Debt Free Wannabe - £4k

Trebor2013

Firstly, I hope those who read this are keeping safe and well during these uncertain times.

So, bit of a story, but felt it was best to share some background...
Since around 2013, I have struggled with debt and bringing some of my debts down. At the risk of sounding full of excuses, the simple factor being, I was spending beyond my means - not by huge amounts in singular months, but increasing my debt a little bit more, month on month, over a 3-4 year period. It started when I had to travel a significant distance for work, with commuting miles not paid for and I continued to spend as though my fuel expenditure wasn't as high and subsequently increased credit spent.

In about 2017 I had my 'lightbulb moment' and found the courage to open up to my parents, who kindly lightened the burden for me (financially and mentally), but not clearing my debt's completely. I had started making in-roads into clearing the outstanding balances, which i have listed below. However, since about mid-2018, i seem to have reached a point, where I am not getting the balances down and some of the time, what I pay off in the month, ends up going back on. I do my utmost best every month to make savings, but trying to keep a balance / healthy life, however, there have also been a couple of influencing factors limiting the money i can contribute each month to paying off the debt:

1) My partner and I have since had children, naturally causing an additional monthly expenditure
2) I have recently changed jobs, resulting in a salary decrease of £3k/annum - current 'monthly' salary £1,350/month after pension/deductions**
3) The mention of 'what i pay off in the month, ends up going back on', has mainly been due to unforeseen household expenditure rather than for personal gain.
**(although, a guaranteed annual salary increase each year for the next 7 years).

Current Debt:
Overdraft (Lloyds) - £1250
Credit Card (Lloyds) - £1150
Retail Finance - £1440 
(Total - £3840)

Monthly outgoings:
Mortgage / Bills / Food (50% share) - £850
Lloyds Credit Card - £55 (current minimum payment)
Retail Finance - £70 (current minimum payment)
Phone Tariff - £54 (admittedly, very high due to a large data package - awaiting upgrade August 2021, to downsize package to sim only plan and retain phone)
Insurances - £100
Fuel - £70 (one tank)
(Total - £1199 (£151 remaining)
Although £151 remains, as mentioned, I do try to maintain a 'balanced' lifestyle and leave myself £30-40 per week for spontaneous (yet necessary) expenditure. But also i try to put a little bit away each month as savings for birthdays/xmas.

In the next couple of years, my partner and I have hopes to move house and ideally I want to get my outstanding debts lowered as efficiently as possible in a bid to recover my credit report, ready for when lenders will want to take a look - (for info if relevant - mortgage remaining = £111,424 -- house value = £240-250,000 - no payments missed since August 2013).

Furthermore; I also have a default registered for a Tesco Credit Card on my credit report (default balance £5700 Oct 2017 - balance settled July 2019). As expected, given all the above, my 'Poor' credit rating is showing as follows:

Credit Karma - 530 
Experian - 658

I know clearing debt is never a quick fix, but I worry that either I'm missing an opportunity to steadily bring it down or I've just got to take the hit and bring it down slowly. I have had a spreadsheet up and running for the past 3-4 years, trying to budget monthly and find saving opportunities where possible; one example being, spending less on immediate family birthdays and cutting out spending on friends birthdays altogether! I don't gamble, smoke or spend recreationally very often.

Any help is gratefully accepted. I've certainly learnt the hard way and I'm forever an optimist. Please feel free to ask ANY questions - give the anonymity on here, i find it easier to be completely open about my situation in the hope of finding support.

DayDreamerandGeneralWaster

Hello! If you post a statement of arrangements with outgoings someone will tell you if they can see any slack 🙂 you can get it from stoozing.com. 

MidsHollie

Hi there,
I would recommend a few things, as below:
- complete an SOA. Post it here if you want advice on it
- start putting money away for less regular spends. It seems that you are using your credit cards for this so adding to your balances
- make a note of every single penny that you spend. 

I can’t even imagine what I would spend £160 of “spontaneous” spends on each month. That’s a lot of money that you are essentially !!!!!! against a wall. Being brutally honest, you don’t earn enough to throw away that amount of cash without thinking about it. You say you don’t spend recreationally, but what is this spend? You could double your debt pay off by cutting this out. It’s about priorities. Do you actually want to get rid of your debt or stay reliant on credit? 
Do you budget? I used to think I budgeted, but really I just made a list of my direct debits. 

I’d also suggest being 100% on the same page as your partner and have weekly money dates. It’s not for some but I suspect those that are on the same page achieve their goals so much quicker

CreditCardJunkie

My tip would be to keep a spreadsheet of what you're spending. I have the Google sheets app on my phone and update every time I pay a bill or make a purchase. I started doing it for myself and now do a household one to make sure we stay within our budgets for heating, electric, shopping etc.
If you read my diary creditcardjunkies back again you'll see the hugeee amount of overspends on basically nothing which was landing me in a circle of debt every month! Good luck.

TheAble

The glaring issue here is lack of income. You sure you can't get a more lucrative job? You can trim expenses in one or two areas but you probably need to be earning at least 50% more.

ryanm8655

TheAble said:

The glaring issue here is lack of income. You sure you can't get a more lucrative job? You can trim expenses in one or two areas but you probably need to be earning at least 50% more.

Agreed, why the £3k drop? 

Is your partner aware of your debts and the fact your wage hardly covers your share of the mortgage/bills?

It sounds like you are doing a lot of the right things and have had a big change in income which has caused the issues. Can your partner not pay a higher proportion of household expenditures?

At the moment you can’t afford the £40/week spontaneous spends money.

enthusiasticsaver

I think given your income is so low and with little disposable income it would be worth knocking that spontaneous spending money on the head for a while at least until the overdraft is gone.  Presumably you are paying 39% interest on that?  I am guessing that is not going down at all.  I would target that first. 

As your income has decreased can your partner pay slightly more than the 50% towards the mortgage/food and bills? Do they know you are in debt? 

To budget correctly and pay off debt you need to save up emergency savings so you don't end up using the cards to put unforeseen expenditure on it.  

To cut back on outgoings I would look at first of all reducing your share of the bills etc if your partner earns a lot more than you.  You are a partnership, you have children so I am not sure why you do not have joint finances.  £100 on insurances when you only earn £1350 is a lot.  What insurances are these? From the £151 a month I would maybe put £50 in savings, £50 overpayment to the debt and keep £50 as spending money for at least a few months until you can maybe increase the income or persuade your partner to pay more of the bills. The insurances also look like an easy win as almost 10% of your salary going on that is way too high. 

monetxchange

I agree, to treat yourself to £120+ of frivolous spends per month is crazy when you don't have a penny. It's time to get hold of this debt now, not just keep ambling through and hoping it goes away. You've been bailed out before and then didn't get rid of the debt and spending issues. Is there a reason you took a job paying half what you got before when you were already struggling and running up debt? Is it just a recession based thing? If so, you need to get out earning more. Delivery pizzas, Amazon, anything. The sooner you accept responsibility and get it gone the sooner you'll have peace of mind.