!
Hugs xx

AnotherJoe

There is always a birthday/anniversary/wedding/baby that I need to pay out for
====

No, you dont "need" to pay for these. Perhaps its thinking like this that got you into trouble? Such as buying a new car and getting a store card, the fact its interest free is neither here nor there yous till spent £179 you dont have.

You dont need a made up "excuse" to not go out with your friend, why not tell her the truth "sorry I'm up to my eyeballs in debt and its made me ill, i cant afford to go out". Once you've done that, that will be a weight off your mind as you wont constantly be having to manufacture excuses which might make her think you are trying to avoid her. If she's a true friend she will understand.


As others have done, I suggest you post an SOA here.

sourcrates

Nothing to stop you going bankrupt, as you rent, so are not a homeowner, as long as it wouldn't effect your job, it's a sencible option for a fresh start.

Go to the stepchange website, they have a debt remedy tool which if you input your details, will spit out a debt solution for you.

Give that a go first, see what it recommends.

Puddylove

Stop throwing around the 'Go bankrupt' line as if it's some sort of mythical cure without consequence.
The OP wants to move to a slightly larger house to start a family; she doesn't want to wait years for discharge.
OP - there is no debt problem without a solution - I suggest you contact Stepchange for professional advice.
Nd perhaps post a Statement of Affairs so that the good people here can help you budget effectively.
Good luck.

hohum

This is totally doable.

First thing I would say is figure out where money is going. A spending diary can be a notepad or a free app. Keep track of where your money goes. I have had a lot of success with software called YNAB which is a bit more than a spending diary, but it is something you pay for so initially I'd say you might try the low cost alternatives.

At the same time as doing your spending diary, start trying to complete an SOA (statment of account). Think of it as a snapshot of your finances at the moment. It will also mean you gather information like how much interest you are paying on each debt. Once you have that info it can help you figure out how much you can afford to pay back each month, and how much interest you are paying. It might be you use some of the money you have at hand to repay some of the debt, if it is costing you to have it. Seeing how much our relatively small debt cost certainly lit a fire under me.

Money can only be spent once. The advantage of having a spending diary and doing an SOA is that you stop doing the classic double count, eg in your head you spend the same £100 three times. You can have anything but you can't have everything. It's a question of priorities. If you want to spend £100 getting rid of debt, you can't then spend that on keeping up appearances.

There's some threads on this forum about how to say no to things I think. Basically, you don't have to go to or do anything. If you can't make a birthday outing just tell your friend you're watching pennies at the moment but could you meet up for a bonus (cheaper) meet instead. People don't actually care that much, in my experience, about what you do. It's usually you that cares more. We have the opposite now where we said no to loads of stuff for so long that our friends and family haven't adjusted to us being a bit more financially stable

It sounds as if you are probably able to meet your repayments at the moment so it doesn't sound like you are in the situation where becoming bankrupt is the answer (and that would certainly not help you with getting a mortgage). However you are right to start looking at your debt as it sounds as though there's a possibility you could be into the cycle of consolidating then running up more debt. But addressing it now means you are giving yourself a chance to get yourself out once and for all.

dktreesea

I would be careful about paying just the minimum on any of your credit cards. That's a road to getting rate jacked. Instead, pay a bit more every month, even if it means you may have to use the card.


Shopping at Lidl and Aldi instead of the big four have done wonders for our finances. I stay out of corner shops too. We used to eat Greggs and MackieDees all the time when on the road. Now I take a sandwich or wait until I get home to eat. Cooking from fresh is a lot cheaper than any alternative, including rubbish frozen foods.


Going bankrupt, if you have reasonable earnings (I'm guessing you do because of the size of your credit card limit and your First Direct Loan), may not be an option you want to go through, because up here in Scotland at least (not sure if it is the same down south) they can garnishee your wages and take all your "surplus" leaving you a pittance to live on.


How often do you replenish your emergency fund? I agree with having it, but not if it is costing you 20% a year interest on your Nat West card. How about paying it off in full? At least that way, if you really need it, it's interest free to use if you pay it off in full from here on in.


There's a scheme George Osborne is introducing in the budget - if you save £50 a month for two years, the government will add on a further 50%. This goes for four years, so could be £1,200 tax free for nothing if you manage to do this for four years. You should be okay, given you have a reasonable emergency savings fund, i.e. you do know how to save. A lot of people don't, so you're on a head start there.

nearlyrich

First Direct Loan -£12,000 (I pay £243 a month for this) This was to purchase a new car and to clear off my overdraft and I gave £1k to my boyfriend to clear his overdraft too. I still have £2500 sitting in a savings account as an emergency fund.

It's not a great idea to have £2500 sitting in a savings account where it won't be getting much interest when you are paying higher rates of interest on other debts. Can you pay it off either the loan or one of your credit cards preferably the one with the highest interest?

Beautiful-Moose

I got in to this situation mainly due to my parents. I never wanted a credit card but my mum suggested I got one when I went on holiday to New York in 2010 for safety reasons. My parents then got in to some bad money trouble as my dad got made redundant and my mum got diagnosed with Cancer so had to go part time at work. There wasn't a lot of money coming in to the house so I had to lend them my card to pay off some of their debts, do bits of food shopping etc. I then fell in to a bit of a depression but didn't realize it at the time. I spent on my cards to try and make myself feel happy but that didn't work after a while and by then I was about £6k in debt. The rest of my Barclaycard balance has been run up by me and my partner we must have spent about £4k moving out recently. We had no furniture etc so had to use my credit card to buy stuff. And the rest is on holidays, gigs, football - the nice life basically because I was a massive IDIOT and lived beyond means. I am putting an end to this now.

The store card I have with Homebase was taken out so we could buy furniture for our flat once that is down to £0 I am closing the card down.

My Natwest account is already shut down so although I have a £3k limit on it I can't spend on it anymore. I shut the account down last year to stop me spending anymore on it.

I can't tell my friend about my money situation. They are very judgmental about money and wouldn't understand so I think it is just best to not tell them or get them involved. I do still see them but most of the time it is round at my place or in a restaurant where I can get a voucher code for it. They don't need to know. The only person who knows about my money situation is my partner.

The only ray of hope I have is that my parents are selling their house so I mey get some money from that. But I don't want to rest my hopes on that if they have money issues of their own.

dktreesea

I see every payment of debt as a pay rise. £100 for you, Mr Bank, and £20 (in interest saved) a year for me....forever. Once my debt is gone I won't be getting into any more unless it's a mortgage and even then it will have to be for a relatively short term.