Our situation, any advice?

elfen

Opening up savings accounts, and working out yearly expenses then dividing them by 12 helps as it means you're not getting them all at one go, you're budgeting a set amount for them every month and it means there's less chance of being caught short.

One area that could be cut down on is the grocery budget - could you drop a brand (named to own brand maybe) and meal-plan, and maybe make snacks instead of buying them (there's a few damn good recipes on the OS board for hobnobs and things)

Poosmate

I think the best way to seperate your finances so you know where you are each month is to open a seperate current account and from that set up all of your standing orders and direct debits for all of your static household bills. I.E. mortgage, secured loan, council tax, water rates, gas, electric, telephone and tv license.

Then make sure you put enough money into this account to cover all of those bills. I like to round up the cost so I put a little extra in so, your mortgage is £653 put in £655 to cover it. Your loan £443 put in £445. Pay your council tax monthly (10 months normally or some Councils will allow 12).

The beauty of this is that you know all of your essential bills are paid for plus from November to March you will have more going into that account than is going out, (water rates paid over 8 months and CT over 10).

I usually forget this account (my bills acount) as it more or less runs itself and I know it's not exactly MSE to keep money in a current account not earning interest when paying debts which are accruing interest, we're talking about a few quid a month extra and with so much other financing to look after, to me, it's worth leaving it ticking over and visiting it each March to see what surplus I have that I can earmark for future bills like car tax, insurance, chunck off a credit card etc.

I also make sure I save at least something a month in a cash ISA, only £15 for me but it's enough to pay my car insurance and some towards the car tax.

There are ways you can cut back on your SOA. Your debts are serviceable and you can keep your credit rating in a reputable state. You can beat this debt but how long it takes is entirely up to you and your spending habits.

For example, if you want to maintain having the latest mobile phones and pay £35 per month for it, fine. Otherwise, you can make your current phones the last "latest" for a couple of years or so and go on to PAYG and pay £10 (if necessary - I never use £10 credit in one month!).

Your grocery bill looks high, as Elfen mentioned, you could save a lot by dropping a brand or even going for some of the value foods. Again, it's your choice if you want to eat beef and salmon and stay in debt for longer or chicken and tuna and become debt free sooner.

Your gas/electric looks high too. Help yourselves and the planet by ensuring electrical items are not left on (or on stand-by) when not in use. Be strong with the kids, kids are notorious for leaving stuff on, get them to turn lights off (if they don't, take the lightbulbs out of the offending rooms!) they'll soon get the message.

Is there any way you or your partner can get a part time job? Or up your income some other way? Selling on Ebay?

When in debt the only way you are going to get out of it is by being honest with yourselves and being prepared to make sacrifices of those things that played a part in getting you into that debt. It doesn't necessarily mean you have to give up those things, just pay less for them! Of course the more you cut back the quicker you'll be out of debt or in a better position to handle unexpected expenses. The coice is entirely yours.

Having said that, I (personally) would not cut back to the bone as it would become very tiresome very quickly. I tried and it was soul destroying. Now, I accept that I'm going to be in debt for a longer time but at least I am sane and happy with my current lot. I also know that if anything really bad happens I do have more cut backs I can fall back on. For me, keeping my sanity and motivation puts about a year (max) on to my indebtedness, but given the ammount of years and the prospect of ever changing circumstances (i.e. I can pay off more debt from month to month, or move it about to 0% interest), that extra time in debt is worth it to me.

Hope that helps.

Poo

firesidemaid

Do you need both cars? If so, can you make the second one 'earn' some income in some way? or can you do without one to save money?

Definitely have a look over on the old-style board as you can save tonnes on your grocery bills by getting good deals, freezing a lot and cooking from scratch. i am just about to make a quiche with smart-price butter and flour, 2 eggs, milk and smart price cheese, bacon and onions for much less than £1.00 (and yummy too). but the other week i made it with what i had in the fridge - an onion, courgette (that was cheap) and a spoon of pesto that was lurking in the fridge. meal-planning and using up leftovers is the way to go. you could definitely shave at least £100 off your grocery bill - you could see it as your money-saving challenge.

also, even even if you have no garden space, use tubs to grow salad leaves and radishes etc - they grow quickly.

good luck x

Poosmate

Further to my last post, it's easy for me as I live on my own and am responsible for all finances. My other current account (My account) is the one my salary is paid into. From this £xxx is transferred to my Bills account (the one I mentioned in my last post). Both accounts are with the same bank and the transfer happens the day after I get paid, it's never gone wrong in over 14 years.

After that one chunck of money has gone from "My account", I know what I am left with to pay for daily/weekly stuff (petrol/food/ bits n bobs). I also pay my credit cards out of this one too. I didn't set it up to be paid out of the "Bills account" because the minimum is reducing and I didn't want to tie up my disposable income in the bills account and risk over estimating or mistaking money in there as being extra and withdrawing it. I prefer to keep them seperately as I only have 3 CC's (2 small, 1 large).

Maybe you could set up another current account purely for your credit cards and again transfer the minimum payments into it from your salaried account set the DD's up and away you go! The problem I see with this is obviously if you are still using the cards the minimums are going to go up so it's harder to make sure you'll have enough in there to cover them (another reason why I keep mine in My account).

It would work great if you have stopped using them though because you'd build a surplus of cash up in that account as your minimum payments decrease which you could maybe call upon at Christmas or occaisionally (maybe every 3, 4 or 6 months) take out a chunk of the surplus to pay a chunk off your CC or put into your ISA for an annual bill.

As I said, the beauty of running a system like this is that, you are seperating your finances into easily manageable chunks and you can see more clearly what you have left after all bills are paid. When your bills and debt payments are set up in their own little compartments, what you have left is where you can make the most savings/cutbacks.

Each month, after my bills money has gone out of My account, I deduct how much is going out for my CC's and divide the rest by 4. This gives me £85 per week out of which I pay for petrol, food, clothes, savings, MOT, car tax, going out (lol - like that happens more than once in a blue moon) and anything I want (luckily I don't want much because I can't afford it).

My life is not a life that most would like and I appreciate that it's much easier when you are on your own and without kids, to live a frugal life. I sit in the dark most of the time and eat cheap tinned food (mainly rice pudding, fruit, stewed steak and spaghetti), noodles (very cheap), pasta and supplement them with fresh fruit and veg. My tv is about 6 years old (bought 2nd hand), computer and mobile phone at least 4 years old, but they all work. I don't replace things for the latest model, I wait for something to break before it's replaced.

These are some of the sacrifices I make in order to keep my Virgin tv package, be able to buy Pringles now and again or a chocolate bar (luckily I'm not a big chocolate eater anyway), Nescafe coffee, subscription to an online game, share in a racehorse (<--- that's not really as extravagant as it sounds only £10 per month). All of which could go or be downgraded (tv is a necessity due to no signal here) should I fall on even harder times.

Hope that helps a bit more.

Poo

bluesindy_2

Welcome Libby

Just to say you've come to the right place for excellent advice, hang on in there and check out the other boards, loads of good advice:)

Poosmate

LOL, that could be me talking, I do exactly the same as you re. bank accs.

If only Martin taught in schools the world would be a better place!!! wish I'd had all this info when I bought my 1st house at 18 (many moons ago!):money: