Hi I'm new and want to be debt free!

Fruit_Gum

Hello

Well after lurking for a few months I have decided to take the plunge and ask you helpful lot for some advice.

I am married with 2 children and recently graduated from University where I spent 3 years doing a degree.

I have a job but cant start for about 5 weeks due to waiting for crb/occupation health checks etc so figured it would be a good time to sort out my finances.

When I first started Uni my husband was earning around 38k per annum (he is self employed) however due to the recession etc his last tax years income was around £20.5k.

During this time we have used credit cards to help us through and we have managed to run up a fair amount of debt. I have so far sucessfully managed to keep transferring to 0% credit cards to avoid the high interest rates, however I have had a few now and think my luck may be beginning to run out.

I requested additional borrowing from my mortgage company to pay off these debts however I was refused. At present we can only afford the minimum payments on each one. My SOA is below. I have completed it including my new salary (when I finally start work)!

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.................... 2
Monthly Income Details
Monthly income after tax................ 1377.92
Partners monthly income after tax....... 1722.66
Benefits................................ 158.45
Other income............................ 0
Total monthly income.................... 3259.03
Monthly Expense Details
Mortgage................................ 480.9
Secured/HP loan repayments.............. 400
Rent.................................... 0
Management charge (leasehold property).. 6.25
Council tax............................. 121.75
Electricity............................. 45
Gas..................................... 60
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 11
Mobile phone............................ 70
TV Licence.............................. 12.12
Satellite/Cable TV...................... 41
Internet Services....................... 10
Groceries etc. ......................... 450
Clothing................................ 50
Petrol/diesel........................... 35
Road tax................................ 18.33
Car Insurance........................... 81.65
Car maintenance (including MOT)......... 33.33
Car parking............................. 20
Other travel............................ 0
Childcare/nursery....................... 85
Other child related expenses............ 40
Medical (prescriptions, dentist etc).... 11.15
Pet insurance/vet bills................. 6
Buildings insurance..................... 8.66
Contents insurance...................... 8.66
Life assurance ......................... 14.96
Other insurance......................... 20
Presents (birthday, christmas etc)...... 60
Haircuts................................ 30
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2310.76

Assets
Cash.................................... 0
House value (Gross)..................... 140000
Shares and bonds........................ 0
Car(s).................................. 15500
Other assets............................ 0
Total Assets............................ 155500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 85000....(480.9)....2.99
Hire Purchase (HP) debt ...... 14887....(400)......9
Total secured & HP debts...... 99887.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
MBNA...........................5532.6....25........0
Yorkshire Bank CC..............2000......51........0
Egg............................121.85....5.........19.9
Current Acc Overdraft..........800.......0.........0
Student Acc Overdraft..........2000......0.........0
Student Loan...................6600......0.........0
Debenhams......................180.55....5.........0
Total unsecured debts..........17235.....86........-

Monthly Budget Summary
Total monthly income.................... 3,259.03
Expenses (including HP & secured debts). 2,310.76
Available for debt repayments........... 948.27
Monthly UNsecured debt repayments....... 86
Amount left after debt repayments....... 862.27
Personal Balance Sheet Summary
Total assets (things you own)........... 155,500
Total HP & Secured debt................. -99,887
Total Unsecured debt.................... -17,235
Net Assets.............................. 38,378

I have recently change gas and electric suppliers which was £5 per month cheaper.

We need two cars (one is a van) for work purposes. My husbands fuel costs come from his and his partners business account

Mobile phone bill is for 3 people. We are contracted in for another 18 months.

I believe I could make a cut in my shopping budget.

The credit cards are 0% till June 2011.

Apart from the Egg and Debehams (which I am going to pay off with my first months salary) should I make payments off the MBNA first (the biggest debt) or a bit off each one?

Would I be better waiting till the 0% is up then transfering to a loan or keep trying to find other interest free cards (might not be many available to me now I've had that many, at least 6 that I can think of)!

I pay £10 per month to Yorkshire to cover overdraft fees (also includes travel insurance and breakdown cover)

My student account overdraft is interest free till Aug 2011.

The other thing that worries me is we have not set any money aside yet to pay husbands tax bill in April 2011. As he has a new van he reckons he will get a lump sum from that to pay tax.

At present we are living well beyond our means and I just need a few more weeks prior to starting this job to get through.

Well done if you've got this far and thanks for reading!

cobblers_boy

Hi, well done for posting.

There will be others along soon but wanted to add some comments. You need to show the minimum payments in your SOA for each of the cards so that you get an accuarte statement of your monthly outgoings. Then it will be easier to decide what to do next.

In terms of debt repayment the following principle should probably apply:

1. make the minimum payments to all accounts first
2. any excess money available should then go straight against the highest interest charging account
3. once this is paid off then move all excess money to the next highest card
4. if all the remaining are on 0% and you are unlikely to renew these then when any interest bearing balances are paid off then put all spare money against the 0% deal that will end first to minimise the interest on it when it does start

Hope this helps and good luck

CB

Fruit_Gum

Thanks for the advice CB I have amended my SOA

NorthernLas

Ideally your OH take home should be after taking a chunk off for tax. Can you make a guess of how much it will be and start putting some away?

If you snowball the cards - pay the minimum on all and any spare to the highest, you will pay the debt off more quickly (http://www.makesenseofcards.com/snowcalc.html)
If you think you are living beyond, a spending diary is a good way to find out if your SOA is accurate.

Fruit_Gum

Hi NorthernLass, yes we should be putting something away for his tax bill (approx £80 per week) but we don't have it. Hopefuly when I start work we can sort this out.

Will take a look at the snowball link, and the diary.

Just remembered another debt! We borrowed £2k off MIL however she has told us she is in no rush to have this back and his happy to wait until we are able to repay. Just something else to add to the already long list.......:mad:

artybear

Hi you mentioned cutting your grocery bill. This site http://www.cheap-family-recipes.org.uk/ provides meal planners and shopping lists to feed a family of four for £100 a month. If you even did a few of these meals it would significantly cut your grocery bill.

HTH

Percy1983

Overall it would seem once your income is coming in you should be ok.

As it is you are keeping you APR's down which is great and of course applying snowballing like people have mentioned above will help, as much as your luck seems to be running out with 0% deals the more you pay the easier they will be to get aswell as asking cards you have cleared if they can offer you anything.

Fruit_Gum

Thanks Artybear that website looks very interesting. I think we will be having some receipes from there.

Fruit_Gum

Percy1983 wrote: »

Overall it would seem once your income is coming in you should be ok.

As it is you are keeping you APR's down which is great and of course applying snowballing like people have mentioned above will help, as much as your luck seems to be running out with 0% deals the more you pay the easier they will be to get aswell as asking cards you have cleared if they can offer you anything.

Thanks Percy. I just received a letter from Virgin who's debt I cleared last year offering me 0% again, hopefully they will still do it when the other 0% runs out.

Will checkout the snowballing thing when back from the school run.

pelirocco

As he has a new van he reckons he will get a lump sum from that to pay tax.


What do you mean?

Fruit_Gum

pelirocco wrote: »

As he has a new van he reckons he will get a lump sum from that to pay tax.


What do you mean?

Hi

My very basic understanding of it is that he can claim the VAT. the original cost of the van was 10k (bought four months ago).

I'm unsure about this to be honest, he does have an accountant who does all his tax returns etc.

I am unconvinced which is why I keep nagging him to sort it out, he doesnt explain it very well and my knowledge on self employment is very limited.