Earthdancer's Debt Free Journey - the First Step SOA

earthdancer

Hello :hello:

I've been lurking on this forum for a while now but have finally summoned the courage to post in the last few days. I've joined a couple of challenges and am now ready to ask for a bit of advice.

First of all, a little bit about us and how we have acquired our debt. Over the last 13 years we have been through 2 house moves, a wedding, the arrival of 3 children and have owned eight cars. We've had numerous store and credit cards, HP agreements, and loans to finance them all.

Six years ago I attempted to clear our debt by paying off and cutting up all our store cards. This was moderately successful and I ended up with 2 credit cards only. Three years ago I attempted to consolidate and took a £22000 loan with PPI :eek: as well as cashing in an endowment policy of £12000 which cleared all cards at the time. We had £2000 of savings behind us for emergencies.

After the surprise arrival of child #3 in 2007 we found ourselves with a huge loan, increasing credit card debts and no savings left, so I made another half hearted attempt to tackle the debt and managed to get the PPI on the loan cancelled as well as cutting back on food, etc.

It wasn't until the end of December however that I finally had my LBM and decided I wasn't happy living under the shadow of debt. We NEED to either move to a bigger home or extend this one but before we can do that we need to free up some disposable income to take a bigger mortgage. The debts must go...

Now we are in a more fortunate position than many on this board in that we have a lot of equity in our home and we are managing to make our debt repayments but my mission in 2009 is to clear as much of the 'rubbish' debt as possible, as quickly as possible. So far I've knocked £900 off the total in two months with regular payments and extra payments from ebay sales but I need to streamline our budget to free up more money to throw at it - hence posting my SOA for some ideas. I would also like to put some money back into our savings as an emergency fund so if my car breaks down (again!) or the boiler goes (again!) I don't have to reach for the credit card and undo our hard work.

So, lovely people, over to you... :T

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 1800
Partners monthly income after tax....... 1100
Benefits................................ 500 (CTC due to go to 0 in April so loss of -350 per month)
Other income............................ 200
Total monthly income.................... 3600
Monthly Expense Details
Mortgage................................ 645 (inc buildings+cont insurance)
Hire Purchase (HP) repayments........... 201

Council tax............................. 134
Electricity............................. 42
Gas..................................... 39
Water rates............................. 28
Telephone (land line + internet......... 21
Mobile phone............................ 70
TV Licence.............................. 12
Satellite/Cable TV...................... 57
Groceries etc. ......................... 460
Clothing................................ 50
Petrol/diesel........................... 200
Road tax................................ 30
Car Insurance........................... 80
Car maintenance (including MOT)......... 20

Childcare/nursery....................... 0 (vouchers taken before tax)
Other child related expenses............ 120

Life assurance ......................... 50
Presents (birthday, christmas etc)...... 50
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 25
Total monthly expenses.................. 2434

Assets
Cash.................................... 300
House value (Gross)..................... 160000
Car(s).................................. 6000
Total Assets............................ 166300

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 70000....(645)......4.49 (reverts to SVR of 5.9% on 1 june)
Hire Purchase (HP) debt ...... 6850.....(201)......14.4
Total secured & HP debts...... 76850.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
NR Loan........................11000.....394.......7.4
Loan from Parents..............420.......20........0
Egg CC.........................150.......5.........19.9
Overdraft useage fee...........5.........5.........0
Evans Store Card...............230.......10........24.9
Capital One CC.................7250......220.......8.5
Total unsecured debts..........19055.....654.......-

Monthly Budget Summary
Total monthly income.................... 3,600
Expenses (including HP & secured debts). 2,434
Available for debt repayments........... 1,166
Monthly UNsecured debt repayments....... 654
Amount left after debt repayments....... 512 (No idea where this is!!)
Personal Balance Sheet Summary
Total assets (things you own)........... 166,300
Total HP & Secured debt................. -76,850
Total Unsecured debt.................... -19,055
Net Assets.............................. 77,245
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

Tixy

Hi Earthdance (like the username!)

I'm not an expert at reading others SOAs but here are my first thoughts.
To identify where the missing £512 goes have you tried keeping a spending diary where you write down everything you spend? I found this helped me a lot.

Your car insurance seems high even for 2 cars. Have you shopped around for this and tried using cashback sites? Or has one of you got points on your licence?
You could probably reduce you mobile phone - is this just for 2 phones or do any of the children have top-ups?
Satellite/cable - look if you can reduce your package or go to freeview. If you really want to keep it phoning the provider and suggesting you are going to leave can sometime get you a reduced price for 6-12months. Is the internet included in this cost?
Have you looked at your life assurance recently? it may be worth shopping around to see if a new policy would be cheaper, the market changes frequently and even small changes to your circumstances can make a difference to the cost (again use cashback sites).
Groceries could probably be cut - have you tried Martins drop a brand challenge? You could look at the old school board for ideas on how to reduce.
If you need to cut more (once your CTC goes) you could look to reduce the presents and entertainment side.

