Help needed to break cycle of debt

monetxchange

You earn well now, but what if you weren’t able to work tomorrow? Don’t take on extra debt on the mortgage that could push you over into not being able to manage if circumstances changed. This no way to shortcut your way out of this other than cutting back and managing your money better.

You say your wife is setting up a business and will be making plenty of money once it gets going, but isn’t that just the best case scenario? I hope for the best for her, but the reality is many businesses fail on the first couple of years and/or take a very long time to get into profit. You’re already teetering on the edge of unmanageable debt. Now is the perfect time to start budgeting hard, smashing down the debt and living frugally. I hope you get your true lightbulb moment soon and realise things just aren’t working the way you’re going.

TW82

Thanks again for all the advice and wise words. 
I'm currently in the process of putting together a SOA (which I will post in here for more clarity). 
A few things worth mentioning. This debt was a lot higher just over a year ago, circa 21k . So I've managed to get down from that point. I have not used any of my credit cards for any purchases during the last 12-18 months . I have however not been paying them off substantially (save for the clearance of another card). 
A lot of silly debt has amassed through poor management, for example business expenses - which when claimed back I have failed to pay the full amount back onto the credit card... facepalm.. 
Most of my debt was amassed over a series of years. Spiked higher due to being made redundant a few years ago with my wife on Maternity, and with astronomical childcare (there was a point that childcare was £1400 a month as an example)  . Thankfully this is much lower now. 
My real problem is that I haven't shared this with my wife or anyone. I've been carrying the burden for a while and pretending that I'm not in a massive amount of debt. This is not conducive to good mental health or a trusting relationship, so I'm doing my best to rectify this and be completely honest . 

So it's not that I'm living above my means (not that I have money left by the end of the months though!)  - I certainly haven't been augmenting my salary with CC spend recently. Just struggling to get it down further. I suppose this is why I'm tempted by the small uplift to mortgage to clear everything. But I take the comments on board and I'm looking to see if I can balance transfer to 0% the higher interest stuff. Has anyone experience of using a 0% card to clear an overdraft debt? 

A point on my wife. She will certainly not be earning 'plenty of money' anytime soon. She was made redundant at the start of the year. She used to work 2 days a week and bought in around 1.1k net a month. She has recently started her own gardening business and has clients already - we will expect her to bring in anything from 500-1k a month off this. But we obviously cant count this yet . 

Thanks again everyone , I wanted to add some context as it may help. 

I'll add my SOA in the next day or so , and then it's all about putting together a 5or so year plan to clear it all. Here's hoping! 

db2016

SOA is best, and the best way for us on here to help you. so glad your getting one sorted.
and forgive me if im wrong, but high earners ive seen on here usually have high earner tastes, eg they dont tend to be the ones shopping at lidl or aldi. more likely to be waitrose. and this simple down shift could save you loads, and go on the debt etc.

monetxchange

I’d strongly advise you sharing all this with your wife. You’re married and these debts have been accrued as a family together and need to be dealt with as a team. She may not have realised that now is not exactly the ideal time to start a relatively low income business that’ll be extremely seasonal at best and will increase childcare costs. It might be a case of talking it through and see what kind of work/childcare arrangements would work out the most economical, at least until you’re clear.

TW82

Hi, all, 
Back again, and this time with more detail on my SOA. A few bits worth noting... I was very down on myself in my OP. That's because I'd kept this secret from my family for so long and I finally came clean/ was rumbled with my wife. The lies were the main source of the betrayal and why i was so stressed out. Having gone through my accounts, I noted that I haven't spent on a single credit card for just over 2 years. So, at least that's a positive in terms of behavior. I am not in the red and augmenting a lifestyle with credit. It is still looming large though and I'm looking for the best way that It can be manageable for me and my family. Especially since a change of circumstances with my wife's career. 

monthly Outgoings and statement balances below 
Salary Net £4,086.78
Natwest Mortgage     £1,111.33
Gas&Elec  (Bulb)             £74
Water (Soutern)               £73.85
Internet (Virgin)                £29 (recently got this reduced from £44)
Life Insurance (Vitality)     £82.02
TV License                        £13.20
Council Tax                       £122
Mobile (Three)                   £40
Car lease (Skoda)             £179.52
Car insurance                    £55.57
Childcare                           £351
Gym (joint membership)    £180
Santander Credit card        £120 
Spotify                                 £9.99
Netflix                                  £5.99
Amazon Prime                    £7.99
Disney life                           £4.99
o2 (mobile)                          £61
TSB Credit Card                 £8.00 min payment (£800 balance 0% until Feb 21) 
MBNA Credit Card              £96.00 min payment  (£7.677.27 balance , £6.958 is 0% until Feb 21) 
M&S Credit Card                 £80 min payment (£2,307 balance)
Labour Party membership (no judgement please ) £4.38
---------------------------------------------------------------------------------------
TSB Overdraft                    £2,200 

