Support and advice for dealing with a massive debt without going under!

PalindromeAlone

Hi All,

 OK, this may be a long first post so apologies in advance (I've lurked for years now but it is time to ask for help). I’m up to my eyeballs in debt, it’s a properly toe curling amount of about £48,000 and I need to really get it sorted…well start to get it sorted. There are however some things I need to say first

1.  I’m tackling this alone – but I am not on my own I have three small children and a husband but currently I don’t feel able to share the debt level with anyone. I know people say it is better to share and I completely get this however I don’t feel my husband is in the best place to take the news mental health wise and as I don’t have a firm plane for moving forward I feel it is best to handle alone for now. There are also other issues related to alcohol addiction (hubby not me) which mean I need to handle on my own for the time being. 

2. My husband is a huge part of the reason for this debt, He has always been awful with money and although I have been reasonable in the past and was never really in debt before we met he carried about £30ks worth when we got together. This was completely paid off at one point due to me taking hold of the finances but since having kids my focus has shifted and I have not been as strong as I could/should have been when saying no to things. I also added my own debt to the amount through using cards etc during maternity leaves with the thought that I could pay back and knowing my own financial situation but failing to take other elements into account.

3. I am looking to go into a survival mode for the rest of this year really to keep us afloat until 2022 when I can hopefully increase my work hours back up to full time and our childcare costs will reduce which will mean we can keep paying off without running out of cash every month. That said…

4. My husband is 99% going to be made redundant towards the end of this year. He is likely to receive a decent pay off of around £6k. Part of this will be used towards debts but he has made the decision in his head that he needs time for a break and so it is likely we will need to budget for 3 months of his salary to keep afloat during this. All being well he will then get back into work but I’m obviously unsure of the salary level       

 So all this means I need to figure out my survival mode plan with the idea of maybe being a little better off next year but with the back up of being able to carry on in survival mode if required until hubby gets a new job.

 All my debt is on credit cards which were on 0% cards but of course these have finished and now I’m juggling payments all over the place. Here is my SOA for you all to have a look at. I’m pretty sure that I have cut as much out as I can for now but suggestions on what else I can cut down on would be much appreciated. Anywhere I have put £1 for payment means hubby tends to cover this so I don’t need to think about it.

Before you look at my figures one of the things I have been doing the last 5 months is collecting cards (not Pokemon, older trade cards etc - what has lockdown done to me!!), some of these I am keeping and those I don’t want, are duplicates etc I have been selling. From this I have made an average of £400 extra a month. This is part of my survival plan for the year. If I can continue this then it should be much easier to stay afloat and to make extra payments. However I am aware that I need to start planning for tax implications. I am not registered as SE and I never thought this hobby would provide as much money as it has done. It is also not a secure income so I have not included it in the calculations below. I am not buying with the intent to sell BUT if I buy 1000 cards then it is likely that a large portion will not be ones I want so I then sell on. If anyone has any other suggestions for extra income then please do let me know.

 Also the surplus there goes on all sorts of things that I have not included in the SOA – presents, haircuts, clothes etc because I don’t do them each month.

 

 Here's my current SOA…

Household Information

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

Number of children in household......... 3

Number of cars owned.................... 1

 

Monthly Income Details

Monthly income after tax................ 2088.25

Partners monthly income after tax....... 300

Benefits................................ 140

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

Total monthly income.................... 2528.25

 

Monthly Expense Details

Mortgage................................ 834

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

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

Management charge (leasehold property).. 0

Council tax............................. 130

Electricity............................. 123.04

Gas..................................... 0

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

Water rates............................. 40.4

Telephone (land line)................... 24.14

Mobile phone............................ 28.78

TV Licence.............................. 13

Satellite/Cable TV...................... 0

Internet Services....................... 0

Groceries etc. ......................... 1

Clothing................................ 0

Petrol/diesel........................... 60

Road tax................................ 28.87

Car Insurance........................... 29.2

Car maintenance (including MOT)......... 0

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

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

Childcare/nursery....................... 0

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

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

Buildings insurance..................... 1

Contents insurance...................... 1

Life assurance ......................... 1

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

Presents (birthday, christmas etc)...... 0

Haircuts................................ 0

Entertainment........................... 0

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

Emergency fund.......................... 0

Total monthly expenses.................. 1315.43

[b]

