Such a mess

Smivvers20

Having been debt free around 12 years ago I have now got myself in more debt.


I have the following:


Tesco Credit card - £3810 (26.89% - 0% is due to finish at the end of this month)
MBNA Credit Card - £5,000 - 9.8% (I think)
Virgin Credit Card - £2,554 (24.9%)
Barclays Credit Card - £13,222.54 (around 18% I think)
Sainsburys Credit Card - £1,664.61 (0% until November 2020)
Ratesetter Loan - £5,125.68 with 54 months to go at £94.92 a month (15.9%)


I earn good local money (£29000 a year) and own a house with my partner (who also has around £20,000 worth of debt). He earns around £45,000 a year.


I know we just need to crack down and start paying them all off but I'm just so confused as to where to start?


The reason I have the MBNA, Tesco and Sainsburys cards is because I split my virgin card between them to try and pay them off but I haven't been strict with myself.


Obviously I'm kicking myself now.


Our only "extravagances" are that I have a horse (but I cant lower any costs on him as he is on DIY so I do everything myself as it is) and I cant sell him either as he is a member of the family. We also eat out a fair bit but obviously that's easy enough to correct.


I'm just so unsure what to tackle first with the debts and what to focus on?


I know its going to take us around 6 years or more to pay it off, but I really just want to feel more in control.


Thank you

EssexHebridean

OK - first off, this is why we say people to be cautious when it comes to consolidation or shuffling debts onto 0% cards - both only work if you are very focused and disciplined AND have addressed the root causes of the debt.

Second - put together your Statement of Affairs (SOA) and post it in here. You'll find the link to the calculator we recommend for this in my signature. Complete it openly and honestly - remember it needs to reflect how things are right now not how you think you "should" be spending or what you think we expect to see. That's not helpful to you or us. Hit "format for MSE" at the end and post it in here and we'll take a look.

I'd also suggest keeping a spending diary for a bit so you can track back what is being spent on, for example - eating out as you mention. At the moment if it were me with that level of debt I'd be wanting to cut that right back to either one takeaway or one modestly priced meal out a month - no more.

For perspective - between the two of you you currently owe in excess of £50k - and that is a lot more than either of you should feel comfortable with I'd suggest - I presume there is a mortgage on top of that, too?

You're in a great position to be able to turn things around now - don't let this chance slip through your fingers!

wishus

Hello! I'm sure other people can advise and will in a bit, but the first thing regular users of this board recommend is doing an SOA, and if you're willing, sharing the results here. You need a good clear picture of where your expenses are so you can see the best way of managing your money.


I've seen other users on here before who had a horse, and yes they are expensive animals, but you already know you need to aim to get your spending in line where you can comfortably afford the upkeep. I'm almost at the end of my debt, and it's meant working breaks rather than package holidays, just a question of priorities, really.

Smivvers20

Thanks both. Ive done the SOA, I know where our money goes really, and it does go on food out (we were spending a lot on takeaways a week, and then going out at the weekend).


I know we can pay this off and yes we are extremely uncomfortable with the debt, but I just wanted to advice with regards to which order we should look at paying debts off.


Should we go highest interest first or lowest balance?


We are both looking at potentially doing part time work on top of our full time jobs as well but need to look in to this further (possibly a delivery driver of some description for both of us).


We haven't been on holiday for years unfortunately (more due to having the horse!).


Thank you for your replies though I really appreciate it.

ratrace

What has caused you both to have a debt of nearly 50k (29+20) and is there any big ticket items such as cars, gadgets etc.... that can be sold asap to pay it off faster, if you have done a soa thats great and you dont have to post it if you dont feel the need to.


