Former high earner now drowning in commitments

bornold

Until recently I was a high earning manager in a technology company. Over the years I have spent money and accumulated a number of monthly commitments.

Since starting a new venture a couple of years ago I have stopped all new expenditure and whilst I still have a reasonable income (GBP120k) I am unable to service these commitments and am going `backwards' by around GBP2,000 / mth.

Outgoings:
2 properties with mortgages - GBP250k and Euro270k
credit cards - total debt around GBP60k (these charges are killing me!)
Loans - GBP20k
Car loan - GBP7.5k

I really should should be able to live (well) on my salary but don't seem to be able to get off the merry-go-round

I confess to being reluctant to sell the properties as I will take a bath at present.

Any thoughts much appreciated

TIA

Belt-tightener_2

The easiest thing to do is break it down into monthy expenditure, on here it is knows as a SOA I'm sure someone will be along to point you in the right direction.

doodledo_2

Hi and welcome to the forum

Best place to start is to fill out a statement of affairs (follow this link and then paste back on the board http://www.makesenseofcards.com/soacalc.html). This basically lists all your incomings/outgoings and debts.

This is a great place to start so it is shown in black and white where your cash is going.

Good luck with your journey

IcklePickle_2

There's a sticky above called Help For First Time Posters and SOA Calculator.

Read this and fill in the SOA then add a post to this thread with your SOA and people will be able to give you pointers.

Are you managing to meet minimum repayments? Are you left with anything at the end of the month?

bornold

Wow! thanks for the quick responses.

I've completed the SOA :-

[tt]Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 4
Monthly Income Details
Monthly income after tax................ 6500
Partners monthly income after tax....... 1500
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 8000
Monthly Expense Details
Mortgage................................ 3625
Secured loan repayments................. 500
Hire Purchase (HP) repayments........... 750
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 234
Electricity............................. 50
Gas..................................... 150
Oil..................................... 0
Water rates............................. 70
Telephone (land line)................... 50
Mobile phone............................ 0
TV Licence.............................. 20
Satellite/Cable TV...................... 50
Internet Services....................... 0
Groceries etc. ......................... 300
Clothing................................ 30
Petrol/diesel........................... 300
Road tax................................ 20
Car Insurance........................... 50
Car maintenance (including MOT)......... 50
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 52
Contents insurance...................... 50
Life assurance ......................... 240
Other insurance......................... 30
Presents (birthday, christmas etc)...... 50
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 6671

Assets
Cash.................................... 7000
House value (Gross)..................... 900000
Shares and bonds........................ 25000
Car(s).................................. 45000
Other assets............................ 0
Total Assets............................ 977000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 510000...(3625).....0
Secured Debt.................. 25000....(500)......0
Hire Purchase (HP) debt ...... 35000....(750)......0
Total secured & HP debts...... 570000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
credit cards...................55000.....0.........0
loan...........................25000.....0.........0
Total unsecured debts..........80000.....0.........-

Monthly Budget Summary
Total monthly income.................... 8,000
Expenses (including HP & secured debts). 6,671
Available for debt repayments........... 1,329
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 1,329
Personal Balance Sheet Summary
Total assets (things you own)........... 977,000
Total HP & Secured debt................. -570,000
Total Unsecured debt.................... -80,000
Net Assets.............................. 362,000
[/tt]

iwanttohavesomemoney

could you afford to sell a couple of cars? I would have thought this would depend on depreciation though, but seems an ok way of releasing some cash.

RAS

Hi

Can you add the Aprs and minimum monthly payments for the cards, breaking then down, and the loans, ditto. Plus the maximum amounts for the cards, any restrcions (like balance transfers) and the end date for the loans.

doodledo_2

Obviously without prying too much is there a need for the second property? Is there enough equity available to clear some of the unsecured debts?

Again do you need 4 cars? I assume the £750 HP is for cars? Could you get rid of a couple and reduce this?

None of your other outgoings seem that high as I assuming you have a fairly large house to heat etc.

In simple terms one house and two cars and with your income those debts would soon be gone.

Welshlassie

bornold wrote: »

Wow! thanks for the quick responses.

I've completed the SOA :-

[tt]Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 4 sell some do 2 of you really need 4 cars??
Monthly Income Details
Monthly income after tax................ 6500
Partners monthly income after tax....... 1500
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 8000
Monthly Expense Details
Mortgage................................ 3625
Secured loan repayments................. 500
Hire Purchase (HP) repayments........... 750
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 234
Electricity............................. 50 check this is the cheapest
Gas..................................... 150 a month?, this is a huge amount, switch
Oil..................................... 0
Water rates............................. 70
Telephone (land line)................... 50 there are cheaper options out there.
Mobile phone............................ 0
TV Licence.............................. 20 I only pay £11.95 whyis your more?
Satellite/Cable TV...................... 50 cut the package back
Internet Services....................... 0
Groceries etc. ......................... 300 this is alot for 2 people, check out the old style board for ideas on how to cut back without cutting the quality of the food you are eating.
Clothing................................ 30
Petrol/diesel........................... 300 this is a huge amount, can it be cut at all
Road tax................................ 20
Car Insurance........................... 50
Car maintenance (including MOT)......... 50
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 52
Contents insurance...................... 50
Life assurance ......................... 240 how much are you insured for??? This can probably be found cheaper elsewhere.
Other insurance......................... 30 Whats this?
Presents (birthday, christmas etc)...... 50
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 6671

Assets
Cash.................................... 7000
House value (Gross)..................... 900000
Shares and bonds........................ 25000
Car(s).................................. 45000
Other assets............................ 0
Total Assets............................ 977000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 510000...(3625).....0
Secured Debt.................. 25000....(500)......0
Hire Purchase (HP) debt ...... 35000....(750)......0
Total secured & HP debts...... 570000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
credit cards...................55000.....0.........0
loan...........................25000.....0.........0
Total unsecured debts..........80000.....0.........-

Monthly Budget Summary
Total monthly income.................... 8,000
Expenses (including HP & secured debts). 6,671
Available for debt repayments........... 1,329
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 1,329
Personal Balance Sheet Summary
Total assets (things you own)........... 977,000
Total HP & Secured debt................. -570,000
Total Unsecured debt.................... -80,000
Net Assets.............................. 362,000
[/tt]

Well done of facinmg up to your debts, you will need to change your life style if you really are serios out sorting these out, but posting here is a start. What happens to the other £1,300 left over at the end of the month??? If you're not sure keep a spending diary.

Good luck.

lemma1968

OK, take a deep breath.

As a fairly high earner (but not quite in your league) I know how you feel. You ask yourself, how can i be earning this and still be in debt.

Its simple - you just don't realise how each commitment actually adds up - the dinner once or twice a week, lunch out with colleagues, weekends away on an ad hoc basis....i have been there, done that and felt the pain when the realisation hits that i have overstretched myself.

4 cars - are they all on finance? You can only drive one at once!
Does your partner have any idea how financially committed you are?
You seem to have enough income to be able to service these debts so long as you do not take out any more.

You have not budgeted for holidays - be honest with yourself -how many times have you been away in the last year and what did it cost you? I used to miss it off the SOA when it was there really but i did not want to admit it.

I suspect your daily out of pocket spending is far larger than you anticipate and you need to keep a spending diary. Its a shock initially...trust me, but when you really see where the money is going you can probably cut back a lot more.

My main aim is to overpay on my credit card to reduce the interest long term and get rid.

Is there any chance you can balance transfer onto 0% cards?