Light Bulb Moment horror!

JUMI

Ok, my husband and I have just had a joint light bulb moment! Having finally decided to sit down together and sort out our finances, we've been onto the CCCS website and done their "Debt Remedy".

So, our SOA is as follows:

Income

My income - £795
Partner's income - £1276
Child benefit - £135

I earned around £700 extra last year through working overtime and will be increasing my working hours from September and doing any additional hours offered.

No Tax Credits - they claim we were overpaid Working Tax Credits about 5-6 years ago and have therefore stopped our Tax Credits to use the money to retrieve the overpayment :mad:

Expenditure

Mortgage - £916 month (£152,000 owed at 4.79% interest)
Mortgage endowment - £10 month*
Council Tax - £108 month
TV licence - £13 month
Water - £95 year
Electricity & Gas - £83 month
Buildings & Contents insurance - £33 month
Mortgage PPI - £47 month
Life, critical illness & income protection - £162 (for us both)
Car insurance for 2 cars - £750 year
Road tax for 2 cars - £330 year
School meals - £12 week
Tobacco - £25 month
Magazine subscription - £8 month
Washing machine cover - £7 month
Loan from parents to buy 2nd car - £30 month**
Food & groceries - £420 month
Clothing & footwear - £50 month
Fuel - £110 month
BT phone & broadband - £50 month
O2 - £80 month :eek:
Kids swimming lessons - £11 week
Scouts subs - £14 month

CCCS also reckons to add:
School trips/activities - £10 month
Medicines/prescriptions - £7 month
Dentist/opticians - £10 month
Vehicle spares/servicing - £20 month
Hairdressing - £15 month (though I'm sure we spend less)
Sundries/emergencies - £25
Childcare costs effectively £0 as husband gets childcare vouchers which covers the full cost.

*husband's policy got 6 yrs to run and will hopefully pay out the £5,000 endowment part of our mortgage

** split 50-50 between two kids regular saver accounts at parents request

The CCCS Debt Remedy calculator gave us following results:

Ave monthly income - £2265
Ave monthly expenditure - £2367
= -£102

This is before the following debts are taken into consideration

Overdraft on Barclays account - £2,000 :eek:
Overdraft Nat West account - £500
Co-operative Bank credit card - £15,000 (4.9% apr, min 2%)***
Barclaycard 1 - £3,500 (26.9%, min 2.25%)
Barclaycard 2 - £1,000 (19.9%, min 2.25%)
MBNA - £1,200 (28.9%, min 2%)

*** Was initially part of mortgage package hence low rate

At the moment we're paying
£300 - Co-op
£78 - Barclaycard 1
£23 - Barclaycard 2
£25 - MBNA
= £426

which given we're already overspending on "essentials" by £102 per month, means a total overspend each month of over £500

= total meltdown, spiralling debts and HUGE amounts of stress all round.

We're getting bank charges just about every week (Barclays agreed overdraft is £1,000) and have had some payments bounce so been charged for those by Barclays and creditors.

Got a meeting with the bank on Friday but not sure quite what to ask/tell them really. Except maybe take out personal loan to cover the two Barclaycards and MBNA card since they're at higher rates of interest.

Will go through budget looking at where we can cut back - mobile phone payments definitely, although husbands only took out his 2 year contract in April and I've got about a year left on mine so not sure where we stand. Looking to switch gas/electric too as current discounted rate ends 1st Sept, but we're with EON so get Tesco clubcard points for money spent with them which helps balance things out a bit.

Any suggestions? Can't see a way out of it at the moment.

Help please.

JUMI

Thanks for your suggestions

Will look at switching insurance deals and see if we can get cover cheaper elsewhere.

We know we need to sort out phone and internet costs - mainly mobile that's the issue. My O2 phone broke and I was offered (by them) a Blackberry as free replacement as my model wasn't made any more. I wasn't told I'd have to pay extra on my monthly contract though until a week or so afterwards when I was having problems getting it to send/receive texts. I should have complained to O2 but didn't. Hubby went to O2 to change his contract as he felt he was paying too much for what he was using.... and came back with an I-Phone that now costs about twice what he was paying before per month :eek:. What's the best way out of mobile phone contracts anyone know?