 

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 320000

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

Car(s).................................. 3000

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

Total Assets............................ 323000

[b]

 

Secured & HP Debts[/b]

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

Mortgage...................... 160000...(834)...... not sure but fixed for another 4 years

Total secured & HP debts...... 160000....-.........

 

[b]Unsecured Debts[/b]

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

Barclaycard Me.................7622......179.......17.8

Barclaycard Hubby..............8502......191.......17.03

Virgin CC......................17145.....444.......18.33

MBNA CC........................5253......66........19.93

Sainsburys CC..................5148......127.......18.32

Halifax CC.....................4311......96........21.55

Total unsecured debts..........47981.....1103......

 

 

Monthly Budget Summary[/b]

Total monthly income.................... 2,528.25

Expenses (including HP & secured debts). 1,315.43

Available for debt repayments........... 1,212.82

Monthly UNsecured debt repayments....... 1,103

Amount left after debt repayments....... 109.82

 

Personal Balance Sheet Summary

Total assets (things you own)........... 323,000

Total HP & Secured debt................. -160,000

Total Unsecured debt.................... -47,981

Net Assets.............................. 115,019

As you can  see it is mega close to the wire as to being able to afford things and going under so I'm walking a very very very fine tightrope. Thanks in advance!

TheAble

It might sound an obvious comment but while it's just manageable now you don't want to make it any worse, so you really need to stop using credit. Go on an all-cash basis and direct as much surplus as you can to these debts - I'd probably tackle that Halifax first, with it being the smallest amount and also the highest APR.

AlwaysWorking

I know I'm stating the absolute obvious and I hate to say this, but your husband cannot afford the luxury of taking three months off work when you are in debt.

You mentioned childcare costs but there is nothing under that heading?

ratrace

AlwaysWorking said:

I know I'm stating the absolute obvious and I hate to say this, but your husband cannot afford the luxury of taking three months off work when you are in debt.

He's not aware they are in £48k's worth of debt maybe if he did he would change his mind

TheAble

There's really not a great deal to trim from that SOA. It's going to be a problem when your husband finishes work as the several hundred pounds worth of expenses (eg groceries) that he's currently covering, plus his £300 contribution as listed, will need to be paid for somehow. 

Those debts are eating up a yard in interest as well - I make it around 10k a year. That's not far off half of your income. 

Others are more knowledgeable than me on the best way forward but it's starting to feel a bit like you might need to have some sort of a chat with your lenders.

sourcrates

Hi,

You are sailing very close to the wind here, and if hubbys wage goes south, then that takes you over the edge.

You should know the difference between essential debt, and non essential debt.

Essential debt is your mortgage/council tax/utility bills/food etc.

All your credit debts are what are termed non essential, which means if push comes to shove, and they don`t get paid, then so be it, a temporary arrangement of £1 per week/month can be set up with your creditors should it become necessary.

The important thing for you now, is to understand how you managed to accrue nearly £48,000 worth of credit card debt, identify why you spent so much, what it went on, was it necessary, then put in place measures so that you can actually live within your means, rather than having a reliance on your credit cards again.

Credit cards are fine if managed correctly, but can be an almighty burden on your shoulders if you keep spending on them, and cannot clear the balance, as a homeowner you really need to be careful how you handle this, although defaulting on these debts would not in itself put your home in danger, it could trigger a series of events that may do so, if you are not on top of it.

