Newbies SOA

mrs_motivated

I finally did an SOA and feel ashamed - guilty of living a champagne lifestyle on beer money!

I think I need to make some serious changes - concentrate on becoming debt free - this was a useful exercise though because it made me face reality :rolleyes:

Its going to be a long hard struggle - any help would be really appreciated - even if its just a proverbial kick up the backside!

PLEASE NOTE I AM ONLY INCLUDING MY INCOME NOT MY HUSBANDS AND ONLY MY SHARE OF THE HOUSEHOLD BILLS, my car expenses ETC. – this is because the debts I refer to are mine and therefore I feel my responsibility to pay back.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2942
Partners monthly income after tax....... 0 (NOT INCLUDED – see above)
Benefits................................ 0
Other income............................ 204
Total monthly income.................... 3146

Monthly Expense Details
Mortgage................................ 475 (contribution to
mortgage and household
bills)
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 22
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 500
Clothing................................ 150
Petrol/diesel … ............ 45
Road tax................................ 10
Car Insurance........................... 24
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 50
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 55
Other insurance......................... 0
Presents (birthday, christmas etc)...... 80
Haircuts................................ 28
Entertainment........................... 100
Holiday................................. 200
Emergency fund.......................... 50
Total monthly expenses.................. 1799


Assets
Cash.................................... 0
House value (Gross)..................... 330000
Shares and bonds........................ 9000
Car(s).................................. 5500
Other assets............................ 0
Total Assets............................ 344500


Secured nor Hire Purchase Debts
Mortgage 95000

Unsecured Debts
Description . Debt......Monthly
Barclaycard 5550 150
Overdraft 3000 0
Barclayloan 10083. 282
Lombard direct loan 3262 326
M & S Credit card 4394 100
American Express CC 2632 150
Virgin CC 9837 200
Total unsecured debts 38758 1208


Monthly Budget Summary
Total monthly income.................... 3146
Expenses (including HP & secured debts). 1799

Available for debt repayments........... 1347
Monthly UNsecured debt repayments....... 1208
Amount left 139

Personal Balance Sheet Summary
Total assets (things you own)........... 344500
Total HP & Secured debt................. -95000
Total Unsecured debt.................... -38758
Net Assets.............................. 210742

Tixy

Hi Mrs M and welcome. Well done on posting.

I would say there are 2 areas where you could make really easy cut backs are the groceries and clothing. Groceries for 4 (even if the children are teens) should be easily manageable on £400 to start, then you could probably cut back over time to £300. Meal planning, trying the drop a brand challenge, batch cooking from scratch should all help you reduce the cost (probably without the family even noticing) another good tip is to shop at local markets, butches, greengrocers where things can be a lot cheaper and a lot tastier.

Clothing at £150 is also a huge amount - is this for all 4 of you? While you have such high debts I would cut right back to essentials on adults clothing, and when buying for children check you are getting value for money.

Your life assurance seems high unless you have serious health issues - definatley try to shop around for this.

Do you have a holiday booked? Is 200 just your share? (is you husband also saving a similar amount?). If not booked then consider going without for a year while you concentrate on lowering your debts.

Whilst you are showing a small surplus at the moment your debts are large. I see you are earning a good salary but you have clearly been spending beyond your means to have so much unsecured debts. Are these debts a result of specific large purchases or just a gradual build up of overspend?

Do you have anything to sell to start to pay them off. Would you consider selling your investments to repay at least one debt.

You haven't included your APRs but once you know these you need to target the debt with the highest APR first, to save yourself the most in interest.

Just my thoughts
Tixy

mrs_motivated

Thanks tixy - yes you are right i do need to cut down on groceries and clothes (I do buy the clothes for all of the family though). I do enjoy cooking and know where i can shave this bill down - already trying to economise and planning meals (using up left over sunday joint etc)

The life insurance is 2 endownment policies (due to mature in 2013) should get about £18000 back, so need to keep this payment up. i will throw that at the debt when i can.

The debts are largely to do with buying a fixer upper house (new windows, bathroom, kitchen etc etc.)

