Credit card debt

bargainhunter121

Hi everyone. I only found out 2 days ago that my husband has run up credit card debt on 3 cards. He's been paying the minimum amount on each but not making much of a dent on the debt. I'm heartbroken as I thought we were doing OK financially. I've always saved, never been in debt myself etc. We have a mortgage together which he's been contributing to and is negligible now thankfully. However, we also have childcare costs of £910 p/m and once he pays the miminum payment on the 3 cards has hardly any money left. We'll hopefully not have to pay the childcare after June this year but until then we're sinking. I've advised him to apply for a 0% card but there's only been two he's eligible for and it'll only be for 5/6 months. (Marble and zupa) he's applied to zupa yesterday, we're awaiting to hear back. His 3 cards he's nearly maxed out are 1: m&s- seems to be paying the most interest however owes the least on this 2: capital one -£12 p/m interest and barclay -£90, this is the one we've asked to transfer to zupa. What's the vest way forward to clear the debt overall he owes 16k on these cards. Just stupid spending. I've cut his cards and told him not to spend anymore and budget to a spend of £100 a month or less. He earns £2300 p/m. Is a loan a better option than multiple 0% cards? Any help appreciated, I have no clue on this. 

Emmia

bargainhunter121 said:

Hi everyone. I only found out 2 days ago that my husband has run up credit card debt on 3 cards. He's been paying the minimum amount on each but not making much of a dent on the debt. I'm heartbroken as I thought we were doing OK financially. I've always saved, never been in debt myself etc. We have a mortgage together which he's been contributing to and is negligible now thankfully. However, we also have childcare costs of £910 p/m and once he pays the miminum payment on the 3 cards has hardly any money left. We'll hopefully not have to pay the childcare after June this year but until then we're sinking. I've advised him to apply for a 0% card but there's only been two he's eligible for and it'll only be for 5/6 months. (Marble and zupa) he's applied to zupa yesterday, we're awaiting to hear back. His 3 cards he's nearly maxed out are 1: m&s- seems to be paying the most interest however owes the least on this 2: capital one -£12 p/m interest and barclay -£90, this is the one we've asked to transfer to zupa. What's the vest way forward to clear the debt overall he owes 16k on these cards. Just stupid spending. I've cut his cards and told him not to spend anymore and budget to a spend of £100 a month or less. He earns £2300 p/m. Is a loan a better option than multiple 0% cards? Any help appreciated, I have no clue on this. 

I think the usual first step can be to post your statement of affairs (SOA) as a household to look at what you're spending and where, and to find ways to release more money.

https://www.lemonfool.co.uk/financecalculators/soa.php

fill it in, and then format for MSE before pasting it up

Consolidation rarely works unless you address the cause of the debt, as you can quickly end up with a loan, and re-maxed out cards... Doubling the debt.

Your husband also needs to be 100% on board with this process too.

fatbelly

If there is enough money to pay the contractual minimums and you can get the debt to 0% then that is the way to go.

(Clearing the Barclaycard may mean they give a 0% offer so that he can switch a balance back. Check the aprs on each card as i would expect capital one to be highest)

If there isn't enough money for that, and he has been robbing Peter to pay Paul to get into this situation then he will default and pay what he can - a debt management plan.

The soa will show which is appropriate

bargainhunter121

[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.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 2300

Partners monthly income after tax....... 1145

Benefits................................ 835.6

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

Total monthly income.................... 4280.6[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 390

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

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

Management charge (leasehold property).. 0

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

Electricity............................. 45

Gas..................................... 49

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

Water rates............................. 0

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

Mobile phone............................ 10

TV Licence.............................. 14

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

Internet Services....................... 35

Groceries etc. ......................... 200

Clothing................................ 20

Petrol/diesel........................... 100

Road tax................................ 15

Car Insurance........................... 30

Car maintenance (including MOT)......... 16

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

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

Childcare/nursery....................... 906

Other child related expenses............ 150

Medical (prescriptions, dentist etc).... 25

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

Buildings insurance..................... 33

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

Life assurance ......................... 15

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

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

Haircuts................................ 20

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

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

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

Total monthly expenses.................. 2203[/b]

[b]

Assets[/b]

Cash.................................... 7500

House value (Gross)..................... 335000

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

Car(s).................................. 12000

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

Total Assets............................ 354500[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 17099....(390)......1.8[b]

Total secured & HP debts...... 17099.....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Halifax (mine) ................390.......5.........25.49

Marks (mine) ..................264.......6.........23.9

Capital one....................6990......220.......24

Barclay card...................7010......200.......21.19

Marks (his)....................2450......60........21.18[b]

Total unsecured debts..........17104.....491.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,280.6

Expenses (including HP & secured debts). 2,203

Available for debt repayments........... 2,077.6

Monthly UNsecured debt repayments....... 491[b]

Amount left after debt repayments....... 1,586.6[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 354,500

Total HP & Secured debt................. -17,099

Total Unsecured debt.................... -17,104[b]

Net Assets.............................. 320,297[/b]

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

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

bargainhunter121

We've also paid for a holiday for the end of April which has cost about 800, but I wasn't sure how to add that in as a monthly cost. I wouldn't have booked it obviously if I'd known. The cash is all mine, we get uc for our childcare costs and dla for our son. I pay my credit cards off every month in full. 

fatbelly

That doesn't look too bad. Nice small mortgage and enough surplus to attack this without defaults.

Make sure you have d/ds set up for the minimum payments, as you don't want late payments on your file.

Incidentally, check your files because there's nothing there to indicate any problem - you should be getting good offers from soft checks like

https://www.moneysavingexpert.com/eligibility/credit-cards/search/?goal=CC_BALTRANSFERV2

Overpaying the highest interest debts systematically is called snowballing

bargainhunter121

I checked my credit rating on experian and its still excellent. Hubby has been trying for 0% cards and there's very few available to him, they only offer it for 5 or 6 months. 

RAS

You really need to account for all the annual costs like holiday, Christmas and birthdays, entertainment (you probably take the kids on a day out occasionally?) etc. 

Look through the last year's statements, work out what you spend in total and divide by 12. That needs to go in a budgeting fund. And set up a house maintenance fund and an emergency fund.

Clothing, food and car maintenance seem to be very low.

Along side that hubbie needs to go through his statements and work out what he's been spending on? Latte habit, lunches, gaming, following his team or spoiling the kids?

bargainhunter121

Is he better going for a loan to pay them off? Only asking because he's only got a choice of 2 x 0% cards now. Werehopin gin June the childcare will no longer be required so to use that money to help pay off the debt. Would he be likely to have the option of further 0% cards after the 5/6 months are up? (We're still awaiting to hear if he's been approved for the 0% card). Also can he apply for 2 x 0% balance transfer cards at the same time? 

Grumpelstiltskin

All getting a loan is doing is moving the debt sideways not paying it off.

It isn't long till June now so any 0% cards would help in the mean time.

fatbelly

Loans tend not to work too well:

1. The interest is collected over a long period so the actual amount can still be high even if the apr seems reasonable

2. If you are not getting good credit card offers, you won't get good loan offers

3. Homeowners get persuaded to take secured loans, which moves the debt to a more dangerous place

It may be (if there are no late payments or ccjs and he is on the electoral roll) then it is the number of applications itself that is affecting his file. Try a 6-month break from applications

In your case you have plenty of surplus to get on and pay the debt down. If there was, say, a 5-year loan, the danger is loss of focus