What to do next....

by Scuba Steve 17 March 2011 |

6 comments | Love

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Hi there,

Myself and my partner are both 24 years old. We both work full time, and have a mortgage with the Halifax for our first home which we bought 13 months ago. I have 3 credit cards with a combined balnace of around £3500, but as I earn a good salary this is perfectly manageable. We also have a couple of bits of finance which is interest free, for furniture.

We have been getting by reasonably well, paying off more than miniumum payments when we can, putting a little away for emergencies or holidays and living a decent lifestyle.

My partner has dropped a bomb on me this week. He has a gambling addiction, and has run up an overdraft of £3000 with the Halifax- who also hold our mortgage. I am obviously distraught about the lying and deceipt but to be honest I am more concerned about the financial implications right now. I do not know how we can pay this back- the maximum we can afford is about £150 a month, this will take years. He has gradually increased the overdraft, meaning lots and lots of credit search done on him in a short period so no doubt his credit rating will be screwed- no option to get a low interest loan, or credit card.

I know it is a long shot but I thought I would ask if anyone has any ideas to help me/us? I am from a family who has been bankrupt in the past and I worry about money alot- I am worried about the mortgage, and how this is going to affect everything we want to do for years to come.

Thank you for reading this.

Ali

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Comments (6)

216

SoftwareBear posted
Actually it sounds like you've been living above your means already I'm afraid.

you shouldn't be saving money if you've got large debts ... interest free debts are still debts to be paid.

You say you have a decent lifestyle, can afford holidays and the like ... then you should be able to swallow £3000.

Does he have any assets he can sell ?

You need to get him to Gamblers Anonymous to deal with his problem ... you need to separate your finances as much as possible ... unfortunately you're tied in to the mortgage.

Joint accounts should be illegal.
Posted on 17 March 2011 | Love 0 loves Report
879

MikeGG1 posted
This is the emergency that you have put money away for.

Firstly, the interest rates on credit cards will be higher than on overdrafts. Pay the minimum on your 2 cards with the lowest interest rates. Concentrate on clearing your cards one at a time. Once you have cleared a card, use that one for any spend but only to the extent that you can settle within the free credit period. That will save you a lot of interest which you can put towards clearing your next card.

Don't think of helping him financially until you are clear of debt and he has broken the habit.

Hopefully he can break his habit, especially if he can't get any more credit and with your moral support. Hence not helping him financially to start with. Sometimes it is kinder in the long run to be brutal.

Mike

Mike
Posted on 17 March 2011 | Love 0 loves Report
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Scuba Steve posted
Hi there,

SoftwareBear- I would never say we are living beyond our means, and when I say decent lifestyle I mean that we can afford to eat and clothe ourselves-we havent been on holiday in 6 years but I mean that we have been putting a little aside for this. There is no question that the little (£540 in a year between us) we have saved will have to go straight to this OD now. I do not consider myself and my partner to have "large debts", I never have- we earn a reasonable salary and until this fiasco the total debt was less than £5000, and staedily declining. This is why I am so worried- he has almost double dhat we owe overnight and it is a cash debt- everytime I get a bank statement or check my balance at a cash machine I am confronted with this massive negative balance.

I suppose I was interested to see if there were any suggestions on the quickest and most efficient way to clear it- I am well aware that being financially linked has its pitfalls but on the flip side it let us on the property ladder, which would be impossible individually.

Looks like it will be just be a case of chipping away at it slowly over the next 3 years- I could kill him!!! GA here we come...

Thanks again.
Posted on 17 March 2011 | Love 0 loves Report
216

SoftwareBear posted
hmm ... does he have life insurance ? 8-) No ... I don't recommend that course of action.

£5000 is a large debt to have on credit cards and at your age being able to afford a house is amazing, but then we don't know where you live or how much family may have helped. But it indicates you have lived beyond your means thus far.

After 17 years I still have a chest of draws I bought for a cheap price at a second hand shop when I bought my first house. They remind me of the struggle I went through to buy my house and the five years of living with an unemployed partner with which I had a joint account who I now assume lied to me about every aspect of his life.

Your partner obviously believes he's a millionaire and has little regard for the worth of the money you both strive to earn each month.

The holiday thing is a good situation, and normal for FTBs. The savings are going to have to go on the most expensive debt ... which is probably the credit cards unless he has breached the overdraft limit.

You need to pay far more than the minimum balance each month.. not just a tenner or so.

I strongly recommend you close any joint accounts now. You will find this difficult without his consent ... and if it means clearing the overdraft now or halving it just to separate that side of things then I'd do it in a flash ... frog-march him to the bank and force him to do it ... if he still loves you he will do his best to avoid financial burden to you and take responsibility for his actions. If he won't do it, then you need to talk to a solicitor very quickly.

My partner withheld consent to close ours for a few weeks ... eventually he accepted defeat without too much damage... but he could have blown the overdraft before closing it ... leaving me with the debt ... he probably didn't realise he could.

He has completely betrayed your financial trust.

He's got to work hard to regain it.

Do not entertain getting a 0% card in your name to transfer the overdraft or credit cards to ... unless it is actually your debt you are moving.

Posted on 17 March 2011 | Love 0 loves Report
879

MikeGG1 posted
Until he is back in line, close all joint accounts. If you help him out, he will be able to gamble again. If he can't get the credit then he can't gamble and hopefully he will break the habit.

The credit cards will be at a higher interest rate that the overdraft so they should be tackled first. He will have more difficulty getting the credit to gamble if his overdraft isn't cleared.

Concentrate on clearing your debts first. You can help him better long-term with moral support and maybe financially when you are clear and he has proved that he has turned the corner. Don't just take his word for it - insist on proof. Addicts can be very devious!

You have 3 cards so you should pay only the minimum on 2 of them. All the extra should go on the card with the highest interest rate to clear it as quickly as possible. The minimum should be paid on all 3 cards by direct debit so that you can't miss a payment. The extra on the one card can be paid by transfer whenever you have spare cash. You must pay in total more than your total spend each month plus all your interest. Any spend should be on the cheaper of the other 2 cards.

At the moment any spend attracts interest from date of purchase. Once you have cleared an account, any new spend on that account would be interest-free until the payment date. That would save you a lot in interest so all spend should then switch to the cleared account and the direct debit on that account should be changed to the full balance. You should then start to clear the next most expensive card and you should have more money to use to clear it because your new spend is no longer attracting interest.

Any loan accounts should be paid as per the agreements.

Don't attempt to take out a 0% card to pay off his overdraft. If it is cleared he will only gamble it away again until he has broken the habit. In any case, and this is your excuse, you won't be able to get a 0% from any of your current card providers and many cards are issued by the same provider (e.g. MBNA issue the Virgin card). He will also have affected your credit rating through your association.

Good luck.

Mike
Posted on 17 March 2011 | Love 0 loves Report
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larnosi1 posted
take look at my financial forums:

http://mimk.eu/
Posted on 08 June 2011 | Love 0 loves Report

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