In a 40k hole that I don't know how to get out of!

Nojls

Hi all,

I am in 40k of credit card debt and I have no idea how to get out of it. This is a plea for help.
This is across 7 creditors with amounts ranging for £737 to £9514. With 0% offers ending, I am now paying £1200 a month. Albeit on an ok salary of £63,500 a year my wife is on a much lower salary, and living in London, home expenses are high. I am now unable to fulfil the £1200 a month payments and sustain living. We don't live a lavish lifestyle and have 2 young children. The debts are with me which she knows a little about. I have cut back things as much as possible but with high rent (approx £2100) a month this is really a struggle. Where do I start? I am 40 years old and want to get this on track asap.

Brie

Welcome and well done for making the first step to get things sorted.

Step 1 is to fill out a statement of accounts (SOA - see below in my signature). Do it accurately, using 2 - 3 months worth of statements. Post it back here and we'll look and see if there's things in your budget that might be tightened up. Or don't post it if you find it too scary and need to retreat for a bit. Most people find that there's things that they haven't noticed (subscriptions etc) or that they have assumed they are being better at budgeting than is true.

I do recommend talking to your wife about this and ensure that she is onside. Last thing you need is for her to think that everything is fine and she go off and book a family holiday or something that you as a family can't afford. You might also need to talk to your children depending on how old they are to let them know that things will be tight so birthday/Christmas expectations need to be toned down. The rest of the family might be relieved to know that you aren't going to participate (much?) in present exchanges - face it how many of us like the gifts we get from in laws?

ManyWays

Welcome! The best place to start is with posting details of your income, expenses and debt, which we call a Statement Of Affairs (SOS).

Our preferred format is here:
https://www.stoozing.com/soa.php

It is often most helpful if you include both your incomes and all the expenses and debts, including hers.
Can you include lender names

sheenas

the first step is list you income and expenses. Some of these will be priority debt and take these from the income first. The remaining amounts needs distribution access the other outgoings proportionally. Further advice can be had from citizens advice. It not a good idea to try and borrow out of this situation.

Nojls

Thank you all. I will do my statement of affairs this evening.

fatbelly

When you're in a hole stop digging. Cancel the direct debits to the cards

Vitor

The most urgent step is telling OPs wife the full position. She is not ordinarily responsible for credit cards in his sole name, but they cannot construct a truthful household budget while she knows only “a little”.

Nojls

[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.................... 1[b]

Monthly Income Details[/b]
Monthly income after tax................ 3431.06
Partners monthly income after tax....... 1600
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 5031.06[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 2095
Management charge (leasehold property).. 0
Council tax............................. 194
Electricity............................. 157
Gas..................................... 0
Oil..................................... 0
Water rates............................. 56
Telephone (land line)................... 0
Mobile phone............................ 42.86
TV Licence.............................. 14.95
Satellite/Cable TV...................... 88
Internet Services....................... 0
Groceries etc. ......................... 250
Clothing................................ 30
Petrol/diesel........................... 200
Road tax................................ 14.43
Car Insurance........................... 54.43
Car maintenance (including MOT)......... 100
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 7.46
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 20
Entertainment........................... 300
Holiday................................. 0
Emergency fund.......................... 50
Playstation Finance Agreement........... 18.82
Kids Bike Agreement..................... 31.68[b]
Total monthly expenses.................. 3734.63[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3500
Other assets............................ 0[b]
Total Assets............................ 3500[/b]
[b]
No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Paypal.........................737.78....28.85.....23.9
HSBC...........................9514.12...291.1.....26.9
Barclaycard....................5623.43...213.3.....0
MBNA...........................7435.48...357.8.....0
Zable..........................1998.2....44........0
Virgin 2.......................4462.95...39........0
Natwest........................3446.92...114.9.....0
Virgin 1.......................3795.22...160.......0[b]
Total unsecured debts..........37014.1...1248.95...- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 5,031.06
Expenses (including HP & secured debts). 3,734.63
Available for debt repayments........... 1,296.43
Monthly UNsecured debt repayments....... 1,248.95[b]
Amount left after debt repayments....... 47.48[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 3,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -37,014.1[b]
Net Assets.............................. -33,514.1[/b]

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

Nojls

Obviously some months throw in unexpected things! As you can see we are on the brink.

Vitor

The SOA shows this is recoverable, but the budget is questionable. £250 for food for four people and nothing for children, medical costs or irregular expenses means the apparent £1,296 surplus is overstated.

Add the expiry dates and later APRs for all the 0% cards, tell your wife the full position, and contact StepChange or National Debtline. A fee-free DMP may be the sensible route. Do not consolidate or use a commercial debt company.

Nojls

Would anyone recommend a self-DMP. 40K is obviously a lot and I would never clear this balance with the interest being placed on top! I don't feel like this is sustainable.