"Simply not solvent!

Seaxwyn · 1 January 2007 at 8:43AM

I’m joining the stampede and starting a debt diary to keep me focussed and, I hope, to get lots of good advice from the wise folk on here.

I’ll put my SOA in the next post, but first here’s a little intro.

For some years we have been living beyond our means, not because of lavish lifestyle so much as low earnings – oh and my failure to save for tax which means big bills twice a year. And in 2005 we spent thousands extending our house.

OH and I are both self-employed and have been for many years. I recently took a part-time job thinking it would make things easier but it didn’t, so I will leave that and go back to full-time freelancing.

I get offered lots of work but am not good at self-discipline so don’t get through as much as I should. OH has had little work for years now due to changes in the industry he works in reducing the need for his very specialist skills. He has been quite depressed for some time and until recently was in denial about the situation. Now he's got a bit of work and things are better. He is half on board with the debt clearance project but I've accepted that I've got to lead it.

We both have self-discipline problems which we need to tackle. Now I have worked out the minimum we need each month, I hope this will motivate us to make sure we earn it.

Right, now for the SOA:

Seaxwyn · 1 January 2007 at 8:48AM

Income

Fluctuates wildly - this is what we expect in January

Self earnings £1411
OH earnings £1385
Child benefit £210.20
Kind sister £100

Total: 3106.20

Outgoings

Mortgage 703.14 (interest only)
Council Tax £130
Gas £41
Electricity £57.55
Water £29.64
Phone & Internet £60
Mobiles £20 (4 mobiles on PAYG)
TV Licence £10.60

Sub-total: 1051.93

Household insurance 19.17
Mortgage Term Insurance £144.22
Life insurance £38.96

Subtotal: 202.35

Food/household shopping £300
Eating/drinking out/work food £40
Clothes £25
Haircuts £10

Subtotal £375

Train £43.60
Diesel £40
Car Insurance £34
Car Tax £10

Subtotal £127.60

School trips £20
Pocket money/outings/treats for kids £50
Birthday/Xmas presents/parties £50 (averaged over year)

Subtotal £120

NatWest Loan £383.86
HSBC Loan £100
Credit Card min payments £250

Subtotal £733.86

Save for tax: £325

Total: 2935.74

Debts

NatWest loan 27,638 APR 7.8% fixed 12 payments made, 72 to go
HSBC loan 6000 APR 12.7% var, 1 payment made, 59 to go

Abbey CC – £6432.50 APR 1.9 til June 07 then 12.9%
Sainsbury’s CC £2559.92 APR 5.94% for life of balance
M&S CC 3875.32 APR 3.9% LOB

NatWest account £ Few pounds in credit! o/d limit £3750 APR 16% tbc
Alliance & Leicester account £3026 o/d 0% up to £2500, 5.9% up to £3750

1171 tax bill due Jan 07 – will pay this on the overdrafts

TOTAL: £50,702.74

34,400 dad – 0% not worrying about this one right now, with his blessing

Seaxwyn · 1 January 2007 at 8:52AM

I really hope people can look at this SOA and suggest ways of tightening it up.

Great that it shows income higher than outgoings - that has not been the case much over the last year or so.

a few notes:

Not receiving child tax credit as this was overpaid previously, should resume in April at £153.15 every four weeks..

Utilities: Reluctant to switch; electricity is with Ecotricity, who I really like, gas we switched recently to supposedly the best deal. I have got much more hardline about switching off lights, computers etc of late and hope will see the results in future bills.

Children’s stuff: this is my biggest weakness. They seldom get new toys or clothes but I do stump up for school trips, outings, pocket money etc. And they are constantly invited to birthday parties and have to take presents. The £100 from my sister is intended to help with stuff for the children.

Extras: we do sell stuff on ebay/Amazon but don’t have very much of value left. I plan to do a carboot in the spring. Will investigate Quidco next time a major purchase is due. But as I usually have more freelance work offered than I can actually do, my aim is to work more rather than doing anything time-consuming online.

Seaxwyn · 1 January 2007 at 8:55AM

Final post from me and sorry for the marathon read. This is just to record work we have booked for the next few months. I feel very daunted about actually managing to do all this, particularly as we both work at home where there are many distractions making it hard to complete a full billable day.

Self

Job: 18 hours/week (4 mornings) Take-home pay £836.40 pcm
Client A job 1: 1-2 days/week @ £150/day – January-June
Client A job 2: 4-5 days each in Feb, April, Aug & Oct, £150/day
Client B: 15 days @ £175/day between now and end March (they want it front-loaded), very likely to be increased and extended
Client C: 35 days @ £180.day Feb-June
Client

casual work £22.87/hour as and when can do it – usually 2-4 days/month but could be more.

