Admitting I have problem debt...

Sam_X_10 · 6 December 2022 at 10:56PM

Hi,
I am completely new to all this and looking for some support really...
I've realised that I'm just in above my head with debt.
I've racked up about 50k in credit Cards and loans - although my partner does have some part to play in this, I feel that it is all my fault as I have just buried my head for so long.
All I've really wanted to do is make my wife happy, but now I realise it's just making us miserable.
I've told her this evening and I know she's angry and incredibly disappointed in me. She's trusted me wholeheartedly, and gone along with me spending after I reassure her all is okay.
I can afford the repayments but I've got little left. My credit rating is down to fair, and I can't get a consolidation loan or balance transfers to reduce the costs.
I could really do with some guidance please.
My wife has an excellent credit rating but hasn't offered to apply for a loan so I guess she doesn't want to do that.
Most of the debt is in my name, with around 10k in my wife's.
Thank you for listening.

kimwp · 6 December 2022 at 11:29PM

Hi Sam_X-10,

You'll need to do a statement of affairs to make sure you can afford your debt payments when you take into account all your expenses, including annual ones. (link in my signature) - Martin's budget tool is also good for identifying all expenses. You can share it here for feedback. Then figure out where you can cut back to pay off your debts faster. You might be able to find 0% transfer cards (make sure that transferring does actually save you money), but consolidation isn't advised as it usually ends up deferring the problem rather than solving it. You can't can't rid of your debt by taking on more debt.

Sam_X_10 · 6 December 2022 at 11:57PM

[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......... 0

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

Monthly Income Details[/b]

Monthly income after tax................ 2500

Partners monthly income after tax....... 1800

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

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

Total monthly income.................... 4300[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 550

Secured/HP loan repayments.............. 556

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

Management charge (leasehold property).. 15

Council tax............................. 180

Electricity............................. 80

Gas..................................... 40

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

Water rates............................. 25

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

Mobile phone............................ 25

TV Licence.............................. 15

Satellite/Cable TV...................... 80

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

Groceries etc. ......................... 320

Clothing................................ 100

Petrol/diesel........................... 500

Road tax................................ 30

Car Insurance........................... 70

Car maintenance (including MOT)......... 20

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

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

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

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

Medical (prescriptions, dentist etc).... 50

Pet insurance/vet bills................. 30

Buildings insurance..................... 15

Contents insurance...................... 15

Life assurance ......................... 0

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

Presents (birthday, christmas etc)...... 25

Haircuts................................ 60

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

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

Emergency fund.......................... 0[b]

Total monthly expenses.................. 2801[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 235000

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

Car(s).................................. 15000

Other assets............................ 1000[b]

Total Assets............................ 251000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 120000...(550)......1.5

Hire Purchase (HP) debt ...... 17000....(256)......0<

Hire Purchase..................10000....(300)......0[b]

Total secured & HP debts...... 147000....-.........- [/b]

[b]Unsecured Debts[/b]

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

MBNA CC .......................6440......200.......30

Halifax CC.....................5455......150.......30

MBNA CC........................1226......50........30

Wife Loan......................10000.....331.......6

HSBC Loan......................17428.....355.......6

Nationwide Loan................4216......258.......6

Virgin CC......................9700......100.......0

Barclaycard CC.................1076......50........30[b]

Total unsecured debts..........55541.....1494......- [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,300

Expenses (including HP & secured debts). 2,801

Available for debt repayments........... 1,499

Monthly UNsecured debt repayments....... 1,494[b]

Amount left after debt repayments....... 5[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 251,000

Total HP & Secured debt................. -147,000

Total Unsecured debt.................... -55,541[b]

Net Assets.............................. 48,459[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

Martico · 7 December 2022 at 12:06AM

Hi Sam,
I feel for you.
As kimwp says, please go ahead and fill in a realistic SOA, which will give you a good steer on your budget. If you feel willing to share that here, then plenty of experienced people will be able to give some practical advice, if that's what you need.
Without knowing numbers, it's difficult to give that kind of advice, but you'll get good support and advice here.

Edit: you've done so, yay

MikeJXE · 7 December 2022 at 12:10AM

You sound like my son in to the tune of £48,000. in the years gone by i have bailed him out but that give the excuse to start again, this time I said no. They have moved out of their rented and moved in with their daughter so they can clear their debts, that should have been till October now extended till July. I'm not sure it will even happen then as I keep spotting new expensive products lying around, plus Christmas coming.

Martico · 7 December 2022 at 12:23AM

First glance, and being brutal by picking on one thing that could be seen as an unaffordable luxury:
Satellite / cable TV at £80 per month adds up to £960 per year.
If that was to go to one of your 30% credit cards instead, you'd both reduce the overall debt and save £280 annually in interest charges.

Sorry if that's harsh, but if you can live with those kinds of economies, they'd be a big help. At some point you'll be able to see yourself to clearing £1,500 per month, sadly at the moment that's going to debt servicing, as I'm sure you now realise.

Each month that you can reduce that debt will be easier, and as it goes down you may find some 0% deals along the way, which will help.

