In dire need of help, time to take control of debt

orangebees22

Hi All,

I've got myself in to a terrible situation of overspending, partially due to mental health issues (depression, anxiety, low self esteem) and also due to a lack of control. Also to add i'm getting married next month so the costs have piled up a lot in the last 6 months.

I'm now on around 50k of debt, with approx 12k on 0% credit cards, 15k on interest bearing credit cards, 4k on buy now pay later (Klarna/Paypal) and then 2 personal loans of about 17k.

I've got a joint mortgage with the fixed rate expiring in 3 years. I don't expect we'll be wanting to move for at least another 3/4 years (i'm worried this wont be possible at all).

I've just started looking into debt management options, as currently i'm making minimum payments on my credit cards, spending probably around £1300 towards my debt each month. Due to the additional spending from the wedding, lots of socialising, I can barely make it 2 weeks without running out of money in my bank account and then adding to the credit cards for the rest of the month.

Any advice or help please? I've been looking into a DMP. It worries me so much not being able to use credit for at least 6 years (as unfortunately i've relied on it for so long). I don't have any savings left. I need to make a change in my spending but also with the wedding next month I don't see myself being able to.

I want to start this thread to make myself accountable for sorting myself out.

Alderbank

I see lots of "I" here but only one "we" .

What is your (soon to be) spouse's appetite for debt? That will be a really important factor in how you go about sorting this in the months and years to come.

orangebees22

https://forums.moneysavingexpert.com/discussion/comment/82079993#Comment_82079993

He has a small amount of debt, but also a fair bit of savings. At the moment we jointly pay bills however this debt i've accumulated is personal and wouldn't want to put it on him as this is all my fault, and I earn a fair bit more than him.

Just to add i've also used the online tools on stepchange and national debtline and they suggested different options (DMP vs IVA)

ManyWays

Does your husband-to-be know about your debt?

orangebees22

Yes he does

RAS

Good, because even, or perhaps especially, if you are going to fund the debt repayments from your larger income, the starting point is that your joint spending power going forward is going to be massively reduced.

Not only do you have to cut spending so that you are living within your budget, you also have to cut further to pay off the years of overspending. That's going to be a shock for both of you.

Before the wedding, and preferably this weekend, the pair of you sit down and do a statement of affairs (income and expenditure) working out your essential living costs.

You need to ask yourself if you are getting married or whether you want a wedding? Because a wedding could jeopardise your marriage long term. Particularly if you add children, mat leave and childcare costs into the equation.

You'll be able to choose the best available deal with your current mortgage provider when your fix ends, but are unlikely to get a new mortgage at a decent rate until the defaults drop off your credit record.

Make sure you both understand the need to cut back and deal witnwith this now.

orangebees22

https://forums.moneysavingexpert.com/discussion/comment/82080256#Comment_82080256

Thanks, I appreciate the advice.

I’ll put together a full Statement of Affairs this weekend and post it here so people can see exactly where I’m at and hopefully point out anything I’ve missed.

I know a lot of this is the result of my own spending over a long period of time, and I’ve definitely used shopping as a coping mechanism at times, which is something I need to address alongside sorting out the debt.

Unfortunately it’s too late to do anything about the wedding costs now as it’s only three weeks away and everything has already been paid for. My focus now is making sure I deal with the debt properly and change my spending habits going forward.

sourcrates

You could not imagine the number of people who mirror your situation, they may have good salaries on paper, but they are servicing many times their income in consumer credit debt, and see using credit to fund this lifestyle as being the norm.

The problem is the slightest upset to your income flow, can be the straw that breaks the camels back, I too lived like this in a former life, my total debt was in the region of 200k, made up of credit card debt, loans, mortgage, and a secured loan.

Events took a turn for the worst, and ended up losing the house, marriage and everything, a very sobering moment in my life I can tell you, and the speed at which it all happened was the hardest to comprehend.

My advice would be to tackle this sooner rather than later, as you can never predict what the future has in store for you.

orangebees22

Here's my personal SOA.

I know my spending has been a big part of how I've ended up in this position, particularly leisurely spending and shopping. That's something I recognise I need to address, and I'm already working through it with my partner.

In the meantime, I'm trying to work out the best way to deal with the debt itself. I'd really appreciate any advice on whether a self-managed DMP, StepChange DMP or IVA seems the most appropriate based on my situation.

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

Monthly Income Details[/b]
Monthly income after tax................ 4000
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 4000[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 750
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 143
Council tax............................. 86
Electricity............................. 30
Gas..................................... 30
Oil..................................... 0
Water rates............................. 24
Telephone (land line)................... 0
Mobile phone............................ 14.5
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 14
Groceries etc. ......................... 100
Clothing................................ 300
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 300
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 34.16
Buildings insurance..................... 0
Contents insurance...................... 12
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 75
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Daily spends (sent to joint a/c)........ 850
eating out/nights out................... 200
Subscriptions........................... 55[b]
Total monthly expenses.................. 3047.66[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 485000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0[b]
Total Assets............................ 485000[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 331305...(750)......3.98[b]
Total secured & HP debts...... 331305....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Virgin Credit Card.............6638......98.3......0
Natwest CC.....................6871......226.......0
Barclaycard CC.................2135......39.6......0
Cosmetic Perosnal Loa..........5667......221.......0
Personal Loan..................13000.....380.......0
Klarna.........................2820......100.......0
Paypal CC......................1479......53.6......0
Chase CC.......................9992......244.......0
Santander CC...................7798......72.86.....0[b]
Total unsecured debts..........56400.....1435.36...- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,000
Expenses (including HP & secured debts). 3,047.66
Available for debt repayments........... 952.34
Monthly UNsecured debt repayments....... 1,435.36[b]
Amount short for making debt repayments. -483.02[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 485,000
Total HP & Secured debt................. -331,305
Total Unsecured debt.................... -56,400[b]
Net Assets.............................. 97,295[/b]

[i]Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

MasterG83

Is the £850 daily spends, obviously spread over a month, half of the total amount you both pay? Between you spending £56 a day on stuff?

Immediately I see eating out, nights out and subscriptions as an instant win £250 a month straight away.

Another instant saving £300 on clothing, there's £550 a month without breaking a sweat.

What is the £300 other travel for?

orangebees22

https://forums.moneysavingexpert.com/discussion/comment/82082340#Comment_82082340

Yes, we both pay £850 a month into the joint which covers some daily spending like eating out but also some bills for our dog etc.

The problem is at the minute ive got some BNPL’s that require me to pay that amount on the clothing until they’re over. I know that I need to reduce my spending but I need some help with the debt that has already built up and some are gaining interest.

£300 is for public transport (I live and work in London)