Suggestions for a newbie debt free wannabe!

Mr_GB

I'll keep things as short as I can!

I've had a look through the various articles and advice on this site, but the more I read, the more daunting it becomes so I'd like some suggestions on the best way forward to clear my debt.

I don't have any *bad debt* as such although I have missed quite a few payments over the last year or so due to ill health and not being able to work. (The big C unfortunately - but I'm now fully in remission! ) I have tried to move my Egg credit card debt, however I was turned down for the Virgin/MBNA jobby with 0% interest.

I don't have any savings and remortgaging my house is not something that I would like to consider! I'm single and I don't have any dependents, I have also exhausted the option of reclaiming bank charges already.

Here is my SOA

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1620
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 320
Total monthly income.................... 1940

Monthly Expense Details
Mortgage................................ 691.96
Secured loan repayments................. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 104.82
Electricity............................. 40
Gas..................................... 50
Oil..................................... 0
Water rates............................. 43.8
Telephone (land line)................... 14
Mobile phone............................ 30
TV Licence.............................. 11.68
Satellite/Cable TV...................... 4
Internet Services....................... 7.5
Groceries etc. ......................... 250
Clothing................................ 40
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 7.5
Pet insurance/vet bills................. 0
Buildings insurance..................... 12.11
Contents insurance...................... 12.11
Life assurance ......................... 14
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 175
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1538.48


Assets
Cash.................................... 0
House value (Gross)..................... 148000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 148000


Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 88000....(691.96)...6.9
Total secured debts........... 88000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Egg Loan.......................10528.....255.......7.66
Egg Card.......................5273......160.......26.9
GE Money.......................1800......60........11.9
Total unsecured debts..........17601.....475.......-


Monthly Budget Summary
Total monthly income.................... 1,940
Expenses (including secured debts)...... 1,538.48
Available for debt repayments........... 401.52
Monthly UNsecured debt repayments....... 475
Surplus(deficit if negative)............ -73.48

Personal Balance Sheet Summary
Total assets (things you own)........... 148,000
Total Secured debt...................... -88,000
Total Unsecured debt.................... -17,601
Net Assets.............................. 42,399

Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission.

Many Thanks in advance for any advice you are able to give me!

ElJayco

This is my first post so hope I don't offend ;-)

I have a wife and 3 kids and we have a large amount of debt ourselves. For a long time we spent more then we earnt and the debts mounted up. The solution to our problem seemed obvious but wasn't easy but after making a number of sacrafices we are now doing the right thing and managed to decrease our debt by about £6000 this year. It's been a tough year especially on the kids not getting as much as we would have liked to give them but it will make a huge difference in the next year or so when we are well on our way to being back on our feet.

Looking at your SoA I would be looking at the following.

Find a cheaper Electric / Gas supplier, I pay £56 a month for both for a 3 bed house and a family of 5, your paying nearly double that for 1 person.

Cut back on Groceries, we spend £500 a month and again there are 5 of us, you spend half that for one person, go with value ranges for a few weeks.

£40 on clothing a week, personally I probably spent that this year. It's tough but if you want to be a DFW then you have to make sacrafices.

The last one is £175 a month for entertainmment, is this nights out and stuff? Seriously, take a break for a few months, get your debts down a bit so your minimum payments go down and then you can start treating yourself again. We may have only been out a few times this year but it's been worth it with the debt we have cleared!

Lastly, get a part time job for a few months to get some extra cash.

Hope that helps.

Miss_Piggy_2

Hi There

Welcome to the forum. Best place to be! A few suggestions:

Groceries...for one person this is a huge amount. I spend approx £150 a month for two adults and a child. It doesn't mean only eating value or basic ranges...we eat well. Most things cooked from scratch.

Electric and Gas : Pretty much the same as mine. However, if you shop around you may get it cheaper. Depends on how much you are at home. If you are out all day then what you are paying is quite steep.

Entertainment: Again, this is a large amount. What do you spend this on? Is it something than can be swapped for a cheaper activity. ie having friends round instead of going out?

Clothing: A reasonable amount but could be cut if you are serious about clearing debt. I spend about £40 every three months on myself (if that!!)

Good luck though - seems you have the right mindset. You'll be amazed at how much you can clear from your debts just by cutting back on a few things.

Miss P
xx

Mr_GB

Not a problem! Constructive criticism is more than welcome

The Gas/Electricity is so expensive because I have a pre payment meter - I haven't yet looked into changing this over to a Direct Debit payment as I'm not quite sure what needs to be done? How would I go about this?

I can try cutting back on groceries but I need to be careful here - for medical reasons I have a special diet, I lose weight very quickly so tend to eat a lot of food! I tend to get my meat, veg and fruit from Aldi as it's cheaper but I then also go to go to Asda for other things. This is definately something I can look into though...

