New poster - in need of advice! Full SOA in post

lobsta100

Hi all

I am new to this part of the forums, but need some help!

Currently my wife doesnt work as she has been looking after our almost 2 yr old son at home. She would look to get a job once our son is at school age. My job currently pays £35k pa but since I am 1 exam from completing my accountancy qualification, my salary would then be minimum £45k from September-ish.

Our mortgage payments are currently fairly low as we have an Interest-only loan with Nationwide on their SVR of 2.5%. However, our flat is small and my wife is expecting our 2nd child (pls G-d) towards the end of the year. We will only have a finite time before the flat is too small to house our family and we would have to look to move, with all the limitations of having to find a mortgage/ deposit.

Our car repayments are only until June 2012 and then it will be fully paid off.

The Virgin Credit Card is a 16 month 0% balance transfer deal, so it is full up to the limit and I currently pay the minimum by DD.

I was paying off the HSBC Mastercard bills every month in full, but recently this was tipping us close to our formal overdraft limit (£1,500) every month. Now, I have been paying off small chunks each month to keep some cash available.

I have attached our full Statement of Affairs below. I would massively appreciate any advice you can give, as I am so keen to eventually be debt-free! I want a real future for my family!

Thanks in advance

Adam L

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2056
Partners monthly income after tax....... 0
Benefits................................ 123
Other income............................ 21
Total monthly income.................... 2200

Monthly Expense Details
Mortgage................................ 443
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 150
Council tax............................. 174
Electricity............................. 47
Gas..................................... 40
Oil..................................... 0
Water rates............................. 39
Telephone (land line)................... 75
Mobile phone............................ 25
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 14
Groceries etc. ......................... 200
Clothing................................ 25
Petrol/diesel........................... 40
Road tax................................ 12
Car Insurance........................... 45
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 77
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 59
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 55
Life assurance ......................... 0
Other insurance......................... 22
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Child Trust Fund payment................ 20
Charity direct debit.................... 150
Synagogue membership.................... 37
Car finance payment..................... 223
Total monthly expenses.................. 1972


Assets
Cash.................................... 11000
House value (Gross)..................... 250000
Shares and bonds........................ 0
Car(s).................................. 14500
Other assets............................ 7500
Total Assets............................ 283000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 212500...(443)......2.5
Total secured & HP debts...... 212500....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Virgin Credit Card.............5800......56........0
HSBC Mastercard................1200......38........21.9
Total unsecured debts..........7000......94........-


Monthly Budget Summary
Total monthly income.................... 2,200
Expenses (including HP & secured debts). 1,972
Available for debt repayments........... 228
Monthly UNsecured debt repayments....... 94
Amount left after debt repayments....... 134

Personal Balance Sheet Summary
Total assets (things you own)........... 283,000
Total HP & Secured debt................. -212,500
Total Unsecured debt.................... -7,000
Net Assets.............................. 63,500

Created using the SOA calculator.
Reproduced on Moneysavingexpert with permission, using other browser.

whitewing

Hello. You have picked a fairly quiet time to post but I am sure you'll get more help later.

My initial thoughts are that phone/mobile and internet seem worth looking at to see if you can bring those down.

You could maybe shave some off the monthly grocery bill too?

whitewing

Also, maybe look at the main site regarding credit card debt: http://www.moneysavingexpert.com/cards/balance-transfer-credit-cards

(Have a read but wait for others who know more to respomd to the thread before you sort anything out)

[Deleted User]

lobsta100 wrote: »

Hi all


Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2056
Partners monthly income after tax....... 0
Benefits................................ 123
Other income............................ 21
Total monthly income.................... 2200

Monthly Expense Details
Mortgage................................ 443
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 150
Council tax............................. 174
Electricity............................. 47
Gas..................................... 40
Oil..................................... 0
Water rates............................. 39
Telephone (land line)................... 75 This seems quite high, check that you are with the company that is cheapest for your usage
Mobile phone............................ 25 Are you tied into a contract? - Do you use all the minutes/texts that you get with your contract? If not downgrade or switch to SIM only contract for a while
TV Licence.............................. 0 Do you not have a TV?
Satellite/Cable TV...................... 0
Internet Services....................... 14 See if you can get this for cheaper if you combine with telephone
Groceries etc. ......................... 200 Does not seem too bad, but perhapse try switching some of your brands to cheaper alternatives to try them out
Clothing................................ 25 If you are needing the extra cash for a few months - try cutting this back to essentials only
Petrol/diesel........................... 40
Road tax................................ 12
Car Insurance........................... 45
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 77 Can this be reduced any? Weekly/Monthly/Season ticket? Can you walk/Cycle/Car share instead?
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 59 (I'm not certain about this (someone else may know better) but can this be prepaid for cheaper?
Pet insurance/vet bills................. 0
Buildings insurance..................... 0 You own your own home you should have this - or have you combined them below?
Contents insurance...................... 55 Is this a competative rate? Check the comparison sites
Life assurance ......................... 0
Other insurance......................... 22 what's this for? - again check comparison sites to ensure this is a competative rate
Presents (birthday, christmas etc)...... 0 You should probablt budget something here
Haircuts................................ 0 You should have something here, no?Entertainment........................... 0 Don't you spend anything here?
Holiday................................. 0
Emergency fund.......................... 0
Child Trust Fund payment................ 20
Charity direct debit.................... 150
Synagogue membership.................... 37
Car finance payment..................... 223
Total monthly expenses.................. 1972