Sam_X_10 · 7 December 2022 at 12:33AM

Martico said:

First glance, and being brutal by picking on one thing that could be seen as an unaffordable luxury:
Satellite / cable TV at £80 per month adds up to £960 per year.
If that was to go to one of your 30% credit cards instead, you'd both reduce the overall debt and save £280 annually in interest charges.

Sorry if that's harsh, but if you can live with those kinds of economies, they'd be a big help. At some point you'll be able to see yourself to clearing £1,500 per month, sadly at the moment that's going to debt servicing, as I'm sure you now realise.

Each month that you can reduce that debt will be easier, and as it goes down you may find some 0% deals along the way, which will help.

So that includes our WiFi amd landline too, sorry it's difficult to split 😔

kimwp · 7 December 2022 at 12:34AM

Sam_X_10 said:

[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......... 0
Number of cars owned.................... 2[b]

Monthly Income Details[/b]
Monthly income after tax................ 2500
Partners monthly income after tax....... 1800
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 4300[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 550
Secured/HP loan repayments.............. 556
Rent.................................... 0
Management charge (leasehold property).. 15
Council tax............................. 180
Electricity............................. 80
Gas..................................... 40
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 0
Mobile phone............................ 25
TV Licence.............................. 15
Satellite/Cable TV...................... 80
Internet Services....................... 0
Groceries etc. ......................... 320
Clothing................................ 100
Petrol/diesel........................... 500
Road tax................................ 30
Car Insurance........................... 70
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 50
Pet insurance/vet bills................. 30
Buildings insurance..................... 15
Contents insurance...................... 15
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 25
Haircuts................................ 60
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0[b]
Total monthly expenses.................. 2801[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 235000
Shares and bonds........................ 0
Car(s).................................. 15000
Other assets............................ 1000[b]
Total Assets............................ 251000[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 120000...(550)......1.5
Hire Purchase (HP) debt ...... 17000....(256)......0<
Hire Purchase..................10000....(300)......0[b]
Total secured & HP debts...... 147000....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
MBNA CC .......................6440......200.......30
Halifax CC.....................5455......150.......30
MBNA CC........................1226......50........30
Wife Loan......................10000.....331.......6
HSBC Loan......................17428.....355.......6
Nationwide Loan................4216......258.......6
Virgin CC......................9700......100.......0
Barclaycard CC.................1076......50........30[b]
Total unsecured debts..........55541.....1494......- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,300
Expenses (including HP & secured debts). 2,801
Available for debt repayments........... 1,499
Monthly UNsecured debt repayments....... 1,494[b]
Amount left after debt repayments....... 5[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 251,000
Total HP & Secured debt................. -147,000
Total Unsecured debt.................... -55,541[b]
Net Assets.............................. 48,459[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

Good start. Do you really not spend anything on entertainment or holidays? Also car maintenance might be a little low for that level of mileage? If you can look at your bank accounts, that will help with realistic numbers, otherwise, you can start keeping a track as you go.

Providing that these are the real figures, then your next step* is to pick one of the debts to focus on paying down - probably the Barclay card or MBNA cc as they have high interest rates and set everything else to the minimum plus a bit. Once that is paid off, focus on the next one.

You also need to understand why you have this debt in order to prevent yourselves being in the same situation again. Was it consistent overspend, a few big purchases that never got paid off etc? This will help you avoid going down the same track.

*Some may advocate saving up an emergency fund as the next step, but you should be able to use your credit cards in an emergency as you won't be defaulting any of the accounts.

Martico · 7 December 2022 at 12:38AM

(I see there's nothing for Internet services, which is now a necessity and may well be tied up in that TV package - the main point still stands.)
I can't offer debt management advice - others here are well placed to do that if that's applicable - I'm here for budgeting thoughts and support. I'm still on a path down from £25k, but the remaining £7k is now all on 0% interest and going happily down.
It's a long road but can be manageable if you're honest with yourself

enthusiasticsaver · 7 December 2022 at 12:48AM

First of all put consolidation loans off the table. They will not help you and generally in fact make things worse.

You only have two options.

Reduce costs or increase income and put as much towards the debt as possible gradually reducing and paying off. This will take a while but gradually your credit rating should improve as the debt reduces and you may get some 0% deals.

Option two is look into a debt management plan which means defaulting (with the aim of making repayments affordable) and interest/charges should be frozen. Your credit rating will be shot however for 6 years and given you do have just about sufficient income to make repayments you may not find you have much spare as the DMP payment is based on affordability.

Personally I would go for option 1. Cut out buying clothes for a year, see if you can reduce other costs as far as possible or even look into a weekend or evening job to get extra income. You and your wife will both need to work together to sort this out.

Martico · 7 December 2022 at 12:52AM

I've found it useful to set up a spreadsheet that I update daily. It covers all spends, bank balance, credit card balances, expected interest etc. It's provided a focus and has made me question everything money-related as and when I spend. And has given me a measure of control that I probably lacked when I used to spend without really thinking about it.
And it's encouraging when I make a small overpayment on a card and see the ripple effect on future minimum payments etc

Admitting I have problem debt...

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