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  • FIRST POST
    • fatrab
    • By fatrab 6th Dec 17, 3:49 PM
    • 11Posts
    • 11Thanks
    fatrab
    The 4 horsemen (debts) of the apocalypse (2018)
    • #1
    • 6th Dec 17, 3:49 PM
    The 4 horsemen (debts) of the apocalypse (2018) 6th Dec 17 at 3:49 PM
    Hi,

    Long time lurker/user of the main site and debt free wannabe/mortgage free wannabe!

    I've decided (light bulb moment) that enough is enough with my current debt situation. I want to stress from the offset that I am not in any financial difficulty, I've not missed any payments in the past 10 years and our income is more than our outgoings. No overdraft. And I want to make sure it stays that way.

    But, I'm sitting here in a situation where we should have expendable income wondering where it all goes every month.

    I've had a quick look at where some of it is going wrong I've found 4 culprits that I want to get my head down and clear within the next 12 months.

    1. Credit card with a balance of £6300 - 0% deal expires this month - £90/month min payment
    2. Bank Loan with a balance of £6200 (£166/month) @ 3.1% - car purchase
    3. Home insurance monthly £12.94, renewal July
    4. Car insurance monthly £34.21, renewal October

    The total monthly saving from these 4 alone is over £300 which would make a huge dent in the mortgage overpayment plan, which I've mentioned below.

    I know it would be a quick fix to transfer the £6300 (again) from the credit card to a 0% deal but I've been doing this for years and just want to get it cleared.

    Between us we have 3 mobile contracts (2 phones and 1 tablet) totalling £70. I haven't considered them as debts and as each contract expires at differing times in 2018 they won't be renewed.

    Most of our bad spending was on take-away food and eating out which we have cut down on considerably.

    I also have this overwhelming desire to clear my mortgage and have been making irregular overpayments - totalling £1800 so far this year. I will be at the end of a 5 year deal @ 3.24% and will have 7 years 4 months remaining come September.

    I want to clear all of these but just can't seem to find any focus or direction to make the best impact on my situation and hope someone reading this has been in a similar situation and can point me in the right direction.

    I feel like I should know what to do, but my brain is frazzled. I'm always really good at making sure I'm on the best deal for energy/insurance/credit card etc but I've lost the plot this year.

    Thanks for any advice in advance,

    Robert
    Last edited by fatrab; 06-12-2017 at 3:53 PM.
Page 1
  • National Debtline
    • #2
    • 6th Dec 17, 6:03 PM
    • #2
    • 6th Dec 17, 6:03 PM
    Hi fatrab


    I must confess I'm a little confused by your reference to items #3 and #4 in that list above.


    In what sense are you aiming to eliminate/clear your spending on home/car insurance? Are you referring to simply seeking better deals upon renewal? Or organising your finances in such a way that you can pay next year's premiums in one go, as opposed to monthly and thus saving a few £?


    The figures you're currently paying for those insurances don't look outlandishly high, though of course I don't know enough about your circumstances to comment on what better quotes might be out there.


    Dennis
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • fatrab
    • By fatrab 6th Dec 17, 6:45 PM
    • 11 Posts
    • 11 Thanks
    fatrab
    • #3
    • 6th Dec 17, 6:45 PM
    • #3
    • 6th Dec 17, 6:45 PM
    Hi Dennis,

    I think once I actually wrote out the above post I realised my own failing.

    I wasn't in a position to pay the insurance in full so paid monthly thus costing more in the long run. But only a few months earlier I'd made an overpayment to my mortgage.

    I follow MSE's advice at renewal and never auto renew so I'm confident that I'm on the best deal for both home & car insurance.

    I seem to be making irrational decisions when it comes to paying off my debt. If I'd kept the money in the bank instead of being hell bent on reducing my mortgage I'd have been able to pay both insurances up front.