Part time jobs is a great idea and will help in paying the debt down faster, i had to do the same when i had debt and it was really tough working nearly all hours god sends (i was a dominoes delivery driver for 6 months) and to be honest it was the wake up call i needed, i regretted all the things i bought that caused me to be in debt and i made a promise to my self that i will never again go into debt for "stuff" i dont care if my car is old, i dont care if i dont have the latest instgram worthy kitchen, i dont care if friends,family or neighbors think that stuff needs replacing because let me tell you when i was working my tail off paying it all off none of these people were to be seen helping, they dont like what i have tough dont come round

sorry for going off topic a little but you need to figure out what and why the debt was accumulated just like i did and work and work on that

someone i used to work with used to say all the time "Play now Pay later" i always think of them words stops me making the same silly mistakes again

buythedip

50k on food is good going

MovingForwards

It's normally recommended to target the highest interest debt first, whilst paying an extra £1 over the normal payment to the others.

delta13

Smivvers20 wrote: »

I know we can pay this off and yes we are extremely uncomfortable with the debt, but I just wanted to advice with regards to which order we should look at paying debts off.

Should we go highest interest first or lowest balance?

Thank you for your replies though I really appreciate it.

I've just looked at the credit cards.
If the balances on your cards remained the same for 12 months, this is how much interest you would be charged each year (I've done some basic math here, someone please correct me if I'm wrong):

Barclaycard - £2379.96
Tesco - £1024

Virgin - £635

MBNA - £490
Sainsbury's - 0 (because it's 0%)

If it was me, I would prioritise overpaying the Barclaycard first - it is costing you more than the other three combined and the sooner you pay it off the more money you'll have to play with in the long run. Like MovingForward said, overpay the others by a quid or two each month and you will notice a difference in time.
And I would cut up/ stop using the Sainsbury's one, and just make sure the balance is cleared before the 0% offer is over. (making sure you pay the minimum payment each month at the very least)

But I can't under estimate the value of psychological wins either - paying off one of the smaller balances might have a positive effect on your mindset if you can pay it off more quickly.

enthusiasticsaver

Smivvers20 wrote: »

Thanks both. Ive done the SOA, I know where our money goes really, and it does go on food out (we were spending a lot on takeaways a week, and then going out at the weekend).


I know we can pay this off and yes we are extremely uncomfortable with the debt, but I just wanted to advice with regards to which order we should look at paying debts off.


Should we go highest interest first or lowest balance?


We are both looking at potentially doing part time work on top of our full time jobs as well but need to look in to this further (possibly a delivery driver of some description for both of us).


We haven't been on holiday for years unfortunately (more due to having the horse!).


Thank you for your replies though I really appreciate it.

That is a significant amount of debt with no assets to account for it so either it has built up over a long period of time or you are overspending much more than you think and not just on food and eating out.

You should tackle the most expensive debt first and if on 0% then the deal which expires first. No point in keeping doing balance transfers if you never make a plan to repay it so it is good you are attacking it now. I would tackle Tesco first as the interest on that balance will be quite high once the 0% finishes (imminently).

Larac

Hi - you need to understand why you both have racked up £50K of debt. I have been there myself and ended up on a DMP - that is rather cold turkey as you have no access to credit but did focus the mind!. You do need to post a SOA - it does help to focus the mind as through that process it will start to identify the 'overspend' A daily spend account will also identify issues - coffees, lunches, leisure spends etc. Realistically you can't carry on in this state as something will crack - in my case I was just paying off the interest and it all gets too much.

monetxchange

All great tips above. What stuck out to me is you have a joint income of £75k a year but say at the end it’ll take approx 6 years to pay off. That’s a really long time on a healthy income, even on a large debt. It indicates to me you’ve not fully looked at how to cut down your spending, or aren’t sure where your money goes.

You should have a healthy wage surplus left after all your bills paid and minimum payments done if you really don’t have an extravagant lifestyle. Have a proper look at your SOA with your partner and be tough on yourselves. You have to make big reductions in your spending to clear this debt. Otherwise I’d worry that you’ll just accrue more living outside your means.

Check out some diaries on here and some Dave Ramsey debt free videos. There are people on much less than you clearing large amounts quickly with determination. Good luck and well done on the tough first step of coming here!