Becoming debt free on variable income?

SpagBol

I have put together this post and then deleted it so many times because I just don't know what to say...so please bear with me if it makes no sense! I am so cross with us and ashamed that things have got this bad so be brutal, I know we've been silly!

A short summary, hubby and I both had good income jobs, we live in the SE so bought a modest 3 bed semi with a massive mortgage and have two children. Things are going well so we borrow a bit of money to do up our house (it was a bit of a death trap but all we could afford!) and lived quite close to the wind financially but all well managed- then my husband was made redundant. He was offered lots of freelance work and so we decided that he should be a WAHD and save on childcare and travel by being at home. Things are going ok but it is so hard doing this on two variable incomes. I have a basic of just over £30k and get about £15k extra across the year depending on my shifts so in my SOA I have given my absolute minimum. My husband can go several months with no income then get 8k as he is commission only and gets paid on publication dates. Hence we have racked up massive debts and although most of them are 0%, it is so stressful living day to day with such huge payments. We do overpay by a couple of hundred (or thousand on a big-pay month) every month but then a car will blow up or something will happen with the house...you know how it is.

Anyway, how can we make this better, faster? We are getting very stressed and I feel like I am missing the precious early years wth my children:( We have been doing extra hours admin work and selling lots of stuff to make ends meet some months...we are very tired and need to sort this out ASAP.

I have done a SOA but the income is averaged out and on the conservative side. I don't know the APRs of the loans sorry I can't get that info from my online banking! Oh, and we have overdrafts too but I wasn't sure where to put that so add another £5k ish of debt...

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 2800
Partners monthly income after tax....... 1000ish
Benefits................................ 134.8
Other income............................ 0
Total monthly income.................... 3934.8
Monthly Expense Details[/b]
Mortgage................................ 1419
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 177
Electricity............................. 25
Gas..................................... 25
Oil..................................... 0
Water rates............................. 19
Telephone (land line)................... 0
Mobile phone............................ 90
TV Licence.............................. 12.18
Satellite/Cable TV...................... 80
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 15
Petrol/diesel........................... 300
Road tax................................ 15
Car Insurance........................... 50
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 150
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 25
Contents insurance...................... 0
Life assurance ......................... 67
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 5
Entertainment........................... 30
Holiday................................. 20
Emergency fund.......................... 10
Total monthly expenses.................. 2774.18

Assets
Cash.................................... 0
House value (Gross)..................... 340000
Shares and bonds........................ 0
Car(s).................................. 8000
Other assets............................ 0
Total Assets............................ 348000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 270000...(1419).....0
Total secured & HP debts...... 270000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Sainsburys card................3754......92........0
MBNA...........................8825......25........0
Bank of Scotland...............5500......57........0
Natwest loan 2.................8000......256.......?
Natwest loan 1.................3782......97.89.....?
Barclaycard....................5418......121.......0
Natwest........................3849......86........0
Total unsecured debts..........39128.....734.89....-

Monthly Budget Summary
Total monthly income.................... 3,934.8
Expenses (including HP & secured debts). 2,774.18
Available for debt repayments........... 1,160.62
Monthly UNsecured debt repayments....... 734.89
Amount left after debt repayments....... 425.73
Personal Balance Sheet Summary
Total assets (things you own)........... 348,000
Total HP & Secured debt................. -270,000
Total Unsecured debt.................... -39,128
Net Assets.............................. 38,872


I don't know what all the "/b" means!! Thanks if you have got this far!! Also ignore the signature at the bottom, it might be out of date...

SpagBol

Oh, the /b has gone! Now I look even more silly...must have been bold...

SJ1

My thoughts are as follows

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 2800
Partners monthly income after tax....... 1000ish
Benefits................................ 134.8
Other income............................ 0
Total monthly income.................... 3934.8
Monthly Expense Details[/b]
Mortgage................................ 1419
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 177
Electricity............................. 25 this is a very good deal with the gas well done
Gas..................................... 25
Oil..................................... 0
Water rates............................. 19
Telephone (land line)................... 0
Mobile phone............................ 90 this is really high - could you get this lower by looking at what you are being charged and trying for more free minutes?
TV Licence.............................. 12.18
Satellite/Cable TV...................... 80Suggest you cancel this - freeview is excellent and nearly £100 on TV is expensive
Internet Services....................... 0
Groceries etc. ......................... 200 well done, this is brill, I have 2 kiddies and my average is £400 on a good month!
Clothing................................ 15
Petrol/diesel........................... 300
Road tax................................ 15
Car Insurance........................... 50
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 150 have you claimed childcare vouchers? Also if your child is 3 then you will get a reduction
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 25
Contents insurance...................... 0
Life assurance ......................... 67this is high - do you need so much life assurance at the moment. Obviously cover the mortgage and a bit over but is this something you could reduce until you get things straightened out?
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 5
Entertainment........................... 30
Holiday................................. 20
Emergency fund.......................... 10
Total monthly expenses.................. 2774.18