    Like I said, I'm usually good at this kind of thing.
    • venison
    • By venison 6th Dec 17, 9:03 PM
    • 1,359 Posts
    • 1,448 Thanks
    venison
    • #4
    • 6th Dec 17, 9:03 PM
    • #4
    • 6th Dec 17, 9:03 PM
    Its not a bad idea to want to pay more off your mortgage but assuming you have a decent mortgage deal it would make more sense to pay off debt first.
    One of my tricks when I think i'm over-spending is for a full month write down day by day EVERYTHING I spend, it can make interesting reading at the end of a month, just one example a newspaper every day 7 days a week can add unto to £7 or if you like £364 a year or in your case a years car insurance.
    I am now a Board Guide on the Credit card board and the Loan board and Benefits board (But give me time to learn the ropes thanks).
    • fatrab
    • By fatrab 7th Dec 17, 8:20 AM
    • 11 Posts
    • 11 Thanks
    fatrab
    • #5
    • 7th Dec 17, 8:20 AM
    • #5
    • 7th Dec 17, 8:20 AM
    a newspaper every day 7 days a week can add unto to £7 or if you like £364 a year or in your case a years car insurance.
    Originally posted by venison

    We applied the same logic to our eating habits as we were eating out or having take-aways far too often. £20-30 per week on fast food and at least £30 every time we were eating out stacks up to a stupid amount of money over the year, not to mention the health implications.


    Then sitting at the end of the month wondering why there's no money left!


    I think need to address the credit card first. If I do transfer it to another 0% deal then need to be far more disciplined with the payments. I have enough expendable income on paper to clear it in less than a year.


    I just need to do it.
  • National Debtline
    • #6
    • 7th Dec 17, 12:42 PM
    • #6
    • 7th Dec 17, 12:42 PM
    Hi again


    It's always easy to think more clearly with 20/20 hindsight so please don't be too hard on yourself. I dare say that you've saved a good deal more than you've wasted over time by following the MSE guidance.


    Out of interest, were these mortgage overpayments out and out "capital reductions" (which are irreversible), as opposed to regular overpayments which can often be claimed back depending on the terms of your agreement?


    Dennis
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • andydownes123
    • By andydownes123 7th Dec 17, 1:17 PM
    • 120 Posts
    • 200 Thanks
    andydownes123
    • #7
    • 7th Dec 17, 1:17 PM
    • #7
    • 7th Dec 17, 1:17 PM
    Can you post a SOA and we can see where your money is going
    • fatrab
    • By fatrab 9th Dec 17, 9:51 AM
    • 11 Posts
    • 11 Thanks
    fatrab
    • #8
    • 9th Dec 17, 9:51 AM
    • #8
    • 9th Dec 17, 9:51 AM
    Out of interest, were these mortgage overpayments out and out "capital reductions" (which are irreversible), as opposed to regular overpayments which can often be claimed back depending on the terms of your agreement?
    Originally posted by National Debtline

    Hi Dennis,


    I agreed with the lender that any overpayments would come off the end term so basically every time I pay £600 it takes a month off the end date. I took out a 25 year mortgage in 2006 (re-mortgaged in 2013 - 5 year deal) and I've got 8 years left so I have made a considerable dent in it over the years. I am 43 and it's my goal to be mortgage free before my 50th birthday.


    I have now transferred £4000 of the £6300 credit card debt to another 0% card. That was the most I could transfer with the credit limit offered, but I was offered the full 36 months so at £100/month it'll be pretty much cleared by the end of the term. Just need to pay the £2300 asap. I will post a SOA shortly. I had done one last week but didn't save it. I'll re-do it.


    Thanks again for responding. Things just seem so much clearer simply by writing them down and getting other peoples input.
    Last edited by fatrab; 09-12-2017 at 10:52 AM.
    • fatrab
    • By fatrab 9th Dec 17, 10:47 AM
    • 11 Posts
    • 11 Thanks
    fatrab
    • #9
    • 9th Dec 17, 10:47 AM
    • #9
    • 9th Dec 17, 10:47 AM
    Few things to explain about the below SOA - wife and I keep finances separate. I pay big bills, cars etc, she runs the house. I've marked the bills she pays with **.
    She's currently on Maternity leave and will be returning to work afterwards.
    We were spending £100+/week on takeaway/eating out. This is now £40-60 and we're still cutting down. I work away from home mon-fri so I have a mortgage & rent to pay for temp. accommodation. I receive subsistence allowance for this and have included that in my monthly earnings.

