Do I have to start worrying about debt?

TotallyBroke

angeljay wrote: »

Will try and answer all parts which people have noted on in my budget:

Can't change mobile tariff in first 9 months to a lower one, I am in month 4.

Have you tried? No harm in asking and telling them you may struggle to pay them in the next few months

I do all my food shopping online, i budget and buy only what I need, i take pack lunches to work so that is how much it comes too. I also have 2 cats which do cost a bit each month which I have included in there.

Stop doing it online all the time, go into the shop on your way home each day. Pick up the bargains in the reduced to clear sections etc. Do an online shop once a month for your tinned stuff and rice etc. Don't buy expensive cleaning products look at alternatives eg, cheap white vinegar and Soda crystals and Bicarb. Look at the Oldstyle section it will give you cheap alternatives for everything. Look on freecycle for a slow cooker, you can cook your dinner all day while you are at work or the gym and then eat when you get home. This is great because you can cook almost everything in a slow cooker and use real cheap cuts of meat

Haircut I have a friend who comes to my house to do it, i could budget on that.... yes I know that one but that is willpower as I always like to have a nice haircut.

So you pay a friend £20 per month to use your water, electric and probably shampoo and you have to clean up the mess. Get yourself to the local college I would expect to pay a friend £5 top whack

£50.00 entertainment is for a month, maybe one trip to the cinema or a drink with friends at my house. I don't think I should lower that because my life would basically be sat in my house ALL the time.

You don't have to stay in as a hermit on your own but what is wrong with a cinema trip at £10 per month and a bring a bottle night at each of your friend's every other weekend. I go out once a month if I am lucky and it costs me probably £20 including cab home

angeljay wrote: »

No overtime available, work has cut back my hours due to credit crunch etc. Could look at bar work and have been doing round my local town.

This would be great if you could do this, it means you would be socialising at the same time and meeting new friends. Your mates could come and prop up the bar abd keep you company.

10 months for council tax.

So in Feb and March you will have £169.80 spare to put onto a debt. Or ring them and ask them to spread over the 12 months so your payment will be £60 per month instead of £80

Elec and gas, before I had a 15 year old boiler which bumped up my bills sky high so i had to pay that amount. I have split it between 2 but it is a one payment of 125 per month. Electric, I do all you have said anyway with plugs etc.

Thats fine but they have based your direct debit amount on those past usage amounts. Give monthly meter readings now and they can then recalculate for you a better monthly figure. Also if you are not in a fixed contract check out a better price plan for yourself.

I dont have a BT landline fitted in my property, so I can only go with Virgin for Internet.

Check online and see if Virgin have any deals going, sometimes if you threaten to leave they will accomodate a new deal

Clothing I don't usually spend that every month, so can keep an eye on that.

So that is money saved. Well done, ask family members to buy you clothing vouchers as Birthday/Christmas presents

Holiday booked, going in september.

Not a lot can be done with this then. But atleast you will not be paying it after this month

Go to gym 4 - 5 times a week so i believe used a lot!

Then keep it if you use it this much, but if you are here 4-5 times a week then your entertainment costs can really be dropped down

Barclays 0% runs out march 2010

What does it jump to then, you need to start ploughing all your spare cash into this before it runs out, or see if you can transfer it to another 0% before the deal expires

Boiler is 2 year 0% loan.

Then I would let this run it's course and concentrate on paying off the Barclay debt or the mortgage

angeljay wrote: »

Thanks for all your suggestions above, but this is basically meaning I have to do nothing. Work and go home basically for god knows how many years until everything is paid off. What will happen when my mortgage rates rise and I am struggling to pay that? Spending a weekend in by myself is hard to cope with, i dont think I can do it for the next odd many years!

It is hard but things can be done as suggested, your alternative would be to try and sell and then rent but you have to consider could you afford the increased rent and still the same bills, the answer would be No plus you would not be able to have the gym, tv package and mobile. So although hard to do it would be the better option of cutting back now while you still have the opportunity.

I've posted my comments in blue for you. Chin up you're not in dire straights yet.

sunshinejoclaire

Ames wrote: »

Your gas and electric look high, have you checked the meter recently?

There's plenty you can do for free so you're not stuck in the house. How about mystery shopping, so you can go for a meal and even get paid for it?

Could you go running instead of using the gym?

Are you sure the yearly bus pass is the cheapest way to go? Round here a weekly one costs about a tenner, so that's less per month than yours.

I'm guessing its right - a one month pass here is £55 or £68 if you go into 2 zones! You must be lucky were you are

TotallyBroke

Another thing I have just thought about with regard to travelling to work, could you get a lift with a work collegue for a couple of quid a week, you could offer £20 per month maybe. You could also enquire at the gym and see if there is someone that goes your way and catch a lift.

