Need perspective, help and advice

Antonio101

Hi everyone
I am new to this forum but having been lurking and following for sometime and found it extremely helpful and insightful. Apologies if I am posting this in the correct thread.

Basically I am 30years old and really feel behind the curve in terms of debt/saving and investment. However this also feels like a turning point for the better for me.

My situation is I am married and have a 3year old son. My wife brings home £5-10k part time and myself £60-70k so we earn well. However over the years, largely due to silly decisions made in my 20's and an expensive wedding I am in £35k of debt spread across credit cards with repayments amounting to £1000 a month. Embarrassingly but thankfully by dad has lent me money to ease my cashflow for 6-12months. I have a house (needs decorating thanks to the little one) and mortgage on help to buy but really feel I should have a bigger place by now. Everyone else is moving to larger houses. I really feel I have set myself behind by 5+ years due to my financial stupidity. from 24-30. Don't get me wrong I enjoyed the cars and holidays etc but have nothing to show for it.

Due to this windfall from my dad I really want to turn things around. My aim is to build up an emergency fund (£5k), currently on £1700 and begin to invest. Any money lumped over the £5k I will offset off against the debt.

As it stands I have £1700 in an ISA and hoping to add £500 to this each month
Pay £200 a month into moneybox (general investment)
£50 into my LISA (£1200 current balance)
£30 into a SIPP (£3000 current balance)
£600 into my nhs pension with £700 controibutions from employer (£9100 current balance).

Once the 6-12months is up I will need to take out a low interest loan (once credit score is repaired) to repay my dad.

Can I ask what everyone thinks of the above plan my current standing is? Have I really messed up and set my family behind massively?. I know my debt should be my priority however having no savings is a massive source of insecurity for me as the main bread winner. I want us to have financial cushioning and would like to be able to decorate etc. I have cut up all credit cards

BoGoF

So you still have the £35k of credit card debt?

If so, your priorities are all wrong. What interest rates are you paying on these? How much of the £1000 per month is interest? Prioritising 'savings' when in £35k of debt is madness.

Yellow_mango

I agree with BoGoF. This is madness. An emergency fund is good, but not at the cost of increasing your debt. If you already have £1200 in an ISA I’d live with that for now and focus on the debt.

How much is your Dad loaning you? Can you list the debts, interest rates and payments? Better yet complete a full SOA so people here can help you.

Antonio101

Thanks guys. All on 0% interest thankfully. He has given me £25K.
As it stands
Nationwide:£8100 0%-£180 per month
Barclays:£10000 0%-£200 per month
American express:£10000 0%-£400 per month
Sainsburys: £1500 0%-£30 per month
Halifax:£4500 0%-£70 per month

I have basically repayed my Amex, Nationwide and most of my barclays with that. So now
My dad I ow £25k
Barclays:£300 0%-£70per month
Sainsburys: £1500 0%-£30 per month
Halifax:£4500 0%-£70 per month

BoGoF

So a better picture than I imagined. How long left at 0%? Are those the minimum payments?
Personally I would increase my payments to those cards so that they were down to nil by the time the 0% is up.

Then, assuming no other debts such as loans, you can look at savings. But you need to be clear on your goals.

Is your ISA cash or S & S?

Antonio101

At least 18months on all cards. Yes they are the min repayments currently.
I have £1700 in a cash ISA and £1200 in a LISA (lifetime isa) which is part cash/shares.

BoGoF

So divide the outstanding balances by months left and increase your direct debit to that.

I imagine the rate on your cash isa is awful? Less than inflation and you are losing money. Would suggest you look at the savings section of this site for better returns.

Antonio101

Yes its terrible.
thankyou I will

MallyGirl

I guess it depends on what you plan to do with the investments but, as a high rate tax payer, don't forget to think about your pension. The tax relief on that will outweigh any other returns - obviously you can't get at it till 55 (currently - may creep up).

Starmummy

I don't think your 'goals' really show a change in attitude to money which is what you need to be in a more secure place.

Thinking you 'should' have a bigger house because other people you know have a bigger house is the same thought process that got you into this mess. (hello big wedding, flash cars and holidays on credit)

The money your dad has LENT you is a loan not a windfall as you have described. This is in frank terms consolidation which for most people just sets them down a path of racking up debts again.

Step 1 should be cutting up the old cards and CLOSING the accounts.
Step 2 should be keeping a detailed money diary and creating a SOA to see where you are spending your generous salary.
Step 3 should snowballing your debts. I would consentrate on saving up to pay a chunk back to your father so that when you have to pay him back the loan you need is as small as possible. no point paying off 0% CC to then have to pay much higher interest on a huge loan.

You're house may require decoration but this is a want not a need. You really need to change your attitude to money first.

As for talking about savingand investing. S&S is great if you know what you are doing but is no different to gambling if you don't know what you are doing. It is not a way to get rich quick.

I am glad you are being so prudent with your pension though. well done for that.

Antonio101

Upon reflection I agree. I have earnt good money since the age of 23 and so got into a habbit of living beyond my means (think £7k holidays etc). Yes it was consolidation. I was using to reduce the strain on the house hold financially and me having to work 6/7days a week which was impacting my marriage and relationship with my son who needs my time as he is autistic.

Ok i have cut up the cards but fear closing them atm due to the impact it will have on my credit score?
Yes I have now got a strict budget in place.

Yes I am saving as much as possible each month (grouped in with emergency fund) which I will use to pay back my dad.

Thankyou. Its the one area I feel ok. However I am really keen to have liquidity behind me also.