Head spinning need advice - debts/babies/bills etc!


Thankyou for anyone taking the time to read and maybe reply to this. Our situation is that we are c 20k in debt but desperately wanting to try for another child at the end of this year. We have a 2 year old and have worked out that childcare costs will be mitigated with this timing as she will be getting some free sessions from Jan 2010 which is when the new baby would start nursery (as I will need to work). The sensible me says wait until the debt is paid off (which is 5 years) but by then she'll be 7 and we really feel that having another child will be worth the struggle and a 7 year gap is just too much between first and second children.

My husband has come up with an idea which I'd really like some opinions on as I can't decide whether it's a good idea or not! Basically we have been in touch with our mortgage company (Nationwide) and qualify for a 1 year mortgage break (we did this when I was on maternity before). This would add £70 onto repayments for the life of the term (another 26 years) so my husbands idea is to apply for this as soon as we are eligible which will be Feb 09 (1 year since last default) and then start putting this payment ( PLUS normal payments towards debts which will vastly reduce them by the time the baby is born which we think (God willing) will be Sept/Oct 09. So then in Feb 10 when payments start again and I go back to work, the overall debt will be vastly reduced and we will have probably around £500 a month freed up - but obviously the mortgage payment will go up and I realise it's not the ideal way to borrow long-term.

Maybe it sounds !!!!less but we are both due for large inheritances in the next 20 odd years plus he gets a forces pension (70k payout plus £15k p/a) in 25 years. Having a family is so important to us and I don't want to look back and think 'oh yes I'm financially secure but wished I could have had more children.'

Anyway, enough ramblings. Here is our SOA:

Monthly Income
Partner - £1400
Myself - £1050
Child tax credit plus child benefit - £110

£2560 take home- We also purchase childcare vouchers through salary of £400 jointly which are reflected in these sums

Mortgage - £852.62 (Nationwide fixed at 4.69 until 2011)
Council tax - £119 (won't let us pay over 12 months, have asked)
Electric and Gas - £75 (just switched to Scottish Power capped until 2010 - suck on that EOn)
Water - £45 (reduced this from £69 by negotiation with water company)
Telephone line rental and calls - £10.50 (cheapest possible package)
Mobile phones - £60 jointly (this is pricey, can't change though and we're both fixed in for few months yet)
TV Licence - £11.61
Sky - £19.50 (recently reduced this, we don't go out so this is only luxury I promise!)
Broadband - £15 (we live in really bad signal area and no free ones are yet available but we're on waiting list)
Groceries - £200 maximum (this is for 2 adults, 1 baby, 3 cats and dog and includes all baby stuff, pet stuff, meals and packed lunches. Am on downshift challenge and looking on Old Style Board for tips on reducing this. Started growing own veg for next year too)
Fuel - £300 (both work fair distance from home in opposite directions, am looking for closer to home. Public transport not possible due to bad oublic transport infrastructure here in Cornwall)
Car insurance - £35 jointly
Pet insurance - £7.49 (cheapest poss for dog, cancelled cats' policies)
Home buildings and contents insurance - £14.35 (cheapest possible through Quidco)
Life assurance (mortgage protection) £12.67 (cheapest possible, through Quidco)
British Gas Homecare for electrics and waterpipes plus boiler - £9 (rediced this from the expensive scheme which was £27)
Xmas savings - £40
Child Trust Fund Savings - £20
Birthdays etc - £20

Total out on bills = £1866.74

Egg Credit Card £5173.35 paying £120 (rate 16.9%)
Halifax One Card £3745.36 paying £75 (rate 16.9%)
Halifax Classic Card £2100 paying £42 (rate 0% for time being)
Tesco Credit Card £2333.79 paying £67 (rate 0% for time being)
Tesco Loan £4558.06 paying fixed £175 (rate fixed at 5.9%, further 26 payments to go)

Total payments on debts = £479

TOTAL OUT £2305.74
This looks like we have £160 month to spare but rest assured this goes out on various other things that crop up and we never seem to have a spare penny! Plus any extra we get we pay a bit more off the top rate credit card.

I know from first glance the obvious thing is that we have a lot of credit card debt on high interest - we are finding it difficult to get cards that offer a high enough limit but are slowly opening more accounts on 0% rates with smaller balances and shifting the balances as best we can. A couple of them are on 0% at the moment but will go to the higher rates soon.

Any advice would be greatly appreciated. I have been through everything with a fine tooth comb and changed to better deals using Quidco where possible but am always open to suggestions from MSE experts!

With many thanks


  • mwa
    mwa Posts: 364 Forumite
    Sorry am just bumping this up as had technical probs with SOA and took a while to edit so it's gone down a couple of pages without anyone seeing it!
  • broadpaws
    broadpaws Posts: 1,391 Forumite
    hi there,

    others will be along soon, the plan sounds ok, but basically you have to be SUPER disciplined to do this, and whack it all off the debt do not be tempted to soend it elsewhere OR to build up any more debt. Are you sure you could do this??
    Your SOA looks quite lean - well done, just 2 suggestions? Could you call your mobi suppliers and reduce the tarif, we were able to take it down a tariff each month - and if you are struggling with the council tax, call them they will not do over 12 months (only 10) BUT will offer a weekly scheme which curiously enough is over 48 weeks!! - JUST make sure you pay on time!!

    Now IF you did spend £852x12 = 10224 + 3648 (cc payments x12) means that all will be gone bar the loan which will have around payments left!! Has the debt built up recently or was it old debt - What I am asking is are you know living within your means?? Otherwise you will still build up debt.

