To consolidate credit cards?

reggierae

I need some advice on debt consolidation. Please read our circumstances to see if it is appropriate. 

Debt amount £19k 

-13k CC £665 minimum per month

-6k on two other cards £380 minimum

0% periods have ended and I am not eligible for any others to balance transfer due to high credit utilisation

Take home:

-I earn a 1.5k as a I can only work 2 days due to childcare costs of twins (1 year olds) 

-Husband is self-employed taking between 3.6k and 5k+ per month. The past 6 months (helpfully, when I returned to work) have been the lower amount but he’s hoping for things to improve in April/May but it really depends which work comes in in his industry. 

Our bills are £3.8k per month as we pay about £1100 on credit cards alone. We’re left with about 1.2k for the month and that includes paying childcare of £35 per week and food, fuel, unexpected/ad hoc essential spending. On paper it seems we could save and overpay our cards but something always comes up. Ie a week without funding for childcare at the end of term cost £160 or an uninsured driver hitting my car costing me £500 in November. Kids’ birthdays in October… 

How did we end up in this situation:

-I first got the cards when our wedding went over budget £3k, I was paying them without issue. 

-We then bought an old house and renovation costs went way over budget and we had to rely on the cards (for instance, an unexpected roof replacement despite being assured by a builder that it was okay). Stupid but I’ve learnt my lesson now about saving for renovation costs. 

-Then, during the renovation I got pregnant with twins. The cost of having twins was astronomical as we needed a new car to fit a pram and car seats, double everything (like £150 per month on formula) The Twins Trust’s research puts the cost at an extra £30k in the first two years compared to having a singleton so it is no wonder we found ourselves in this dire situation. 

I’m usually so careful with money. I budget and batch cook each month. I never spend anything on myself or my partner. I budgeted carefully for Christmas. We have 65% equity in our home, with a good 5 year fix until 2027. I feel depressed and stuck in a hole that we’re never getting out of. I’m terrified that something big will happen and we’ll not be able to pay the bills. I’m so ashamed and scared. 

On to the consolidation loan:

-Take a 13k loan. Pay off biggest credit card reducing monthly bill to £196 from £665.

-Use the difference to pay off other two credit card over the next 6 months. Freeing up £380

-Then in 2027 remortgage extra pay off the loan (don’t want to remortgage now as our rate is so good). The way I view it, at least this way the money will be getting paid off (albeit over a long time and won’t be eaten up by interest payments). 

By then end of this, we’ll have around £900 extra per month to save for unforeseen circumstances and get away from the anxiety of barely surviving. I don’t see a way out without doing this. I will not use any more credit cards and haven’t done so since I returned to work from maternity leave. 

I can’t increase my income because my partners job involves working away from home so I can’t commit to extra shifts in a second job or increase my hours in my current job until at least September 2025 when we get 30 free hours for the twins as any extra work I do will be consumed by childcare costs. Even so, there’s no guarantee I’ll be able to up my days. 

I know these loans are usually a big no-no, but we’re never going to find ourselves in the exceptional circumstances of having twins again, nor will we ever move house or get married again (hopefully). I truly feel I’ve learnt from this and will never end up in the same situation again. 

What should I do? We have literally nothing left to pay these cards off ourselves currently or that’s what I would be doing.

Grumpelstiltskin

You say you are careful with money yet you then say something always comes up like kids birthdays, these come up every year so you should be budgeting every  month and saving the money.

reggierae

I’m as careful as I can be in our circumstances. I saved for Christmas. Returning from maternity leave in September meant I only received my first wage after being unpaid for 3 months at the beginning of October so we weren’t in a position to save for their birthday before then and had to buy everything that month.

EssexHebridean

OK - first question you need to ask yourself is that if you can no longer get 0% deals to transfer cards to, what sort of loan do you realistically think you'd be able to get? Chances are it will  be one for those with poor credit files, at a high rate, which in itself probably won't be great! 

Second thing is to put together your SOA (Statement of Affairs) which will also then give you a proper written down budget to work from going forwards. That will also tell you how much surplus you have at the end of the month to pay towards debts (or, conversely, how much in negative you are!). The key thing is though that it will force you to look at your expenditure over a year rather than just a month at a time. You'll learn to budget and set funds aside for the "big one offs" - so birthdays, christmas, holidays and that sort of thing, as well as budgeting for an emergency fund in case of any genuinely unforseen expenses. once it's completed, then if you format the SOA for MSE and copy and paste into your thread we can have a look and see if there might be savings you've missed?

Third - increased income - you CAN do things like surveys (there are threads elsewhere on here with pointers to which outfits are worth doing stuff with) which can be done in your own time (in as much as you have your own time, with twins!), how about selling clothes the little ones have grown out of, too, or toys they are now bored with but are in good condition? There are various options for making money which can be done without needing to "go out to work" for added hours! 