The £200 holiday - my husband does contribute to holidays too.... we could give this up or at least look for a cheaper break. ( I know this sounds pathetic, but i dont want my family to miss out because i was stupid)

the shares i own - are a recent purchase - i kind of figured at the last stock market crash that i had nothing to lose to invest, my theory was if they go any lower then the whole country will be bankrupt and debt will mean nothing.... luckily my gamble paid of :j and although I bought £2000 worth of shares in Jan this year they are now worth about £10,000! just now i wonder if i should sell them or wait? I would like to keep some of them, but could sell £5000 worth and get rid of one debt.

I am overpaying on all my credit cards (and have never missed a payment) my lombard loan over in 8 months - I then plan to pay this money against other debts.

PS - doing my FIRST EVER CAR BOOT SALE THIS SUNDAY - wish me luck

GeorgeUK

Mortgage................................ 475
Interest only or repayment?

Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Check the comparison sites to see if you are getting the best deal. (uswitch, moneysupermarket)

Mobile phone............................ 22
PAYG?

Satellite/Cable TV...................... 0
Internet Services....................... 0
Is this a package deal?

Groceries etc. ......................... 500
Very nice of you to buy the neighbours their groveries too Really needs to be cut down. Have a look at the oldstyle board and try cooking in bulk.

Clothing................................ 150
Every month? That's my annual budget.

Car Insurance........................... 24
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 55
Again, check the comparison sites to make sure you are getting value for money.

Presents (birthday, christmas etc)...... 80
Quite alot, but i suppose you have money left over at the end of the month. Maybe cut down a little?

Holiday................................. 200
How about a UK holiday rather than going abroad?

Emergency fund.......................... 50
Good - this is needed until you get a cushion of sorts.

I would advise you to use some of the savings to pay towards the debts - especially the more volatile ones. You haven't put up the APR's you are paying for your debts, but it may not be possible to get 20%APR return on your investments. You took a gamble and it paid off - quit while you're ahead (unlike me).

Another thing to look at is trying to reduce the aount of interest you are paying on the debts. You may be able to get a 0% creditcard to transfer some of the higher APR debt to and if you do manage to clear a card might get a balance transfer offer as an existing customer which doesn't require a credit check . You can have about 3 credit checks in a 6 month period before your credit score is affected so bear that in mind if you do apply for some 0% cards.

mrs_motivated

thanks for your help and advice,

my mortgage is a repayment mortgage the £475 is just my contribution to the mortgage / household debts (my husband pays the rest).

I think one of my main problems is, I just pay on my debit card (often without thinking) - I am going to try and take a set amount from my account each week in cash and when its gone - its gone!

Also could anyone give me advice on 'snowballing' - i have read two different opinions on this.
1. pay the highest debt off first?
2. pay the lowest debt off first?

Which would you recommend and why?

Mikeone

mrs_motivated wrote: »

Also could anyone give me advice on 'snowballing' - i have read two different opinions on this.
1. pay the highest debt off first?
2. pay the lowest debt off first?

Which would you recommend and why?

With snowballing, the smartest move from a purely financial point of view is to pay off the debt with the highest APR first, as this is cheaper in the long run. However, many people find that tackling the ones with the smallest balance gives a psychological boost, as you get through the individual debts more quickly.

GeorgeUK

You are usually better off getting rid of the highest APR as Mikeone says. I prefer to pay off the lowest balance if there is a chance i can do so within a few months to take advantage of a possible balance transfer though - if there is other debt with a high APR that i may be able to transfer.

the_cat

mrs_motivated wrote: »

Thanks tixy - yes you are right i do need to cut down on groceries and clothes (I do buy the clothes for all of the family though). I do enjoy cooking and know where i can shave this bill down - already trying to economise and planning meals (using up left over sunday joint etc) Surely if you have been spending this much on clothes for a while, you could all make do with what is in the wardrobe for a few months at least.

The life insurance is 2 endownment policies (due to mature in 2013) should get about £18000 back, so need to keep this payment up. i will throw that at the debt when i can. Have you checked to see what the surender value and resale would be? When added to the interest you will be paying on the loans for the next 4 years, it might be beneficial to cash them in.

The debts are largely to do with buying a fixer upper house (new windows, bathroom, kitchen etc etc.)

