Your Help and Advice Welcome

Karonher

Firstly, I would look to see where the £755 you should have left is going. With that you could easily clear the store card next month, then start putting all the extra money towards the debt with the next highest rate.

katsu

Start by writing an SOA together and agreeing a joint budget. What do you both want to spend your money on?

That will help you both feel better and you caen user the snowball calculator here (search for it) and see how a few extra £ will help clear your debts.

Then go look at the daily small things threads and see what other little changes might help you both improve your financial situation.

Please keep posting. Being here changed our life, Mr Katsu and I, in a great way and can do the same for you, I promise.

enthusiasticsaver

Kiwimel wrote: »

Ok. So I came clean to my husband and now there are 2 of us totally stressing out about this. I actually feel physically sick and asked for an idea of what he has remaining at the end of each month and he confirmed my thoughts - very little. We live a nice life and he agrees we will have to make drastic cut backs.

So. Where to start?

Do we just keep ticking over trying to pay off as much as possible on the debts while we remortgage? Poster above is right - childcare costs will reduce significantly once little one receives free hours which will be this time next year.

Do I attempt to shift the higher interest rate debts to 0% cards before remortgage at Christmas?

Or back to the old question I asked earlier - do I consolidate my debt to my mortgage and we try to recover by overpaying when the childcare costs reduce?

I genuinely thought I would feel better having told my husband but I feel worse. He hasn’t been able to see any light at the end of this tunnel.

So you both agree you need to make cutbacks and if you are both on the same page it will be so much easier. I still do not recommend consolidation and definitely not on to the mortgage. It may seem like a quick easy fix but it inevitably leads to higher debt in the long run as you need to adjust your spending habits and learn the lesson not to build up on credit and it will be more expensive as a mortgage is over a much longer period.

Pay as much off the debt as possible before remortgaging but if you stick with the same provider they probably will not even credit score you so moving any of it to 0% should not affect the remortgage.

Can you cancel the satellite/cable tv? That is £85 which is expensive. The mobile phones and gas/electric are also quite high. I would tackle overpaying the store card first which is the smallest debt and the most expensive and when that is gone close it down. If you can move the interest bearing credit cards to 0% that will help.

ohdearhowdidthathappen

Well done for tackling this and telling your husband. Sounds like he was living in blissful ignorance, how did he think you were still paying the mortgage with little income?! Once you take childcare costs off your salary, you and your husband basically have the same salary! So he should be paying half of everything apart from said childcare.

I would personally look at every bill and expenditure and see if it's as cheap as possible; utilities, phones etc. Your TV and phone costs are high for a start, as is your gas/electricity for a 2 bed flat.

Have you applied for tax free childcare? You get 20% off your bill, makes a big difference.
Your childcare is very high too, have you looked at alternatives, childminder?

I wouldn't add your debt to your mortgage or increase your term, especially if you hope to move in the next few years. It looks like there's plenty of wriggle room in your JOINT income to pay off your debt. I'd definitely try and move those high interest rates to 0% though.

Take care and hope you find a way to make things work

clairebeth

Here are my few thoughts on ways you could be proactive today:

Go through your bank accounts and pick out every unnecessary direct debit (charities, unused gym memberships) and cancel then with the provider and your bank.

Open a joint account (might I suggest 'Monzo', it's an app based bank and updates instantly, plus you can create little separate 'pots' to set aside money for childcare, emergency fund, groceries, bills etc.)

Set up a standing order for payday for the amount you need to cover those expenses to go into joint account ( £3610 according to your SOA, but this may need to be adjusted to give yourselves a little bit of entertainment money). So, it could be £1600 from your husband, £2000 from you. Your family finances are now centered on this account that you can both operate from and see the comings and goings easily. (You could both have a separate Monzo card to keep your personal entertainment money in).

The first month, put that £755 remainder from your SOA into your emergency fund, so you don't have to use credit again if something you haven't budgeted for comes up.

Now set up a standing order for the remainder of your wages (£1307) to pay down the debts. Ideally, change the higher interest borrowing to 0%. Then, pay the minimum on all but the one paying the highest interest. (So, according to your SOA, you can put £755 a month straight onto this higher interest debt.) Set it up, get it going and stick to it. You can pay that store account in the first month, then channel the £46 you were paying on that plus your £755 into the next one.

You will not be debt free by December, but you will be living within your means and making progress. Is it absolutely essential that you remortgage in December? What is your lender's standard variable rate? Is it drastically more than 2.85%? Weigh up the options and consider whether staying on the default SVR for six months might benefit you or if you could manage to get the deal you need based on your very high income and the £230000 equity you have in the property. Speak to an independent mortgage advisor and see what they say about your circumstances.

And really think about whether you ARE going to grow out of your flat before you remortgage, is there somewhere cheaper you could move to? Don't disregard living small though, we are a family of 4 in a two bedroom flat and couldn't be happier, it is also cheap to heat and quick to clean!

A few points on your SOA:
Gas and Elec is twice what it should be for a two bed. Have you double checked your account is not in a lot of credit? Are you doing the usual energy saving like bulbs, turning down thermostat, only boiling the water that you need, etc?

Mobile phones costs are high, SIM only can be £5 to £10 for 3GB. If you are still in contract and have to pay the phone off, phone your provider and ask what better deal they can give you on the actual plan. If near the end of contract you may be able to just pay off the phone and then be free to change to sim only with another provider.

Cancel your satellite, this is crazy money. If you really want to, get Netflix for £7 a month or Amazon tv for £80 a year.

The biggest thing is: you and your husband are losing money by working the job he is in.

Take home pay: 1600

Cost for him to work:
Childcare: 1400
Car costs: 280
Total cost for him to work: 1680

A few thoughts on this: can he (or you) compress your hours into four days or work from home to remove one day of nursery a week? (In fact, if you could both do it and work opposite days then you could reduce nursery costs by 40%).

If not... does he live his job, or does he just do it to pay the bills? If it's the latter, there's no point in him working it. He'd be better off working an evening/ night/ weekend job, even for 16 hours a week, and looking after your child while you at work. If he has a problem with not earning as much as he did before, let him consider that he is effectively 'earning' the childcare costs (1400 a month, plus whatever else he can earn in a part time job, so it's effectively a pay rise, and a good one at that). Also, it only needs to be until your child starts school/ gets 30 hours funding, it's not forever.

Get rid of the car. Look into City Car club if you really need to use a car now and then.

Anyway, those are just a few thoughts for you. I hope they are helpful!