This is time to take action - absolutely had enough

Billsown

Hello Folks 

I joined fairly recently but it's taken me until now to pluck up the courage to actually post about our debt situation. Basically, I am absolutely sick and tired of our money situation. sick and tired of working hard to service debts. Sick and tired of taking all of the responsibility for dealing with it ( more on that later) and sick and tired of constantly worrying about our precarious finances. We have actually been making changes for the past 4 months and my SOA reflects this, however it's early days and we have a lot of work to do. 

We have no sob story. We have basically F*****d up over the past 15 years, borrowing for things we didn't need, not saving for things etc. A lot of our money has been spent on holidays and stuff for the house/decorating, but a fair chunk has just been spent on 'stuff'. I have no excuses. We shouldn't have let it happen but I can't change that now. 
Every year we would go on holiday, sticking the balance on a credit card. 0% offers were always available and we earn good money so we 'could afford it'. We would swap our cars when we wanted to and shopping trips and weekends away would all be put on credit cards with a vague plan to pay it when we reached payday - we never did. Bring in a wedding, maternity and house purchase and things really accelerated. We now owe in excess of 60K which is stomach churningly. It was higher but he have managed to totally clear 5k during lock down, as well as building up a small emergency fund. 
I am the one that deals with the bills etc. My wife was just as happy as me to spend the money but has been quite critical towards me recently regarding our level of debt. She knew we owed a lot of money but was angry and shocked when we sat down in March and added it all up. This has been difficult for me to accept. I might be the one that deals with the bills but as far as I am concerned we both spent the money and therefore we are both responsible. Not once did she ever ask me, or take any real interest in the money or debt. I have really struggled with her attitude towards me over this and it's caused considerable friction. Thankfully we are both on the same page now and eager to get it sorted. 

The good thing is that we have a decent income and we can afford our payments. At this stage we certainly don't need a DMP etc, we just need to get our backsides in gear and get this paid off. We have already proven that with a bit of budgeting we can make inroads fairly quickly but we need to keep up the momentum. The amount of money that we were previously burning through is utterly shocking. 

Here is our SOA. This is what we have been doing since April. It's no perfect and we are still learning, but it's a start. 

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 1

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 3774

Partners monthly income after tax....... 1302

Benefits................................ 0

Other income............................ 0[b]

Total monthly income.................... 5076[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 518

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 124

Electricity............................. 50

Gas..................................... 60

Oil..................................... 0

Water rates............................. 40.19

Telephone (land line)................... 0

Mobile phone............................ 70

TV Licence.............................. 12

Satellite/Cable TV...................... 20

Internet Services....................... 19

Groceries etc. ......................... 300

Clothing................................ 50

Petrol/diesel........................... 160

Road tax................................ 6

Car Insurance........................... 55

Car maintenance (including MOT)......... 50

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 120

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 9

Pet insurance/vet bills................. 8

Buildings insurance..................... 18

Contents insurance...................... 10

Life assurance ......................... 28

Other insurance......................... 0

Presents (birthday, christmas etc)...... 50

Haircuts................................ 20

Entertainment........................... 100

Holiday................................. 0

Emergency fund.......................... 100[b]

Total monthly expenses.................. 1997.19[/b]

[b]

Assets[/b]

Cash.................................... 1500

House value (Gross)..................... 210000

Shares and bonds........................ 0

Car(s).................................. 5000

Other assets............................ 0[b]

Total Assets............................ 216500[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 59000....(518)......1.79[b]

Total secured & HP debts...... 59000.....-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

barclaycard 1..................12500.....240.......6.9

barclaycard 2..................4750......90........6.9

aqua...........................4400......123.......35.9

Very...........................1200......60........50

MBNA...........................2700......27........0

Barclaycard 3..................2500......59........17.9

tesco..........................4250......125.......16.9

overdraft......................2250......0.........19.9

loan Halifax...................7700......133.......6.9

Creation.......................4100......41........0

creation.......................3800......38........0

MBNA...........................7800......285.......24.9

loan (lloyds)..................2500......248.......7.9[b]

Total unsecured debts..........60450.....1469......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 5,076

Expenses (including HP & secured debts). 1,997.19

Available for debt repayments........... 3,078.81

Monthly UNsecured debt repayments....... 1,469[b]

Amount left after debt repayments....... 1,609.81[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 216,500

Total HP & Secured debt................. -59,000

Total Unsecured debt.................... -60,450[b]

Net Assets.............................. 97,050[/b]


I am still shocked when I see this level of debt in black and white. Does anyone else owe this much?? I feel like we are in the top bracket for extreme debtors!!!!

Any advice welcome. Thank you 

Time2Go_25

As you say you have a good income and assuming the SOA is accurate then you have £1600 each month spare to start to pay off the debt. Start with those with the biggest APR. The very account can be paid in full this month, then the aqua over the next 3 months, then onto the second MBNA account. 

sourcrates

Hi,

You are lucky in many ways, you have sufficiant income to service your debts, so you don`t need debt management advice.

I`ve seen plenty of SOA`s in my time from people with 50k plus of debt, on a quarter the income you have.

You just need to budget a little better, and throw your disposable income at the debts with the highest APR, as mentioned above.