The £200 holiday - my husband does contribute to holidays too.... we could give this up or at least look for a cheaper break. ( I know this sounds pathetic, but i dont want my family to miss out because i was stupid) I understand your point, but they have all benefitted from the champagne lifestyle and new bathroom, kitchen etc so it is perfectly fair that the whole family make a certain amount of sacrifices. I firmly believe one of the most important lessons to give my kids is that money is a finite resource and that choices in what to spend it on mean some things are off limits. Besides, cheaper does not automatically mean worse.... most kids LOVE camping

the shares i own - are a recent purchase - i kind of figured at the last stock market crash that i had nothing to lose to invest, my theory was if they go any lower then the whole country will be bankrupt and debt will mean nothing.... luckily my gamble paid of :j and although I bought £2000 worth of shares in Jan this year they are now worth about £10,000! just now i wonder if i should sell them or wait? I would like to keep some of them, but could sell £5000 worth and get rid of one debt. I would sell these ASAP. As you say, a gamble has paid off. A smart gambler quits when they are ahead. A greedy one usually loses

I am overpaying on all my credit cards (and have never missed a payment) my lombard loan over in 8 months - I then plan to pay this money against other debts.

PS - doing my FIRST EVER CAR BOOT SALE THIS SUNDAY - wish me luck Good luck!

A few thoughts in red

Ames

mrs_motivated wrote: »

I finally did an SOA and feel ashamed - guilty of living a champagne lifestyle on beer money!

I think I need to make some serious changes - concentrate on becoming debt free - this was a useful exercise though because it made me face reality :rolleyes:

Its going to be a long hard struggle - any help would be really appreciated - even if its just a proverbial kick up the backside!

PLEASE NOTE I AM ONLY INCLUDING MY INCOME NOT MY HUSBANDS AND ONLY MY SHARE OF THE HOUSEHOLD BILLS, my car expenses ETC. – this is because the debts I refer to are mine and therefore I feel my responsibility to pay back.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2942
Partners monthly income after tax....... 0 (NOT INCLUDED – see above)
Benefits................................ 0
Other income............................ 204
Total monthly income.................... 3146

Monthly Expense Details
Mortgage................................ 475 (contribution to
mortgage and household
bills)
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 22
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 500 ouch, this is really high, as others have said you can cut this a lot.
Clothing................................ 150 Again, really high. Depending how old the kids are you could look on ebay, in charity shops or on freecycle for clothes for them.
Petrol/diesel … ............ 45
Road tax................................ 10
Car Insurance........................... 24
Car maintenance (including MOT)......... 10 Are all these figures half of the actual cost? If insurance is half then that's really high.
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 50
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 55
Other insurance......................... 0
Presents (birthday, christmas etc)...... 80 This again seems high, I'm sure you can cut it.
Haircuts................................ 28
Entertainment........................... 100
Holiday................................. 200
Emergency fund.......................... 50
Total monthly expenses.................. 1799


Assets
Cash.................................... 0
House value (Gross)..................... 330000
Shares and bonds........................ 9000
Car(s).................................. 5500
Other assets............................ 0
Total Assets............................ 344500


Secured nor Hire Purchase Debts
Mortgage 95000

Unsecured Debts
Description . Debt......Monthly
Barclaycard 5550 150
Overdraft 3000 0
Barclayloan 10083. 282
Lombard direct loan 3262 326
M & S Credit card 4394 100
American Express CC 2632 150
Virgin CC 9837 200
Total unsecured debts 38758 1208


Monthly Budget Summary
Total monthly income.................... 3146
Expenses (including HP & secured debts). 1799

Available for debt repayments........... 1347
Monthly UNsecured debt repayments....... 1208
Amount left 139

Personal Balance Sheet Summary
Total assets (things you own)........... 344500
Total HP & Secured debt................. -95000
Total Unsecured debt.................... -38758
Net Assets.............................. 210742

I've put a few things above, but they've already been mentioned by others. Does your partner know about your debts? If they were spent on doing up the house then really they're joint debts. Also spenidng on the kids, if they're his then he should be contributing. If the debts went on designer shoes and handbags, then I could understand you wanting to deal with them yourself, but on making a home for your family it's different.