Where am I going wrong?

nicmalauren · 6 January 2018 at 1:54PM

Hi folks,

Posting because my aim for 2018 is to be debt-free (excluding my mortgage). Have generated a SOA to see how do-able anyone thinks this may or may not be. Any advice on where I can skim down my outgoings is gratefully received as I seem to be dipping into my overdraft when by my own calculations I shouldn't need to. I know I overspent at Christmas, and now I need to get back on track.

So here goes nothing:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1213
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1213

Monthly Expense Details
Mortgage................................ 186.2
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 2.5
Council tax............................. 56
Electricity............................. 30
Gas..................................... 0
Oil..................................... 35
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 4.99
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 27.49
Groceries etc. ......................... 60
Clothing................................ 10
Petrol/diesel........................... 9
Road tax................................ 1.5
Car Insurance........................... 6.25
Car maintenance (including MOT)......... 2
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 16
Pet insurance/vet bills................. 0
Buildings insurance..................... 4
Contents insurance...................... 4
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 0
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 574.93

Assets
Cash.................................... 0
House value (Gross)..................... 70000
Shares and bonds........................ 0
Car(s).................................. 300
Other assets............................ 0
Total Assets............................ 70300

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 50358.3..(186.2)....2.44
Total secured & HP debts...... 50358.3...-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
IKANO Loan.....................300.......300.......0
MBNA CC........................1485......25........0
VIrgin CC......................2744.28...27.44.....0
Loan from Mum..................557.......0.........0
Overdraft......................468.85........0.........15.84
Total unsecured debts.......5555.13...352.44....-

Monthly Budget Summary
Total monthly income.................... 1,213
Expenses (including HP & secured debts). 574.93
Available for debt repayments........... 638.07
Monthly UNsecured debt repayments....... 352.44
Amount left after debt repayments....... 285.63

Personal Balance Sheet Summary
Total assets (things you own)........... 70,300
Total HP & Secured debt................. -50,358.3
Total Unsecured debt.................... -5,555.13
Net Assets.............................. 14,386.57

Anywhere it says "Car", substitute the word "Motorcycle" and the low figures should make more sense. The insurance, tax, MOT etc are all paid annually so I just divided the amount by 12. Same for my ground rent, and buildings/contents insurance as they're also paid annually.

Ideally I want to be able to get to the point where I have enough set aside so that I can pay my rates (aka Council Tax in rest of UK) and my phone line rental annually as that typically results in savings too.

I would also like to build up an emergency fund, especially as my boiler is on it's last legs (hence the high monthly oil spend - it's horribly inefficient) having had several repairs in the last 12 months but I'm trying to hold off replacing it until 2019 as then I'll qualify for a boiler grant (boiler will be 15yrs old by then). Not sure whether I should make provisions for this now, or if throwing all my money at debt first is the better plan.

I'm not really sure where I should be distributing my money to make it go furthest. I'm pretty sure my top priority should be getting out of my overdraft as it's the only one that attracts any interest at the moment, but it's also the only one that I'm not obliged to pay anything towards (I would feel terrible not paying my mother back as she's partially relying on the income from me at the moment).

I currently pay £111 per month back to my mum, so I was thinking that as the last £300 payment on the IKANO loan is this month (yay!) I could then put that towards clearing my debt to her from Feb onwards, then once it's cleared (March time?), start paying £400 towards one of the credit cards? The 0% interest deal on both of the CCs expires in September 2018.

So far, have signed up for the January Bring Your Lunch To Work Challenge, and have set myself the challenge of not buying any food this month (except milk) to force me to clear out the freezer and be inventive with what I already have in the house.

As I say, all advice welcome.

TIA,
Lauren

elsien · 6 January 2018 at 2:04PM

Do you not have any water rates?

Dobbibill · 6 January 2018 at 2:06PM

Hi Lauren,

Your SOA looks pretty trim already.

Just a few things jump out at me.

