Is there a way out of this?

Familyofseven

Hi! This is my first time posting, I am absolutely desperate for help/advice! 
My husband and I have been in a continuous cycle of debt for years. We have had family help us numerous times by paying off loans and credit cards. This time 4 years ago we were debt free before we purchased our shared ownership property. We don’t have healthy spending habits, we have no savings or emergency fund and things like birthdays, Christmas and holidays  are funded by credit cards. 

Since February, this year, my parents have taken on our loan payment and are making the monthly payment towards one of the credit cards. Since then we have managed to build up another £16k on various credit cards (My parents don’t know this and I can’t even bring myself to tell them!) There is no excuse for it, and we have absolutely nothing to show for it! I’ve been on maternity leave this year so income has been reduced and the overspending has continued. I’ve done our SOA and will post below - the figures for birthdays / holidays / Christmas aren’t accurate as we’ve never budgeted, with not even being able to meet the minimum payments for credit cards right now I suppose those things should be £0 but it’s not realistic with such a large family! 

There are also a couple of other debts like Klarna and Very, that I haven’t accounted for on the SOA as things can be returned. 

Having read posts on the forum i’m wondering whether a DMP would be an option but i’m worried about when we come to remortgage (current rate ends 31/1/25) realistically we need to move to a bigger property as 7 of us currently in a 3 bed but i’m not sure there is much hope! 

I’m also looking for a new job and the possibility of going full time, however it would just increase our childcare and reduce the help we get via tax credits to pay for it! My husband is also getting just over 2k (per year) pay increase from Jan. 

Anyway any advice would be appreciated!  

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......... 5
Number of cars owned.................... 2[b]

Monthly Income Details[/b]
Monthly income after tax................ 856.1
Partners monthly income after tax....... 2312.2
Benefits................................ 901.21
Other income............................ 0[b]
Total monthly income.................... 4069.51[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 508.5
Secured/HP loan repayments.............. 0
Rent.................................... 532.69
Management charge (leasehold property).. 0
Council tax............................. 179
Electricity............................. 214
Gas..................................... 0
Oil..................................... 0
Water rates............................. 59.68
Telephone (land line)................... 0
Mobile phone............................ 96.98
TV Licence.............................. 13.25
Satellite/Cable TV...................... 51
Internet Services....................... 40.14
Groceries etc. ......................... 600
Clothing................................ 50
Petrol/diesel........................... 300
Road tax................................ 27.55
Car Insurance........................... 150.16
Car maintenance (including MOT)......... 40
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 380.25
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 29.41
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 19.77
Life assurance ......................... 17.54
Other insurance......................... 20.05
Presents (birthday, christmas etc)...... 85
Haircuts................................ 24
Entertainment........................... 100
Holiday................................. 85
Emergency fund.......................... 0
DFS..................................... 35.87
Horse riding............................ 100
Cheerleading............................ 105
Swimming................................ 70
Amazon prime............................ 8.99
Apple storage........................... 6.95
Disney+................................. 7.99
Apple music............................. 16.99[b]
Total monthly expenses.................. 3975.76[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 177750
Shares and bonds........................ 0
Car(s).................................. 15000
Other assets............................ 0[b]
Total Assets............................ 192750[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 127240...(508.5)....2.84[b]
Total secured & HP debts...... 127240....-.........-   [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Loan ratesetter................11665.....293.7.....3.9
Credit card virgin.............3987.74...39.88.....0
Credit card barclays...........2898.81...86.96.....0
Credit card Tesco..............3075......31........0
Credit card MBNA...............6531.1....163.2.....0
Credit card halifax............4142.73...70........32.04[b]
Total unsecured debts..........32300.38..684.74....-  [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,069.51
Expenses (including HP & secured debts). 3,975.76
Available for debt repayments........... 93.75
Monthly UNsecured debt repayments....... 684.74[b]
Amount short for making debt repayments. -590.99[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 192,750
Total HP & Secured debt................. -127,240
Total Unsecured debt.................... -32,300.38[b]
Net Assets.............................. 33,209.62[/b]

FreeFallerSaver

Welcome to the forum and well done for embracing this and for doing your SoA, it can be quite a shock when you see the figures laid out in front of you.

There will be some brilliant folk along any time soon with some help and pointers, but just a very quick observation from me: it looks like most of your credit cards are at 0%, is that actually the case? If so it would be helpful to know when those promotional periods come to a close. Also, which one of the cards are your parents servicing for you?

Familyofseven

Thanks for your reply! 

All the credit cards are 0% currently apart from the Halifax. 

My parents currently pay £200 a month to the Virgin card as this is the only one they are aware of - the 0% ends in May 2025. 

Barclays is 0% until May 2025 
MBNA has 2 balance transfers on with different end dates and 1 money transfer:
£2823.55 until Feb 2025 
£2583 until Nov 2024 
£1124.55 until July 2024 
Tesco has 1 balance transfer and 1 money transfer: 
£2638.93 until Nov 2024
£467.07 until Feb 2024 

It’s all a bit of a mess! 