Ames

Just thought of something else, BT often do offers for new phonelines, I got mine for £30 instead of £120 a couple of months ago, and recently they were offering them for free. So it's worth keeping an eye on and changing when you can.

Jesthar

angeljay wrote: »

Hopefully this will help:

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household.........
Number of cars owned....................
Monthly Income Details
Monthly income after tax................ 1200
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1200
Monthly Expense Details
Mortgage................................ 425
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 84.9
Electricity............................. 60 - unless your house is big and cold, this is high for one person; shop around for cheaper tarrifs and check your meter readings
Gas..................................... 65 - unless your house is big and cold, this is high for one person; shop around for cheaper tarrifs and check your meter readings
Oil..................................... 0
Water rates............................. 24.1 - are you on a water meter?
Telephone (land line)................... 10
Mobile phone............................ 35 - ask about lowering this, and be persistant even if they say no first time - they need the business at the moment!
TV Licence.............................. 12
Satellite/Cable TV...................... 17.5 - is your TV with Virgin? Could you get a better deal that way?
Internet Services....................... 10
Groceries etc. ......................... 130 - For one person? I get annoyed if I spend more than about half that in the supermarket a month, including non-food and kitty things. And that includes some stuff I could same more money on if I wanted to...
Clothing................................ 30 - go 'essentials only' for a while
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 64.9
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 13
Pet insurance/vet bills................. 0
Buildings insurance..................... 6
Contents insurance...................... 6
Life assurance ......................... 10
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20 - you can cut back here
Haircuts................................ 20 - you can cut back here
Entertainment........................... 50 - you could (and should) make savings here
Holiday................................. 100 - not much you can do about this now, but try not to think of it as extra money you will have - it will have to go on your debts once finished with.
Emergency fund.......................... 0
Gym..................................... 30 - as long as you use it regularly, fine - but you should regard it as part of your entertainment for the month and reduce your entertainment budget accordingly
Total monthly expenses.................. 1223.4

Assets
Cash.................................... 0
House value (Gross)..................... 90000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 90000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 98500....(425)......4.79
Total secured & HP debts...... 98500.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Barclays.......................5500......100.......0
Boiler.........................2700......108.......0
Total unsecured debts..........8200......208.......-

Monthly Budget Summary
Total monthly income.................... 1,200
Expenses (including HP & secured debts). 1,223.4
Available for debt repayments........... -23.4 - not good, you are over budget even before you reach making debt payments.
Monthly UNsecured debt repayments....... 208
Amount short for making debt repayments. -231.4
Personal Balance Sheet Summary
Total assets (things you own)........... 90,000
Total HP & Secured debt................. -98,500
Total Unsecured debt.................... -8,200
Net Assets.............................. -16,700
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

I am not sure what it all means, the house i think is in NE as I bought in 2006 with a NR together mortgage. As you said my new partner needs to chill out about the house but what do I do when rates go back up...... NR will put their SVR up as well making the house unaffordable unless I can some how secure a fixed rate!

The boiler was a seperate loan as well took out 2 years into living in the house.

There is not really enough room for a lodger, my current partner does not live with me but is there a lot of the time so would be something I could consider! But they are on a very basic wage salary and have rubbish credit for no chance of them helping!

I agree with a previous poster, if you cook for your partner a lot it's not unreasonable to ask him to pay for the shopping sometimes.

Anyway, the obvious thing is that you can't carry on like this - you are not within your monthly available budget even before you start paying debts. That means you have to find and extra £250 from somewhere, and fairly soon. Your food budget is a good target here, and you will also have the extra £100 from your holiday once you finish those payments.

Also your utility bills, you mention your place is small so I'd expect to see about half those figures (combined). Start doing regular meter readings, get online and try and find a better tarriff (I did last year and knocked loads off my bills! And don't forget to check cashback sites to see if you can get cashback too), and check your useage patterns (things like tumble driers eat money) and heating/hot water settings.

I know I mentioned it previously, but you also really should consider your gym membership as part of your entertainment for the month and reduce your entertainment budget accordingly. You'd have to get rid of it anyway if you went on a DMP, and you wouldn't be allowed that much for entertainment either.

You could also do with earning extra money, try using cashback sites when you do you shopping online to get extra money back (it does take a while to come through, but it is worth it!), and also for Daily Clicks (yes, it's only pennies, but it all adds up). There are plenty of other ideas for making a little extra money too.

Anyway, you have caught this just in time, and with a bit of hard work you can get through this - but you do need to be careful, as it wouldn't take much for things to go the other way...

~Jes

moneymakestheworldgoround

HI angeljay,

There has been some excellent advice on here so I am only going to repeat it !

If you want to keep the house, you need to make changes you may not like.

If you want to keep your lifestyle, you need to sell the house, or risk increasing your current debt each and every month by overspending.

Only you can decide which option is best for you.