I plan to resign from the Job as it gets in the way of more lucrative freelancing, there is no flexibility to do the hours over fewer days.

OH

Casual job 1: 25 hours/week (5 mornings) at £5/hour plus free food
Casual job 2: 4.5 hours/week (3 afternoons) at £6.44/hour – I have suggested he drops this one

Client E: 4 or 5 paintings at £850-£950 (6-10 days per painting), at least one to be completed in Jan
Client F: 18 days @ £200 day Feb- March tbc

seven-day-weekend · 1 January 2007 at 8:57AM

Hi there!

What is the mortgage term insurance? Can that go?

Seaxwyn · 1 January 2007 at 9:12AM

Hi, this is a policy that will pay off the mortgage in the event of either of our deaths. I think this is essential as neither of us could pay it alone.

The other life insurance would pay 100k if one of us died, the total mortgage is 153k I think, so perhaps we could reduce the mortgage term one, I hadn't thought of that - I will look into it. Thanks for the suggestion.

pink_fairy_7 · 1 January 2007 at 9:13AM

Morning Seaxwyn

Just a few things from a quick look at your soa

Gas and Electric seem high
Phone Internet (£60) also seems high
Mortgage term ins ?
Food £300 - How many people is this for?
Eating Out?

pink fairy x

Dumyat · 1 January 2007 at 9:18AM

can you really both afford to drop the jobs which provide a reliable source of income?

I am not saying this to kick you when you are down, but was taking on another £6000 of debt a good idea given your circumstances.

you include savings for tax...then say you will need to use overdraft for tax bill?

edit...note from your post that you dont actually add up the debt you have...it comes in well over £80,000 not including your mortgage. are you still sticking your head in the sand here. you note that outgoings are less than incomings, but that is only making minimum payments. you are going to have this debt a long time unless you make some serious changes.

head down to moneysaving old style board for hints on cutting back on housekeeping costs.

Seaxwyn · 1 January 2007 at 9:35AM

Thanks pink fairy and dogrose

I agree gas and elec seem high. Gas bill is due in Feb so I will see what the damage is and review switching. But I'm sceptical about saving much by switching as I have done this several times so the so-called best deals, and never noticed a drop in price.

Phone/internet - I know! OH deals with this and is very reluctant to change - assures me this is the best deal. I will keep nagging on this one. He has to send enormous files and so says he needs more than the usual broadband. We run three websites with domain names etc so it's not just for calls.

Mortgage term insurance - see my reply to seven day weekend above - I wouldnt want to be without it but will look into whether this is the best option. OH is 57 and mortgage has about 20 years left to run so unlikely to get it dirt cheap.

Food - £300 for 6 people. I know lots of people achieve it much cheaper than this but I haven't managed so far. Learned lots from OS board and will persevere. We don't have any cheap supermarkets nearby though - Sainsbury's, Morrisons and local market are our only options.

dogrose - you are so right about the loan. OH took this out last month when he had a mini lightbulb moment and I was absolutely gutted. However it was part of him becoming more responsible so not all bad. Definitely aim to pay this one off early.

Jobs - I feel OK about leaving mine as I can earn far more freelance. I was entirely freelance for ten years with no shortage of work. The pay is not good and it basically takes up all my child-free time. OH not so sure, most months he earns nothing so the sandwich round is a lifeline.

I have no savings for the tax bill due in Jan but know I should save for future as this is how I got into debt in the first place.

Thanks again

Dumyat · 1 January 2007 at 9:42AM

If you can earn more then you have to knuckle down and make provision for your tax bill. you are so close to the edge here. I wish you and your family well.

hypno06 · 1 January 2007 at 10:03AM

Start making lists! Since I went self employed they are my lifeline as I do find it difficult to balance home/work stuff, as they are all based at the same location!

So get yourself an A4 or A5 notebook and write lists of everything - what you spend, what you earn, what you have to do. Have a real brainstorming session over a cup of coffee every day. Really focus your mind and enjoy crossing things off as you do them.

Don't bury your head in the sand over the debt. My debt was around £100k at the beginning of 2006 and we often tried to kid ourselves that things were fine!!

Get all the details together, loan to Dad included, and do a snowball calculation to see what your Debt free date is. It will also show you how much difference throwing an extra £10 a month to the debt will make. For me, I work out how much difference one extra client a week, or a month, (I am a complementary therapist) would make to the debt - it then makes me more inclined to get more clients in as I can see the direct result!

For my husband, he worked out how much difference one additional hour's overtime a month makes. Again, it focuses us on real results as a direct result of our own hard work.

Good luck!

"Simply not solvent!

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