Dilemma, please advise!

Dreamer80

Hi,

We currently have a loan (£11.5k outstanding) and savings of £600.

My husband is currently in the RAF earning just under £30k per annum. I work 10 hours per week earning £3.5k per annum.

My husband is due out of the RAF early next year so the dilemma we have is do we try and pay off as much of the loan as possible or try and bump up the savings as much as possible to put towards a house deposit? (we will have his £25k gratuity to use towards the deposit). Obviously buying a house will depend on his future employment in any case.

In an ideal world I would love to increase my hours at work but having two young children (one disabled) prevents me from doing so at the moment.

Not sure what to do for the best, HELP!!

Thanks x

[Deleted User]

Hi and welcome,
if you post an Statement Of Affairs: http://www.makesenseofcards.com/soacalc.html then people on here, and yourself, will have a clearer idea of what your current situation is, and help you with hints and tips so that you can plan for the future.

DVardysShadow

Dreamer80 wrote: »

... the dilemma we have is do we try and pay off as much of the loan as possible or try and bump up the savings as much as possible to put towards a house deposit? (we will have his £25k gratuity to use towards the deposit).

Pay off the loan. You are paying loan interest rates for all the money in savings and getting savings interest rates back. And most lenders deduct your loans from the amount they will lend you, so there is no point in not paying the loan off.

Dreamer80

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................ 275
Partners monthly income after tax....... 1550
Benefits................................ 460 Please note £285 of this is my daughters Disability Living Aloowance which I will not use unless directly for her!
Other income............................ 0
Total monthly income.................... 2285
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 100
Electricity............................. 40
Gas..................................... 47
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 32
Mobile phone............................ 45 For both mine and hubby's
TV Licence.............................. 12
Satellite/Cable TV...................... 24
Internet Services....................... 15
Groceries etc. ......................... 300
Clothing................................ 20
Petrol/diesel........................... 150
Road tax................................ 17
Car Insurance........................... 24
Car maintenance (including MOT)......... 50 approx
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 105
Other child related expenses............ 30 Children's savings acct
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 13
Buildings insurance..................... 0
Contents insurance...................... 15
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50 Saving with Park for Xmas
Haircuts................................ 15
Entertainment........................... 15
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1429

Assets
Cash.................................... 600
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 5500
Other assets............................ 0
Total Assets............................ 6100

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Loan...........................11500.....350.......13.1
Total unsecured debts..........11500.....350.......-

Monthly Budget Summary
Total monthly income.................... 2,285
Expenses (including HP & secured debts). 1,429
Available for debt repayments........... 856
Monthly UNsecured debt repayments....... 350
Amount left after debt repayments....... 506
Personal Balance Sheet Summary
Total assets (things you own)........... 6,100
Total HP & Secured debt................. -0
Total Unsecured debt.................... -11,500
Net Assets.............................. -5,400


Hope I have done that right!
Thanks in advance for any advice!

RachelS

I know how stressful a partner leaving the Forces can be! I'd say you need to start using your daughter's DLA for everyday household stuff. That is, unless she needs it for therapy, special items etc. You can't work more hours because you're caring for your daughter...that's what the money is for. I hope that doesn't offend you, obviously it's your choice!

Dreamer80

Thankyou Rachel,

No that doesn't offend me at all.

However, I just cannot bring myself to use money awarded to my daughter! At the moment all she really needs is a special needs buggy but that's not to say that she won't need things in the near future. If I use that money and she then needs something and I can't buy it for her I would feel terribly guility.

I see that as "her" money, not ours to use for our debt
xx

Dreamer80

If any-one has any futher advice I would be most grateful,

Thanks

clang_uk

Hi there,

I know that with my loan, I have to pay a fee if I want to over pay, or shorten the length of time it takes. This may apply to you.

About your daughter's benefit. I see the pickle you're in, in a way it sounds like you are too much of a good parent, and are setting aside that money for her. The benefit has been awarded to help you support her, and you need to be in a good financial situation for that to happen. You shouldn't feel bad about using it to help you help her (if that makes sense) or if she doesn't need too much at present, look at saving half of it away (maybe in her savings account) and use the other half to tackle the debts.

The only other thing I could suggest is to sell the car and buy a second hand run-about.

Hope this offers some help.

dbt3mummy

Have you thought about applying to the RAF Benevolent (sorry spelling!) Fund?
I know they can help with interest free or low interest loans. Due to your husbands service and the medical needs of your daughter they may even me able to help with a deposit or mortgage.

I know one of the previous occupiers of a quarter we were once in, his mother became dependant on him and they helped fixing a 0% loan for a LARGE sum of money in order to buy a small house for themselves.

These societies and RAFA etc are there to help. Don't feel bad for using, after all your husband has been paying into them.