Hope this helps. Good luck.
Tixy

Tixy

Also meant to say (and I'm sure you already know this) make sure you pay off the high interest cards first. If you really have £512 free you could clear Egg and Evans in a month and get rid of those high APRs.

earthdancer

Thanks for the quick response. I think the spending diary has to be done - I didn't realise we had so much unidentified spending.

I forgot to say that the car insurance figure includes £14pm for breakdown cover. My car is on it's last legs so I daren't drop this. I haven't tried cashback sites for insurance but will bear it in mind at renewal time.

I'll try threatening the satellite company with leaving - would be just my luck that they'd say ok lol DH insists on the full package, but given we don't have nights out this is our luxury spend. We also pay £8.75pm for insurance for the box.

Mobiles - DH puts £20pm on his PAYG and my contract phone which I just renewed in November (18 month contract) is about £50pm, but we use the free minutes for all calls rather than the land line and I do text an awful lot.

We tried to get a better deal on the life insurance but due to me being classed as 'obese' the premium actually went up a lot Being overweight costs money as well as being unhealthy.

Finally, the shopping downshift - yes I think that could work. We do buy quite a lot of budget brands anyway so trying a few more would be a good idea.

Thanks

tealady

Hi I would ebay/car boot/amazon anything you don't use. Go through the kids stuff as well.
The money you raise can then be paid off the debt with the highest APR
Oh and cut up the cards as you clear them.

moo2moo

£14 per month for breakdown cover is plain silly. Tesco offer RAC cover via clubcard deals for 2 adults driving anything at roundabout £30 a year, less if you don't want home cover. Quidco have some great RAC offers too. Check the Ts and Cs of your current policy before you change though though as some have huge penalties if you cancel.

Why do you need insurance on your SKY box? You can buy unwanted working ones on E-bay for sesnsible prices if yours does break. You're paying almost £100 a year as it is. Put that money into an emergeny fund and replace items as required.

What are your other child related expenses? and if Sky is your only luxury because you don't have nights out why is your entertainement spend £100 per month?

How big is your overdraft? £5 a month as a usage fee is £60 a year that you don't need to be paying.

The Evans card. Clear it. Now. You have a huge monthly surplus. Get rid of the Evans card and its ridiculous interest rate. Feb is a short month. If you pay council tax 10 monthly and water 10 monthly its also a much cheaper month too. Use the surplus wisely and you'll save yourself £10 per month in unnecessary interest payments. Clear the Egg card too. You will still have £150 more than you need before you make any other changes.

trina2010

if your husband insists on the full sky package because you dont go out, why do you have a £100 outgoing for entertainment? what is this for?

debrag

earthdancer wrote: »

Hello :hello:

I've been lurking on this forum for a while now but have finally summoned the courage to post in the last few days. I've joined a couple of challenges and am now ready to ask for a bit of advice.

First of all, a little bit about us and how we have acquired our debt. Over the last 13 years we have been through 2 house moves, a wedding, the arrival of 3 children and have owned eight cars. We've had numerous store and credit cards, HP agreements, and loans to finance them all.

Six years ago I attempted to clear our debt by paying off and cutting up all our store cards. This was moderately successful and I ended up with 2 credit cards only. Three years ago I attempted to consolidate and took a £22000 loan with PPI :eek: as well as cashing in an endowment policy of £12000 which cleared all cards at the time. We had £2000 of savings behind us for emergencies.

After the surprise arrival of child #3 in 2007 we found ourselves with a huge loan, increasing credit card debts and no savings left, so I made another half hearted attempt to tackle the debt and managed to get the PPI on the loan cancelled as well as cutting back on food, etc.

It wasn't until the end of December however that I finally had my LBM and decided I wasn't happy living under the shadow of debt. We NEED to either move to a bigger home or extend this one but before we can do that we need to free up some disposable income to take a bigger mortgage. The debts must go...

Now we are in a more fortunate position than many on this board in that we have a lot of equity in our home and we are managing to make our debt repayments but my mission in 2009 is to clear as much of the 'rubbish' debt as possible, as quickly as possible. So far I've knocked £900 off the total in two months with regular payments and extra payments from ebay sales but I need to streamline our budget to free up more money to throw at it - hence posting my SOA for some ideas. I would also like to put some money back into our savings as an emergency fund so if my car breaks down (again!) or the boiler goes (again!) I don't have to reach for the credit card and undo our hard work.