    Household Information[/b]
    Number of adults in household........... 2
    Number of children in household......... 1
    Number of cars owned.................... 2
    Monthly Income Details

    Monthly income after tax................ 3500
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 213
    Total monthly income.................... 3713

    Monthly Expense Details

    Mortgage................................ 800
    Secured/HP loan repayments.............. 400
    Rent.................................... 300
    Management charge (leasehold property).. 0
    Council tax............................. 136
    Electricity............................. 0**
    Gas..................................... 0**
    Oil..................................... 0
    Water rates............................. 0
    Telephone (land line)................... 0
    Mobile phone............................ 70
    TV Licence.............................. 12
    Satellite/Cable TV...................... 33
    Internet Services....................... 0
    Groceries etc. ......................... 0**
    Clothing................................ 0**
    Petrol/diesel........................... 400
    Road tax................................ 43
    Car Insurance........................... 34
    Car maintenance (including MOT)......... 90
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0**
    Other child related expenses............ 0**
    Medical (prescriptions, dentist etc).... 0
    Pet costs................. 0**
    Buildings insurance..................... 13
    Contents insurance...................... 0 - combined with buildings
    Life assurance ......................... 7
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0**
    Haircuts................................ 0
    Entertainment........................... 0
    Holiday................................. 0
    Emergency fund.......................... 0
    Netflix................................. 5.99
    Gym..................................... 32
    Total monthly expenses.................. 2375.99


    Assets

    Cash.................................... 0
    House value (Gross)..................... 128000
    Shares and bonds........................ 0
    Car(s).................................. 27000
    Other assets............................ 0
    Total Assets............................ 155000


    Secured & HP Debts

    Description....................Debt......Monthly.. .APR
    Mortgage...................... 66000....(800)......3.24
    Hire Purchase (HP) debt ...... 20000....(400)......6.9
    Total secured & HP debts...... 86000.....-.........-

    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    Credit card....................4050......100.......0
    Credit card....................2300......0.........19.9 - to pay off in full by end of January
    Loan...........................6200......166...... .3.1
    Total unsecured debts..........12550.....266.......-


    Monthly Budget Summary

    Total monthly income.................... 3,713
    Expenses (including HP & secured debts). 2,375.99
    Available for debt repayments........... 1,337.01
    Monthly UNsecured debt repayments....... 266
    Amount left after debt repayments....... 1,071.01

    Personal Balance Sheet Summary
    Total assets (things you own)........... 155,000
    Total HP & Secured debt................. -86,000
    Total Unsecured debt.................... -12,550
    Net Assets.............................. 56,450
    • starting_again_in_the_sun
    • By starting_again_in_the_sun 9th Dec 17, 7:48 PM
    • 50 Posts
    • 181 Thanks
    starting_again_in_the_sun
    Hi Fatrab,

    It's quite tricky to comment on your SOA with so much missing, could you do a joint one with what your wife pays?

    Do you really spend nothing on food or entertainment even though you live away from home during the week?

    Good luck!
    • fatrab
    • By fatrab 10th Dec 17, 11:05 AM
    • 11 Posts
    • 11 Thanks
    fatrab
    Hi,

    Wife's situation is complicated so we keep our finances separate.

    She pays certain bills and I pay the rest.

    We do a big shop on a Sunday which includes my food for the week that I take with me. My wife pays this. I don't normally go out during the week, apart from to the gym 2 or 3 evenings.

    If I'd filled out the SOA a few months ago it would be a very different picture but basically since Oct I've cut down on takeaways and eating/drinking out and joined the gym.

    We still have a take away on a Friday night when I get home (£20) and we go to a local cafe for Sunday breakfast (£10) so we're not spending anywhere near what we used to.

    On paper it looks like I should have loads of money left but I don't.

    This week I'm going to write down every penny that I spend. I feel like i must be missing something somewhere.

    Thanks

    Robert
    • redpete
    • By redpete 10th Dec 17, 12:32 PM
    • 4,139 Posts
    • 3,644 Thanks
    redpete
    Wife's situation is complicated so we keep our finances separate.