Little_bit_taller

Hi @Familyofseven

Well done on posting. Have you and your husband had a good chat about the situation? You really need to be united in your approach to becoming financially savvy as otherwise it sounds like the cycle will just keep happening.

You obviously have a lot of fat you can trim from your budget but it just depends on what you are prepared to do in order to get yourselves in a better position.

If you cut back hard for a few months you could clear 1 of those debts no problem then snowball onto the rest.

What are your thoughts?

Karonher

Good luck with sorting this out - it can be done but will take time.

There are some areas that can be cut.

Some of the entertainment should go - the children may not like having to scale back a little now but it will be worth it in the end. Its close to £470 a month if you add in online payments as well.

Do you need to have the holiday?  Unless you are paying the money off directly it does not seem to show anywhere.

Food - maybe not a great deal you can do here, but a bit of budgeting should save a bit.

The car insurance seems high for cars that are worth £15,000 between them. Is that an accurate figure? Petrol is high as well. Would that drop if some of the entertainment was stopped? It could be a win win.

Will the childcare fees stop at any time soon or will the new baby be adding to them?

When are the phone contracts up - they can be cut to SIM only.

Can you cut down on the electricity cost? I know it seems to be your only energy but it is still very high. Surely in the next couple of months with warmer and lighter days you can cut back and put the extra money to a card.

Do you know how long your parents are going to pay what they are paying? If you could make more by working full time rather than part time it would be worth losing some benefits as more could be paid of a card. Is there anyway either of you could make a little more even if it was something like surveys online. It would take a month or so to see anything but it can start to add up.

sourcrates

First off, sorry for being blunt, but I find its best the truth be told, so the question has to be, what have you spent all that credit on?

Because whatever solution you end up putting in place, the very first thing you must do is identify how the debt was accrued, then change your ways and see that history does not repeat itself.

You have a monthly income most can only dream of, yet you are spending as though you earn twice that amount, it`s got to stop, otherwise nothing is going to help you get out of this.

As an example, your monthly ad hoc spending for the kids and entertainment is almost £400.

A lot of regulars to this forum have that amount as there entire monthly budget.

MFWannabe

Familyofseven said:

Hi! This is my first time posting, I am absolutely desperate for help/advice! 
My husband and I have been in a continuous cycle of debt for years. We have had family help us numerous times by paying off loans and credit cards. This time 4 years ago we were debt free before we purchased our shared ownership property. We don’t have healthy spending habits, we have no savings or emergency fund and things like birthdays, Christmas and holidays  are funded by credit cards. 

Since February, this year, my parents have taken on our loan payment and are making the monthly payment towards one of the credit cards. Since then we have managed to build up another £16k on various credit cards (My parents don’t know this and I can’t even bring myself to tell them!) There is no excuse for it, and we have absolutely nothing to show for it! I’ve been on maternity leave this year so income has been reduced and the overspending has continued. I’ve done our SOA and will post below - the figures for birthdays / holidays / Christmas aren’t accurate as we’ve never budgeted, with not even being able to meet the minimum payments for credit cards right now I suppose those things should be £0 but it’s not realistic with such a large family! 

There are also a couple of other debts like Klarna and Very, that I haven’t accounted for on the SOA as things can be returned. 

Having read posts on the forum i’m wondering whether a DMP would be an option but i’m worried about when we come to remortgage (current rate ends 31/1/25) realistically we need to move to a bigger property as 7 of us currently in a 3 bed but i’m not sure there is much hope! 

I’m also looking for a new job and the possibility of going full time, however it would just increase our childcare and reduce the help we get via tax credits to pay for it! My husband is also getting just over 2k (per year) pay increase from Jan. 

Anyway any advice would be appreciated!  

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......... 5
Number of cars owned.................... 2[b]