So I wish you luck with it, I don`t thing hubby taking 3 months off work is a very good idea given your circumstances.

enthusiasticsaver

I too do not think your husband can afford the luxury of taking 3 months off work and he should be made aware that you are in debt even if you do not disclose the total figure. I appreciate if he is battling alcohol addiction too then this is difficult but if you want to get out of this you need to do so as a team. Surely if he is awful with money normally then having 3 months leisure time is going to give him more available time to spend or is the plan for him to take over the childcare to reduce the costs? I think you need to be careful about the SE income as there may be tax implications which presumably you have not budgeted for.  

It is absolutely imperative you stop spending on credit initially and ideally cut the cards up so neither of you can be tempted to spend on them. There is so  little leeway and you are not budgeting for many of these expense items or saving for emergencies so you may have to consider a debt solution like a DMP if your husband does lose his job and you are unable to meet minimums.  Prioritise expenditure so that mortgage and utilities and food get paid but everything else will have to be put on hold if you cannot make the income stack up. 

FluffyBabyPenguin

I can't advise on the debt but wanted to offer virtual hugs, that sounds like a lot to be dealing with by yourself. It sounds like the debt has been built up by you both, and so the burden should not rest on your shoulders alone. No need for blaming each other really, these things happen, credit card debt is easily built up when no-one is looking! Well done for assessing the situation, totaling it all up and deciding to do something about it.

I do understand you may have anxiety about telling your husband, but he's going to have to know soon enough. It will be easier to tackle as a team, especially if he currently has different expectations about the future, yous need to be on the same page. There's just no point in you metaphorically breaking your back to pay back debt when he might be continuing to spend abundantly, drink excessively, and plan to be without employment for several months. If he doesn't have a very good handle on his drinking, it could get worse during a spell of no work...

Unless he only earns £300 a month, you will have a better picture of your situation if you include his actual earnings and spends. It may be that you have more ease to work with jointly, or the picture will help identify what areas you both need to work on. 

I was only able to stop adding to my debt once I cut up the cards and deleted them from my Amazon/Paypal etc. That felt liberating! Okay it sucked having to learn to live within my actual means but it meant I wasn't tempted to put non-essentials on them. I think I have one card tucked away in the back of a drawer for actual emergencies but I've never needed it. Once (if) your husband gets redundancy, perhaps a portion of it could be put securely aside as an emergency fund so you can have breathing room when things come up. If you are only just about to cover the minimums on your credit cards, it could be worth speaking to a debt charity about your options for managing it. 

PalindromeAlone

Hi All, Thank you so much for the comments and sorry not to be back on here sooner. It's a juggle with work and the kids etc.

I'll try and go through some of the bits that need answering as they are not clear.

Yes we have childcare costs but we still get vouchers which are taken out at source, I get the full amount of £243 a month and hubby gets £100 so this is where we pay from. It is enough to cover all our costs at the moment. I didn't add it as I didn't want to noted as extra income because we can't use it anywhere else. 

I completely understand what you are all saying about telling my husband but at the moment I just can't. I don't think I can explain it more than that, I just can't. I don't think the words would even come out if I tried. For now I need to focus on what I can do myself. I am sure the time will come to talk to him but right now it's just not something I can do. 

Yep, I am working on not using the cards at all. I have hidden them all away and have one for emergencies. 

I too also feel that taking time off work is not going to be ideal however this is a negotiation I need to do with OH, he feels he needs the time after a stressful period and that Christmas is going to be a bad time to look for a job. I will be talking to him about this going forward but obviously I cannot force him so need to balance things. He is also looking at his alcohol intake and is trying to cut down which will be hugely helpful but obviously is down to him. I can support as much as possible but ultimately it's him who has to do this. 

I'm aware of which debts are essential and non essential and am going to give the card companies a call to see if I can lower rates etc for a period to allow me to get more paid off. I'm also starting to look at paying a set amount each month rather than just the minimum so I know what is what. This should help me to budget more efficiently. I will look to review payments every 6 months so that I keep paying as efficiently as possible. 

I will look at my SOA and add OH's salary in there as soon as I can.