    She pays certain bills and I pay the rest.
    Originally posted by fatrab
    But it makes it really difficult to sensibly comment on the SOA when it only gives part of the household situation. No point in saving a few quid on more reasonable mobile costs or TV when lots of discretionary spending is missing completely (holiday, treats in grocery bill, entertainment...). Also, wasn't a proportion of the credit card debt spent on household expenses rather than just yours? If so then why only consider it your problem to pay it off.
    loose does not rhyme with choose but lose does and is the word you meant to write.
    • starting_again_in_the_sun
    • By starting_again_in_the_sun 10th Dec 17, 8:24 PM
    • 50 Posts
    • 181 Thanks
    starting_again_in_the_sun
    Assuming that you don't have £1000 left at the end of the month, I agree with you that you should start a spending diary ASAP.

    Other than that, as the PP stated, it's quite hard to comment but I would agree that phone costs are huge and you don't need cable TV, Netflix is good enough.

    Also, your petrol costs seem really expensive considering you live away from home during the week but I am a bit out of touch with UK prices!
    • Dobbibill
    • By Dobbibill 10th Dec 17, 11:35 PM
    • 2,545 Posts
    • 3,634 Thanks
    Dobbibill
    Hi fatrab,

    If you are looking to get insurances paid annually in the future, you need to put that money to one side before the renewal date arrives.
    They don't look excessive but you can make savings by paying annually. Also consider sites like TCB or Quidco too to get savings.

    I know you have marked your OH down for getting presents for Christmas & Birthday but do you really never buy them anything? If you do, account for it and also put that aside.

    You say you don't 'really' spend on entertainment but then go on to say you spend £20 on a Friday night takeaway and £10 on a Sunday breakfast - this is all well and good but where is it in your SOA

    You are a homeowner but do not have an emergency fund in place - this needs to be addressed. Can I suggest at least £1000.

    Your vehicle is a huge commitment every month, costing you just over £950 - how long are you payments likely to continue?

    You have a fair amount to throw at debt repayments but agree with other posters about the spending diary. You need to find out why you don't have what your SOA says you should have.
    I'm a Board Guide on the Energy, Student Money Saving, UK Armed Forces and
    Local Money Saving - Wales boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.


    A person who never made a mistake, never tried anything new.
    • fatrab
    • By fatrab 11th Dec 17, 10:32 AM
    • 11 Posts
    • 11 Thanks
    fatrab
    Hi and thanks for all the responses.


    To answer a few of the points raised:


    I am happy with my current deals on tv, energy, phones etc and I'm not trying to save in these areas. As I mentioned above, when my current mobile contracts expire these will not be renewed, mainly due to bad service from Vodafone - nothing to do with the cost, although I have been given a mobile phone through my employer at no cost to me so obviously I'll cancel the others when the time comes. My wife is aware that she'll have to get her own contract when the time comes.


    My SOA relates to my income and outgoings so I don't really understand what my wife's finances have to do with it? It is my own spending/bill paying habits (my own stupidity) that I am questioning and I am satisfied that our arrangement works for both of us.


    My credit card debt was accumulated over 4 years ago when I made a very silly car purchase which I ended up throwing good money after bad. I have been transferring this debt from 0% deal to 0% deal and chipping away at it (was originally £10k), so I am entirely responsible for that. My wife has her own credit card, no overdraft and a property mortgaged between her and her mother, hence why our finances are kept deliberately separate.


    I receive company car allowance and have included this in my SOA. I use the car to drive to my work location which is 200 miles from home hence the high fuel bill, but I do get the price of the fuel back in mileage allowance.


    I definitely don't have £1000 left at the end of the month and this is what's making me realise something is wrong. In recent months I've had under £100 left by the end of the month, however this month it looks like I'll have around £600 left.


    Thanks again,


    Robert
    • fatrab
    • By fatrab 11th Dec 17, 10:47 AM
    • 11 Posts
    • 11 Thanks
    fatrab
    Hi fatrab,

    If you are looking to get insurances paid annually in the future, you need to put that money to one side before the renewal date arrives.
    They don't look excessive but you can make savings by paying annually. Also consider sites like TCB or Quidco too to get savings.