So, lovely people, over to you... :T

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 1800
Partners monthly income after tax....... 1100
Benefits................................ 500 (CTC due to go to 0 in April so loss of -350 per month)
Other income............................ 200
Total monthly income.................... 3600
Monthly Expense Details
Mortgage................................ 645 (inc buildings+cont insurance)
Hire Purchase (HP) repayments........... 201

Council tax............................. 134
Electricity............................. 42
Gas..................................... 39
Water rates............................. 28
Telephone (land line + internet......... 21
Mobile phone............................ 70 - cut down
TV Licence.............................. 12
Satellite/Cable TV...................... 57 - reduce and combine with phone & internet
Groceries etc. ......................... 460
Clothing................................ 50 - cut out for a while
Petrol/diesel........................... 200
Road tax................................ 30
Car Insurance........................... 80
Car maintenance (including MOT)......... 20

Childcare/nursery....................... 0 (vouchers taken before tax)
Other child related expenses............ 120

Life assurance ......................... 50
Presents (birthday, christmas etc)...... 50
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 25
Total monthly expenses.................. 2434

Assets
Cash.................................... 300
House value (Gross)..................... 160000
Car(s).................................. 6000
Total Assets............................ 166300

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 70000....(645)......4.49 (reverts to SVR of 5.9% on 1 june)
Hire Purchase (HP) debt ...... 6850.....(201)......14.4
Total secured & HP debts...... 76850.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
NR Loan........................11000.....394.......7.4
Loan from Parents..............420.......20........0
Egg CC.........................150.......5.........19.9
Overdraft useage fee...........5.........5.........0
Evans Store Card...............230.......10........24.9
Capital One CC.................7250......220.......8.5
Total unsecured debts..........19055.....654.......-

Monthly Budget Summary
Total monthly income.................... 3,600
Expenses (including HP & secured debts). 2,434
Available for debt repayments........... 1,166
Monthly UNsecured debt repayments....... 654
Amount left after debt repayments....... 512 (No idea where this is!!)
Personal Balance Sheet Summary
Total assets (things you own)........... 166,300
Total HP & Secured debt................. -76,850
Total Unsecured debt.................... -19,055
Net Assets.............................. 77,245
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

see my comments only a few on this one

debrag

earthdancer wrote: »

Mobiles - DH puts £20pm on his PAYG and my contract phone which I just renewed in November (18 month contract) is about £50pm, but we use the free minutes for all calls rather than the land line and I do text an awful lot.

Sorry but who are you with? much better deals with unlimited text for much cheaper. I pay £35 a month (some times a little more) and I use it instead of my landline and text all the time.

earthdancer

Hi All

Thanks for the ideas. I thought we were getting a good deal with the breakdown cover but it sounds like there are significant savings to be made there.

Overdraft last month was £170 - a big improvement on the previous 2 months of nearly £600 and nearly £1000 - and I think we may just end this month in the black for the first time in more than a year!

The entertainment budget covers DH's need to buy one Doctor Who DVD and a couple of CDs per month, plus about 4 gigs per year which average about £40 per ticket. He is not as committed as I am to clearing our debt, but to be fair I probably ran up a lot more than he did. We are trying to put money aside now so we have this money in advance in future.

Other child related expenses are the kids activities such as swimming and play centres, plus school meals. I don't include this in with groceries.

Finally, the mobile - I committed to the 18 month contract just before I had my LBM so I know this is a ridiculous amount to pay now. Not sure of my options for getting out of it, as tariff I'm on was what allowed me to get the phone I wanted, but I'll give O2 a ring to see if I can do anything about it.

Cheers

debrag

earthdancer wrote: »

Hi All

Thanks for the ideas. I thought we were getting a good deal with the breakdown cover but it sounds like there are significant savings to be made there.

Overdraft last month was £170 - a big improvement on the previous 2 months of nearly £600 and nearly £1000 - and I think we may just end this month in the black for the first time in more than a year!

The entertainment budget covers DH's need to buy one Doctor Who DVD and a couple of CDs per month, plus about 4 gigs per year which average about £40 per ticket. He is not as committed as I am to clearing our debt, but to be fair I probably ran up a lot more than he did. We are trying to put money aside now so we have this money in advance in future.

Other child related expenses are the kids activities such as swimming and play centres, plus school meals. I don't include this in with groceries.

Finally, the mobile - I committed to the 18 month contract just before I had my LBM so I know this is a ridiculous amount to pay now. Not sure of my options for getting out of it, as tariff I'm on was what allowed me to get the phone I wanted, but I'll give O2 a ring to see if I can do anything about it.

Cheers

you could have gotten an iphone on o2 for less than £50.

Your OH needs to cut down on things he clearly hasn't had his LBM and with the way he spends money it will take years to clear