£1200 a yr on presents is very expensive.
Do you never have your haircut?
Do you really only spend £20 a month on entertainment?
You are a home owner but don't have an emergency fund - you need to think about getting £1000 minimum put aside here.

Paying off the overdraft first and then snowballing the payments to the other debts is a good plan.

Can I also suggest you keep a spending diary - this would be absolutely everything and anything you spend - you shouldn't have to dip into the overdraft each month but you are which means something is amiss in your SOA.

Your SOA says you should have £285 left after all expenses so where does this go if you are also using your overdraft?

Once you find out the problem of the missing funds you will be able to make a plan. If you find you do have this surplus each month then get that emergency fund topped up ASAP.

nicmalauren · 6 January 2018 at 2:12PM

elsien wrote: »

Do you not have any water rates?

No, I'm in Northern Ireland so we don't pay water rates or council tax as such, we just pay what we call "rates" which includes all that sort of stuff - in my SOA I listed that value under Council Tax as it seemed the closest option!

Karonher · 6 January 2018 at 2:13PM

It does seem as if you can afford to pay a lot off especially with the loan finishing.

The two things I noticed were that you have not filled in the £111 you are paying your mum, and £60 a month seems low for food on a regular basis. I am doing the £50 January spend for 2 of us this month and it it was not for Christmas items that would be impossible.

nicmalauren · 6 January 2018 at 2:19PM

Dobbibill wrote: »

Hi Lauren,

Your SOA looks pretty trim already.

Just a few things jump out at me.

£1200 a yr on presents is very expensive. - I'm an eejit, that should have been annually.
Do you never have your haircut? Rarely. I went through a phase last summer where I had it all cut off to a pixie crop but then have been growing it again since.
Do you really only spend £20 a month on entertainment? I wasn't really sure what to include here. All I could think of was £10 for Netflix and then I stuck on an extra £10 as a buffer, but now that I think about it, this is where beer money and the like should go,
right?
You are a home owner but don't have an emergency fund - you need to think about getting £1000 minimum put aside here. How do I get started with this? Open a cash ISA and start putting something in it monthly? Should I pay off debt first?

Paying off the overdraft first and then snowballing the payments to the other debts is a good plan.

Can I also suggest you keep a spending diary - this would be absolutely everything and anything you spend - you shouldn't have to dip into the overdraft each month but you are which means something is amiss in your SOA.

Your SOA says you should have £285 left after all expenses so where does this go if you are also using your overdraft? Definitely think this is the root of my problem - I spend money but don't necessarily know what on. Hoping my January challenges will help combat that.

Once you find out the problem of the missing funds you will be able to make a plan. If you find you do have this surplus each month then get that emergency fund topped up ASAP.

Thanks - have added some comments in red. I think the spending diary is something I need to get on ASAP.

nicmalauren · 6 January 2018 at 2:28PM

Updated SOA with slightly more accurate present and entertainment costs...

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1213
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1213

Monthly Expense Details
Mortgage................................ 186.2
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 2.5
Council tax............................. 56
Electricity............................. 30
Gas..................................... 0
Oil..................................... 35
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 4.99
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 27.49
Groceries etc. ......................... 60
Clothing................................ 10
Petrol/diesel........................... 9
Road tax................................ 1.5
Car Insurance........................... 6.25
Car maintenance (including MOT)......... 2
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 16
Pet insurance/vet bills................. 0
Buildings insurance..................... 4
Contents insurance...................... 4
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0
Entertainment........................... 70
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 534.93

Assets
Cash.................................... 0
House value (Gross)..................... 70000
Shares and bonds........................ 0
Car(s).................................. 300
Other assets............................ 0
Total Assets............................ 70300

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 50358.3..(186.2)....2.44
Total secured & HP debts...... 50358.3...-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
IKANO Loan.....................300.......300.......0
MBNA CC........................1485......25........0
VIrgin CC......................2744.28...27.44.....0
Loan from Mum..................557.......0.........0
Overdraft......................468.85........0.........15.84
Total unsecured debts...5555.13....352.44....-

Monthly Budget Summary
Total monthly income.................... 1,213
Expenses (including HP & secured debts). 534.93
Available for debt repayments........... 678.07
Monthly UNsecured debt repayments....... 352.44
Amount left after debt repayments....... 325.63

Personal Balance Sheet Summary
Total assets (things you own)........... 70,300
Total HP & Secured debt................. -50,358.3
Total Unsecured debt.................... -5,555.13
Net Assets.............................. 14,386.57

Dobbibill · 6 January 2018 at 3:29PM

Ah - the presents looks more realistic now.

