Debt free newbie!

Matt37

I have watched this forum for a bit and am finally ready to get a grip of my own situation which has always been historically bad due to constant over spending. I have a great credit rating and have never missed a payment on anything, even my debts are being repaid with little or no interest. My problem is really that I never fully get on top of things, and as a consequence seem to always be paying off the things I did 3 years ago and live like a student day to day (which is funny as I am a lecturer!).
I have an Ok basic salary of £37k and my debts are as follows:

Mortgage £159,000 Interest only on a life time tracker £270 pcm! (House value £210000

Top up Mortgage £17200 paying of as repayment at £300 pcm (4 years 10 months to go!)

Student loan £17000 (Paying off at £154 pcm) 8 years 3 months to go!

Credit cards £14000 0% PA until July (Paying off at £300 pcm)

On the up side I have a classic car I may sell valued at £6000

I know this seems pretty foolish, I have never really laid it all down like this. I would appreciate any good advice? My bills before repaying any debt are £500 pcm once I add my mortgages and student loan this comes up to £1250 and leaves me around £1000 pcm which I somehow spend? I cycle to work, seldom go out but drink quite a lot of good wine! I am 37 years old now and just a bit fed up and keen to be more grown up about my finances.
It would be great to be out of my CC debt at least?
Matt

Tixy

Hi and welcome

The key thing is to find out where else you are spending that £1000. When you say your bills are £500 are you including just things like council tax, insurance, utilities, phones etc ie actual bills. Or have you allocated a spend to groceries, car maintenance, clothes, etc etc.

First its probably a good idea to do a statement of affairs, and make sure you budget for everything, eg for road tax budget 1/12 of the annual cost each month (oh just thought you might not have road tax with a classic car but you get the idea) - this is the template - http://www.makesenseofcards.com/soacalc.html May as well budget for your wine as well (some would say put this in entertainment rather than groceries).

Then once you have that and see what you should be left with after all those costs and debt repayments you'll know how much is 'missing'. Then its probably a good idea to keep a spending diary to write down everything you spend to track down that missing money.

Once you know all that you'll be in a good place to look for areas you can save money or cut back to allow you to start payment more off your debts.

Matt37

I have updated my spending using a SOA I found, felt quite cathartic!
This does not include my student loan which comes off my salary at source or council tax as my partner pays this.I still seem ton be spending an extra £622 somewhere, grrrrr...

Statement of Affairs and Personal Balance Sheet

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 2003
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 300
Total monthly income.................... 2303

Monthly Expense Details
Mortgage................................ 336
Secured/HP loan repayments.............. 307
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 60
Gas..................................... 60
Oil..................................... 0
Water rates............................. 31
Telephone (land line)................... 55
Mobile phone............................ 20
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 50
Petrol/diesel........................... 40
Road tax................................ 10
Car Insurance........................... 15
Car maintenance (including MOT)......... 10
Car parking............................. 5
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 25
Contents insurance...................... 25
Life assurance ......................... 0
Other insurance......................... 12
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 250
Holiday................................. 50
Emergency fund.......................... 20
Work Lunches............................ 90
Total monthly expenses.................. 1681


Assets
Cash.................................... 0
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 5000
Total Assets............................ 221000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 159258...(336)......1.5
Secured Debt.................. 17200....(307)......0
Total secured & HP debts...... 176458....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
MBNA...........................13000.....170.......0
TESCO..........................900.......10........0
Total unsecured debts..........13900.....180.......-


Monthly Budget Summary
Total monthly income.................... 2,303
Expenses (including HP & secured debts). 1,681
Available for debt repayments........... 622
Monthly UNsecured debt repayments....... 180
Amount left after debt repayments....... 442

Personal Balance Sheet Summary
Total assets (things you own)........... 221,000
Total HP & Secured debt................. -176,458
Total Unsecured debt.................... -13,900
Net Assets.............................. 30,642

Tixy

You said you were paying £300 off your cards right? so that is £130 of your left over £442, so now only £312 left to find

Is your 2003 after the student loan deduction?
Do you pay a TV licence?
How much do you spend on presents a year?
Is £120 all you spend on car maintenance, MOTs, servicing, tyres etc a year?

