Help needed from anxious poster

Desperate_for_advice · 7 March 2017 at 8:24PM

Hi all, long time reader, first time poster.

Here goes; my wife and I bought our dream forever house last year with a 25% deposit and zero debt, I have a salary of £49k and my wife £19k, all good so far?

Thing is I'm terrible with money and like to spoil my wife and 2 kids with things they don't need (£18k holiday to Florida over Xmas for eg) my wife is very trusting and just believes what I say regarding how much things cost, my fault as it's how it has always been.

Since August 2016 when we moved I have got 6 unsecured loans and a credit card and now have total debt of approx £63k with monthly payments of £1350, I have had a mini breakdown over this as with the mortgage etc I have negative monthly disposable income and am borrowing more just to get by.

I have had my wake up call and need to get this sorted, I cannot speak to my wife about it as it's a complete betrayal and she would never forgive me, she just wouldn't. I have been in touch with step change and they suggest I go on a DMP, my knowledge is very limited on these but they say my commitment to them for all creditors would be £370 per month which would be a great relief but I know there is bound to be catches.

On our mortgage there is a 2yr fixed rate which finishes August 2018 then if goes on SVR my payments go up £220, I need some advice as to what to do as if I go for a new mortgage deal to keep payments near what they are now they are bound to do a credit check and I assume with being on a DMP my credit will be shot to bits?

I do not care if I ever get another piece of credit in my life as I cannot continue or would ever want this level of stress again as it's unbearable, my wife is totally against loans/credit etc hence another reason why I cannot tell her.

Long story and I know it is me and only me who has contributed to this situation I'm just confused as to which way to go.

This has taken a lot to do this but it's only my fault.

Thanks

ada-or-ardor · 7 March 2017 at 8:47PM

Welcome! First of all, a deep breath is in order.

I think everyone will say what I'm about to say which is to tell your wife. I know that prospect seems awful at the moment, but I'm sure a contributing factor to your breakdown will be the secrets and lies you need to tell in hiding this debt from her. Guaranteed, she will find out one day, and it is much better it comes from you direct than discovering a bill or having a bailiff at the door as happened to someone I know while he was at work and his missus at home....

You're married, in a partnership. I don't know you or your wife but highly doubt she would break up with you, IF you go to her with defenses down and with a plan on how to handle this. I also highly doubt you would manage to pay off 63k debt on a 49k salary without her noticing something is up. Read any thread on this forum in a similar vein and you will see that everyone eventually realised the importance of telling their partner, and it not going anywhere near as badly as they expected.

You and your wife are financially linked I assume through a mortgage or bank account, and it is therefore highly irresponsible to conceal this debt from her. She has a right to know what her finances look like, even if she has been ignorant (wilfully) so far. Tell her about it now, while you have a 49k salary and a plan of attack; don't let her find out when the !!!! hits the fan, you get made redundant, and you're trying to pay it off on 19k a year. You both need to make changes: you need to start addressing your spending habits, and she needs to start taking some active role in the family finances too.

Finally, your wife needs to know because you will not tackle this by changing your habits alone. If she is used to 18k holidays (lucky lady!!) She is going to notice when she's not getting them, and as you proclaim to be terrible with money, I would fear that left to your own devices you wouldn't get this debt past the 50k mark without someone to be accountable to. And that should really be her because she needs to change her habits too, and realise that Christmas holidays to Florida are a thing of the past.... Unless she's been keeping a secret from you and she won the Euromillions last month!!

On a practical note, people much more knowledgeable than me will be along shortly to advise on the pros and cons of a DMP and whether going self-managed or through stepchange is the best option. You should also, when you've cleared your head a bit, post an SOA which you'll find at the top of the board, so people can look at these spends and where it is going, and advise where you can make some savings. You also need to start putting some money in an emergency fund pronto, especially if you do go down the DMP route.

You also need to truly identify where you have spent all this money, so you can change your behaviour and look out for triggers. If you don't solve the root problem, nothing will change. Nobody is "bad with money". You have a family: you and your wife need to take some personal responsibility and build a secure future for your child - what is needed to do that is just a little bit of knowledge and a whole load of willpower. You will find all of those things here in the form of a wonderful and supportive group of people who are or have been EXACTLY where you are now. However, the rest is inside yourself. So first of all, change that inner dialogue from "I'm terrible with money and that's how I got in debt" to "I have made mistakes but I will fix them and this is how...."

Best of luck with everything, please come back and let us know how you get on in your journey.

Ada

moneyfacts · 7 March 2017 at 8:48PM

Don't worry you can fix this. Maybe tell your wife that you need to cut back to sort some credit cards out and not discuss the total figure just yet.

With your income you can pay it off relatively quick but god knows you need a total change of lifestyle and attitude to money. That's the real journey.

You will receive a lot of advice on here but all you need to know is, the less you spend, the quicker you solve your debt problem.

moneyfacts · 7 March 2017 at 9:02PM

Also what happened for you to suddenly get into debt after having none just last year? It seems you must have also had savings for the diposit too?

Desperate_for_advice · 7 March 2017 at 9:02PM

Thank you both for your very quick and thoughtful replies, Ada I agree with what you say I really do but I just cannot tell her at this minute, I will tell her but want to get into some sort of plan about what I am going to do about this, I know and accept that my lifestyle needs to change but this is not something that has happened over a period of years it's over the last 8mths, I got a promotion in work and thought I was billy big b***s so it's not long term habits that I need to change, I didn't even have a credit card or overdraft a year ago and I'm 39!

I just want to get into some sort of agreement where I am not starting payday on a negative balance, stepchange say £370per month to my creditors but realistically I could double that and still be £475 better off each month.

I just have no clue as to the after effects of a DMP, I will keep researching and coming on here for help and advice.

Thanks again guys and to anyone who may have read my rambles.

Desperate_for_advice · 7 March 2017 at 9:04PM

We had deposit mainly gifted to us so we were fortunate with that, one loan just turned into another and I was taking out loans to clear credit card then maxing credit card out again.

moneyfacts · 7 March 2017 at 9:06PM

I was on a dmp years ago and it was the best thing I did. The biggest impact is your credit score but of course that does repair

If you can't meet the minimum payments without getting into debt, this will be your best option and no shame in it either

I understand why you want to find a solution first before telling your partner. That makes sense.

Desperate_for_advice · 7 March 2017 at 9:09PM

I think a DMP is the way to go but just worried about what happens next August when my fixed term mortgage finishes, if I go onto variable rate then monthly payment increases by approx £220 which I can absorb if need be as I would imagine any other remortgage would require credit check and don't want to go there...

Thanks for your replies, I already feel slightly better.

elsien · 7 March 2017 at 9:10PM

A DMP will impact on your credit rating. If you want further information about how this might affect you in the future, such as remortgaging, you might want to go back to Stepchange and ask some more questions.