Thank you everyone, I really appreciate your comments and support. 

PalindromeAlone

Here you go - new SOA including husbands salary

Household Information

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

Number of children in household......... 3

Number of cars owned.................... 1

 Monthly Income Details

Monthly income after tax................ 2088.25

Partners monthly income after tax....... 1171

Benefits................................ 140

Other income............................ 0

Total monthly income.................... 3399.25

 

Monthly Expense Details[/b]

Mortgage................................ 834

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

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

Management charge (leasehold property).. 0

Council tax............................. 130

Electricity............................. 123.04

Gas..................................... 0

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

Water rates............................. 40.4

Telephone (land line)................... 24.14

Mobile phone............................ 28.78

TV Licence.............................. 13

Satellite/Cable TV...................... 0

Internet Services....................... 0

Groceries etc. ......................... 400

Clothing................................ 0

Petrol/diesel........................... 60

Road tax................................ 28.87

Car Insurance........................... 29.2

Car maintenance (including MOT)......... 0

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

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

Childcare/nursery....................... 0 - deducted from salaries before tax (total £343 a month)

Other child related expenses............ 20

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

Buildings insurance..................... 29

Contents insurance...................... 0

Life assurance ......................... 0 – currently deducted before pay from OH’s salary

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

Presents (birthday, christmas etc)...... 0

Haircuts................................ 0

Entertainment........................... 0

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

Emergency fund.......................... 0

Total monthly expenses.................. 1760.43

 

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 320000

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

Car(s).................................. 3000

Other assets............................ 0

Total Assets............................ 323000

[b]

 

Secured & HP Debts[/b]

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

Mortgage...................... 160000...(834)......0

Total secured & HP debts...... 160000....-.........

 

[b]Unsecured Debts[/b]

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

Barclaycard Me.................7622......179.......17.8

Barclaycard Hubby..............8501......191.......17.03

Virgin.........................17145.....444.......18.33

Halifax........................4311......96........21.55

Sainsburys.....................5148......127.......18.32

MBNA...........................5253......66........19.93

Total unsecured debts..........47980.....1103......

 

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,399.25

Expenses (including HP & secured debts). 1,760.43

Available for debt repayments........... 1,638.82

Monthly UNsecured debt repayments....... 1,103

Amount left after debt repayments....... 535.82

 

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 323,000

Total HP & Secured debt................. -160,000

Total Unsecured debt.................... -47,980

Net Assets.............................. 115,020

It is looking like if OH is made redundant that is redundancy figure will be about £6800 according to the work online calculator. I am hoping to put at least £1000 towards debts from this - ideally more. If the plans remain the same with regards to OH taking some time off work then I think I need to earmark £4000 from this to help cover bills etc. If we can come to an arrangement where he takes less time off before job hunting then I will make bigger payments to the cards. 

Work have indicated that they would like me back as FT from January to all being well I will go back to 5 days and my take home salary after child benefit is likely to be £2570 and then when my youngest starts to get his funded hours after Easter next year I will be able to cut this right down for a while to say £50 a month. I've also realised that I am not claiming child benefit for my third. I thought it was capped at 2 but that is a different benefit we are not entitled to. I will get this organised which will give us an extra £45/£50 a month. 

Currently the best case scenario in my head for 2022 is that in January I go back to FT and OH gets a job a current salary level (or higher) which starts in February. Then we should have slightly lower debts and more income with expenses going down again after Easter. 

At the moment I need to try and get as much in balance as possible over the next 6 months and create a worst case scenario plan for 2022 to try and put us in as good a place as possible. 




 

kimwp

I really feel for you, you are taking a lot on your shoulders. I can see it is difficult to broach this with your husband, but how do you hope to tackle the debt if he doesn't know about it, yet (as you say) is the main contributor? You will be trying to fill the hole while he is emptying it.

Re your SOA, you really need to add those things like haircuts, presents etc to get a proper understanding of your spending.  Just divide the annual total by 12.