So I think total spend for the above is at £2,701.84. This spend covers minimum payments only and doesn't account for paying off my TSB overdraft (it's an account I no longer use .... long story relating to their IT meltdown) 

I have recently been approved for a 0% sainsburys card to take the £3,025.676 from M&S and MBNA which if i take it will last until Sep 21. 

I haven't included my food bills or shopping in the above. We are a family of four so we tend to spend quite a bit on this , I'd say around £100 a week at least. It's also worth noting that we have an overdraft of 800 in our current account that's used all the time. We are always super tight just before payday. 

I'm very interested to hear any expert advice on managing this debt down within a realistic time scale ... eg 6/7 years. I'm open to looking at everything. 
I'm also still tempted to add the debt figure to my mortgage. I know that's a big no no on here, but due to the fact it increases my mortgage by around £70 a month and clears everything it's very tempting - especially whilst my wife get's her business up and running. I get that it makes unsecured debt secured, but it's not going to be the £70 a month that put's my home at risk, it would be missing mortgage payments full stop. I've also not spent a thing with credit cards for 2 years , so the behavioral point I think I've mitigated. This may be a ill judged statement though.

I want to thank this group again. You're all legends and offering such amazing advice. Thank you. 

     


 




  

Willing2Learn

Welcome back @TW82  

TW82 said:

I have recently been approved for a 0% sainsburys card to take the £3,025.676 from M&S and MBNA which if i take it will last until Sep 21. 

I haven't included my food bills or shopping in the above. We are a family of four so we tend to spend quite a bit on this , I'd say around £100 a week at least. It's also worth noting that we have an overdraft of 800 in our current account that's used all the time. We are always super tight just before payday. 

I'm very interested to hear any expert advice on managing this debt down within a realistic time scale ... eg 6/7 years. I'm open to looking at everything.   

That Sainsbury card should help with reducing your debt.  As far as your SOA is concerned.  We need far more data, if we are to give the best advice, guidance and support.  It needs to be a list of ALL income, expenses, debts (both secure and unsecured), and assets.  Please use the SOA online template linked below.  Please remember to click on the 'format for MSE' button near the bottom of the form, before you copy & paste the whole lot into this thread.  Thanks 

https://www.lemonfool.co.uk/financecalculators/soa.php

doraspenlow

TW82 said:

I haven't included my food bills or shopping in the above. We are a family of four so we tend to spend quite a bit on this , I'd say around £100 a week at least. It's also worth noting that we have an overdraft of 800 in our current account that's used all the time. We are always super tight just before payday. 

If you're always bottoming out your £800 overdraft each month then, realistically, you need to add that to the list of debts.

In my experience, overdrafts are one of the worst debts to keep because the bank in within their rights to suddenly demand it all back (by taking away your overdraft facility). This is unlikely to happen unless your credit score takes a hitting, but it can. Personally, I would rather shift that debt to a card by doing a 0% money transfer if available. Then reduce the overdraft facilities so that you can't use them again.

Looking at the financial info that you've given, you should have nearly £1900 left over to pay for groceries and everything else. Where is that money going? No judgement at all. It's just that without knowing where that money is going you can't make a realistic budget. Some things it could be going on are: gifts, bits for the house, days out, clothes, shoes, Christmas, meals out, etc. etc..

I would second the advice to take a look at YNAB.

Andyjflet

Looks like you are really getting stuck into changing your habits !
First thing I would say is bin off the Netflix / Disney / Spotify and save yourself £28.96 per month which you can snowball perhaps get that TSB card off quickly and small wins help you feel more positive about the road ahead. 

[Deleted User]

...and losing the gym membership would get you permanently out of your OD for ever more and let you start making some decent overpayments.  

Assuming you already own a pair of trainers and have access to a pavement, then a few quid on resistance bands and the like would keep you in shape and still let you lose lbs while saving £££s.

The mobiles also look a bit pricey for the odd phone call and a game of Snake*.

*Other more modern games are available.

MallyGirl

I'd recommend you both keeping a spending diary - write down every penny that you spend (not just the big stuff but also coffee, newspaper, bus fares, etc. That will show you where the rest of the money goes.