Advice please - we are falling into the hole

jess0910

Hello everyone,

I'm new here, and am looking for advice on what to do about debts. My husband and I earn about £50k between us (he as a sales manager, mostly commission based, and me as a freelancer). We bought a house last summer after renting for a while.

After a good first year in the house, the last few months have seen our finances spiral out of control. Until summer we were managing OK with our incomings and outgoings - I was earning more than ever from my freelance work, although my parents come in sporadically across the month rather than on any regular date. Over the summer my husband closed a business he had run a couple of years ago, knowing that he was going to owe the bank some money on it. To pay back what he owed he took out a loan - to my knowledge, he did not consider Limited Company bankruptcy or liquidation (not that there was much left to liquidate).

My husband's biggest fear is ending up in huge mounds of debt, which is something his father did (it ended in a repossession), and it's something that has always driven him to earn enough for us to be at comfortable. Ironically, I think this is why he never considered any other option but to borrow to pay off his business debt - because he feels that any mistakes are his own and he must take responsibility for them rather than letting someone else deal with it.

The loan payment comes out halfway through the month, whereas most of our other payments come out at the start. Every month since it started it seems to wallop us across the face when it comes out, even though we know how much it is going to be - it's basically half the amount of our mortgage payment. I know that if I jot down our basic outgoings (in terms of mortgage, insurance, utilities, etc, plus the debt), it will not fall too far short of what my husband tends to bring home every month.

Added to this, my husband's employers have cut commissions this past month, which now means he's earning even less than before, through no fault of his own. This has cut him quite deeply, not just in terms of financial worry but also in his feelings of value and confidence as an employee. Things have been so tight that we have had to put food shopping and petrol on our credit card, which is now at almost £2000 (it was used earlier in the year to pay for some private medical procedures and already had a partial balance on it).

As a freelancer I bring in a reasonable part-time wage (full-time isn't possible due to school-aged children and no money for childcare), but it doesn't seem to be enough to fill the gap for the rest of the month. I feel like I'm going a bit spare about what to do in the immediate future. It's a month until Christmas and I have yet to do any shopping, whereas most other years I am nearly half done by now. I wanted to utilise some Black Friday offers to get my son some Lego, but notwithstanding the credit card balance, at the moment we are nearly £700 overdrawn. There is nothing left at the bottom of the well and a huge chunk to pay to even bring us into the black.

I know my husband and I need to sit down and work all this out sensibly and honestly but I worry about him taking this all so personally because he is the main wage-earner and the loan payment is as a result of his business not working out. I know this will all play on his fear about his dad's debts so I don't want him to feel punished any more than he is probably punishing himself - but we need to do something now. I know our first step is to complete a proper incoming/outgoing budget, see what we can cut, get back to the essentials and maybe do an eBay selling wave, but I would really appreciate any advice.

Thank you.

DrWatson1

If you want any objective advice, you need to post your income and expenditure, and a list of assets and liabilities.

The main thing is you seen to have faced up to the problem early, which makes dealing with it much easier.

fatbelly

The numbers tell the story.

Here's a calculator.

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

Please format the results for mse.

On_my_way

There is one thing that you must do as a couple which will save the situation quickly:

*Maximise your earnings- if you are freelance and the work is out there could you not also work evenings and weekends when your husband is around to look after your children? If the work is out there then you need to do it - could your parents help with some childcare?

Good luck, you can sort this out.

On_my_way

I should have also written that there are many, many tips on here to seriously cut down on food shopping etc.