Help / Advice needed to cut outgoings & debt

R_H_T

Hello - can someone please offer some advice or suggestions (I appreciate it can only be opinion via this forum) - but any feedback would be greatly received.

I am in a well paid job (£60k) and a homeowner. However, I am finding my outgoings + mortgage repayments getting too much. Clearly I need to reduce something but i just need some guidance.

I am thinking too about remortgaging as I have a very high interest rate for a further 3 years. But, my early redemption fee is so high (£14k) that any potential savings would be hard to recover.

My current mortgage is £282k. Monthly repayments are £1700 (5.75 fixed for 5 years - 3 years remaining). House value at 'approx' 360k.

Monthly c/card and loan outgoings total £650 per month.

What are my options? Consolidate the c/card and loan debt into one? Applying for another mortgage which is tricky due to the penalty? Take a payment break from my mortgage lender to reduce the other loans?

Any tips? Thanks so much!

gonzo127

first thing to do is to post a statement of affair (SOA) the link is at the top of the forums i believe this will put down all of your income and outgoings in black and white and allow people to help you spot places where there could be reductions

the usual rule of thumb is to not consolidate as most people usualy end up finding themselves in a worse situation after a few years as they end up racking up even more debt on top of the consolidated loan, so if you can do a SOA and post it for everyone we can go through it with you to try and help you reduce your outgoings

sorry quick edit... another reason for this is because on about £60k a year i would expect you get around £3-4 k a month in wages after tax etc and since your current debt out goings are £2350 this means you probabll find a lot of money is tied up in places you wouldnt expect, with a SOA it will allow us to help spot these areas where you could improve without drastically changing your lifestyle

andys15

Have you got any other info, ie does your wife earn?

It is sometimes difficult when you are a high earner, to realise that you cannot afford a lifestyle an income like yours deserves.

I am on slightly more and my take home pay is 3.5k, and my wifes is 1.6k. If you are on a single income then I assume that over half your pay is for your mortgage, possibly leaving you with about 800 pounds left after paying your debts. Then comes council tax etc etc, so again I assume you are left with about 2-300 pounds. Its a tough one without knowing too much, but do you drive a flash car, flash holidays. Yo need to tell us more.

R_H_T

Hi - thanks so much folks for the prompt replies - so quick! I'll prepare an SOA and will post. My wife does not earn, no, because we have two small children. We get very little benefits, hardly anything, due to my wage being just over the limit (but i'm not complaining!).

We don't drive a flash car and no holidays. I just think the c/card repayments are too high as our spending elsewhere is fairly reasonable. But, I'll post an SOA as soon as I can to show.

I really hope I can do something as with a good wage it should be possible?? I'm trying to stay positive.

gonzo127

well the SOA is a incredibly useful tool as it is used to put in everything you spend in a month, a lot of it is things you do not usually think about (at least until you have done a SOA) just spend some time on it and try and do it as honestly and accuratly as possible

GeorgeUK

Here's the link for the SOA calculator. Just format for MSE.
http://www.makesenseofcards.com/soacalc.html

Rather than consolidating, you may be able to get some 0% credit cards to help you reduce the amount of interest you are paying and get the debt down quicker.

I would also advise keeping a spending diary as moost people spend more than they think but can never remember what it was spent on.

R_H_T

Here is my SOA. i dont have life insurance as my employer covers me (5 x salary etc). Also my HP agreement includes car maintence etc. Most of the ccards are on 0% already but will move the other two.

I think it's more of a cash flow problem as well as clearly too much outgoings. the car is our only nice to have - but nothing flashy. I must be doing something wrong?!

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................ 3345
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3345
Monthly Expense Details
Mortgage................................ 1720
Secured/HP loan repayments.............. 293
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 175
Electricity............................. 48
Gas..................................... 79
Oil..................................... 0
Water rates............................. 50
Telephone (land line)................... 30
Mobile phone............................ 26
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 360
Clothing................................ 25
Petrol/diesel........................... 35
Road tax................................ 12
Car Insurance........................... 35
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 200
Childcare/nursery....................... 10
Other child related expenses............ 25
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 25
Contents insurance...................... 25
Life assurance ......................... 0
Other insurance......................... 50
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 3256

Assets
Cash.................................... 0
House value (Gross)..................... 360000
Shares and bonds........................ 0
Car(s).................................. 18000
Other assets............................ 1500
Total Assets............................ 379500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 277000...(1720).....6.39
Hire Purchase (HP) debt ...... 14604....(293)......5.6
Total secured & HP debts...... 291604....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
AA.............................6000......88........8.9
Bcard..........................1400......25........17.5
MBNA...........................1400......25........0
Overdraft......................3300......0.........0
Tesco..........................2950......55........0
Post Office....................4850......120.......0
Total unsecured debts..........19900.....313.......-

Monthly Budget Summary
Total monthly income.................... 3,345
Expenses (including HP & secured debts). 3,256
Available for debt repayments........... 89
Monthly UNsecured debt repayments....... 313
Amount short for making debt repayments. -224
Personal Balance Sheet Summary
Total assets (things you own)........... 379,500
Total HP & Secured debt................. -291,604
Total Unsecured debt.................... -19,900
Net Assets.............................. 67,996

R_H_T

Here is my SOA. i dont have life insurance as my employer covers me (5 x salary etc). Also my HP agreement includes car maint etc. Most of the ccards are on 0% already but will move the other two.

I think it's more of a cash flow problem as well as clearly too much outgoings. the car is our only nice to have - but nothing flashy. I must be doing something wrong?!

