1st post - would appreciate any help and advice

Magpie100

And please - get some Contents insurance, immediately. With £28000 worth of debt you wouldn't be able to afford to replace anything lost, stolen, broken or damaged in your house. It won't costs much but it is essential - take £50 off the presents budget if necessary.

JayRitchie

Hi

It seems to me you are in the horrible position of having a just about sustainable cashflow without doing anything different, but will be in huge trouble as soon as something goes wrong - such as a health problem, house repairs or needing a new car. Just read the threads on here to see how easily that can happen.

Its clear how committed to your wife and daughter you are. Seriously - young children don't need much cash spent on them and don't miss out on things. Different when they are older.

As for your options:

1) use £500 a month to clear the cards - you think this will take 5 years.

ok - not sure how you have calculated this. At present you pay £770 a month in repayments. If you keep up this rate on my calculations (so when the loan finishes reassign this amount to credit cards) you would be debt free in 50 months. You can probably better this as the overall debt comes down by getting better interest rates - you would pay £38,000 to clear £28,000 of debt.

The bad part about this is how slowly the debt reduces. After 2 year you still owe a little over £16k. At some point will you need a new car? Do you need a car to work or live? Looks a bit frightening to me, although I think you have a reasonable discretionary income remaining.

If you pay an extra £500 a month you have a balance after 24 months of £2,000. Your repayments would come down to £324 a month for a further 6.5 months - leaving you with an extra £445 a month above the do nothing option - and of course you are £790 a month better off after this - about 18 month. That looks a lot more feasible.

Your budget looks tight in some areas (clothing for example - what sort of jobs do you do?). Ok for a while but probably not sustainable with office jobs. However with £50 a month entertainment budget you can cut the presents of £150 a month. Young children don't notice and relatives need to be aware of how perilous your position is. Your groceries budget can be cut by £150 a month. Hard - but not required long term. You can tough it out. Given you will have no social life you have plenty of time to meal plan and batch cook. With a bit more focus on saving every penny you can get to £900 a month for additional relayments.

Now you need to increase earnings - wife works a few shifts at the weekend while you focus on your daughter? Some evening work? Gardening over the summer months? Anything you can sell?

Lets see what happens if you pay an extra £1000 a month. After 15 months Your debt is £4,800. That even allows for a bad month when you can only afford an extra £300. You are only left with the loan - so for a really tough 15 months you end up over £400 a month better off for the next 35 months compared to the do nothing option. My bet is that you could do this, and it would leave spare money for the inevitable household bills which come.The overall cost of this is £31,500, leaving enough spare cash from doing nothing to buy a replacement car.

Or if you cant face being that tough put an extra £1,000 a month in the pot for 6 months then an extra £500 for the following 14 months. After 20 months you will have cleared the cards and just have a loan balance of £3k outstanding. Not that bad for a couple who have bought a house and had a baby is it? As the debt comes down you'll be able to get better rates and beat this figure.

2) Remortgage. Seems a risk waiting - why deny yourself cashflow when you will really appreciate some money to spend with your daughter over many years? The interest you will pay on the cards and then the mortgage is horrible.

3) Sell house and move in with parents and then rebuy. Dont do this - you seem to be in an area with increasing house prices. With a lower deposit you will get worse interest rates. I'm a bit concerned you may struggle to get a mortgage. Seriously - don't end up renting for years to avoid short term pain. Think of yours and your childs future.

4) secured loan - nah. Risk your home and just delay paying again. I'm concerned about major repairs when you may need this option for an emergency.

Look - paying the extra £1000 a month, even £500 a month needed to clear these debts is no tougher than people put up with to save for a deposit to buy a house. Have a really tough year - the future will be far brighter for it.