Aside from the money you cannot find there are probably quite a few areas you could cut back on expenditure. Just upping your card repayments to £400 (or more) will soon start to make an impact on the balances (providing you don't reuse the cards).

I do think a spending diary for a couple of months would help, it helps find those little costs such as lottery tickers, newspapers, magazines, coffees etc.

tbourner

It was cars that were hiding in my payments! We started a spending diary just over a year ago (wife has only just got used to me moaning at her for not getting a receipt! ) and now the budget for car repairs in my budget spreadsheet is £48 a month whereas before it was £12!

There are a few areas that you'll find you spend more over a year than you thought, a spending diary is a good thing to start even though you know you won't get the benefit for a few months at least.

Matt37

Ok thanks guys diary it is! I do all my own car work and servicing (my partner and I go halves), forgot the TV, doh! I just seem to run out of money early every month and end up living on pennies for the last week which is mad! I think the money goes on food at work and coffee along with wine and house repairs (I spent 3k here this year!). It's really hard, I don't know how people cope so well on less salary and with kids, I must just be really bad at budgeting or living in a bubble. I guess it's good to start considering all this anyhow, perhaps I just need to stop drinking so much (possibly spend £250 here). Feel pretty low about all this, someone tell me something to inspire me to grow up a bit please

tbourner

The wife's just been signed off with depression! That doesn't help does it. Actually there've been loads of things causing that but partially because of money. What we've done in the last couple of months is add to our budget for shopping, some things that we want to allow ourselves. For us it was takeaways and the fact that we haven't been able to go out for meals together like we used to, so instead of blowing a load of money after 6 weeks of abstenance, we now have a meal planner for 30 meals to have, and one of them is 'takeaway' and one of them is 'meal out', so once it's crossed off the list we have to wait until next month. This helps with our online shopping as we buy a set amount for all the meals, plus it helps with budgeting as I know roughly how much we'll spend on those things each month, but most importantly it keeps us sane as we have something to look forward to each month.
Obviously it won't be the same thing for you but it gives you an idea of the problems we had and how we solved them. Maybe a meal planner doesn't suit your life either, even just a list of main meals and how much each one costs in ingredients would be helpful.

MFWannabe

Matt37 wrote: »

I have updated my spending using a SOA I found, felt quite cathartic!
This does not include my student loan which comes off my salary at source or council tax as my partner pays this.I still seem ton be spending an extra £622 somewhere, grrrrr...

Statement of Affairs and Personal Balance Sheet

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 2003
Partners monthly income after tax....... 0 - You need to put this in you live together
Benefits................................ 0
Other income............................ 300 - What is this?
Total monthly income.................... 2303

Monthly Expense Details
Mortgage................................ 336 - In your first post you said this was £270 per month?
Secured/HP loan repayments.............. 307
Rent.................................... 0 -
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 60 -this is high; check comparison sites
Gas..................................... 60 this is high; check comparison sites
Oil..................................... 0
Water rates............................. 31
Telephone (land line)................... 55 - This is high! Check to see if you can get cheaper
TV Licence.............................. 0 - you need something in here
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 50 - You should cut this down to £20
Petrol/diesel........................... 40
Road tax................................ 10
Car Insurance........................... 15
Car maintenance (including MOT)......... 10
Car parking............................. 5
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 25 - this is high, check comparison sites
Contents insurance...................... 25 - this is high, check comparison sites
Life assurance ......................... 0
Other insurance......................... 12
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 250 - this is incredibly high!! you need to cut this right down to £100 max
Holiday................................. 50 - You need to put this on hold until you've paid off debts
Emergency fund.......................... 20
Work Lunches............................ 90 - you need to stop this!! Take your own, the cost should come out of food budget
Total monthly expenses.................. 1681


