Gutted - how did it happen?

Katapolt · 11 June 2018 at 11:01AM

After having a reshuffle of credit cards i have come to realise i have just over £3k owing on one.

In October i paid off £9k of debt, and in December bought my first house. I know some of the things are house things, and a few bits on my car like new tyres, but i just don't know how it got to £3k

I feel like such a disappointment. I'm now also saving for a wedding, and just feel like i've left my OH down and worry i wont ever get a grip.

I've moved everything onto one card so i don't pay any interest for 36 months, and with the monthly payments i'm making it'll be paid off in 24 ish months, as long as it doesn't grow.

what can i do to stop myself? Should i close all cards i have (i have 3 others all clear) and just not allow myself any card at all "for emergencies".

Any tips are greatly welcome

EssexHebridean · 11 June 2018 at 3:51PM

OK - your question "How did it happen" is actually answered within your first sentence..

Katapolt wrote: »

After having a reshuffle of credit cards i have come to realise i have just over £3k owing on one.

In October i paid off £9k of debt, and in December bought my first house. I know some of the things are house things, and a few bits on my car like new tyres, but i just don't know how it got to £3k

I feel like such a disappointment. I'm now also saving for a wedding, and just feel like i've left my OH down and worry i wont ever get a grip.

I've moved everything onto one card so i don't pay any interest for 36 months, and with the monthly payments i'm making it'll be paid off in 24 ish months, as long as it doesn't grow.

what can i do to stop myself? Should i close all cards i have (i have 3 others all clear) and just not allow myself any card at all "for emergencies".

Any tips are greatly welcome

You've taken your eye off the ball, and forgotten that what goes out, first needs to come in.

Step 1) Put together a full and honest SOA (Statement of affairs) - the link is in the sticky post at the top of the board or in my signature. It needs to reflect the situation as things are now - not how you think things should be - hence my use of "honest" above. Car costs for example must be budgeted monthly - you save the money up and then you spend it out - not the other way around.
Step 2) Cut up any remaining credit cards - just do it. In fact this could just as easily be step 1.
Step 3) Start to build yourself an Emergency Fund - as a home owner with a car you need to aim for £1,000 as a starting point - once the debt is cleared then start to build that further. The problem with keeping a CC for emergencies is that when temptation strikes it's amazing what you can convince yourself qualifies as an "emergency"!

You've done the right thing shifting it to 0% - so now tackle the cause of it getting there in the first place. Get that SOA done, post it in here, and we can make suggestions of where there might be savings you may have missed.

Katapolt · 11 June 2018 at 4:55PM

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 1400
Partners monthly income after tax....... 1800
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3200

Monthly Expense Details
Mortgage................................ 975
Secured/HP loan repayments.............. 166
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 145
Electricity............................. 87
Gas..................................... 0
Oil..................................... 0
Water rates............................. 12
Telephone (land line)................... 0
Mobile phone............................ 35
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 30
Groceries etc. ......................... 120
Clothing................................ 0
Petrol/diesel........................... 200
Road tax................................ 0
Car Insurance........................... 35
Car maintenance (including MOT)......... 15
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 25
Pet insurance/vet bills................. 10
Buildings insurance..................... 7.5
Contents insurance...................... 7.5
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 100
Total monthly expenses.................. 1990

Assets
Cash.................................... 2000
House value (Gross)..................... 22000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 24000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 1276650..(975)......0
Hire Purchase (HP) debt ...... 3000.....(166)......0
Total secured & HP debts...... 1279650...-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
credit card....................3200......125.......0
Total unsecured debts..........3200......125.......-

Monthly Budget Summary
Total monthly income.................... 3,200
Expenses (including HP & secured debts). 1,990
Available for debt repayments........... 1,210
Monthly UNsecured debt repayments....... 125
Amount left after debt repayments....... 1,085

Personal Balance Sheet Summary
Total assets (things you own)........... 24,000
Total HP & Secured debt................. -1,279,650
Total Unsecured debt.................... -3,200
Net Assets.............................. -1,258,850

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

Things Like the car and the phone i plan to change when i can. Phone is due up at the end of July. My car is on a lease agreement and i'm in the process of working out if i can get rid of it early, but from what they've said thus far it'll cost me the same amount to hand it over as it would cost for me to keep driving it for the next 18 months.

For the credit card min payments i dont know what the minimum is as i have a DD set for the £125 a month. Also, i dont have access to mu OHs wage for my debt - it isn't his issue and he saves very well, so i need to deal with it myself.

Katapolt · 11 June 2018 at 4:57PM

and to clarify - i dont save for a holiday or have anything like that - i save a set £100 a month and thats for anything, house, holiday, trips.

I dont get my hair done, maybe once a year for my birthday with the money im gifted. We dont go out for meals or anything, if we do it comes out of our household account which i pay £800 into every month.

Roxydebtfree20 · 11 June 2018 at 5:08PM

think you need to check your soa again! you have a million pound mortgage on a house valued at £22,000

chelseablue · 11 June 2018 at 5:21PM

Your SOA says you have £1,085 left after everything but only save £100 a month?

What happens to the rest?

zippygeorgeandben · 11 June 2018 at 7:33PM

and dare I ask how much you are saving for a wedding...?

enthusiasticsaver · 11 June 2018 at 8:08PM

I think your soa raises more questions than gives answers to how your debt has risen. I think EH is correct in that you have taken your eye of your finances and have been spending uncontrollably since moving. That needs to change if you are saving for a wedding.

You have said you don't have access to your OHs wages so presumably you have separate finances. Do you split bills down the middle to work out that £800 to joint bills? As your partner earns more can he not pay more to joint bills? This may be why the debt has arisen.

If you earn £1400 and save £100 and put £800 to the joint account this leaves you with £500 each month. Out of that £500 £416 is going on your car and £35 to your phone so that is £451. This leaves less than £125 to pay your credit card so this is why you have problems. That £800 needs to reduce or this problem will get worse. Split the council tax, mortgage and utilities and food. Ideally as your partner earns more he should pay 55-60% and you pay 40-45%.

enthusiasticsaver · 11 June 2018 at 8:17PM

Also I am not surprised your OH has more money and savings. He gets £1000 spare income a month and you get £500 to cover your car, all personal bills, savings, mobile and credit card debt. You are then in negative territory without you spending a penny.

I have just added up all the joint bills and they come up to £1419 including insurances. Do the groceries come out of the joint account? You need to speak to your OH before this gets worse and at the very least reduce that £800 to £700 until the debt is clear. Explain to him the reason you are in debt is because the car and household bills payment leave you with virtually nothing to spend, save or repay debt. That is his problem too as the mortgage was presumably based on your joint income and you are not sharing incomes so you are paying a bigger share of your income to the mortgage than he is.

gwynfil · 11 June 2018 at 9:07PM

My advice is:

(1) You have paid debt off in the past so know you can do it.
(2) Pay off the credit card according to your plan at least.
(3) Only have one credit card.

(4) Don't feel pressure to overspend on a wedding.

(5) Avoid spending on the card, by reminding yourself how important your home and security and peace of mind is.
(6) Try and discuss your hopes for a bright financial future with your OH. Maybe you can work out a way to save and spend less on credit when emergencies arise
(7) Stay positive- Im sure you can get through this successfully.