Need to confess my debt...

MamaRoo

This is a bit of a long one, so I hope you bare with me.

Okay, so my husband and I have baby no. 2 on the way this year and we have resolved to shift at least our credit card before baby arrives in August.

Our debt is not just a credit card though and for a long time I have been feeling more than uneasy about it, to the point of sheer embarrassment over just how much debt we are in and how much we pay out between us in a month just on the credit card, Loans, car finance and PCP. I havnt even told my best friend as I am just too embarrassed and we honestly tell each other everything. But I still feel I need to get it all off my chest to SOMEONE, hence why I am here. Hopefully you will be understanding and non judgemental, maybe have even been in a situation to the extent we have.

So this is the lowdown in rough numbers:
£4,500 on credit card
£5000 car finance
£7,800 loan
£25,000 loan
£19,000 pcp

Quite honestly I am disgusted with ourselves.
We readily accept that we have been abysmal with money for the entire 10 years we have been together. A combination of being entirely frivolous with money, having the attitude of 'I'll just stick it on the credit card', multiple consolidations of debts over the years, and on top of it all absolutely NO savings to show for any of it. We don't have a mortgage either.

Together we take home quite a reasonable amount, but simply because of the sheer amount we are paying for these various things, we have very little/none left after the other bills and food goes out. I wouldn't say we are struggling, we certainly never go hungry or anything, but I feel absolutely awful when I think of our little one who we could be treating to a day out every now and then and we can't.

Our glimmer of hope is that all of these agreements will end in the next 5 years, so right now we are just plodding along and I view this time as our 'penance' for how we have been with money.

We have budgeted paying £400 a month off the credit card (which is every single extra little penny from my wage after my bills go out) But I'm feeling quite unconfident at the moment as we have had a lot of bad luck with stuff going wrong over the last few weeks. For example I had a nearly £300 car bill at the start of Jan and just the other day out washing machine died on us. Because hubby is a farm manager and we have a toddler as well as 2 large dogs, we rely on it so much and need it to be a decent one. To repair it would have been just as expensive as getting a new one so we just got a new one. Our tumble dryer also died but luckily we were able to fix it with a £20 part from eBay. So straight away for the January payment We already fall short of our £400 target

I hope I'm not waffling too much, I just need to get it all off my chest. Can anyone offer support and words of advice? We have cut down on ALL unessessary bills (stuff like Netflix etc), we are pilfering the house for things to sell, we have switched entirely to shopping at Lidl, have switched to cheaper energy tariffs and always get the best deals on insurances and things like that, and we are literally not spending any money on anything that isn't bills or the weekly food shop. Hubby has also looked into the marriage tax thing which should be arriving in the next few days.

Thank you for being patient x x x

Unicorn_cottage

Well done on facing your debt. Are you paying off your debts effectively i.e. using the snowball method?

It is a lot of debt so it may be worth speaking to a debt charity as you may be able to get help.

The only tip I can add is that you don't always have to buy new. Get yourself onto Gumtree, Facebook market place and Freecycle and have a look around. You can definitely pick up a good washing machine at a lower cost than new and sometimes you see people giving white goods away. I know it might not be ideal but it would see you through for a while. I got our cooker and fridge freezer for free we just had to pick them up and they are good brands.

MamaRoo

Hello, thank you for your reply!

I havnt heard of the snowball method, but after looking into it, luckily we are already doing it. We are focussing at shifting the credit card (which is the smallest debt) and just paying the minimum payments on the rest.

My only worry is when I go on maternity, my pay will more than half so it will be much more difficult to pay any extra on top of our payments. We have calculated we will be able to make ends meet although it will all be extremely tight. After I return to work we then will have to factor in childcare costs as well (no family to help with that).

Would we be eligible for help? Like I say we are able to pay all the bills and keep ourselves fed and give our little one all the essentials he needs like childcare, clothes and shoes etc. My other worry is that by getting help would that affect our credit score? Sorry if I'm being a bit ignorant about it all, it's all very complicated for my tiny brain����

Unicorn_cottage

The snowball method is overpaying the debt with the biggest apr first in order to make the most of your money.

You can certainly speak to charities such as Stepchange (might help with getting it off your chest etc) about your situation and it would only affect your credit score if you want down the route of an iva/dmp etc due to defaulting. Like you say you are often not overpaying the £400 that you want due to situations like broken white goods etc etc and as maternity leave is on the horizon you need to ensure you are in the best position to manage these debts long term.

If you wanted you could fill in a statement of affairs and the good people here may find other ways for you to cut back - http://www.stoozing.com/calculator/soa.php

Karonher

Is the PCP for a vehicle and is there any way you can come to an arrangement to give that back? As you mention a farm I know it could be a work related vehicle.

MamaRoo

Thank you Unicorn Cottage, I will certainly look into the SOA!

Karonher: yes the Pcp is a vehicle, but not a company one, however we do need a car each due to both of our jobs requiring a certain degree of travel. By coming out of the agreement though (maybe to downgrade to a cheaper/smaller car) would that affect of our credit rating as we are breaking the agreement? Would the dealer be happy or even be able to downgrade us, thereby making the payments smaller? I suppose it's something we would need to ask the dealer direct...

tlc678910

MamaRoo wrote: »

Our glimmer of hope is that all of these agreements will end in the next 5 years, so right now we are just plodding along and I view this time as our 'penance' for how we have been with money.

x

Hi MamaRoo,
Are the debts you have listed up to date and accurate? E.g. is the loan 25k and the pcp 19k at the moment or is that what you took out and you have already been paying them back a while? I ask because they are very round numbers and also because you mention “all the agreements will end in the next 5 years” and those sums sound a lot to settle in five years?

It’s tricky for people to give advice without knowing your income/outgoings and how much you have available for debt repayments. That is why people will ask you to post a full statement of affairs. I will have a look for the link for this and post it next message. (I see someone has kindly posted link)

It occurred to me that if you can afford all these repayments and it is only the extra to the credit card that is tipping you over the edge then if you were able to pay off everything else but your credit card remained the same - perhaps because you pay off some and then need to buy something like the washing machine or car repair - your debt would go from £61,300 to £4,500 over the five years (which is great).

People who know about benefit help that is available would need to know about your household income / likely childcare expenses etc before they can say if you might get help.

Edit: with so much ending in the next five years when a loan ends the money you have been paying to it can be redirected to the credit card/ an emergency fund/ a little breathing room.

Tlc

EssexHebridean

Hi MamaRoo - and well done for posting - it's never easy to say "we've got a problem" like this.

It looks to me like your first - and biggest - problem is that currently you're not budgeting - things like the washing machine needing replacement - this should have been able to come straight from an emergency fund then be topped back up again over a few months. The £300 car bill also - was that really something that was entirely unexpected or was it something like servicing, tyres or MoT that you could have foreseen, and budgeted for?

I agree with those who've said that a full SOA will help - not oinly because it means that if it is posted here we can take a look and see where savings might be able to be made that would enable you to pay off the debt sooner, but also because that would then give you an real-life working budget which will help you to better manage your money. get it done, and let's see what we can sort out with you!