Buried our heads in the sand for too long!

Mr_W

Hi, looking for some help/advice becoming debt free....

Long story short, my gf is in a lot of debt. I am not & should have a decent credit rating...

Only recently has she come to me & asked for help, I always knew she had debts but never really asked/acknowledged how much.

She has *tentatively* agreed for me to take over her finances, but I'm struggling where to start. What do you need to know (or do I need to find out) to address this?

Bit of background:

• I think her debts total around £8200
• She has an annual income of £8400 (currently part time & caring for our daughter)
• My income is £28k, I've been reluctant to contribute to paying off the debts so far as I have not accrued them, particularly without addressing the root cause
• We have been together over 10 years & have a daughter together (hence the title of the forum!)
• The mortgage is solely in my name
• Her credit rating is poor
• We have no joint accounts
• I am not adverse to transferring debts into my name; but this would need to be in some structured/planned manner to do this & hopefully cost as little as possible
• In my view she spends some money on cr*p, but whilst this hasn't direct affected my finance/credit rating I have turned a blind eye...

Looking forward to hearing from you :undecided:

On_my_way

Hi

Firstly, you shouldn't transfer any debts into your name as you need to maintain your good credit record.

What you need to do is BOTH go through your income and outgoings so you can either pay more of her bills so that she can devote more money to her debts or actually help her clear some of those debts especially if she's working part time to look after your daughter so this is not just her responsibility it's yours too. (legally it's hers).

Good luck - you will both be able to save money if you work out where you may waste money. There are lots of tips on here for how to clear debts and how to reduce spending.

Mr_W

Ok, thanks. couple more points...

her bills consist of the council tax, TV license & her mobile phone. She picks up some of the cost for our daughter (nappies, wipes & a bit of food etc - shes only 18 months) but also takes all of the child benefit (the only benefit we take)... currently the rest of her income is her own to spend on the debts/herself

i pick up the rest of the bills.

Whilst it may seem an odd arrangement to some, keeping our money separate works (or has worked) for us so far. The debts existed well before our daughter did & again I have been reluctant to pay for debts I have not accrued (would you consider this unreasonable?)

I suppose what I am asking is, if I were not around, would she be able to clear the debt on her own? Or do I need to step in & assist financially.

Again, this is an arrangement that has worked for us so far, I do not live a live of riley on the extra money I bring in - most of it goes on the house or a nice holiday for us all to enjoy

Bouncybubbles

What are the debts are they CC or overdrafts loans etc? If you are planning a long term future together possibly having a joint mortgage at some point in the near future etc then it may be wise to help before the debts escalate to a point where she won't get credit for a good few years. What has she spent the money on? If it was items for your daughter then are they a joint responsibility? I do not intend to offend just advise

sourcrates

Hi,

First, you cannot transfer debt to another person, her debts, remain her debts, no matter what.
Of course there's nothing stopping you helping to pay them off, if you were that way inclined.

You don't mention what form the debts take, I'm assuming credit cards, loans things of that nature, if you intend to keep your finances seperate, then what she earns will not leave an awful lot of spare cash, if she can't make any headway with them, she may possibly want to look at a debt relief order, or maybe a debt management plan, it's difficult to advise without knowing all the facts.

Mr_W

yes we're in it for the long haul & yes I'd like a joint mortgage to give them both some security should anything happen to me.

debts are:
£1800 in overdraft (over 2 accounts)
£3167 remaining on a loan (£3500 will cost £6700 over 60 months)
£850 on a credit card
£150 with next
£2300 with littlewoods (apparently this is considerably less if certain payments are made on time - I'm a bit naive as to how this works)

about £100 of it was probably spent on our daughter last xmas (i also spent on her too), the rest is historical & from what I can tell a lot of it made up of astronomical fees/interest

Mr_W

when i refer to transferring debts; could i not, for example, take out a 0% balance transfer card in my name & transfer her credit card debit over to that? paying off at 0% over the duration?

tlc678910

Just curious when you mention your partner buys a "bit of food" does she do the bulk of the food/toiletries/household product shops i.e the weekly shops or do you do the weekly shops and she really does just buy the odd bit of top up.

I ask because groceries/household are usually a significant cost and would explain where a good chunk of her money goes.

Tlc

andyfromotley

Just my twopennorth worth.

You have been together 10 years. You have a daughter together. You should be thinking in terms of our finances, not yours and hers. You are obviously a bit smarter with money so its sounds right that you sort this out from your joint income.

Thats jsut my opinion. Look at your life. Youre playing a team game now,

Mr_W

Ah yes the grocery shop... i get paid in the middle of the month, other half at the end, we do a shop each shortly after payday. Mine is done online, I go through the cupboards with a tablet in hand & buy what we need. Other half goes to the super market & puts stuff in the trolley she thinks we need then probably 'tops up' later. Consequently my monthly shop is about £60-70, hers is more like £100 - I'm sure money can be saved here.

She takes the child benefit to assist here & I stand the full cost of my shop. I am of the belief that this £20/week should be a fair chunk towards our daughters needs. Part of the problem here i've realised is that the child benefit gets paid into an account with a permanently maxed out overdraft so its whacked with fees & interest before we start.

I accept the 'our' finances opinion. Some of the debt (I think it was even more at the time) existed before even I was on the scene. I've 'mentioned' over the years that she should clear it but she hasn't managed to do so on her own (i've never really acknowlegded how much/bad the debt was until now), as i've mentioned above i've been reluctant to pay for debts i have not personally accrued. There's also an element of what I deem frivolous spending & whilst this has come from her own pocket I have turned a blind eye, if this came from a pot that I directly contribute to then there would be arguments...

Other than the finances we have a great relationship & love our daughter dearly.

So, given the list of debts above, what's the best way to attack this?

enjoyyourshoes

First you both need to have a heads together open discussion about what your joint objectives in life are.

Make them SMART (specific, measurable, achievable, realistic, time-bound)

Without joint commitment to the life objectives you will not get any change in behaviours (she buy crap + £8 K debt on £8K income).

This is critical (I have been here twice and life can be slippery, especially ingrained behaviours/attitude and lack focus and self discipline)

Then agree a financial plan of how you will both achieve these objectives within your financial envelope.

The obj may to rid debts within X months. The detail may include you transferring the CC ball to your own 0% card (don't use it for any purchase and set up DD to ensure its paid off within the term) At same stage agree the amount debt transferred to you and how she will pay this back to you and again write this down and get 100% commitment.

Work out APR for all the debts (see detail below on OD), get the 'details' of the Littlewood's stuff and get details of car loan and any potential options/charges for early payment (thats if you have available funds to meet this and OD erradication)

The OD may be very high payments (interest as they often are made up of interest rate plus charges)

Get her to spend less.

Get her to reconcile bank account daily with any transactions (if she is keeping CC (!!!!?) these should be included, thus accruing the cost to allow full payment on statement date.

Assist her in her buying decisions and support her to a new more frugal and concious spending pattern. Start discussion how she could save and how. This will be some time as debts are high relative to income.

Assist her on taking charge of her finances.

Good luck

Review the progress weekly, then monthly etc