Debt, Depression and mentions of Divorce? Request for Financial Support & Advice on Debt Management

Kratos666

Introduction: 

Longtime follower and fan of MSE, particularly the Podcast. Despite years of effort, my wife and I are struggling to clear our debts. Our financial tensions have escalated recently, adding stress to our relationship, culminating in a distressing situation tonight where my wife expressed feelings of hopelessness.

Background: 

Over our 11-year marriage, I've taken several loans to consolidate debt from credit cards, often stemming from my wife's spending. Discussing finances with her is challenging due to her anxiety and depression. The recent discovery of a £2700 monthly credit card bill has intensified our problems. While our relationship and family life remain strong in other aspects, finances remain a significant strain.

Situation: 

While we've managed our finances, my wife’s use of credit cards remains a mystery. I understand the unexpected expenses like vet bills, car repairs, and school uniforms etc. but there is just so much spending that I cannot grasp. We maintain a joint account and monthly spreadsheet budget for essential outgoings. However, she often deviates, making unbudgeted purchases on her credit card. Despite a recent loan payment freeing £290/month for us, we've uncovered further debts due to my wife's spending. Last month, we tried consolidating by transferring balances and committing £1500 of our monthly income towards debt repayment. Yet, ongoing card usage has hindered our progress. On the mental health front, my wife has consulted resources and professionals, including suggestions from MSE's Mental Health and Debt leaflet.

SOA (Statement of Affairs): 

I've compiled our SOA based on a recommendation, hoping someone with experience can offer insight.

[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................ 2346

Partners monthly income after tax....... 2438

Benefits................................ 650

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

Total monthly income.................... 5434[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 1251

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

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

Management charge (leasehold property).. 0

Council tax............................. 187

Electricity............................. 263

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

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

Water rates............................. 88

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

Mobile phone............................ 100

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

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

Internet Services....................... 103

Groceries etc. ......................... 500

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

Petrol/diesel........................... 200

Road tax................................ 10

Car Insurance........................... 65

Car maintenance (including MOT)......... 25

Car parking............................. 25

Other travel............................ 50

Childcare/nursery....................... 80

Other child related expenses............ 50

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

Pet insurance/vet bills................. 100

Buildings insurance..................... 30

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

Life assurance ......................... 63

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

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

Haircuts................................ 50

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

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

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

Kids Savings............................ 150

Overpay Mortgage........................ 100

Work Related............................ 35

Gym..................................... 90[b]

Total monthly expenses.................. 3930[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 380000

Shares and bonds........................ 400

Car(s).................................. 900

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

Total Assets............................ 381300[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 272515...(1251).....3.34[b]

Total secured & HP debts...... 272515....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Mark - Bank Loan Sain..........7812......434.......3.9

Mark - Very Account............53.63.....8.........0

Amy - Tesco C Card.............6766......147.......20

Amy - Next Store Cred..........444.......20........29

Amy - Bank Loan MBNA...........11565.....514.......9.7

Amy - MBNA C Card..............4770......123.......0

Amy - Virgin C Card............8007......87........24.9[b]

Total unsecured debts..........39417.63..1333......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 5,434

Expenses (including HP & secured debts). 3,930

Available for debt repayments........... 1,504

Monthly UNsecured debt repayments....... 1,333[b]

Amount left after debt repayments....... 171[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 381,300

Total HP & Secured debt................. -272,515

Total Unsecured debt.................... -39,417.63[b]

Net Assets.............................. 69,367.37[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

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

    

dawnybabes

For the first month I’d keep a diary of everything you both spend money on, a coffee a day, a magazine, a quick sandwich all suddenly add up to an awful lot.

the electric seems high ? Are you in credit ?

Are you nearly out of contract on the phones ? Can you go sim only ? I buy ‘new’ phones every few years off eBay or magic magpie selling my old one and just pay about £17 for unlimited date / texts etc. 

anything you can sell to make extra payments ?

enthusiasticsaver

First you have to stop with the debt consolidation.  It never works and leads to higher debt as it has with you.  This is because it tricks you into thinking you have repaid debts when really all you have done is shuffled it around and it means that the lack of budgeting and unfunded spending continues as before.  The only way to stop that is to stop using credit altogether.  Cut the cards up, do a budget (as you have done above) and just use debit cards and a budgeting app or one of the accounts like monzo or starling where money is kept in separate spaces, so a bills space, food space, fuel space etc etc. Move money into savings to pay for unexpected car repairs or vet bills, birthdays etc etc. 

You could cut down on some of those outgoings like groceries, phones or entertainment and I would prioritise dealing with the debt over kids savings and mortgage overpayments. Why are your internet services costs so high? 

The other issue is obviously your wifes out of control spending habits.  Will she agree to having cards removed from her? Ideally she needs to not have the means to spend if she is unable to exercise any sort of self control over her spending.  Remove card details from apps, websites, apple pay etc etc.  Basically make it as difficult to spend as possible. One thing you could do almost straight away is pay off next and very, both expensive cards and then close them down. Then focus any overpayments on the interest charging cards and move any to 0% if you  are able to. 

