Help

emmabean9

Hi

I've not posted before on a forum so apologies if I get this wrong or if I've posted in the wrong place.

I need some advice on how to move forward as I am overdrawn by £3500. My limit is £4020 (with a £500 buffer but this incurs daily charges and is by agreement only) I am trying to reduce my outgoings as much as possible so to pay off my overdraft as quickly as possible and get back into the black. I haven't missed payments on anything.

I am a single parent with one child working 30 hrs per week. I can't work overtime as Tax Credits will reduce and I will be in the same situation. My son is only 5 and childcare is a big problem.

My Income is as follows

Earnings £930.00
Tax Credits £315.00
Maintenance£150.00
Child Benefit £81.20

Total Income £1476.20

These are my outgoings

House
Mortgage (£110000.00) £708.89 (will reduce January 2011 when fixed 6.95% rate comes to an end and I go on to base rate & 2.34%)
Water £ 34.27
Gas & Electric £ 82.00 (will reduce over summer plus have really good deal with provider so switching isnt an option)
Council Tax £ 75.10 (already have 25% single person discount)
Home & Contents Insurance £ 10.00

Car
Car Insurance £25.00
Car Service & MOT £13.75
Car Tax £ 2.50
Fuel £50.00
Tunnel £10.00
Car Park £29.38

TV
TV License £12.12
Sky £48.00 (reduced to £36.73 for a few months - trying to get out of contract completely otherwise paying until February 2011)

Finance
Repayment to Mum and Dad for deposit on House £ 50.00 (£14400 left to repay - interest free)
Personal Loan (£10000) £163.16 (81 months to go)
Overdraft Interest £ 20.00 (currently £3500 overdrawn on £4000 limit)
Current Account Fee £ 6.50 (can't get rid of otherwise interest rate on overdraft will rocket)
DFS £ 17.18 (27 months to go)

Other
Housekeeping, ie Food etc £100.00
Child Care £ 95.00

Total Outgoings *** £1552.85 ***

So every month I am going at least £75 more into my overdraft. I am thinking of selling my car and using the money to repay some of my overdraft. I can get a travel pass which would cost about £60 a month so that would mean I was only going overdrawn by around £5 per month but if there is any other way I can reduce my outgoings further, ie if anyone knows how I can get out of Sky contract (which seems to me to be the only thing I can get rid off), please can anyone help?

Thanks

nottoolate

hope you get some help soon

could you post your SOA with more detail using this?

http://www.makesenseofcards.com/soacalc.html

paulwf

Most people on their own on that level of income would seriously struggle to find over £750 a month for their property. Could you take in a lodger? If not can you extend the length of the mortgage? A very quick search in the Wirral area suggest 2 bed flat rentals start from £495 a month.

I know none of the options are ideal but that is by far the largest chunk of your outgoings.

Tixy

Hi and welcome

emmabean9 wrote: »

Hi

I've not posted before on a forum so apologies if I get this wrong or if I've posted in the wrong place.

I need some advice on how to move forward as I am overdrawn by £3500. My limit is £4020 (with a £500 buffer but this incurs daily charges and is by agreement only) I am trying to reduce my outgoings as much as possible so to pay off my overdraft as quickly as possible and get back into the black. I haven't missed payments on anything.

I am a single parent with one child working 30 hrs per week. I can't work overtime as Tax Credits will reduce and I will be in the same situation. My son is only 5 and childcare is a big problem. has he started school yet? if not how soon?

My Income is as follows

Earnings £930.00
Tax Credits £315.00
Maintenance£150.00
Child Benefit £81.20

Total Income £1476.20

These are my outgoings

House
Mortgage (£110000.00) £708.89 (will reduce January 2011 when fixed 6.95% rate comes to an end and I go on to base rate & 2.34%)
Water £ 34.27 is this meter or unmeasured
Gas & Electric £ 82.00 (will reduce over summer plus have really good deal with provider so switching isnt an option) are you paying by dd then or do you pay quarterly (as if on dd it doesn't usually reduce in summer) This is high for 2 of you, are you sure its the best deal? can you reduce your usage?
Council Tax £ 75.10 (already have 25% single person discount)
Home & Contents Insurance £ 10.00

Car
Car Insurance £25.00
Car Service & MOT £13.75
Car Tax £ 2.50
Fuel £50.00
Tunnel £10.00
Car Park £29.38 anychance this can reduce? can you car share sometimes? any chance you can park further away for cheaper? is this work parking?

TV
TV License £12.12
Sky £48.00 (reduced to £36.73 for a few months - trying to get out of contract completely otherwise paying until February 2011)

Finance
Repayment to Mum and Dad for deposit on House £ 50.00 (£14400 left to repay - interest free)
Personal Loan (£10000) £163.16 (81 months to go)
Overdraft Interest £ 20.00 (currently £3500 overdrawn on £4000 limit)
Current Account Fee £ 6.50 (can't get rid of otherwise interest rate on overdraft will rocket)
DFS £ 17.18 (27 months to go)

Other
Housekeeping, ie Food etc £100.00 are you sure this is all you are spending?
Child Care £ 95.00

Total Outgoings *** £1552.85 ***

So every month I am going at least £75 more into my overdraft. I am thinking of selling my car and using the money to repay some of my overdraft. I can get a travel pass which would cost about £60 a month so that would mean I was only going overdrawn by around £5 per month but if there is any other way I can reduce my outgoings further, ie if anyone knows how I can get out of Sky contract (which seems to me to be the only thing I can get rid off), please can anyone help?