    I know you have marked your OH down for getting presents for Christmas & Birthday but do you really never buy them anything? If you do, account for it and also put that aside.

    You say you don't 'really' spend on entertainment but then go on to say you spend £20 on a Friday night takeaway and £10 on a Sunday breakfast - this is all well and good but where is it in your SOA

    You are a homeowner but do not have an emergency fund in place - this needs to be addressed. Can I suggest at least £1000.

    Your vehicle is a huge commitment every month, costing you just over £950 - how long are you payments likely to continue?

    You have a fair amount to throw at debt repayments but agree with other posters about the spending diary. You need to find out why you don't have what your SOA says you should have.
    Originally posted by Dobbibill

    Hi Dobbibill,


    Thanks for your response, I've quoted it separately as there's a lot of good points.


    I've always paid annually until this year. I just allocated my money to the wrong places and messed up. I will never make that mistake again. Lesson learned!


    Nope, wife buys presents. That's part of our arrangement. We don't buy Xmas or birthdays for each other and have agreed to keep it that way until our feet are cleared of all debts including mortgage. Harsh, but it's what we've agreed.


    I didn't include the £30 in the SOA as I wanted to see what my committed outgoings were. This week's diary will find out if I'm being honest with myself. Which I seriously doubt that I am.


    I am very mindful of the lack of emergency fund. I do need to address this. I have always thought it better to put any spare cash into the mortgage, hence 0 in current account but 3 months taken off the mortgage end term this year alone.


    I have a car on HP which I use for work and receive car allowance for, and I have included this in my income. I also pay for my wife's car (bank loan). She pays her own tax and insurance.


    The missing £1000 per month is the issue, not my outgoings. I withdraw way more than I claim to spend. This week/month's diary is going to be interesting.


    Thanks


    Robert
    Last edited by fatrab; 11-12-2017 at 10:51 AM.
    • Dobbibill
    • By Dobbibill 11th Dec 17, 6:38 PM
    • 2,545 Posts
    • 3,634 Thanks
    Dobbibill
    Hi Dobbibill,


    Thanks for your response, I've quoted it separately as there's a lot of good points.


    I've always paid annually until this year. I just allocated my money to the wrong places and messed up. I will never make that mistake again. Lesson learned!
    Originally posted by fatrab
    You've learned from the mistake and that is brilliant. Well done for owning that error

    Nope, wife buys presents. That's part of our arrangement. We don't buy Xmas or birthdays for each other and have agreed to keep it that way until our feet are cleared of all debts including mortgage. Harsh, but it's what we've agreed.
    That's good - I had to ask the question as some will disregard a cheeky little £10 pressie as not warranting an entry on the SOA. It's a good mindset to have while you tackle the debt.


    I didn't include the £30 in the SOA as I wanted to see what my committed outgoings were. This week's diary will find out if I'm being honest with myself. Which I seriously doubt that I am.
    That diary is going to be the big eye-opener I think which is fab as you can start to reconcile 'wants' and 'needs' and monitor things alot closer.

    I am very mindful of the lack of emergency fund. I do need to address this. I have always thought it better to put any spare cash into the mortgage, hence 0 in current account but 3 months taken off the mortgage end term this year alone.
    I think the mortgage overpayments may have become your main goal for a while causing you to push other priorities a little more towards the back of the queue.
    Stepping back and reassessing everything brings it more into perspective.
    Switching priorities for a while will make overpayments more effective in the bigger scheme of things but for now that goal needs to be parked temporarily.....but you know this which is the reason you are doing this.

    The missing £1000 per month is the issue, not my outgoings. I withdraw way more than I claim to spend. This week/month's diary is going to be interesting.
    Please come back and let us know how the spending diary goes - I think it's going to shed alot of light on things.
    Your posts show an excellent attitude towards tackling all this and genuinely wish you all the best.
    I'm looking forward to your spending diary update.
    I'm a Board Guide on the Energy, Student Money Saving, UK Armed Forces and
    Local Money Saving - Wales boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.


    A person who never made a mistake, never tried anything new.
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