How should I begin to deal with this?

in Debt-free wannabe
12 replies 1.1K views
I have always been careful with money, but a combination of maternity leave, covid and one or two other things have left me in a bit of a pickle.

My overdraft is £1,000 and I just cannot get out of it.

At the moment my income varies between 500-1000 a month, and every other month I'm maxing out my overdraft again. 

I also have £800 on a credit card and £300 on a store card. My husband has an overdraft of a few hundred,and a few hundred left to pay on a small home improvements loan that we took out a few years ago when we bought our house.

I am to blame for this. My eldest child is a teen, and has suffered from mental health issues post covid, so I have said "yes" to every opportunity going- Duke of Ed, music tuition, hobbies- in an effort to get them out of the house and socialising.  

My youngest is a preschooler, we have no childcare costs as my husband and i work around each other, but this will limit how much I can work for some time yet. 

We thought about getting a Credit Union loan out to clear all debts, cancel the overdraft, and consolidate it into one monthly repayable debt, but they want three months of my bank statements, and I've just gone over by £20- they will never accept that. 

My overdraft and credit card are with Nationwide. They won't decrease the overdraft limit until you are out of it, but I can't get out of it to start decreasing it!

Our outgoings aren't huge and on paper we should manage, but here I am with not a penny in my account and £150 of PE kit to buy, £70 to pay preschool....

Where should I start first? I hate the overdraft most of all, it was a bad days work when I opened it and I regret it. The worry keeps me up at night. I estimate I pay about £50 in fees and interest a month on the overdraft and credit card
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Replies

  • fatbellyfatbelly Forumite
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    The effective interest on the overdraft will be quite high.


    Have you seen Martin's guide?


    https://www.moneysavingexpert.com/banking/cut-overdraft-costs/


    It would be useful if you could post a statement of affaires. Calculator here. Please format for mse.

  • enthusiasticsaverenthusiasticsaver Forumite, Ambassador
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    Consolidating debt is not the right option anyway. If you only have £500-£1000 income anyway are you in a position to repay the debts? If not you may need to consider a DMP where you default on the debts, get the interest frozen and repay at an affordable amount. It will trash your credit record though.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected] All views are my own and not the official line of MoneySavingExpert.
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  • oldfashioned_girloldfashioned_girl Forumite
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    Sorry I thought I'd added- my husband earns about 20k after tax, some of the debts are in his name and some mine. I earn around 7k give or take. Our mortgage is tiny, we live in a cheap area,we run one car and our outgoings are small.

    I'll have a look at the statement of affairs page now
  • BrieBrie Forumite
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    Lateral thought while you get your numbers together.  Is the teen able to get a job to help pay for their activities?  I'm thinking of washing cars, weeding gardens, cutting grass.  I've seen a number of similar enterprising young people being boosted via the NextDoor website.
    "Never retract, never explain, never apologise; get things done and let them howl.”

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  • oldfashioned_girloldfashioned_girl Forumite
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    First Post
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    [font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

    Household Information[/b]
    Number of adults in household........... 2
    Number of children in household......... 2
    Number of cars owned.................... 1[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 600
    Partners monthly income after tax....... 19800
    Benefits................................ 140
    Other income............................ 0[b]
    Total monthly income.................... 20540[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 250
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 49
    Electricity............................. 65
    Gas..................................... 0
    Oil..................................... 0
    Water rates............................. 0
    Telephone (land line)................... 0
    Mobile phone............................ 48
    TV Licence.............................. 14
    Satellite/Cable TV...................... 7.99
    Internet Services....................... 30
    Groceries etc. ......................... 250
    Clothing................................ 0
    Petrol/diesel........................... 150
    Road tax................................ 13
    Car Insurance........................... 28
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 72
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 5
    Buildings insurance..................... 30
    Contents insurance...................... 0
    Life assurance ......................... 10
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0
    Haircuts................................ 0
    Entertainment........................... 0
    Holiday................................. 0
    Emergency fund.......................... 50[b]
    Total monthly expenses.................. 1071.99[/b]
    [b]

    Assets[/b]
    Cash.................................... 0
    House value (Gross)..................... 80000
    Shares and bonds........................ 0
    Car(s).................................. 1500
    Other assets............................ 0[b]
    Total Assets............................ 81500[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 0........(250)......0[b]
    Total secured & HP debts...... 0.........-.........- [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Household Loan ................400.......80........0
    Credit card ...................780.......50........0
    Overdraft......................1000......0.........0[b]
    Total unsecured debts..........2180......130.......- [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 20,540
    Expenses (including HP & secured debts). 1,071.99
    Available for debt repayments........... 19,468.01
    Monthly UNsecured debt repayments....... 130[b]
    Amount left after debt repayments....... 19,338.01[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 81,500
    Total HP & Secured debt................. -0
    Total Unsecured debt.................... -2,180[b]
    Net Assets.............................. 79,320[/b]

    [i]Created using the SOA calculator at www.LemonFool.co.uk.
    Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]
  • oldfashioned_girloldfashioned_girl Forumite
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    Teen actually has just got a job in a local business, but we've all come down with covid and the business owners were on holiday recently, but teen should be able to make between 25-50 a week doing that, at least over summer. We just haven't seen the benefits of it just yet!

    In September one of our debts- the household loan- should be paid, plus the bulk of the teens activities will not be renewed as the most expensive ones have been dropped as it is GCSEs starting, plus we will no longer have to pay for nursery for the littlest. So that's a saving of about £150 plus whatever the activities would have cost (a lot)

    I've just tried to post my statement of affairs, a very rough one as my husband isn't here for me to double check a few things, plus I'm not very good at working it!


  • oldfashioned_girloldfashioned_girl Forumite
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    Oh for goodness sake I've put my husband's yearly income rather than monthly- good grief! That's what happens when you think you have a few minutes peace from the little one!
  • fatbellyfatbelly Forumite
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    You have an edit button.

    Allow yourself something for clothes and presents

    Are you in Scotland? No water costs
  • enthusiasticsaverenthusiasticsaver Forumite, Ambassador
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    If your debts are only just over £2k this should be doable with £27k annual income and a small mortgage.  The soa obviously is incorrect as you need your husbands monthly income and ideally you should put the interest rates.  You also need the mortgage amount outstanding (approx will do).  You need to allow for everything you spend. Getting rid of the overdraft should be your first target as  that will be expensive.  Can you reduce the overdraft in your head by reducing it by £100 per month for example so that month 2 you do not go above £900 overdrawn and month 3 £800 overdrawn and so on. Or if you or your husband can get a money transfer card to repay the overdraft then cancel it? 
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected] All views are my own and not the official line of MoneySavingExpert.
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  • sammyjammysammyjammy Forumite
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    Have you ever done a benefits check?  You may be entitled to Universal Credit, always worth a check
    "You've been reading SOS when it's just your clock reading 5:05 "
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