The £40 clothing is per month, but you're quite right I could probably make do with what I have for now.

Ah yes the entertainment! This is something I need to definately work on, I do enjoy going out and tend to spend a lot on alcohol/food/cinema tickets etc etc etc Maybe it's time to become anti social for a little while haha

doodledo_2

Hi and welcome to the forum.

The two things which jump out to me are your groceries and your entertainment.

Groceries could easily have £100 shaved off them.

Good luck with your journey

fairydiamond

ElJayco wrote: »

Lastly, get a part time job for a few months to get some extra cash.

A good idea for some people, but someone in remission from Cancer I would not suggest this, too much strain.

Just wanted to wish you luck, I understand your situation, my partner has just been diagnosed with cancer and we will struggle for money, but we'll be ok.

Hope you get sorted mate.

ElJayco

The way to think about it (which is what has kept me going) is that you are paying £475 a month on unsecured debts and this amount is no doubt increasing monthly as you are overspending because of your socialising.

If you didn't have those debts then you could be spending £300 a month on entertainment AND save £200 a month for something else!

I can imagine it will be harder for you to cut back on this when you are single but if you don't the end result will most lkely be much less desirable.

In reality you only need to cut back for a few months to reduce your unsecured debt monthly outgoings, once they are down to a more manageable level you can start entertaining again, just try and pay off more then the minimum payments as that is the killer on credit card debt.

dancingfairy

Hi. A couple of suggestions from me:
1) perhaps you could cut the food bill a little - obviously you need to be sensible and not go too mad but try and cut it gradually - I am sure the MoneySavingOldStyle board will help you out with that one.
2) cut entertainment and clothes back a bit if you can.

You are only £73 a month short so you might be able to make the shortfall up by cutting back in some of the areas. However have you thought about doing a dmp - basically you have a budget to live off and then the money spare is spread between your creditors -they should also reduce charges for a while to help you get back on your feet. I have no doubt you could manage by cutting back but since you have been ill you might find it less stressful to go through a free organisation like your local CAB/National Debtline/CCCS etc to get them to manage a dmp for you and then if your situation changes you can pay back more or less depending on how things are. It will affect your credit rating but as you have already begun to miss payments you might find this a good route to go down and it might give you some space to a full recovery.
Best of Luck
df

Mr_GB

Thanks for your help everyone.

Things I need to do :-

- Investigate into a direct debit payment for Gas and Electricity.
- Reduce amount of money spent on Groceries and Entertaining.

Regarding my Egg Card, is there anything I can do to try and reduce the interest? This my main worry at the moment, 26.9% APR on an amount of £5300 is very excessive.

FiaryDiamond - my best wishes are with you and your partner, it's an awful situation to be in - try and stay positive, it's the best medication! I know I'm a complete stranger but should you need anyone to talk to that's been through the highs and lows, please feel free to PM me

RedDino308

Hi Mr GB,

There are a couple of extra things you could try.
1 Mobile Phone. If you are on a monthly deal and out of contract then look at beating them down (there are a few good articles here about how to do it). You may get down to as low as £5/month.

2 Keep a spending diary where you write down everything that you spend - right down to that bar of chocolate on the way to work. You'll soon build up a picture of your true spending habits and where the money really goes. For instance buying a £2 coffee every work day is £500 a year!

3 Can you get prepaid prescriptions? These are great if you are on regular medication and will save you bucket loads

4 Look at shifting to a water meter. £43 a month sounds like the ratable value and your consumption is probably a lot less. Swapping over is free to do and can save you a fortune. The rule of thumb is that if you have more bedrooms than people then switch to a meter.

5 Your grocery bill is high. There are a few things to try such as.
a - Swapping to a lower tier. e.g. buying normal rather than premium
b - Doing your shopping in two or three places.
c - Plan your meals to minimise waste.

6 Get hold of your credit report (it's free - again do a search here) and find out why you were likely to be rejected for the MBNA card. Is it fixable?

7 Do you research and if appropriate look for another card at a lower rate and transfer that Egg Card amount of it.

8 Is your council tax paid 10 monthly or 12 monthly? Try and make sure it is 12 monthly to help your budgeting.

9 Make sure you do pay at least the minimum amounts on your debts and then pay any extra you have available to the highest percentage rate debt first.

Hope this helps a bit.

RedDino308

jenjade

hi and welcome

just wanted to add some infor for you i recently changed from prepay to direct debit i just contacted my supplier to arrange a date and they came and did it for free! my fisrt bill on the electric showed £460 credit i phoned up and question it they said the owed it to me from the pre pay although i was only £6 in credit they sent me a cheque and haven't asked for it back!! well worth doing also a lot cheaper just phone them up!