    June - Watch
  • mwa
    mwa Posts: 364 Forumite
    Thankyou Broadpaws, I appreciate your time! To answer your queries:

    Yes we are super discliplined and are not big spenders (despite the debt) - the debt has accrued recently due to big car repairs (new engine, 2.5k ouch), we got married and a lot of this went on cards (long story involving a wedding which should have been last year and got cancelled 10 days before and lost all saved money, so had to pay for new wedding with cards), Tesco loan is for car and is old - and few thousand accrued when I was on maternity leave. I was also off work sick for 3 months with a serious illness last year after my maternity leave and debt accrued then.

    I already called my mobile company and have reduced down to lowest package plus bought an extra text package as this was what was causing large bills before. I should feel this effect next month hopefully. My husband is on lowest package too, but it does still seem a lot I agree. We're not struggling with council tax as such, it's just another bill really but I know some areas allow you to pay over 12 months and I wanted to point out that I'd explored that option.

    Newsflash since posting earlier - have just been successful in applying for a Virgin card at 0% for 15 months with 7200k limit so can shift some of the bad debt onto that - am currently paying £120 to Egg - £75 of which is interest so this will be a fantastic saving!

    Best regards
  • broadpaws
    broadpaws Posts: 1,391 Forumite
    Thats great news on the egg card, move it all over and as much as you can of the other one, advice would be not to close the empty cards, but let them lie dormant for a month or 3, then they may offer you a lifetime balance deal - or similar. If not then close em down!!!
    The good news with the council tax if you pay it over 10 months you are then getting 2 months off which I would suggest you pop in your emergency fund - to be honest canc the CTF payment and call this your emergency fund as a car/house owner you really should have at least £30 a month for this - so when bolier/washing mach /car packs up you are NOT reaching for the credit cards, when the debt is gone you can start paying a bit in teh CTF then.
    And to be honest you guys should have a clothes allowance of £20 each amonth and perhaps £30 a month for entertainement, a bottle of wine/pizza your SOA IF you are gonna stick with it must be liveable - what about haircust etc? Cut xmas/birthdays down to £20 a month total just while you are getting straight a very good soa is on this link

    There is a button at the bottom which will let you format for MSE - take a peek and make some of the adjustments mentioned and see what it looks like then...
    June - Watch
  • littleangels3
    personally i think if everybody waited til they could AFFORD a baby they wouldnt end up having any because there is never a right time.
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  • mwa
    mwa Posts: 364 Forumite
    Thanks again Broadpaws - good tip about keeping accounts open, I'd have shut them down otherwise. I was thinking about closing the CTF as this is something I can start up again in the future. We are lucky enough to have warranties for boiler/washing machine/white goods as previous owner bought these then gave them to us when we moved in, but the car certainly goes on cards when it packs up so this is good advice also. As for clothes, I get any clothes from Freecycle or car boots. Haircuts I go to the local college and pay £14 for a cut and colour every 3 or so months which saves a fortune. Xmas savings are tricky as we are both from a big family (11 siblings between us all with kids!) and we thought it best to save as previous years have caused debts after Xmas. Birthdays are tricky too - I do have a present cupboard where I stash any real bargains I get in sales and use these wherever I can.

    I actually used that SOA calculator and had real problems formatting it for here, thanks for the tip!

    Littleangels - yes I agree, but then it's no fun being on maternity leave getting £400 a month and not being able to pay bills so I am trying to be half sensible! Our toddler wasn't planned and certainly wouldn't have been an option if we'd thought about it sensibly so I know where you're coming from!

    Best wishes
  • firesidemaid
    firesidemaid Posts: 2,129 Forumite
    First Anniversary Combo Breaker Bake Off Boss!
    you obviously already use quidco, but using this site there is still money to be saved in lots of places/ways.

    where do you do your shopping? asda and tesco both take money-off coupons even if you do not buy the items (as long as they sell them). generally tesco will take unlimited different ones, asda 10% of your bill - ther are threads on her for this PLUS threads for 'printable coupons' - free money! i save loads per week. cut coupons out of mags, papers etc, pick up leaflets, ask friends....

    use tesco clubcard deals for presents (eg. mag subsciptions), meals out (i ordered my pizza hut ones this am) etc

    can either of you take extra hours/ job to earn more money to throw at debts?
  • mwa
    mwa Posts: 364 Forumite
    Thanks Firesidemaid - some great ideas and I didn't know you could use any coupons at Tesco! I will be doing this from now on also! I check Quidco every day for good offers and have so far had £730 in the last 12 months from them.

    What I should have mentioned before was that we both do extra work to pay debts off quicker too - hubbie does prison guard duties once a month and I do Body Shop at Home parties 1-2 times per week. This money goes towards paying things off and also unexpected things that come up that would normally go straight on a card.

  • Bargainfinder_3
    Hi mwa, speaking as someone who has had 2 miscarriages, I would say that you are right about looking back, being financially secure and yet not having the family you want.

    You seem to have a disciplined and sensible plan for the next few years, and I dont think it is heartless to 'count' on an inheritance!

    We have taken the decision to stop trying now until we are out of debt, but our debt free date is June 09

    My first miscarriage was due this month and I know without a doubt, I would rather have that baby in my arms and have a debt free date of 5 even 10 years time.

    I really hope that it all works out for you and your husband xxxx
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  • Yorkshire-Lady_3
    Hi mwa, speaking as someone who has had 2 miscarriages, I would say that you are right about looking back, being financially secure and yet not having the family you want.

    You seem to have a disciplined and sensible plan for the next few years, and I dont think it is heartless to 'count' on an inheritance!

    We have taken the decision to stop trying now until we are out of debt, but our debt free date is June 09

    My first miscarriage was due this month and I know without a doubt, I would rather have that baby in my arms and have a debt free date of 5 even 10 years time.

    I really hope that it all works out for you and your husband xxxx

    Sending you a big hug.:kisses3:

    Y-L xx
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