How are we going to manage?

exessexmum

After months of being told "not to worry" and that "it won't make a difference" the Inland Revenue are stopping our tax credits. My DH got a new job a couple of years ago that on the face of it seems fairly well paid, but his pension is nearly 30% of his salary, its compulsory so his gross salary doesn't bear any relation to his take home. We have been relying on the tax credit payments of £400 every 4 weeks to keep our heads above water and now they are stopping, at least until April, then will be greatly reduced to approx £150-200. We are currently living hand to mouth, I don't see how we can lose £400 and keep our heads above water.

This is our monthly budget:
Salary £1100
Other income £400
Child benefit £159
Total in: £1659

Mortgage £551.93
Council Tax £78
Water £30
Gas/Electric £60
Car insurance £20.15
Child trust fund 1 £18
Child trust fund 2 £12
Child trust fund 3 £10
Loan £167.76(a £15K loan over 10 years, consolidating old debts from yonks ago) still has 8 years to run
Build/cont insurance £31.42
TV lic 10.99
BT 40.00 (phone and internet)
Groceries incl nappies, formula, pet food etc £386.71
Christmas £50.00
Holiday £83.33 (this is booked and half paid for now so cant cancel)
Birthdays £41.67
Car £70.00 (maint and tax - we run 2 cars, we need the 7 seater as we have a large family and also run a small car for Dh to commute the 40 mile round trip to work, we live in the country)
Sofa payments £60
Fuel £86.60
Assorted days out, occasional treats with kids etc £113.30
Total out: £1921.86

Plus we have £6000 on a credit card, 0% but we still need to clear it.

So, how do I claw back £300 plus a month, and clear the credit card and survive?!!! I've done the budget thing as I'm so bad with money and followed Martins tips, but I can't shave off anything from anywhere that I can see, we dont have Sky, or mobile phones on contracts, dont drink or smoke or go out at all. HELP!!!!

jonesMUFCforever

This might sound callous but you are spending on things you cannot afford.
The holiday imo has to go - cancel now and see if you can get anything back- if not write off what you have already paid.
Contact IR and appeal about reduced tax credit. I think there was something in the papers recently about they cannot reduce your payments if it causes hardship - some are paying it back at something like £10 per month. If this could be reviewed it would help you a lot but only on a short timescale.
Are you on any special deal with your mortgage? Consider getting a fixed interest deal to reduce your monthly payments.
You need to ditch the Child trust funds for now - it is commendable that you want to help your kids but for now you can't afford it.
I would also recommend that the kids outings has to go for now - remember you are spending money that you have not got!
From your posting it seems that this overspending has been going on for years and it is only now that it is hitting home.
You need professional help - I would ask to speak to a debt councellor at the CAB as a first step. If you do nothing you will be dragged down until it is too late. Consider for one moment what would happen if your OH could not work due to illness - would it all collapse around you?

I do wish you well in whatever you decide.

Magentasue

Agree with all of above. Would also say second car shoud go until your debts are cleared, it is a luxury. It would mean changing your lifestyle and doing the shopping when the car is there etc, this would also slice your fuel bills.

Stop spending so much on birthdays and Christmas - £100 month isn't realistic for someone in debt!

I suppose, like ejones said, this is a case of having to change your life - if you've been booking holidays and buying sofas while you have over £20,000 worth of loan and credit card debt suggests a long run of oversepending.

Finally, could you get a weekend or evening job when your partner is home.

Sorry - this will sound unsympathetic, I know but there isn't really a painless way out. You can't carry on as you are without things getting worse.

EDIT: Just realised there's other income of £400 a month so maybe you already have a part-time job.

Also, maybe you do need two cars for getting kids to school etc but couldn't you manage with two small cars? Are the cars worth much? Could you sell themand just get cheap runarounds, if you haven't already?

exessexmum

Magentasue wrote:

Agree with all of above. Would also say second car shoud go until your debts are cleared, it is a luxury. It would mean changing your lifestyle and doing the shopping when the car is there etc, this would also slice your fuel bills.

Stop spending so much on birthdays and Christmas - £100 month isn't realistic for someone in debt!

I suppose, like ejones said, this is a case of having to change your life - if you've been booking holidays and buying sofas while you have over £20,000 worth of loan and credit card debt suggests a long run of oversepending.

Finally, could you get a weekend or evening job when your partner is home.

Sorry - this will sound unsympathetic, I know but there isn't really a painless way out. You can't carry on as you are without things getting worse.

EDIT: Just realised there's other income of £400 a month so maybe you already have a part-time job.

Also, maybe you do need two cars for getting kids to school etc but couldn't you manage with two small cars? Are the cars worth much? Could you sell themand just get cheap runarounds, if you haven't already?

Thank you for your responses. I have depression, have had for some years and I spend money like its water. Have finally decided to get some help for the depression and now have to face up to the spending (my DH knows about very little of it)
I dont work as we have a 6 month old baby. My husband works very irregular shifts so I would be unable to get an evening job. The £400 is a maintenance payment. We have 4 kids so really need the MPV so I can take the kids to places when my DH is working, as I said we live in the country so its not like I can get public transport, there isnt any!!
I am going to sell as much stuff as I can on Ebay, and try to get to grips with what we owe and take it from there. Any more advice is more than welcome, please keep it coming.