Assets
Cash.................................... 0
House value (Gross)..................... 340000
Shares and bonds........................ 0
Car(s).................................. 8000
Other assets............................ 0
Total Assets............................ 348000

Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 270000...(1419).....0
Total secured & HP debts...... 270000....-.........-
Unsecured Debts
Description....................Debt......Monthly.. .APR
Sainsburys card................3754......92........0
MBNA...........................8825......25....... .0
Bank of Scotland...............5500......57........0
Natwest loan 2.................8000......256.......?
Natwest loan 1.................3782......97.89.....?
Barclaycard....................5418......121...... .0
Natwest........................3849......86....... .0
Total unsecured debts..........39128.....734.89....-

Monthly Budget Summary
Total monthly income.................... 3,934.8
Expenses (including HP & secured debts). 2,774.18
Available for debt repayments........... 1,160.62
Monthly UNsecured debt repayments....... 734.89
Amount left after debt repayments....... 425.73
Personal Balance Sheet Summary
Total assets (things you own)........... 348,000
Total HP & Secured debt................. -270,000
Total Unsecured debt.................... -39,128
Net Assets.............................. 38,872

You need to find out what the APR's are - pay this highest off first and work your way down. Clearly you can meet the minimum repayments so use the extra and keep picking away at it - you will get there. I would also recommend keeping a diary of your spending each day - it's a good way to keep on top of things.

Good luck...

SJ

SpagBol

Thank you for having a look at the SOA, we were paying £100 for gas and electricity but changed to EON and they suggested £50...I suspect it will go up in a few months. For the Sky, it is our phone and broadband too but agree the package needs to go (Hubby loves his sport and I'm working on it). My mobile is £35 and will change to PAYG when my contract is up but Hubby uses his for work calls so it is £55pcm. I will ask him if he needs it to be quite so high or if he could get a better tarif. Groceries is an average, I do a big £80 shop every fortnight and then top up the following week for fresh stuff for about £30- and we use Tesco basic everything!!

I know we are lucky in that we can keep up the minimums but I am worried my job is unsafe due to the cuts...

Thank you for having a look!

Nottoobadyet

I think you're doing great! I'm sorry that you're so stressed, but truly you are well away from disaster. You still have about £400 left at the end of the month after repayments, even with the pricey TV and everything. If, spaghetti monster forbid, you lost your job you could go interest only or take a mortgage holiday and take your kids out of nursery while you're home. It wouldn't be fun but it wouldnt be the end of the world either.

Well done you!

SpagBol

Thanks, I know you are right but it feels like such a huge mountan to climb...we have looked into interest only but Santander won't allow it. We have extended the term to 30 years- we were paying £1800 pcm!!

SJ1

Glad to help, I am new to this too so just suggestions. Take it your hubby can't reclaim the phone as if I recall right he is free lance? Don't forget to deduct it off your income for tax!

S

SJ1

If you are really worried about job loss what about insurance. I can't recall how these work exactly as I got one then a month later was made redundant so it didn't work for me as you have to be in it I think 3-6 months before it covers you. I think it basically gives you your salary if you get made redundant = do read small terms and conditions on these if you do decide to go for it. I had a firm that helped if you want their name as they were v good and explained all the oddities of it. It was about £30 a month and at the time (bank crisis time) I thought that was well worth it. Luckily the redundancy payment helped until I got a new job a few months later. You can't do it if you are a temp though...

Former_E.ON_Company_Representative:_Malc

SpagBol wrote: »

Thank you for having a look at the SOA, we were paying £100 for gas and electricity but changed to EON and they suggested £50...I suspect it will go up in a few months.

Hi SpagBol

Hope you don't mind if I intrude on your thread. Thought I might be able to offer a couple of pointers to help with your energy account.

Keep an eye on your usage. Check the meters regularly and give us a call if you think you are using more than the Direct Debit is covering. The last thing you need right now is to build up an unexpected balance for gas and electricity.

Make sure you are on the tariff/supplier best suited to your circumstances. There are extra discounts available for managing your account online and paying with a Direct Debit.

Pop your annual usage in kWh on to one of the comparison sites. This will list all the tariffs available, both with us and other suppliers.

If you do find your usage increasing, there are ways of keeping this in check. We can help with this.

We have a specialist Energy Efficiency team who will be happy to help you reduce your usage. Give them a call with a list of your appliances.

Ask for a copy of a booklet called '100 ways to save money by saving energy.' It's free and contains lots of useful advice to help you cut back.

Check out our website, particularly the interactive house. More good tips here. :cool:

Hope this is of some use SpagBol. Give me a shout if I can help further as will be happy to do so and good luck with the saving.

Malc