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................ 3345
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3345
Monthly Expense Details
Mortgage................................ 1720
Secured/HP loan repayments.............. 293
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 175
Electricity............................. 48
Gas..................................... 79
Oil..................................... 0
Water rates............................. 50
Telephone (land line)................... 30
Mobile phone............................ 26
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 360
Clothing................................ 25
Petrol/diesel........................... 35
Road tax................................ 12
Car Insurance........................... 35
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 200
Childcare/nursery....................... 10
Other child related expenses............ 25
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 25
Contents insurance...................... 25
Life assurance ......................... 0
Other insurance......................... 50
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 3256

Assets
Cash.................................... 0
House value (Gross)..................... 360000
Shares and bonds........................ 0
Car(s).................................. 18000
Other assets............................ 1500
Total Assets............................ 379500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 277000...(1720).....6.39
Hire Purchase (HP) debt ...... 14604....(293)......5.6
Total secured & HP debts...... 291604....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
AA.............................6000......88........8.9
Bcard..........................1400......25........17.5
MBNA...........................1400......25........0
Overdraft......................3300......0.........0
Tesco..........................2950......55........0
Post Office....................4850......120.......0
Total unsecured debts..........19900.....313.......-

Monthly Budget Summary
Total monthly income.................... 3,345
Expenses (including HP & secured debts). 3,256
Available for debt repayments........... 89
Monthly UNsecured debt repayments....... 313
Amount short for making debt repayments. -224
Personal Balance Sheet Summary
Total assets (things you own)........... 379,500
Total HP & Secured debt................. -291,604
Total Unsecured debt.................... -19,900
Net Assets.............................. 67,996

gonzo127

R_H_T wrote: »

Here is my SOA. i dont have life insurance as my employer covers me (5 x salary etc). Also my HP agreement includes car maint etc. Most of the ccards are on 0% already but will move the other two.

I think it's more of a cash flow problem as well as clearly too much outgoings. the car is our only nice to have - but nothing flashy. I must be doing something wrong?!

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................ 3345
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3345
Monthly Expense Details
Mortgage................................ 1720
Secured/HP loan repayments.............. 293
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 175
Electricity............................. 48
Gas..................................... 79 - not bad however have you changed supoplier recently, would be worth looking into even if you have and if you do it check on quidco etc
Oil..................................... 0
Water rates............................. 50
Telephone (land line)................... 30 - seems expensive unless its phone TV and boradband bundle
Mobile phone............................ 26 - any way to drop this, is it still in contract could you phone them up and ask for a drop in tariff?
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 360 - a good start however you probably could knock a little bit of with meal plans
Clothing................................ 25 - should be able to cut down here as currently standing on £300 a year for clothes,
Petrol/diesel........................... 35
Road tax................................ 12
Car Insurance........................... 35 - when is renewal? could do a check for prices + cashback (quidco etc)
Car maintenance (including MOT)......... 0 - NEEDS to be something here if only for MOT and TAX
Car parking............................. 0
Other travel............................ 200 - whats this?
Childcare/nursery....................... 10
Other child related expenses............ 25
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 25
Contents insurance...................... 25
Life assurance ......................... 0
Other insurance......................... 50
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 3256

Assets
Cash.................................... 0
House value (Gross)..................... 360000
Shares and bonds........................ 0
Car(s).................................. 18000
Other assets............................ 1500
Total Assets............................ 379500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 277000...(1720).....6.39
Hire Purchase (HP) debt ...... 14604....(293)......5.6
Total secured & HP debts...... 291604....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
AA.............................6000......88........8.9
Bcard..........................1400......25........17.5
MBNA...........................1400......25........0
Overdraft......................3300......0.........0
Tesco..........................2950......55........0
Post Office....................4850......120.......0
Total unsecured debts..........19900.....313.......-

Monthly Budget Summary
Total monthly income.................... 3,345
Expenses (including HP & secured debts). 3,256
Available for debt repayments........... 89
Monthly UNsecured debt repayments....... 313
Amount short for making debt repayments. -224
Personal Balance Sheet Summary
Total assets (things you own)........... 379,500
Total HP & Secured debt................. -291,604
Total Unsecured debt.................... -19,900
Net Assets.............................. 67,996

ok i have made a couple of comments it does appear that your mortgage is whats 'killing' your finances however the options i see for you at th emoment, and i am sure other people will be able to offer other options but these are the ones i see

1/ change to a interest only mortgage this should free up some money probably somewhere in the region of £300-400 the main problem with this is it will extend the length of it and not free up that much to increase payments however it wouldnt do anything to your credit file

2/ contact one of the debt management charities and get on a DMP this should freeze all interest on debts and take away the 'minimum' monthly payments giving you one set payment a month to be distributed according to the DMP - this one again would be a lengthy option with how much you have to pay your debt according to the SOA (£89) and would effect your credit file

3/ your OH to get a job if possible and since you are currently only £224 a month down it would only have to be a part time post (evenings at a supermarket?)

4/ look at selling your house and moving somewhere cheaper

seroxat_chick

You've forgotten to include your Child Benefit of £132.80 which is paid every 4 weeks.

andys15

The biggest problem is the mortgage. I know how hard it is to earn a big wage to expect to live in a big house, but it is taking over half your pay. I was tempted to get the big 5 bed detached, but it would have skint me and left me with no standard of living, so I opted for a 3 bed detached for 1k a month less. I see only 2 choices, sell the house or your wife needs to get a job. When did yo buy the house because you seem to have quite a lot of equity in it, are you sure thats not your valuation, or the valuation prior to the credit crunch. You need to be honest.