Sharing a car isn't a practical solution for us at the moment - work in different directions plus I drop kids off at school on my way to work and husband picks them up from childminder on his way home as he finishes much earlier than me.

podperson

Mortgage - £916 month (£152,000 owed at 4.79% interest)
Mortgage endowment - £10 month*
Council Tax - £108 month - is this over 10 months, if so can you spread out over 12?
TV licence - £13 month
Water - £95 year - seems a bit high, check comparison sites
Electricity & Gas - £83 month
Buildings & Contents insurance - £33 month
Mortgage PPI - £47 month - is this included with your mortgage? if not shop around
Life, critical illness & income protection - £162 (for us both) - do you need mortgage ppi and income protection? plus this seems quite high, check comparison sites
Car insurance for 2 cars - £750 year
Road tax for 2 cars - £330 year
School meals - £12 week - can they take packed lunched?
Tobacco - £25 month - can you quit or cut back/switch to roll-ups
Magazine subscription - £8 month - needs to go
Washing machine cover - £7 month - you now have an emergency fund included lower down so get rid of this
Loan from parents to buy 2nd car - £30 month**
Food & groceries - £420 month - you don't say how many kids but this could come down a lot, check the old style boards for tips, some feed a family of 4 on £200 so should be able to cut 50-100 off it in the longer term
Clothing & footwear - £50 month
Fuel - £110 month
BT phone & broadband - £50 month - shop around, can get phone and internet from places like sky and virgin for around £25
O2 - £80 month :eek: - really needs to go down, ring them up and ask about reducing the package at least
Kids swimming lessons - £11 week
Scouts subs - £14 month

CCCS also reckons to add:
School trips/activities - £10 month
Medicines/prescriptions - £7 month
Dentist/opticians - £10 month
Vehicle spares/servicing - £20 month
Hairdressing - £15 month (though I'm sure we spend less)
Sundries/emergencies - £25
Childcare costs effectively £0 as husband gets childcare vouchers which covers the full cost.

Just a few suggestions but lots of places where cutbacks could be made. Also could be worth ringing up tax credits and saying that you are struggling at the moment and could they take the repayments back at a lower rate, seems steep that they are taking the whole payment off you rather then just a percentage.

happycamel_2

Not sure about insurance deals, I think these are great for people with spare money but wouldn't you be better putting the money in an emergency fund or paying down debt with it rather than spending on something that may never happen? Exception is life insurance, which, if you have dependents, is essential. Stop the washing machine cover.

You should be able to halve the grocery bill each month. Lots of people feed a family of four on £50 a week, its not easy but it can be done. Magazines and tobacco need to stop. BT phone and broadband is excessive. Get a broadband contract through 02 for £6.50 a month, BT landline is £15 a month. If you can't get out of the mobile contracts then at least use your minutes to make calls and don't use the BT line.

I bet this doesn't cover everything. What do you spend on entertainment? Pub trips, days out, kids pocket money, satellite telly etc? I think you need to keep a spending diary to see where the money really goes and then try and cut down from there. Try setting yourself a target for some no spend days. Try to cut down the clothes, stick with what you have or buy second hand.

Also do you have anything you can sell? Ebay, boot fairs etc, could you start doing Avon or Virgin Vie?

Hope that helps and good luck,

Marisco

I agree with what has been suggested, but would also get rid of the swimming lessons, its £44pm!!!

redpete

podperson wrote: »

Water - £95 year - seems a bit high, check comparison sites

I'm pretty sure there's no competition for household water & sewerage services.water supplier.

Marisco

No there isn't, but £95 per year is cheap!! I pay £26pm over 10 months and I though ours was reasonable!!! My daughter pays £35pm and my granddaughter pays £45:eek:

podperson

Apologies I wasn't working it out properly over the year Depends on your area whether you can change I think, as well as what the price is. I used to live in a 2 bed house where we paid less then £10 a month, now we are in a much smaller flat but get stuck with a £400 a year bill tied in with the council tax :mad:

JasX

redpete wrote: »

I'm pretty sure there's no competition for household water & sewerage services.water supplier.

yup, it also seems pretty low.... £8 pm for water is half what I pay

Marisco

Aye it does depend on the area you live in, and it's based on the old rating system, which is why my granddaughter pays more than my daughter despite living just a few streets away:( The water rates up here are cheaper than Welsh Water anyway!:)

Ames

Have you thought about a water meter? You can check on your suppliers website to see if it should be cheaper, they're free to fit and free to be removed within a year if it's costing you more. My bills went down from about £30 a month to £10.