I spend £140 for 4 of us a month on food. To get out the house, we go for walks to the park, beach, forest, nature reserves etc.. Volunteering was a good piece of advice. There are plenty of things you can do to get out the house. Orange do the 2 for 1 tickets on Wednesdays for the cinema, mystery shopping would get you free meals out, there is one site you can sign up for and get free tickets for new films etc...

I personally would love to own my own home and would sacrifice everything for that. But if you dont feel comfortable with the level of debt and the perception of 'giving up' things, then sell it.

Katie-Kat-Kins

Right, you need to examine your priorities.

If you really want to keep your house and not bankrupt yourself then you will have to make some lifestyle changes - end of. They don't have to all be awful but you do have to be open to trying rather than poo pooing everyone's suggestions. You also have to recognise that at the moment you are living beyond your means and that you aren't entitled to a certain level of lifestyle but have to earn it.

If your current lifestyle is more important that staying in your home, then look into selling up, getting a cheap flat share and paying off the debts with the money saved on the mortgage, but think about the future, about how long you would be happy in a flat share and about getting back on the property ladder in future. Personally I think it is worth a few sacrifices to stay in your own home.

If you are prepared to listen and make an effort then my suggestions are as follows:

1. Cancel the gym and take up running or powerwalking instead, that is free and you can probably find some other people to hook up with to run so that you get some socialising in too. If you really can't face that switch to a council run leisure centre instead. Alternatively if it isn't the social side you like just the exercise check out amazon for some fitness DVDs to do at home. Gym membership is an expensive luxury that you can't afford.

2. Ditch sky, switch to freesat, that requires no new outlay and no subscription, doesn't matter that you don't have an arial. There will be plenty of channels to watch, trust me, I only have five and I survive. TV is not crucial to life. You can watch other stuff online too.

3. Read your gas and electric meter every month and get bills based upon actual readings not monthly ones. Estimated bills are a recepie for disaster you will find that you are either grossly underpaying and have a huge debt (that they will happily let you rack up for 2 years) or that you have been grossly overpaying and the utility company are sitting on a big wedge of your cash that you could have been using to pay off your debts.

4. Keep a record of those readings each month and try to cut the amount you use each month by being more efficient. If you have a water meter do the same with the water. The utilities board is a great place for tips.

5. Compare prices for all your utilities and insurance and switch if you can get a better deal.

6. Cut your groceries bill, this is actually quite easy. Visit the old style board for tips but downshifting on brand is a good starting place as it ensuring you aren't wasting food. There is a lady on that board who fed her family of four for a month on £25 without any of them going hungary or having to eat anything too awful, it makes your £130 look pretty unreasonable.

7. Cut your clothing bill, for the sake of hitting your debts you can wear what you have for the next year and only buy essentials. Check out the Health beauty and fashion board for tips on cutting your clothing spend. Go to the shops less, and everytime you think about buying something ask yourself whether you need it or want it. Give yourself a 24 hour cooling off period before you purchase too.

8. Entertainment, you have to see this as a luxury too, I appreciate you don't want to stay home all the time but think about doing things free or cheap, make use of orange wednesdays for free cinema, two for one deals if you eat out, vouchers for freebies etc. Consider doing free things, a country walk and a picnic, a romatic meal at home etc. Mystery shopping can get you a free meal out too. Voluntary work can be sociable too and also interesting challenging and great for the CV.

9. Phone your mobile provider tell them you are in financial difficulty, most will reduce your tariff even in the first six months.

10. Up your income, a lodger is a great way to get a good chunk, you only need a spare room, often they only want monday - friday as well so you have the place to yourself at weekends. Your OH has to understand that you are skint and need to do these things to keep your head above water.

11. Look for a second job, bars are great but also consider, shops, petrol stations, restaurants, cafes etc.

12. Keep a spending diary, start today, it will show you where you can save and help you make your SoA more accurate. It will also put you off spending on unnecessary items.

13. Redo your SoA when you have taken some of these steps, it is a work in progress, update it regularly to identify savings and put you on the road to becoming debt free.

Good Luck!

angeljay

The Major worry I have at the moment is the house, what will happen when rates go up they will only make my payments higher, like i said should i remortgage the secured part and add the unsecured part to my debts?

anh1904

What will happen unless you decide to make some changes is that you will spiral into further debt.
You are living beyond your means. Either reduce your lifestyle, up your income, or accept you need to move out.
Harsh, but true, sorry.

moneymakestheworldgoround

angeljay, I appreciate you probably want a yes or no answer, but it depends on the person, the situation and stuff like that.

In your case, when you posted your SOA, the concerns from me (and others) was that you are already spending £230 ish more than you can afford in a month. Forget about remortgaging questions, you cannot afford to live at the moment month in month out at all.

You need to therefore make a decision about whether to keep and scale down spending or sell up first.