£45k debt - how?

Kayalana99

I don't normally post on here so apolgies if my advice is backwards. Personally I would start fresh from your paydays. Work out exactly what bills are going out (not things like food but rent, water...things you can't avoid) and work out what is left.

Keep a watch of your food bill. Don't try and do to much together or you'll fail, but when you shop, ask yourself do you really need this? Why not just give the cheaper version a go? No need to swap forever if you don't like it, but how about for this week I'll try this cheaper one etc (Personally I find shopping online helps as you can pick and choose what you need rather then impulse buys)

Then keep track of your spending for the month on 'extras' and see where you can cut back.

You both bring in decent wages, so even without cutting back majorly, just getting to grips with your day to day spending will help you massively. Yes you can go through everything with a fine tooth comb, but I'd start simply by keeping track and being more aware of your spending for the first month, keeping record and just making minor changes, second month sit down with everything and start being a bit more organised, hopefully by month three you'll be watching your finances a bit more and not hiding under a pillow, then hopefully you can start fine tooth combing.

MrsTinks

Well done

Realizing that there is probably always an excuse is a HUGE step in addressing the excuses! Do a couple of months worth if you can bear it. Otherwise you can set yourself a budget and work that way. Like reducing the food budget (I will do a wild guess and say you probably spend more than £400 because it's easy to do once you factor in things like meals out, wasted food, lunches etc. ) You probably also have more treats and presents etc than you realise...

Finding the black holes is the first step to plugging them

Money_maker

Do either of you smoke? This can be a big black hole where money vanishes. Also takeaways/meals out? Many underestimate how much or often they spend out on these.

boxofpaws

Hi all,

Just a quick update to say I am logging my spends as a starting point. I am focusing on the grocery shopping, so am meal planning and ordering online. We are going meat free one or two days week (although that's also for the health and environment benefits), which cuts the shopping too. Also we've been overpaying on gas and electric according to our last meter reading and we have a reasonable credit to come back (confusingly on Monday it looked like £1100, today it looks like £600). Our overdraft is already £800 smaller than it was this time last month with this small amount of effort.

Thank you all so much for taking the time to reply, and being so supportive. I'll make sure your good advice doesn't go to waste. I'll report back when I can give a more accurate soa.

Boxofpaws

boxofpaws

Also I should add, neither of us smoke. We don't have children living with us but I have 4 adult stepchildren, and we do give them cash for birthdays, Christmases and crises!

DCFC79

boxofpaws wrote: »

Also I should add, neither of us smoke. We don't have children living with us but I have 4 adult stepchildren, and we do give them cash for birthdays, Christmases and crises!

Maybe look at how much you give them and stop giving them cash for what the crises are.

enjoyyourshoes

You need to get a grip on your finances which means knowing where you are daily, here is a 3 step plan:-

1. Work out you annual/1/2 & 1/4ly bills. Then do a cash flow to calculate how much you need to accrue per month to pay for these (including insurances (cheaper if you pay annually than monthly as you get charged interest, car related costs (mot, tyres, road tax etc). This will take 30 minutes

2. Produce a monthly rolling bank reconciliation, which includes your income, all SO/DD/rentals etc (that are monthly) also take into account what you calculated from 1 above.Write in diary when these are to renewed and start renegotiating these 1 month before expiry (MSE has an article on this)

3. Reconcile the bank account (above) with all your daily purchases, DO THIS EVERY DAY (3o seconds).
This will produce a accurate balance in your account. Include all purchases, swipes, contactless, p@Pump etc etc. This can be analysed at end month to see what is costing you and what needs to be eradicated.
A useful technique is to include all CC purchases on this reconciliation, as how else will you be able to pay off the CC bill when it hits the doormat?

So its 30, 30, 30 and you will know what is in your account at any point in time. Plan would be to spend less than you earn and throw as much at the debt as possible.

Calculating which debt to pay off when:-

1. OD first as often the charges (not apr) are crippling

2. Highest apr next (with proviso that any 0% can be paid off before the term finishes, set up DD with amount required to pay this off and add this to your monthly reconciliation and put this into the highest apr account you can find, not forgetting to use balance to pay off CC before the interest stats !)

3 If you can not save enough to pay off the 0% deal before expiry, then analyse what apr you will be paying once it expires and this may affect you decision on which to pay off next?

Cut back, cut back, cut back. You both possibly know what needs too go and will be more committed if you work that out together and have clear strategy to get debt free.

Once you are debt free have a clear new objective on what life goals you want to achieve and start saving for these.

foxgloves

I think you've got into debt for pretty much the same reasonn we did. We were on a good joint income (though not as good as yours) & so we spent what we liked, borrowing when supplies of money ran short & we still wanted to spend. Having lived most of my adult life like that......I didn't get a grip till my early 40s.....I know how much I have come to value being solvent, budgeting & living within my means. I would not go back to the donestic financial chaos you describe.
A food spend of £400 for 2 people is huge. We spend between £200 & £250 a month on groceries, which includes all our food, basic toiletries, cat food & cleaning products. As you say you cook from scratch, you should be able to reduce this by up to half & free up a good wodge of cash for debt repayment.
Clothes is too high. Do you really need £100 of new clothes a month? If you look through your wardrobes, you may well be able to commit to a year of essentials (i.e undies) & thus free up another decent hit of cash for debt clearance.
Presents. You can't afford £100 a month while you have those debts. Giving £1200 a year away isn't viable. You owe a lot, so you are effectively handing out someone else's money. Can you reduce present spending to a sensible agreed budget & stop the cash leaks for stepchildren's crises? Perhaps you can help them in other practical ways. My parents bailed me out financially several times & I was so grateful at the time, but with hindsight, it delayed me taking financial responsibilty for myself. I was working, so I could have saved up a modest emergency fund (say £500) to help with car services/repairs etc. It was easier to accept chunks of money from my parents when I had a tight month.
Those are the areas which jump out at me. If you also like to eat out, visit coffee shops, order in take-aways, then that's another area where you can save significant money. You earn a good income. Plan for a couple of frugal years & chuck every £1 saved at your debts. You will be happier for it. Our own income has now halved due to redundancy (public sector 'austerity' cuts) but we have more 'spare' cash now, simply because after 25 years of silly spending, I finally learned to budget....& I love it!
Good luck!
F

Lovin_It

The mortgage payment looks too high - I would remortgage as a priority, you should save £300-400 here

It looks like a lot of debt but keep a clear head. Apply for 0% credit cards asap and transfer as much across as possible. You can save (repay) £1000 a month from these rough figures.

No need to panic but nip it in the bud now!

Lovin_It

Mortgage - looks like you've got just over 30% equity - nationwide offering 2 year fix, no fee, at 1.74%

http://www.nationwide.co.uk/products/mortgages/new-customer-remortgaging/mortgage-rates

So £740pcm repayment over 25 years (don't know how old you are)

So approximately £400pcm saving (repayment opportunity)