Entertainment would be everything from a drink with friends, netflix, a takeaway, if you don't have any personal spends then coffees, magazines, packet of polos on the way to work. Absolutely everything.

Emergency fund can be just a different account, not necessarily an ISA (interest rates are pants on ISAs) put a little in each month so you are building it up slowly. If you use all your money to throw at the debt and don't have an emergency fund then there is a risk you will need to put something on credit before you've cleared your debts and so the circle starts again.
You can crank it up to the full £1000 when your debts are done but at least have something in there.

There's a few ways to address where the money is going that you aren't seeing. Either keep a spending diary, this means writing down every penny you spend or you can work in cash, so withdraw whatever it is you have for the month and when it's gone, it's gone.

The good news is by amending the presents category you have created extra funds - the bad news is you are now leaking more money than you thought you were before.

Another thought re: your SOA - is your Council tax and water rates on the standard 10 month payment structure?
If they are what do you do with the 'free months'?
If not, and it is over 12 months this makes your budgeting plan equal every month and possibly easier to manage.
ETA - you don't have water rates?

enthusiasticsaver · 6 January 2018 at 4:33PM

I think you need a spending diary or spending app tracker as obviously the soa is incorrect or you would have plenty of spare monthly income.

I would suggest you look at your bank statements for last 3 months to see where your money is going. The groceries is low. No takeaways, coffees out or is that included in the £70 entertainment?

£10 per month on presents for birthdays and Xmas seems low but if you have a small family it may be correct. Just add up what you spent on Xmas presents though.

nicmalauren · 6 January 2018 at 6:03PM

Dobbibill wrote: »

Ah - the presents looks more realistic now.

Entertainment would be everything from a drink with friends, netflix, a takeaway, if you don't have any personal spends then coffees, magazines, packet of polos on the way to work. Absolutely everything.

Emergency fund can be just a different account, not necessarily an ISA (interest rates are pants on ISAs) put a little in each month so you are building it up slowly. If you use all your money to throw at the debt and don't have an emergency fund then there is a risk you will need to put something on credit before you've cleared your debts and so the circle starts again.
You can crank it up to the full £1000 when your debts are done but at least have something in there.

There's a few ways to address where the money is going that you aren't seeing. Either keep a spending diary, this means writing down every penny you spend or you can work in cash, so withdraw whatever it is you have for the month and when it's gone, it's gone.

The good news is by amending the presents category you have created extra funds - the bad news is you are now leaking more money than you thought you were before.

Another thought re: your SOA - is your Council tax and water rates on the standard 10 month payment structure?
If they are what do you do with the 'free months'?
If not, and it is over 12 months this makes your budgeting plan equal every month and possibly easier to manage.
ETA - you don't have water rates?

As I mentioned above, we don't have water charges in N. Ireland, we pay rates to the LPS instead of council tax so that covers our water/sewarage/waste etc.

Anyone got any recommendations for apps? My phone is pretty much glued to my person at all times so an app sounds like a good option for me. I've heard the term YNAB being thrown about on the forum?

theoretica · 6 January 2018 at 6:42PM

I agree, your SOA looks nicely slim, but the problems are where it does not match reality. The things like rates which don't change will be fine, but you need to keep track of entertainment, food etc to see it they are keeping to plan.

Sounds like you need a line for boiler repairs, and other such irregular domestic costs too.

Where am I going wrong?

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