I want to stop drowning

debtaghh

Morning,

I am now off work and feel like I really need this break.
I have been thinking of debt a lot lately and still really don't understand how things got this bad. We don't own a house, our one tv kettle, toaster, sofa are all over 10 years old. I have a handbag and purse that have been broken for ages ( bag nearly 2 years) I haven't been abroad on a proper holiday in over ten years apart from funerals and a three day wedding that was partially paid for by family. I don't have jewellery or many clothes. We get given a majority of clothes for our dd. We rarely eat out, I just don't understand how we have the amount of debt that we do. I've been really worrying about our future esp with this constant Brexit talk, we can't afford to have price increases etc.

enthusiasticsaver

Ironically not owning a house is probably one of the things which has contributed. In many cases due to sustained low interest rates and high rents particularly in London and the South East mean mortgages are often cheaper than renting and gives you more stability so no money being shelled out for moving.. I would be really interested to know how the high family debt occurred given it can't be for house deposit.

You have three kids and from memory you started young so did not have a chance to get your careers up and running so living in an expensive area with relatively low incomes and obviously spending more than you had coming in has presumably led to an accumulation of debt over time. You were doing holidays until fairly recently and UK holidays are not really cheap unless it is camping. I understand why though totally but probably the debt has increased gradually over time until you have now got to a point where you cannot let it get higher and a vast proportion of your income is going on servicing debt.

I don't know how old you are but it is good that you are now willing to explore debt solutions as that would seem to be the best way out or radical solutions like moving away from London if this is where you live. We did it 30 years ago and never looked back. Our children were pre school though so it is harder for you to do that. I think you need to talk to your family hard as it is and say you cannot sustain the £250 a month until the IVA or DMP has been going a while. It would actually have been better for you if you did not have the family debt and instead of helping you they have enabled you in increasing it and not sorting it out years ago.

Has it increased in the last few months since you moved?

Try not to worry too much about Brexit. There is lots of scaremongering around at the moment. None of us know exactly what will happen yet.

Silver_Queen

I second what enthusiasticsaver says about Brexit. I work in a field that will be directly impacted by what kind of deal we come out with but I'm not too worried about Brexit yet. I keep up to date with all the developments and we simply just do not know enough to be able to say what will happen. There's no use crying over spilt milk before the milk has even been spilt!

I think the problem that you have had is not big ticket items like you've listed but a general living beyond means over the years. To be completely honest with you (and I hope you aren't offended) I get the feeling that you have an ideal budget that you have slightly convinced yourself that you're sticking to but having lurked for a while I think that you overspend on a lot of categories and say that it's necessary so you justify it to yourself that way. Whether the spends are actually necessary I can't say. Also, I think (but I may be wrong) that you regularly overspend on your small grocery budget. I think this is where the debt has been built up.

You set yourself extremely ambitious goals but there's no real realistic way of reaching the goals. £20k paid back when you may even be struggling to get your budget balanced and not accrue further debt is a VERY ambitious goal. I know what it's like because I do the same.

I would really strongly urge you to do a DMP. I know that you aren't enthusiastic about the idea, I think that is clear from the various discussions over your diary which have been had on numerous occasions. However, unless you make other drastic changes such as relocating to a significantly cheaper part of the UK, I just don't see how you could do it otherwise. This isn't a lack of faith in you but a physical impossibility on your current income versus outgoings.

debtaghh

The debt has increased due to the move and the expenses that came with that.

I have been on stepchange's website and have a reference number to call them.

I think I'll change my goal to 10k in a year as that's more realistic.

enthusiasticsaver

Silver Queen is completely correct that aiming for £20k reduction is setting yourself up for failure. £10k is more realistic but please speak to stepchange. I think you will need to have a conversation with your family and it worries me that in the past you have said they are unsympathetic because stepchange absolutely won't allow for family debt and finding a spare £250 will make life just as difficult. Finding £100 per month may be more realistic.

I do wonder if you really will not default on the family debt and stepchange won't allow £250 for repayment whether a self managed DMP may be better where you deal with your creditors yourself and offer what you can afford. Poor single lady has a diary and I think she is doing just that. Perhaps put a full correct soa up here again and we can help.

debtaghh

My family will not budge on the money owed as £80 is on credit cards under their name.

enthusiasticsaver

So if you paid £100 that would cover the £80 on credit card. When you get an IVA or DMP up and going and you see how your categories pan out and you are saving for Xmas, emergency savings and car maintenance you could then start increasing gradually if there is room in your budget.

I strongly urge you not to borrow more from them. It is making things worse as their debt appears to be just as if not more than immovable as your unsecured creditors and borrowing from family can cause relationship problems.

An soa needs doing with correct interest rates, minimum payments and reasonably accurate spends for groceries, entertainment, personal spends, childrens spends, presents, fuel, car maintenance etc. Work it on basic wages and mark down whose name the debt is in.

debtaghh

I have to pay my parents £170 and their credit cards £80. They won't let me reduce this at all, I've tried

enthusiasticsaver

Then I think it will have to be a self managed DMP unless stepchange will allow enough leeway for you to find that £250.

Stepchange will help you with the categories but as you have the extra family debt of £250 you will need to include that but stepchange won't. It will mean defaulting on all the credit cards. Opening up a bank account which is not linked to any of your creditors and no overdraft would be the next step. There are template letters on the DMP thread to send to your creditors when you have worked out how much you can pay them. Ask them to freeze the interest. You won't be able to do an IVA if you prioritise the family debt. There are lots of people who have done this and say the relief that there is a way forward really helps their mental health.

debtaghh

To be honest I don't feel like I could do that.

If I don't mentio the £250 could I not just find that through allocating hair cuts, clothing etc that I don't really do monthly?

From what I remember previously a dmp was coming out as £650 per month plus adding the £250 we weren't any better off which is party why we didn't do it.