FrankieM

Hi,
I agree with stopping the child trust funds...thats £40
Cut back on Christmas and birthdays.I don't know how many people you have to buy for, but I would try to get by on £40 per month for both...that saves £50.
Also grocery shopping. We have 7 in our household ( and a dog and cat) at the moment and I spend £280 a month....so thats maybe a saving of £100 depending on how much you can get it down to.
Also if hubby needs a vehicle for work, perhaps he could look at a small motorbike. A CG125 or similar. Cheap insurance, cheap tax, very economical.
Also cut down/ out treats and days out for children....thats another £100.
So thats nearly £300 without taking into account how much you'd save by having a motorbike or canceling your holiday.
It can be done but it takes tough choices.....

tattooed_lady

Please don't be offended exessexmum but if you are going to be that short of money you will have to cut back drastically and that means getting rid of the mpv. I have an old banger (only 1 car in household) and it does us, to be honest with you I'd quite happily do without and walk most places. How old are your 3 older kids, are they at school and how far away is it? If it is nearby then you don't need a car for it. Do you have any parks or activities for kids nearby that you can walk to? I know it will be hard but that will be alot of extra money that could go towards your monthly living. Sorry if I sound harsh but I really don't think 2nd cars are a good idea unless if it's absolutely essential.

exessexmum

Thank you. I have been through the budget and I think I've got it down to the min, I'd like to keep the kids saving plans if I can as they are these long term 15 year things and if I cancel I wont get back what I've paid in let alone anything else. I will look at reducing our grocery bill and also no more takeaways etc. I am by nature very extravagent with gifts so will have to learn to become less so. I'll have a think about the motorbike, DH did have one but I found it very stressful as his journey to work is wild country lanes, mostly at night and I was always mad panicking! He has an in bits bike in the garage that he can't sell, or so he says, so will investigate further.

summerday

Hi exessexmum,

Well done for being brave enough to post, and for providing your details. Welcome to MSE!

I do think the other posters are right in that it seems you have been overspending for a long time, so this can be an opportunity for you to really take stock of your relationship with money. Please do not be tempted to buy anything else on credit (like the sofa), as even if it seems affordable at the time, you never know when your circumstances might change, as yours recently have done, and then £60 a month can seem like quite a lot to have to find each month.

The good news is, if you're really prepared to make changes to how much you spend and on what, I really believe you can get by on your income. What I suggest you do is have a good read through of other posts on this debt free board, and take on board the advice given to other posters, as much of it will apply to you as well. Then go on to the Money Saving Old Style board, as this will give you loads of help and inspiration on how to save money at home and on food/ groceries. It will take you a while to read through all this, but it's worth it I promise you, and you can make notes on anything that can help you.

For your kids- I understand that you want to take them on nice holidays and save for the future for them- it's lovely that you want to help them like this- but at the moment while money is tight the money you are saving in the CTFs and on days out etc would be put to better use on paying essential bills and ensuring you don't go into more debt. There are loads of things you can do with your kids that cost no or little money and they will enjoy these just as much. I don't have kids (yet!) but have done heaps of voluntary work and babysitting and can give you some ideas and tell you some websites if you like.

Have a good look at the outgoings you have posted and be honest about which things you can scrap or cut down on.

Well done for posting, that's the first step, lots of others will come along to help too.

Sarah.x

Magentasue

Well, you're doing something now so that's the main thing, it can only get better.:D I think you should go with ejones' suggestion and get advice from CAB or one of the other organisations offering free advice. Cancel the trust funds, holiday etc, get rid of the internet and forgo the days out for a while. Trim a bit off your shopping and fuel and you could get your outgoings down to just over £1500 a month:

Total in: £1659

Mortgage £551.93
Council Tax £78
Water £30
Gas/Electric £60
Car insurance £20.15

Loan £167.76(a £15K loan over 10 years, consolidating old debts from yonks ago) still has 8 years to run
Build/cont insurance £31.42
TV lic 10.99
BT £15
Groceries incl nappies, formula, pet food etc £350

Birthdays £10
Car £70.00
Fuel £65

Also, consider cheaper credit - is your loan at a good rate? Have you got another 0% deal for your credit card debt lined up? It goes without saying that you should NOT be using credit cards! Can't see your credit card payment in your budget.

Would it make it easier to get everything set up on Standing Order/Direct Debit and let your OH manage the finances while you're feeling low and under pressure. He could give you say £80 a week for food etc and you wouldn't have to worry about anything else. Of course this might not be best for you - only you know if it would feel resentful or grateful if this happened.

daveboy

4 kids.

£550 mortgage.

I'll buy a house and have a child when I can afford to pay for them.

If that means never, then it means never.

I take home half what you have a month, and for some reason I have money left over sometimes when next pay day comes round.

Money saving sometimes takes the form of not having what you can't afford.

I'd love kids but know I might never financially be able to have them, so forgive me, but for something like this, I don't feel sorry.

To be relying on benefits with an income coming in too is a situation I'm lost for words on. It's the reason I believe child benefit needs changing, so the child benefits directly instead of it disappearing into thin air.

black-saturn

Well it's quite obvious you will have to cut down somewhere so I've done some pointers:

Gas/Elec - £60 - don't put the heating on, put a jumper on instead. Change all the light bulbs to energy saving, do the washing at night. Try to use candles in the evening, they are very romantic.

Water - £30 - Go on a water meter and cut down on water.

Xmas - £50 - Cut down on Xmas. Explain to people that your money has taken a serious drop and you can't afford such extravagant presents anymore.

Treats - £113.30 - As in Xmas.

Birthdays - £47 - As in Xmas

Child Trust Fund - £30 - Stop this for now until you get back on your feet.

Groceries - £386.71 - I have a family of 3 and I pay £40 every 6 weeks so you should be able to get yours down to £100 at the most!! Take tips from the Old Style money savers and make things from scratch.

I know that the holiday is booked and you can't cancel but after you have been on that it will be time to think about going on a Sun holiday or some other budget holiday. Not as bad as it sounds as I have been on 10 Sun holidays and some of them have been the best holidays I have ever been on.

Your basically going to have to live like you unemployed until you get your debts paid off.