I know you see your daughters money as hers - I feel the same *but* at the end of the day she needs a roof over her head and parents that can concentrate on her and her sibling, not constantly worrying about where the next £ is going to come from to help clear the debt

Nottoobadyet

Dreamer80 wrote: »

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................ 275
Partners monthly income after tax....... 1550
Benefits................................ 460 Please note £285 of this is my daughters Disability Living Aloowance which I will not use unless directly for her!
Other income............................ 0
Total monthly income.................... 2285
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 100 Do you get teh single occupant discount while hubby is away?
Electricity............................. 40 seems a bit high along with gas, maybe shop around
Gas..................................... 47
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 32
Mobile phone............................ 45 Not too bad, but you could always go PAYG if you wanted
TV Licence.............................. 12
Satellite/Cable TV...................... 24 could always cut back here
Internet Services....................... 15
Groceries etc. ......................... 300 ... and here. Go to the OS board on here for tips on healthy, cheap cooking
Clothing................................ 20
Petrol/diesel........................... 150
Road tax................................ 17
Car Insurance........................... 24
Car maintenance (including MOT)......... 50 approx
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 105 can some of this be paid out of DLA?
Other child related expenses............ 30 Children's savings acct
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 13
Buildings insurance..................... 0
Contents insurance...................... 15
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50 Saving with Park for Xmas
Haircuts................................ 15
Entertainment........................... 15
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1429

Assets
Cash.................................... 600
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 5500
Other assets............................ 0
Total Assets............................ 6100

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Loan...........................11500.....350.......13.1
Total unsecured debts..........11500.....350.......-

Monthly Budget Summary
Total monthly income.................... 2,285
Expenses (including HP & secured debts). 1,429
Available for debt repayments........... 856
Monthly UNsecured debt repayments....... 350
Amount left after debt repayments....... 506
Personal Balance Sheet Summary
Total assets (things you own)........... 6,100
Total HP & Secured debt................. -0
Total Unsecured debt.................... -11,500
Net Assets.............................. -5,400


Hope I have done that right!
Thanks in advance for any advice!

Do you really have £500 at the end of the month? if not, revisit the SOA to see what you've missed.

If you can pay back the loan without penalties, do so. If not, start saving and hopefully you can make a settlment for the total.

[Deleted User]

Dreamer80 wrote: »

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................ 275
Partners monthly income after tax....... 1550
Benefits................................ 460 Please note £285 of this is my daughters Disability Living Alowance which I will not use unless directly for her! - Does your daughters DLA all get spent every month then? Or are you saving this somewhere for when you need to make a large purchase for her? Is the savings you have included below all hers, or is this something seperate? Do you then make regular monthly spends from it for her? Sorry this is not clear
Other income............................ 0
Total monthly income.................... 2285
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 100 (is this spread over 10 months, and can you spread it over 12?)
Electricity............................. 40
Gas..................................... 47
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 32 (check if you will get a better deal if you combine TV, phone and internet)
Mobile phone............................ 45 For both mine and hubby's (do you use all the minutes/texts that you get as part of your package - if not drop down a tarrif)
TV Licence.............................. 12
Satellite/Cable TV...................... 24 (do you need this? Can you cancel?, if you can't/don't want to cancel - see of combining with phone/internet will give you a saving)
Internet Services....................... 15 (as above)
Groceries etc. ......................... 300 (visit the old style board who should be able to help you shave a little of this - batch cook, drop a brand, cook from scratch etc)
Clothing................................ 20 (do you spend this every month>)
Petrol/diesel........................... 150 (is there any way of reducing your usage?)
Road tax................................ 17
Car Insurance........................... 24
Car maintenance (including MOT)......... 50 approx
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 105 (does this and the savings below come out/or part come out of your daughters DLA?)
Other child related expenses............ 30 Children's savings acct (can you reduce this for a few months until the loan amount is lowered - you can always increase it once this has been paid)
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 13
Buildings insurance..................... 0
Contents insurance...................... 15
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50 Saving with Park for Xmas
Haircuts................................ 15
Entertainment........................... 15
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1429

Assets
Cash.................................... 600 (if this is yours and not savings for your daughter then pay it off your debt unless the interest (unlikely) is above 13.1% - but make sure you won't get penalised for early repayment)
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 5500
Other assets............................ 0
Total Assets............................ 6100

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Loan...........................11500.....350.......13.1 (how many monthly payments are left? And how many months until your hubby leaves the RAF?)
Total unsecured debts..........11500.....350.......-

Monthly Budget Summary
Total monthly income.................... 2,285
Expenses (including HP & secured debts). 1,429
Available for debt repayments........... 856
Monthly UNsecured debt repayments....... 350
Amount left after debt repayments....... 506 (you do have a good surplus at the end of the month so you could in theory pay extra of the loan to pay it down a bit until your circumstances change)
Personal Balance Sheet Summary
Total assets (things you own)........... 6,100
Total HP & Secured debt................. -0
Total Unsecured debt.................... -11,500
Net Assets.............................. -5,400


Hope I have done that right!
Thanks in advance for any advice!

Hi, I think that you could make small changes to save a little, and you do also have a generous surplus at the end of the month so in theory you could be over paying a fair bit.
You need to find out if by making overpayments you will be penalised with an early repayment charge. And depending on what the answer is decide if it's worthwhile making overpayments or saving the surplus in a savings account.

Also, what's not clear to me is what you have said about the benifit you recieve for your disabled child - are you spending this on her every month - or is this being saved somewhere for her? I couldn't see it on the SOA - Or is the £600 savings you have effectively hers? I'm a bit confused.