Assets
Cash.................................... 11000 (If you have savings you should probably pay your debts with this as the interest you are paying on your debt (21.9%) is most likely a lot higher than the % of interest that you are earning on your saving)
House value (Gross)..................... 250000
Shares and bonds........................ 0
Car(s).................................. 14500
Other assets............................ 7500 (no idea what this is, so can't advise)
Total Assets............................ 283000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 212500...(443)......2.5
Total secured & HP debts...... 212500....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Virgin Credit Card.............5800......56........0
HSBC Mastercard................1200......38........21.9
Total unsecured debts..........7000......94........-


Monthly Budget Summary
Total monthly income.................... 2,200
Expenses (including HP & secured debts). 1,972
Available for debt repayments........... 228
Monthly UNsecured debt repayments....... 94
Amount left after debt repayments....... 134 (Do you have this at the end of every month? If not keep a Diary of what is being spent during the month so you know exactly where all your money is going from the very small things to the bigger things, once you know where it goes you can make decisions on whether you should cut back or not. It's amazing how the little things add up - a coffee at £2 every day on the way to work isabout £40 a month!)

Personal Balance Sheet Summary
Total assets (things you own)........... 283,000
Total HP & Secured debt................. -212,500
Total Unsecured debt.................... -7,000
Net Assets.............................. 63,500

Created using the SOA calculator.
Reproduced on Moneysavingexpert with permission, using other browser.

Your overdraft doesn't seem to have been included in your list of debts - is that now paid off? If so, is the APR lower than the 21.9% that you are being charged on your CC? If so transfer over to overdraft.

Also, you are in the plus, so shouldn't be too hard to get rid of all your debt and start saving for your next home and your family. Good Luck.

WASHER

lobsta100 wrote: »

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2056
Partners monthly income after tax....... 0
Benefits................................ 123
Other income............................ 21
Total monthly income.................... 2200

Monthly Expense Details
Mortgage................................ 443
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 150 IS THIS CORRECT EACH MONTH
Council tax............................. 174 - THIS SEEMS HIGH TOO, HAVE YOU CHECKED YOUR BAND
Electricity............................. 47
Gas..................................... 40
Oil..................................... 0
Water rates............................. 39
Telephone (land line)................... 75 EACH MONTH, IT IS VERY HIGH
Mobile phone............................ 25
TV Licence.............................. 0 DO YOU NOT HAVE A TV?
Satellite/Cable TV...................... 0
Internet Services....................... 14
Groceries etc. ......................... 200
Clothing................................ 25
Petrol/diesel........................... 40
Road tax................................ 12
Car Insurance........................... 45
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 77
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 59 - THIS SEEMS HIGH EACH MONTH
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 55 - HIGH AGAIN, DOES THIS INCLUDE BUILDINGS? STILL SEEMS HIGH IF IT DOES
Life assurance ......................... 0
Other insurance......................... 22 - WHAT IS THIS?
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Child Trust Fund payment................ 20
Charity direct debit.................... 150 - THIS SEEMS QUITE ALOT EACH MONTH? COULD/WOULD YOU CONSIDER REDUCING IT A WEE BIT?
Synagogue membership.................... 37
Car finance payment..................... 223
Total monthly expenses.................. 1972


Assets
Cash.................................... 11000
House value (Gross)..................... 250000
Shares and bonds........................ 0
Car(s).................................. 14500
Other assets............................ 7500
Total Assets............................ 283000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 212500...(443)......2.5
Total secured & HP debts...... 212500....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Virgin Credit Card.............5800......56........0
HSBC Mastercard................1200......38........21.9
Total unsecured debts..........7000......94........-


Monthly Budget Summary
Total monthly income.................... 2,200
Expenses (including HP & secured debts). 1,972
Available for debt repayments........... 228
Monthly UNsecured debt repayments....... 94
Amount left after debt repayments....... 134

Personal Balance Sheet Summary
Total assets (things you own)........... 283,000
Total HP & Secured debt................. -212,500
Total Unsecured debt.................... -7,000
Net Assets.............................. 63,500

Created using the SOA calculator.
Reproduced on Moneysavingexpert with permission, using other browser.

I have added comments in above. You say your salary will increase from September, which is great, however you need to check if you will lose your child tax credits and child benefits as your salary will be over £40K a year. (some changes are coming in April 2011, some later, you need to check).

lobsta100

WASHER wrote: »

I have added comments in above. You say your salary will increase from September, which is great, however you need to check if you will lose your child tax credits and child benefits as your salary will be over £40K a year. (some changes are coming in April 2011, some later, you need to check).