It's brilliant that you've got a decent length left on a good mortgage fix - that will be a real help, but it makes it all the more key that you tackle the debt before that finishes, as chances are then your payments are going to increase! 

I'd urge you not to consolidate - or at last not to commit to doing so until you've got the budgetary aspects under control, and actually worked out whether just clearing the debt normally is workable. As you get further along the line, you will also see more 0% deals coming available again and that will help of course. 

reggierae

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................ £1506.60 + around £850 extra pm in July/August due to OT

Partners monthly income after tax....... self employed lowest month of 2024 £3560

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

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

Total monthly income.................... £5056.06[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 673

Secured/HP loan repayments..............  £797 (HP with 2 years remaining plus work van PCP)

Council tax............................. £195

Electricity/Gas................................... £223

Water rates............................. £42.19

Mobile phone............................ £167.51 (two phones + a phone I pay for for my mother)

TV Licence.............................. £13.25

Internet Services....................... 55.48

Groceries etc. ......................... £600

Clothing................................ 50

Petrol/diesel........................... 70

Road tax................................ £22.60

Car Insurance........................... £128.73

Car maintenance (including MOT)......... one has cover included with payment, other is new (0, but should really save)

Car parking............................. varies depending on job location 

Childcare/nursery....................... £35 per week

Other child related expenses............ £12 per week activities 

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

Buildings Contents insurance...................... £23.64

Life/critical illness ......................... £24.06

Other insurance .........................  £10.82 business

Professional loan………. £130.72 for course renewal loan for 12 months ending in October, £200pcm to my previous employer for leaving after maternity leave, will be repaid in September 

Family loan: 700 remaining, paying £150pcm

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

Haircuts................................ £50

MBNA….. £665

Other credit cards……. £347.16

Entertainment........................... £25

Postcode Lottery……….. £12

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

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

Total monthly expenses.................. £4490.74

[b]

£316 remaining and that’s without anything coming up which it always tends to! 

reggierae

I do sell on Vinted (made about £140 in December!), my husband sells surplus from his jobs on eBay, but we tend to use this money to replace things for the babies or do something for fun like go out for breakfast. Though this year we are putting a stop to that too. I do overtime WFH on evenings in June and July as that’s the only time of year it is available.

My husband gets paid weekly which doesn’t help as it’s confusing because we need to leave money in an account to cover the bills that week, but also need to take money out to survive! We really need to save a month of bills up to to stop this. 
 

reggierae

The amount outgoing above should be *£4840 as I forgot about two bills the first time around. 

TheAble

When people consolidate they typically just keep spending again on the newly freed-up credit cards. Then you get to the point where you can't make your repayments and end up in some kind of debt management. Honestly it would be better to nip it in the bud now than continue down that path.

RAS

You need to add the APRs to the card debts, please.

Your husband is self-employed, so hopefully setting aside the money every month required by HMRC?

Mean-time he really needs to separate out his business costs from the family finances. That may mean on paper it makes little difference to the outcome, but it doesn't help either of you if the high level of his gross pay hides the realities of your spendable household income. If it's an expense for tax purposes, it's not household expenditure.

I'd suggest working out a budget based on his lowest net income, and your income. The aim is to stabilise your finances. Then work on a budgeting fund (insurance, holidays, MOT for your car) and start an emergency fund. In difficult months just add £1, in good months, top it up. 

Likewise, just pay the minimums in difficult months. Those months when either of you work extra, allocate money to the budgeting fund if it's behind, some towards the informal debts, some to the most expensive debt and stash more in the emergency fund. Then discuss one treat and see what you can do to pay even more towards the debts.

ManyWays

-Take a 13k loan. Pay off biggest credit card reducing monthly bill to £196 from £665.
That sounds surprisingly cheap for someone with your amount of debt, have you actually been offered this loan or is this just some advertised rate you have seen? Or is this a secured loan - which you should rule out with your partner having a very variable income, never put your house at risk.

Does your husband have enough money put away for tax this month?

Childcare/nursery....................... £35 per week is that just term time and you have to pay more in the holidays?

HP with 2 years remaining plus work van PCP have you both looked at 
https://www.moneysavingexpert.com/reclaim/car-finance-undeclared-commission/. This wont help you soon - it will be 2026 if at all, but start it off now.

The numbers dont look as though they add up right so could you use our SOA again and put all amounts in as monthly amounts and separate out debt repayments from living expenses?

EssexHebridean

On the SOA calculator there is a "format for MSE" option which then enables you to copy & paste it into your thread - that's probably the best way of ensuring that the figures all add up and that all the information is there.