Going to be in debt - help/guidance required

Loadedsoul

Hi Everyone,

Long time lurker on the savings board - first time poster here. Need some guidance please.

I am going to be in debt with Amex for £2600 next month - this was due to an emergency medical expense for my mum. I also borrowed £2000 from my employer and have gone from £30k in savings to £0 in savings. In the span of 2 months! Stupid of me to have touched this but I had no choice.

I need some help with this and trying to figure out the best way to do this. I’ve never been in debt in my life and it’s scaring me so much i have sleepless nights and just mentally struggling. I’m fastidious about living frugally and saving. Think comes from growing up poor and my mum instilling this in me from a young age.

I earn £2600 a month after taxes. I pay £1645 for two rents and bills for me and my mum (mum is 75 and lives overseas) this includes food, electric, rent, water, my council tax and a cheap (£10) Sim only mobile. I don’t have any frivolous spending, can’t remember the last time I bought new clothes (year ago I think) and had my last haircut 7 months ago. Don’t have a car or travel expenses as my work is walkable from home. I used to go out maybe once every 2 weeks with a friend for a cheap dinner date but that’s about it. Haven’t done this in the last two months.

After bills I’m left with £955. Do you think it’s best I pay off £955 to Amex and the rest of the debt I transfer to a 0% cc. Then I can set up monthly payments of £450 to the card and to my employer. This will mean living home to work for the next however many months it takes to clear this off and having no emergency or spending money for anything else.

Any help, guidance or advise would be much appreciated.

Thank you,

Loaded

sourcrates

I assume the Amex is a credit card, not a charge card, just pay what you can afford from your disposable income, no need to panic here, a reasonable time frame would be 2 years or so, no need to panic.

Loadedsoul

Hi sourcrates,

thank you so much for the response. Yes the Amex is a credit card. I usually pay it off in full every month. I only got the card and use it to build up my credit score to be able to afford a mortgage - now that seems like a distant dream. Took me a good 10 years to save. Be in my late 40's by the time i'm able to save that much again.

Sorry was really panicking about the whole situation. Do you suggest paying lower amounts and maybe saving some money if i do the balance transfer. Just want to be out of this mess and be able to breathe again.

sourcrates

The thing is not to overexpose yourself, just make sure your repayments are affordable, sometimes things happen in life, which you need to deal with, don’t let it be a stumbling block.

mattvolatile

Don't panic! This is literally what credit cards are useful for. See if you can transfer your balance to a 0% card, add pay this (very affordable) debt off over the course of the offer. A money transfer card might be useful too if you need to pay back your employer immediately.

Does your mum not have any insurance that can cover the costs she incurred with her illness?

Loadedsoul

Think you’re right - maybe it’s better I settle the credit card first. I’ve been searching the boards for an answer and see a lot of people struggling to balance transfer from an Amex.

My employer is quite nice and is willing to wait till I can afford to repay them. They understand my circumstance and are even willing to get me a free flight ticket to visit my mum for 2 weeks. Been with the company 10 years + .

Unfortunately mum doesn’t have any medical insurance due to the country she’s in. Such is life!

Willing2Learn

Loadedsoul wrote: »

... I’ve been searching the boards for an answer and see a lot of people struggling to balance transfer from an Amex...

Yeah, it is because an AMEX only has a 15-digit long-card-number instead of the usual 16-digits. Whichever BT card issuer you are considering, make sure to give them a phone call first to double check AMEX compatibility before you make the application.

pjcox2005

Sounds like it's emergency situations but I would be less concerned about the £2-£3k AMEX debt, but more how you've hemoraged £30k savings in 2 months.


Have these expenses stopped or could you be further in debt within a couple of months?

Loadedsoul

Thanks willinglearn: hadn’t thought of this! Will call the card company before I apply.

Hi Pjcox: yes this was basically for emergency hospital and medical bills and it’s all been paid off in full (they wouldn’t provide services unless paid) won’t have any more bills coming in. Just the Amex I need to sort.

Loadedsoul

Just a quick update - ive applied for MBNA card and they have advised they accept Amex BT. This will ease some of the stress. I've set it up with a Direct Debit of GBP 200 a month so hopefully pay this lot down over the coming months.

BabyStepper

This is going to sound harsh, but I wanted to add to the good advice you've been given already.

Your mum's lifestyle is not sustainable. You are paying her rent, bills and now medical expenses. Why does she have no money? If she really needs that much help, do you have siblings who could chip in? I don't know where she is living or why she is living there but if she lived with you, you could support her much more cheaply. Your mum has just wiped out any chance you have of buying a home soon. This is serious for your long term financial future.

Dave Ramsey would tell you it's a boundary issue. And advise that when you support someone's lifestyle, you have a right to pore over their finances and make sure they are not misbehaving with your money. You need to speak to your mum about her income. Really quickly.

I wish you all the best.