Assets
Cash.................................... 0
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 5000
Total Assets............................ 221000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 159258...(336)......1.5
Secured Debt.................. 17200....(307)......0
Total secured & HP debts...... 176458....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
MBNA...........................13000.....170.......0 - You said you were paying £300 per month off credit cards?
TESCO..........................900.......10........0
Total unsecured debts..........13900.....180.......-


Monthly Budget Summary
Total monthly income.................... 2,303
Expenses (including HP & secured debts). 1,681
Available for debt repayments........... 622
Monthly UNsecured debt repayments....... 180
Amount left after debt repayments....... 442

Personal Balance Sheet Summary
Total assets (things you own)........... 221,000
Total HP & Secured debt................. -176,458
Total Unsecured debt.................... -13,900
Net Assets.............................. 30,642

Hi
I've added some comments above. You can get this sorted by making some of these cutbacks but also some of your expenses in your soa don't tally with what you said in your first post?
If you follow some of the above advice you could make cutbacks of nearly £400 per month. Paying that much extra off your cards each month you could seriously make a dent in those debts
If your partner lives with you then you need to include their income in your soa and all expenses and all debts.
I would seriously consider selling the car; you could clear the Tesco card and pay a chunk of the MBNA card so the debt is seriously reduced by the time the 0% offer is up. Hopefully when that runs out you will have paid a lot of the debt off even if you've not managed to clear it all. Hopefully you will be able to get another 0% deal to move the remining debt to.
You definitely need to reduce the amount you're spending on entertainment especially if that's the amount you're spending on wine!!

Matt37

Thanks guys, really good advice.I feel like a teenager! I will re adjust the SOA and post again next week once I have re assessed things. Matt

katsu

Get your bank statements for the last few months and analyse those - categorise the spending and see where your money really goes.

Start collecting all your receipts to help with this.

Matt37

Ok so I have updated and adjusted my budget, I had missed some stuff off and I also got some figures wrong so it should give a better picture now. The Satellite/Cable TV heading covers all of my media phone/tv/web and I have found better rates for my insurances now too, but it still makes for scary reading! I have added the amount of money my partner transfers to my account every month as her income as I am just trying to work out my own affairs.

My target is to pay off my 2 credit cards initially so I am going to stop drinking, make sandwiches every day, stay away from Costa Coffee and try sell some stuff on Ebay... :A
I have just put the minimum payment on my credit cards for now and intend to try and pay £600 PCM extra off them with this new budget. This means I should be able to clear them in 18months or sooner if I can sell some stuff.



Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 2056
Partners monthly income after tax....... 470
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2526

Monthly Expense Details
Mortgage................................ 336
Secured/HP loan repayments.............. 307
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 120
Electricity............................. 50
Gas..................................... 66
Oil..................................... 0
Water rates............................. 51
Telephone (land line)................... 0
Mobile phone............................ 20
TV Licence.............................. 12
Satellite/Cable TV...................... 50
Internet Services....................... 0
Groceries etc. ......................... 150
Clothing................................ 30
Petrol/diesel........................... 25
Road tax................................ 10
Car Insurance........................... 20
Car maintenance (including MOT)......... 20
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 13
Contents insurance...................... 10
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 150
Holiday................................. 50
Emergency fund.......................... 20
Total monthly expenses.................. 1540


Assets
Cash.................................... 0
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 8000
Other assets............................ 8000
Total Assets............................ 226000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 159285...(336)......1.99
Secured Debt.................. 17200....(307)......1.99
Total secured & HP debts...... 176485....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Student Loan...................13500.....0.........1.5
Tesco Credit Card..............937.......25........0
Virgin CC......................12901.....130.......0
Car Loan.......................2200......208.......6.9
Total unsecured debts..........29538.....363.......-


Monthly Budget Summary
Total monthly income.................... 2,526
Expenses (including HP & secured debts). 1,540
Available for debt repayments........... 986
Monthly UNsecured debt repayments....... 363
Amount left after debt repayments....... 623

Personal Balance Sheet Summary
Total assets (things you own)........... 226,000
Total HP & Secured debt................. -176,485
Total Unsecured debt.................... -29,538
Net Assets.............................. 19,977