Monthly Income Details[/b]
Monthly income after tax................ 856.1
Partners monthly income after tax....... 2312.2
Benefits................................ 901.21
Other income............................ 0[b]
Total monthly income.................... 4069.51[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 508.5
Secured/HP loan repayments.............. 0
Rent.................................... 532.69
Management charge (leasehold property).. 0
Council tax............................. 179 - is this over 10 months? If so you could change to 12
Electricity............................. 214 - this is very high, can you cut this down? Is this based on actual usage or your direct debit? 
Gas..................................... 0
Oil..................................... 0
Water rates............................. 59.68 this seems very high? 
Telephone (land line)................... 0
Mobile phone............................ 96.98 - how many mobiles is this for? Change to sim only 
TV Licence.............................. 13.25
Satellite/Cable TV...................... 51 - this is very high as it doesn’t include internet 
Internet Services....................... 40.14 - this is very high, are you in contract? 
Groceries etc. ......................... 600- appreciate there 7 of you so you may not be able to cut this much 
Clothing................................ 50
Petrol/diesel........................... 300
Road tax................................ 27.55
Car Insurance........................... 150.16 - wow this is incredibly high, is there anyway this can be reduced at all? 
Car maintenance (including MOT)......... 40
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 380.25
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 29.41
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 19.77 - is this buildings and contents combined? 
Life assurance ......................... 17.54
Other insurance......................... 20.05 - what is this for?
Presents (birthday, christmas etc)...... 85 - is this accurate? 
Haircuts................................ 24
Entertainment........................... 100 - this needs to be reduced for now 
Holiday................................. 85 - this needs to go for now 
Emergency fund.......................... 0
DFS..................................... 35.87 - how long left on this? 
Horse riding............................ 100 - this needs to go for now 
Cheerleading............................ 105 - this needs to go for now 
Swimming................................ 70 - this needs to go for now 
Amazon prime............................ 8.99 -  needs to go 
Apple storage........................... 6.95 -  needs to go 
Disney+................................. 7.99 - needs to go 
Apple music............................. 16.99[b] - needs to go 
Total monthly expenses.................. 3975.76[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 177750
Shares and bonds........................ 0
Car(s).................................. 15000  - are you able to sell one of the cars? If not able to go down to one car could you buy a cheap run around instead? 
Other assets............................ 0[b]
Total Assets............................ 192750[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 127240...(508.5)....2.84[b]
Total secured & HP debts...... 127240....-.........-   [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Loan ratesetter................11665.....293.7.....3.9
Credit card virgin.............3987.74...39.88.....0
Credit card barclays...........2898.81...86.96.....0
Credit card Tesco..............3075......31........0
Credit card MBNA...............6531.1....163.2.....0
Credit card halifax............4142.73...70........32.04[b]
Total unsecured debts..........32300.38..684.74....-  [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,069.51
Expenses (including HP & secured debts). 3,975.76
Available for debt repayments........... 93.75
Monthly UNsecured debt repayments....... 684.74[b]
Amount short for making debt repayments. -590.99[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 192,750
Total HP & Secured debt................. -127,240
Total Unsecured debt.................... -32,300.38[b]
Net Assets.............................. 33,209.62[/b]

You need to cut out / back on everything while you get to grips with paying the debt. You cannot carry on trying ti fund your current lifestyle as you will get further and further into debt 

Martico

I understand that a large family is demanding, but if you've ambitions to have a larger home and more comfortable future, I agree that you have to be realistic about what you can afford to spend on what. As things stand, and assuming that budget is accurate, you're barely making ends meet before those non-priority can be serviced. So getting a budget that you can live to (and hopefully save for a bigger property) is essential. 
I'd agree that payments for most of those (all those?) online services are a luxury that you can't afford. 
Kids' activities? I'd be tempted to see if your parents would help contribute there rather than towards your debts. But those costs are still very high, so maybe look for some cheaper activities? You really can't afford the current outgoings.
You've got some tough conversations coming, as well as some serious budgeting. A DMP may still be the most viable route, but if you don't get a strong budget in place first, I fear the cycle may repeat

Familyofseven

@Karonher - thanks for your reply. There isn’t much I can do with the kids clubs at the moment, I know it’s ridiculously high but cheerleading we are tied into as my Daughter competes and i’d have to pay a fee to take her out! There are also other factors as to why she does it - I wish there was a way of cutting it down. But swimming I am going to have to cut out. 

Holiday will have to be cut out for this year at the very least. 

Food is such a tricky one! We probably spend over £600 which is where the credit cards come in and we’ve let that go on. 

Car insurance has doubled this year and despite doing every single comparison website I couldn’t get it cheaper. I have a large 7 seat and there are a couple of non fault claims / 1 fault claim. Fuel is expensive as my car isn’t really economical for the journeys I do - mostly town driving, taking children to school (3 different drops) and my husband travelling for work. 

Childcare cost is for the foreseeable and thats just for the baby to be with a childminder 3 school hour days a week - which is the worry if I was to go full time as obviously this would increase. 

My husband is looking into a second job in the evening as we know we need to increase the income to get out of this. My parents are paying off the Virgin credit card and the loan, well that was the plan i’m not sure how they’d feel if I was to tell them about the other debt - I feel incredibly guilty and ashamed. 

@sourcrates - I understand the blunt question, there is nothing to show it’s just spending, birthdays, christmas, UK holidays, takeaways, food shopping, fuel. We know we can’t let this continue and we’ve got to get a grip on it now. I’ve put the reasons above for high club costs - but agree we’ve lived like we have a higher income than we do. This has only increased in the last couple of years but then the spending just increased alongside.

I appreciate all the replies so far - we are aware / agree with most comments but just stuck in the cycle with no real budget and despite family help we can’t get a grips on it. Would talking to a debt charity be worthwhile? 

Little_bit_taller

There is everything on this website to help you get a handle on your debt i.e. https://www.moneysavingexpert.com/family/money-help/ - have a look at doing a money makeover for instance.

In your circumstance I don't think talking to a charity is the answer. You really need to learn how to budget as a 1st step and really take the bull by the horns in order to secure your families future.

Martico

For getting a grip on the grocery budget and meal planning, the old style board ( https://forums.moneysavingexpert.com/categories/old-style-moneysaving) has loads of tips and advice