Please find my SOA - l would appreciate some advice and guidance

jamie.1980

I have listed my SOA below, although from the calculations its shows that money is left over, in reality I always end up having to ask family or friends for some money. This is really bad as I have a young family.



I think part of this is, that I have two properties currently on let on buy to let mortgages, I have tried to give a true reflection of the costs of these, but there are additional costs i.e. gas checks that I have not noted. Also there are times when payments are late in coming etc which can cause issues.



The other issue I have is that from having a secure job role in the public sector, I have taken up some project roles in the last few years. I am now working for an organisation where I am contracted until late 2011. However I am starting to hate the job and the way the management in particular behave and act, the more I am there the more depressed i get. I would like ideally to secure a new position but I have not found many and the ones that I have found are low paid due to current economic conditions.





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.................... 1

Monthly Income Details
Monthly income after tax................ 1636
Partners monthly income after tax....... 0
Benefits................................ 210
Other income............................ 925 (Rent received from two houses currently let out - we rent)
Total monthly income.................... 2771

Monthly Expense Details
Mortgage................................ 725 (Buy to Let Mortgages)
Secured/HP loan repayments.............. 0
Rent.................................... 525
Management charge (leasehold property).. 0
Council tax............................. 140
Electricity............................. 50
Gas..................................... 0
Oil..................................... 0
Water rates............................. (incorporated into Council Tax)
Telephone (land line)................... 40
Mobile phone............................ 45
TV Licence.............................. 12
Satellite/Cable TV...................... 19
Internet Services....................... 15
Groceries etc. ......................... 200
Clothing................................ 80
Petrol/diesel........................... 20
Road tax................................ 20
Car Insurance........................... 80
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 20
Medical (prescriptions, dentist etc).... 5
Pet insurance/vet bills................. 0
Buildings insurance..................... 75
Contents insurance...................... 50
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 5
Haircuts................................ 10
Entertainment........................... 25
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2191


Assets
Cash.................................... 0
House value ..................... £200,000
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 10000
Total Assets............................ 213000


Secured Debts
Description Debt Monthly APR
Mortgage


Northern Rock £105,000 £420 6%
Halifax £63,000 £300 5%
£168,000

Unsecured Debts
Description....................Debt......Monthly.. .APR
Lloyds credit card..........200......40.......16.9%
Barclays Loan...................6000......166.......6.7%
Lloyds Loan ....................230......60 ..........9%
Barclays ........................3000.....118.........8%
Total unsecured debts......9430....£384


Monthly Budget Summary
Total monthly income.................... 2,771
Expenses (including HP & secured debts) 2,191
Available for debt repayments........... 580
Monthly Unsecured debt repayments....... 384
Amount left after debt repayments.......£196

Personal Balance Sheet Summary
Total assets (things you own)........... 213,000
Total HP & Secured debt................. 168,000
Total Unsecured debt.................... 9,430
Net Assets.............................. £35,570

isy1011

Well done for posting.

I dont see much that you can cut back on as your insurances are high because of the houses.

Can you sell a property?

Can you switch cards to 0%?

Also, start a spending diary so you can see where your money is going each week/ month.

jamie.1980

Thanks for your prompt reply

I have looked around selling a property, but due to current market conditions and with a tenant in place, It is unlikely for the next year at least.

Reference switching the credit card - there is not a lot on this, but will look out deals. Always good to have the cc as a back up.

I have never considered doing a spending diary, will speak to wife about starting.

Thanks Jamie

HappyMJ

£20 per month in petrol/diesel....get rid of the car and walk, get taxi's and buses. £20 gets me enough fuel to go around 130 miles. Get some Life insurance if you don't already have it. Do you have any holidays? Most people do but forget to budget for it so start putting about £20 per month per person aside for your next holiday to avoid using the credit cards again. Your electric is very low considering your gas is zero. Most households are about £80 plus per month combined.

LisaPapakis

I'm not very experienced in these issues, but it doesn't seem like a good idea to me to have two buy-to-lets when you rent yourself. I'm a landlord and you often have to pay out for little things like gas certificates, energy performance certificates etc, and what about if something really goes wrong with the property? What about if your tenant doesn't pay the rent for three months? And causes a substantial amount of damage to the property? (This happened to me once.) You have to cough up, and it doesn't sound like you've got an emergency fund. Looking at it that way, you are two months away from financial meltdown.

Unless you are in negative equity, I would probably sell both of your lets. In the current state of your finances, they are high risk. I would sell them cheap and get rid, and if you make a bit of money from the sales then pay off your debts. Are you tenants on an AST, and if so, for how long?

theoretica

I suggest that you look at your past bank/credit card statements both to work out where your unaccounted for money has gone and to form a more exact view of how your rental properties have been doing over the long term. If they are running at a loss I suggest you investigate selling them- you can ask estate agents questions with no commitment to get a better picture of your options.

jamie.1980

Thanks for your replies.

Both Tenancies are on year ASTs - one until end Aug 2011 and one until end March 2011. I do have landlord insurance so that does protect me a little along with boiler cover, which is incorporated into costs.

I think a shopping diary seems a good idea to look at exactly where money is going.

I suppose the biggest risk I forsee is the state of employment market.

I do have equity in the properties, I will continually review if a good time to sell. One slight benefit is that the tenants are LHA and I receive money, that comes from the tenants via the local council.

Electricity is right, is quite a hi-tech energy efficient system, although with the winter starting it can go up. I don't really use my car, I will look at seeing how much I can get for it by selling via internet sites and that will help decide if I should sell or hold.

Thanks for the replies so far.:)

LisaPapakis

Sorry, I still don't like your lets, but I can see that you do.

Are they in excellent condition? If not, then you will be looking at some capital expenditure over the next few years. How are you going to pay for it? What about if one of your tenants decides not to move out, but the LA won't pay their rent? Does your landlord insurance cover the legal costs of enforcing eviction?

You're robbing Peter to pay Paul, which is never good. A landlord with two properties should not be asking friends and family for money every month.

Also, your accounts for your lets should be treated as a business, separately from your household. It's not as simple as 'rent - (mortgage+insurance) = profit' You need to take your accounts from last year, find the net profit (that's the REAL profit, with all the incidental expenses taken away, including tax), divide by 12 and carry that forward as projected income this year. Presumably you did a tax return so you could take the info from there.

I think the risk from your lets is as real as the risk from the employment situation. Whichever way you look at it, you're vulnerable.

barbarawright

Do you really only spend £200 a month on groceries? It's possible but I'm always a bit suspicious when people are so exact about figures that are so low. Maybe keep all your receipts for a few weeks or keep a spending diary as others have suggested.