Hi, OP here. I really appreciate your comments and hope that mor ewill post here with some advice.

In response to some of the comments....

Our overdraft is a formal arranged o/draft of £1,500. At the time of doing the SOA we were not into it at all. However, generally we go at least £500 into it each month, or more if I pay off a large chunk of the credit card bill.

The £150/ month under "management charge" is the Service Charge for our block of flats.

The council tax band is unfortunately correct - £174 every month!

The telephone bill I put in wrongly - it is £74/ qtr so about £23/month

We do not have a TV.

The "medical" is our BUPA health cover which is £50 odd / month.

The household insurance is a recently taken policy that is in fact cheaper than our last one.

Other insurance is £10/month service plan on our car and £11/month for Dom&Gen appliances cover.

The "charity direct debit" includes our £27/month synagogue membership and charitable donations of £120. We believe in giving approximately 10% of take home pay to charity - it is an integral part of the religion.

whitewing

You are on a good salary so maybe you have lots of stuff at home? I was wondering if you/your wife could join the Declutter thread? This may a) help your flat be bearable for a little longer and b) prompt you to look at selling some of the stuff? Maybe you could challenge yourself to become 'cash neutral' on some of your expenses eg sell your child's old clothes/equipment to buy the new requirements.

Is your wife looking to go back to work when your firstborn is at school or when the new baby is at school?

beanielou

Can I ask if you might be prepared to cash in part of your other assets to pay off your debt?
Welcome to MSE & congratulations on your impending new arrival

Wee_Pilsbury

lobsta100 wrote: »

Hi all

Assets
Cash.................................... 11000
House value (Gross)..................... 250000
Shares and bonds........................ 0
Car(s).................................. 14500
Other assets............................ 7500
Total Assets............................ 283000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 212500...(443)......2.5
Total secured & HP debts...... 212500....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Virgin Credit Card.............5800......56........0
HSBC Mastercard................1200......38........21.9
Total unsecured debts..........7000......94........-



Created using the SOA calculator.
Reproduced on Moneysavingexpert with permission, using other browser.

OP, you seem to have substantial assets - £11000 cash and £7500 "other assets" yet your unsecured debts total only £7000. Is this a mistake? If not, then the obvious thing to me (apart from making some savings on monthly outgoings suggested by previous posters) is to use your cash to pay off you debts.

Or am I missing something?

lobsta100

Wee_Pilsbury wrote: »

OP, you seem to have substantial assets - £11000 cash and £7500 "other assets" yet your unsecured debts total only £7000. Is this a mistake? If not, then the obvious thing to me (apart from making some savings on monthly outgoings suggested by previous posters) is to use your cash to pay off you debts.

Or am I missing something?

Replying to the last few posts:

I will look on the Declutter thread. My wife would hope to work part time once the new baby is at an age to go to a childminder .etc

In terms of selling assets..... our assets are really just engagement ring,furniture and a little bit of religious silverware.... so not really sellable.

The £11,000 cash is £10,000 in a fixed 1 yr bond until 14 April 2011, and an e-ISA with around £1,000 in it.

If I were to use all the cash to pay off the credit cards, I am not sure I earn enough to cover all the outgoings without putting anything on the credit card, even with the overdraft?

Or am i not working it out correctly?

Wee_Pilsbury

lobsta100 wrote: »

Replying to the last few posts:

I will look on the Declutter thread. My wife would hope to work part time once the new baby is at an age to go to a childminder .etc

In terms of selling assets..... our assets are really just engagement ring,furniture and a little bit of religious silverware.... so not really sellable.

The £11,000 cash is £10,000 in a fixed 1 yr bond until 14 April 2011, and an e-ISA with around £1,000 in it.

If I were to use all the cash to pay off the credit cards, I am not sure I earn enough to cover all the outgoings without putting anything on the credit card, even with the overdraft?

Or am i not working it out correctly?

The general train of thought on these boards is that there is no point in having savings if the rate of return on those savings is less than the rate of interest you have on your debts. Now, I would presume that the money you have in your fixed rate bond will not be available to you until maturity. However, the amount you have in your eISA would pay off almost all the debt you have on the HSBC card - and this card is charging an APR of 21.9%. Unless the interest rate on the ISA betters 21.9% then ......... well, you will see where I'm going with this.

If you paid off most of the HSBC card in this way then the interest you would pay would be far less and I don't think it would be long before you cleared it, thus giving yourself extra money each month that you previously used for debt payment. It may not be that much but as you will see from some of the great things people on this board manage, a little can go a long way.

To be honest, your debts don't seem to be that bad and if you take on board the advice already given and try to find ways to pay out a bit less on some things and do a spending diary to see where the money really goes then I think you can get on top of this.

You possibly could shave a bit off groceries (check out the Old Style board for inspiration:D) and I'm wondering if you really need BUPA cover. You will know best on that though.