Debt, avoidance and accountability - hopefully?

K11m

Good morning lovely people,

So, I am here to try and get myself together. I have some credit card debt, I have just read a comment on another thread that struck a cord with me and its been my light bulb moment.....

"if you treat it as a low priority debt it will always be seen as low priority debt to you"

My credit card debt as been a low priority as I have passed it off, I have not been accountable to my part in my debt. 

Initially we took out a credit card, interest free, to buy and fit a kitchen. We had saved but alongside that I was then pregnant going on mat leave - literally the kitchen finished the day I went in hospital! I panicked about putting all that saved money to the bills as I was then on maternity pay. So i took out a credit card in the middle of a night feed, paid the bills with that and then sat on my savings - my thoughts were give it 6 months and if need be I can just clear the card with our savings it will be ok.

I had my baby the end of 2019. Covid hit, it hit everyone, my husband is self-employed and his industry was shut down. That money saved us. Long story short we battled on for 2 years making money work, building his business again and battling through. We were a hard hit industry and we had no support available to us but we got there but on the way, when it was hard I used a second credit card to cover us, car services, Christmas gifts, we also had one holiday that cost us £600.

Roll on to 2024 my baby is nearly 5. I have just rolled this debt onto new 0% cards each time the promotions ran out and paid either the minimum or a larger fee when we had some surplus. But ultimately I have ignored it as a priority.

So my initial debt in 2019 was £6,000. I now owe £9,563.58. No interest still but clearly I have not travelled the right direction.

I am currently able to pay £200 a month towards this debt. Being self employed my husband is the main breadwinner but I am working fitting in hours around him and the two children.

I am looking to move this debt again in March as my promotion runs out, I am worried given the economics that I may now struggle to move a larger debt. Maybe, I haven't looked yet.

We have no emergency fund and have got by without one. Do I throw everything I have got at this credit card between now and march? or cut it down to the minimum repayments and then attempt to get some savings aside? The min payments would be £125. So I could save £75. There is potential for the odd £30-40 surplus on the shopping budget to add to this but that's a month by month thing.

I feel like we are frugal, we live boring lives, biggest monthly expense that isn't a bill is sky tv at £95 but it is all we have, my husband is an F1 fan and given he works so hard this is his only real treat in life. Honestly, we are very low key people. I am confident there isn't anymore money to squeeze out of our budgets unless I do extra shifts to top us up (which I did in October to put money aside for this children's Christmas gifts) 

Would I be stupid to consider an DMP for this amount? I am looking at 3-4 years to clear this at £200 a month do I just need to keep on track and suck it up?

I have the flexibility now the children are both in school to do extra shifts to pay for things that are due I likely before would have stuck on credit. Car service, birthday/Christmas. Unexpected bills will catch us out with no savings which worries me. 

I am taking this as a priority debt now.....I have said it out loud!!

K11m

I should maybe add to this we are home owners and have a mortgage, good rates and currently fixed on a 5 year due to end 2026 so we are fairly 'stable' there. I have considered putting this debt onto our mortgage but didn't last time we renewed as was convinced I would have it cleared - haha!   

13thlegion

Sounds like you've definitely had life happen! Welcome, you are amongst a friendly bunch here.

If you've not already give this thread a read through, it has a lot ofvery useful information. https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps-to-take-are-here-please-read-then-ask-questions

Doing a Statement of Affairs, also called an SOA, will also help massively. And if you feel up to it sharing on here will let many cleverer minds than mine comment and offer suggestions, either on the paths ahead, or on ways to save money. This one has a format to MSE option so it can be shared here. https://www.lemonfool.co.uk/financecalculators/soa.php

Tips for the SOA, the first one or two are always wrong somewhere, and that is fine. For things that are not monthly you can do the maths to work out the equivalent costs, eg. Xmas costs £600 is actually £50 per month.

For my opinion - I think some sort of emergency fund is vital, even if it just £1000 stashed somewhere. Borrowing from yourself feels much better if anything goes a bit of course, compared to e.g. putting a washing machine on credit.

And do not put the debt on the mortgage. It is a false economy and puts risk on your home whereas the debt now is not a threat to your family home.

fatbelly

While you are at 0% and able to meet the minimum payments then there's no need to consider anything radical.

There might come a problem in March but probably someone will give you a balance transfer deal.

What's a little more concerning is that somehow the debt is drifting upwards and it seems your spending is not really under control. If you could post a statement of affairs, that would help.

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

The only item you mention is Sky. I suspect if you set aside an hour to phone them, and said that money was tight and you may have to leave, then the price would come down

https://forums.moneysavingexpert.com/discussion/5480644/sky-tv-retention-deals-post-your-haggling-successes/p672