Thanks

I would do a full SoA using the link in the post above - you haven't accounted for clothes, presents, haircuts, any entertainment/activities with your child. Are you sure you only spend £100 on food, cleaning, toiletries etc? great if you do but this is quite low.

As the mortgage rate is fixed quite high have you considered working out how much penalty you would have to pay to come out of it now? sometimes it can still be worthwhile.

As to the sky contract - probably might be difficult to get out of it but phone up and ask again if they will drop you to a basic tariff - say you are in financial hardship.

Do you have any items (other than the car) you can sell to raise funds to pay a chunk off your overdraft. Would it be feasible/practical to consider getting a lodger?

How much is your house worth compared to the mortgage?

Just a few ideas, hope some may be worth thinking about.

emmabean9

Hi Nottolate and everyone else

I have pasted the Statement of Affairs below - hope this makes things a little clearer.

To answer the other queries:

My son is already at school, he attends breakfast club everyday and a couple of afterschool clubs - this is so I can get my 30 hrs a week in work. I can't afford any more childcare even though tax credits cover a lot of it I am still worse off at the end of the day.

Water is unmeasured

Gas & Electric is due to my excessive consumption of gas. I seriously abused the central heating from October to March and am now paying the price. It is my intention to reduce my usage as much as possible over the summer and keep it low as humanly possible over the winter months.

With regards to car parking - I actually have the cheapest contract space available in the area - most of them for approx £50 pcm. If I gave up the car then my travel costs would reduce to £65.10 pcm for a monthly travel pass.

Mortgage - I only bought my house in November 2007 and deal doesn't end until 3 years later - penalty is still around £4-5k as I got a 99.99% mortgage (think I was one of the last to get one of those) I can't extend the term as already on a 35 year mortgage (nearly 32 now).

Lodgers - really would be a great help but as I have a child in the household it would have to be someone I know and trust (both personally and financially) and I'm not too sure how it would affect Tax Credits.

Housekeeping - Yes I really am only spending £100 each month - my son is a superstar - he goes without a lot and doesn't complain.

[tt]Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household......... 1
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 930
Partners monthly income after tax....... 0
Benefits................................ 396.2
Other income............................ 150
Total monthly income.................... 1476.2
Monthly Expense Details
Mortgage................................ 708.9
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 73
Electricity............................. 15
Gas..................................... 67
Oil..................................... 0
Water rates............................. 34.27
Telephone (land line)................... 11
Mobile phone............................ 0
TV Licence.............................. 12.12
Satellite/Cable TV...................... 37
Internet Services....................... 0
Groceries etc. ......................... 100
Clothing................................ 0
Petrol/diesel........................... 50
Road tax................................ 2.5
Car Insurance........................... 25
Car maintenance (including MOT)......... 13.25
Car parking............................. 29.38
Other travel............................ 0
Childcare/nursery....................... 95
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 5
Contents insurance...................... 5
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Account Fee............................. 6.5
Total monthly expenses.................. 1289.92

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 0
Total Assets............................ 3000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 110000...(708.9)....6.95
Total secured & HP debts...... 110000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Personal Loan..................10000.....163.1.....9.1
Loan from Parents..............14400.....50........0
Overdraft......................3500......20........18.4
DFS............................463.86....17.18.....0
Total unsecured debts..........28363.86..250.28....-

Monthly Budget Summary
Total monthly income.................... 1,476.2
Expenses (including HP & secured debts). 1,289.92
Available for debt repayments........... 186.28
Monthly UNsecured debt repayments....... 250.28
Amount short for making debt repayments. -64
Personal Balance Sheet Summary
Total assets (things you own)........... 3,000
Total HP & Secured debt................. -110,000
Total Unsecured debt.................... -28,363.86
Net Assets.............................. -135,363.86
[/tt]

Tixy

Hi again

Only other thing I can think of it whether it might be worth seeing if you could take a repayment holiday from your personal loan. If you could take a 3month or 6month break at 9.1% and then divert that money to your overdraft for those months this would give you some breathing space. If you do consider this option then make sure you read the loan ageement and understand the impact on the amount of interest you will pay overall etc.

As to the option of your car, that really is a difficult choice, how much do you use it outside of commuting? can you get your son to school on public transport (unless you walk of course) and get public transport to work at the right time? Do you use the car to visit relatives etc and would that cost more or be difficults if you cannot.

I don't know about the impact on tax credits of a lodger, be worth finding out. I know that income from a lodger is tax free under the rent-a-room scheme but not sure if they would recalc your tax credits. Totally understand about you not wanting a stranger but might be an option if a friend or relative was looking for somewhere?

Aside from that and the previous comments the next step would usually be to consider a debt management plan, however with so much of your debt being owed to your parents this may be a difficult step to implement. It still might be worth talking to one of the charities though.

emmabean9

Tixy - thank you - you have given me some food for thought.

Selling car is quite drastic but I live local to my son's school and train stations so would still be able to get to work on time and pick on time. Would be lots of walking though - though that would help my figure!