Is she able to access any sort of therapy to deal with her anxiety or depression and is that what is causing her to overspend? Or is the money situation which is leading to the anxiety and depression?  Sometimes these things are linked and it is difficult to see whether people spend to feel better then get stuck in cycle of guilt as their finances spiral out of control leading to more anxiety and depression. 

enthusiasticsaver

Also, if your user name is your real name I would ask MSE administrators to change to something which cannot be identified in real life. 

foxgloves

I definitely second the above views on consolidation loans. They are an attempted route out of debt which rarely works for the very reasons given. I speak from experience. We had a few of these....each time using them to consolidate credit card & other smaller loans to produce a smaller monthly payment which we would then be able to pay off more swiftly. Oh ha, ha. If only. We would add up the amount we needed to borrow to consolidate then add a little bit extra for something we 'needed' to buy, plus a little bit more 'just in case' to get us in a better position going forward. This never happened. Credit cards were not cut up, stupidly high overdraft limits were not reduced, flexiloan accounts were not closed. With finances feeling more relaxed once the consolidation loan had worked its evil magic, it was business as usual with our attitude to all things financial. No budgeting, outspending our income every month & treating available credit limits on cards as 'our money'. You will know from what I am describing that of course our debts rose again until......yes, we had the genius idea of taking out another consolidation loan. Rinse & repeat. My partner was just starting to mention a 4th one when fortunately this coincided with a sea-change. I had a light-bulb moment. Not the little flickers I'd had in the past which lasted for 2 days if that, but a really big one. A 'Why do we never have any money even though we both work full time & earn professional graduate salaries?' (not huge, I might add, but very much a decent whack for a household of 2 people) I sat at my desk one afternoon & added up all the payments we were making each month to pay off debt & it was both eye-opening & eye-watering. That was the end of my silly over-spending. My partner saw my debts coming down & wanted in on the action. We later joined our finances together, which made budgeting very much easier to manage. 
You have a decent household income, so it ought to be possible to find a way through this. The anxiety & depression will make some of it more difficult. I am fortunate not to have suffered from depression, but I have certainly had a horrible couple of years of anxiety disorder & with hindsight (although it was not caused by anything money-related), having a sensible plan in place to get our finances buoyant & on track would have been a positive thing during those times. I don't think there is any situation in life which is improved by being in debt. Apart from a mortgage to buy a home, maybe a loan to buy a sensibly priced reliable car for commuting to & from work, perhaps a career-development loan, all other consumer debt eventually becomes a millstone & items need to be saved for, as do completely foreseeable expenses.
If your wife is unable to stop un-budgeted spending, then I think you will need to put something in place. If she can't stick to a budgeted for monthly amount of personal spending money, then you may have to limit her access to credit cards. Do you actually set a monthly budget together? If not, this would provide evidence of why money-frittering cannot continue. That's quite a long post......my main message is that consolidation is rarely the way out people hope it is going to be.
Re your SOA - there are better people on here than I for advising on these, but there should be room for reducing your monthly grocery spend. Do you meal plan? That was a game changer for us when we were cutting back our very liberal approach to food shopping to get our debts paid off. Also might be worth looking at any avoidable electricity wastage that might be going on as that seems quite high to me, even given that energy prices did increase a lot. It's really hard to do comparisons as nothing is ever quite 'like for like' but for reference, we are a household of 2 adults in a 3-bed semi-detached, paying £120 per month for combined electricity & gas 
My best wishes for starting to get things sorted. Even getting it all down into words & admitting there is a problem is progress. 
F

Floss

OP, the best thing for your wife would be to be unable to obtain any credit, to get defaults and to start a DMP, along with seeking support for her health.

To do this, her existing cards need to be destroyed, all payment details removed from phone & laptop / pc, and stop paying all the credit card accounts so they default. It will trash her credit record, but once defaulted, the accounts will be frozen & interest will stop. While you are waiting for the defaults to appear, pay off the Very & Next using the money you would have paid on all her credit accounts and when those 2 are paid, close them completely and start to save that money into an emergency fund along with any savings you can make from your SOA, and then

Looking at your SOA, personally I would suggest the following:
Cut the clothing budget to £50
Pause the mortgage overpayment 
Pause the kids savings for now
Get contents insurance - this is VITAL
See if you can get on a water meter

You will get more advice if you repost onto the DFW main board (possibly using a new username) and keep this as a diary to chart your progress.

Good luck 🙂

Kratos666

Thank you all for your advice and gudiance - it's been a day of researching, planning and difficult conversations. I now have all 3 credit cards in my possesion and my wife has agreed that I should have oversight of these cards.

The SOA isn't entirely accurate - for example I bundled the contents insurance in with the price we pay for house insurance (we do both). I have spent the day budgeting and cutting costs as recommended and am now going to seek advice and gudiance on managing these bloody credit cards... I don't like the idea of defaulting payments or DMP as my wife was in one of these when we first met and it was a pain staking process to get out of the program she was in.

I will change name and keep this log moving on - if anything to keep us both focused on the journey toward a debt free life.

Floss

To be quite honest, the process of defaulting & period of recovery is a path that needs to be taken, no matter how hard. Borrowing oneself out of debt doesn't work, and once it is up & running, a self-managed DMP is very straightforward and has no fees. 

For info, I'm in a self managed DMP and I've been here before, over 20 years ago. I got out the hard way and was debt-free for years. Then 5 years ago my marriage fell apart, I moved out & eventually relocated, started a new job, bought my home and ended up with a 5-figure divorce bill to get rid of him, all the while racking up c/c debt.