What you must be is strict, with your future spending, its so easy once the debt is cleared to rack it up once again, and its common practice to actually see that is the end result in many cases, yo yoing in and out of debt, because you can and for no other reason.

So if you want to make a permanant life change, learning to live within your means, is a good first step, and should not be too difficult on 5 grand a month.

ryanm8655

First thing to do if you haven’t already is set all DDs to just above the minimums.

Then as above, target the highest interest debts first. Clear the very and then next target the Aqua and MBNA. Closing down the accounts as you go.

As you go you may find you can get some more 0% deals and switch some of the other debts to fresh deals. 

I set up a spreadsheet of all my cards noting when the deals end and the APRs when they do. Then it’s a game of staying ahead of them when you get to that point. I started out with about 8 cards and 2/3s of the debt bearing interest. It’s amazing how quickly things start to move once you get the interest payments down. All of mine has been interest free for a while now and I’m down to the last 3 cards. You’ll be amazed at where you are at by the end of the year if your SOA is correct.

You do have a lot of debt but you also have a lot of income, so no need to panic. 

Set up a diary for some accountability and to help keep track of your progress. I also use mine for those days when you just want to rant (quite often in recent times ha).

You’ve done the hard bit so keep it up!

ElizabethRose

I'd personally use your surplus every month to pay a lump sum off the highest interest debt each month. Also once they are settled close the credit card or account. Like @ryanm8655 says in month one very will gone so your surplus is up to £1700. Then 3 months later you'll have cleared the aqua so your surplus will be around £1800 to tackle the next one. Good luck.

enthusiasticsaver

Your debt is high but you have a good income and a good disposable income so I would just resolve to sort this out and do without holidays etc for now.  You have cleared £5k of debt in a  few months so just keep that going.  I would target Very first and then Aqua as those are both charging very high interest. I would also try and get rid of the overdraft.  In 5 months they could be gone if you use the £1600 surplus.  You both need to communicate a lot better over your finances in the future to keep on track. 

[Deleted User]

You're stronger than you know.
You're 'lightbulb moment' has happened 😊, now you see things clearly you'll be able to move forwards and your incomes, plus the reality of clearing 5k in a few months just shows it's easy for you to. 

Repeat/replicate the lifestyle you adopted during those restriction/lockdown months and you'll clear this easier than you think.
Christmas is already present in some shops (awful but true😣 ) so pre-empt temptations and weaknesses or you'll be into January and full of regret; a day of xmas expensive excitement is a month of financial heartache - ontop of your 60k.

Edit: Have a look at the Debtfree Diaries at the top of this subforum, you'll see many people in the same situation as you, it can help to get you through the difficult times when you see someone else doing well - there will be a new person posting in a few days that will read yours and get some comfort from what you're doing ...... this is a great resource for support if you allow it 🙂

kimwp

I'm literally so excited about how fast you can pay this debt down. With the amount of surplus you have, it's practically a game of how you can challenge yourself to pay it off faster. (Although I get that it probably doesn't feel like one at the moment). Hit the higher APRS hard, transfer to 0% offers (assuming the numbers make sense) and you'll have it gone in good time. If you can see it as a game, I think you will find it easier to continue into good saving behaviours when you no longer have any debt.  Will be following!

warby68

Your debt level is high but your income is high enough to deal with it which is great.
That really means its just all on you to set a budget, stick to it and exercise a whole lot of self control for a sustained period. If its built up over 15 years then its not as huge a level of overspending as those who have built it up over 5 or so, especially when you add in some high interest rates and periods of lower income as well as just the spending. So it shouldn't be too difficult to adjust and resolve to deal with it over a reasonable period.
Clearly at some point your wife designated you the money manager and had certain expectations of you in that role but you never got that message and continued to think the spending was obvious and your decisions all joint so above all you need to communicate going forward. Build in regular budget reviews and discuss spending plans together before they happen.
Everyone will manage a large debt repayment plan differently but I would go hard for your first year - no hols, no big spends at all and really throw everything at it with a view to getting rid of the highest rates and hopefully being offered some 0% stuff as well. Then I'd relax just a bit to a lifestyle you can sustain for the several years it will take to clear the debt in full so perhaps a small holiday and a small budget for the house, that kind of thing so life is not so miserable. You really want to maximise the initial phase where your motivation is high and you already have all the shiny new stuff, but also recognise that you have to live differently for a long time to come and strike a balance that is sustainable. 

PommeVerte

kimwp said:

I'm literally so excited about how fast you can pay this debt down. With the amount of surplus you have, it's practically a game of how you can challenge yourself to pay it off faster. (Although I get that it probably doesn't feel like one at the moment). Hit the higher APRS hard, transfer to 0% offers (assuming the numbers make sense) and you'll have it gone in good time. If you can see it as a game, I think you will find it easier to continue into good saving behaviours when you no longer have any debt.  Will be following!

Omg same here ! So excited ! I hope you let us in on your repayment journey OP ! Well done on having your lightbulb moment, its so painful isnt it ... but you can totally do this, get rid of the Very debt asap, that apr stings !!

TheAble

Don't forget to save a little money too, as well as paying off the debts. Having a few quid to call your own is very motivational.