Debt Free in how long?!

silentmike486

I am 24, my new wife is 27 and our son is 2 and a half, and we are expecting a new arrival in July. We have several debts including a loan, credit cards and a (new) tax bill. She hasnt been earning for three years, as shes been looking after our son.

Weve tried tightening the strings a bit, but theres just so much going out and so little coming in (or feels like it!). Ive tried getting a lower APR loan to cover the old natwest loan and some CCs, and also tried getting a new card for balance transfer, but was refused even though there were no real problems with my credit file (according to experian). That was in October, so I may try again soon.

My SOA will follow shortly, and any suggestions or help will be gratefully recieved, and I will answer any questions.

Thanks in advance,

Mike

silentmike486

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.................... 2
Monthly Income Details
Monthly income after tax................ 2450
Partners monthly income after tax....... 0
Benefits................................ 600
Other income............................ 0
Total monthly income.................... 3050
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 271
Rent.................................... 750
Management charge (leasehold property).. 0
Council tax............................. 198
Electricity............................. 20
Gas..................................... 30
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 0
Mobile phone............................ 90
TV Licence.............................. 13
Satellite/Cable TV...................... 33
Internet Services....................... 76
Groceries etc. ......................... 500
Clothing................................ 50
Petrol/diesel........................... 130
Road tax................................ 25
Car Insurance........................... 127
Car maintenance (including MOT)......... 20
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 117
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 70
Buildings insurance..................... 0
Contents insurance...................... 18
Life assurance ......................... 10
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
Child Trust Fund........................ 10
RAC..................................... 12.75
Total monthly expenses.................. 2655.75

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

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0<
Car 2..........................2000.....(111)......0<
Car 1..........................1500.....(80).......0<
Engagement Ring................400......(80).......0
Total secured & HP debts...... 3900......-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Loan...........................3000......113.......0
Natwest CC.....................1250......50........0
Barclaycard CC.................2000......80........0
Income Tax.....................3300......0.........0
Tax Overpayment................500.......50........0
Old Elec Bill..................126.......42........0
O/D............................2250......0.........0
Old Acct.......................1000......50........0
Santander CC...................1500......50........0
Total unsecured debts..........14926.....435.......-

Monthly Budget Summary
Total monthly income.................... 3,050
Expenses (including HP & secured debts). 2,655.75
Available for debt repayments........... 394.25
Monthly UNsecured debt repayments....... 435
Amount short for making debt repayments. -40.75
Personal Balance Sheet Summary
Total assets (things you own)........... 8,000
Total HP & Secured debt................. -3,900
Total Unsecured debt.................... -14,926
Net Assets.............................. -10,826

scubaangel

Good luck, once you get the SOA up the lovely people on here can help you to find savings where possible.

lvm

silentmike486 wrote: »

Monthly Income Details
Monthly income after tax................ 2450
Partners monthly income after tax....... 0
Benefits................................ 600
Other income............................ 0
Total monthly income.................... 3050
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 271
Rent.................................... 750
Management charge (leasehold property).. 0
Council tax............................. 198
Electricity............................. 20
Gas..................................... 30
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 0
Mobile phone............................ 90 This is very high, even for 2 phones. Can you reduce the contract?
TV Licence.............................. 13
Satellite/Cable TV...................... 33 Can you cancel and get a freeview box for £20
Internet Services....................... 76 Very very high. What is this for? My phone/tv/broadband (unlimited) is £38.50 for Sky
Groceries etc. ......................... 500 Quite high - could you reduce by £100?
Clothing................................ 50
Petrol/diesel........................... 130
Road tax................................ 25
Car Insurance........................... 127 I guess this is due to your age but have you shopped around?
Car maintenance (including MOT)......... 20
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 117
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 70
Buildings insurance..................... 0
Contents insurance...................... 18
Life assurance ......................... 10
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
Child Trust Fund........................ 10
RAC..................................... 12.75
Total monthly expenses.................. 2655.75

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0<
Car 2..........................2000.....(111)......0<
Car 1..........................1500.....(80).......0<
Engagement Ring................400......(80).......0
Total secured & HP debts...... 3900......-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Loan...........................3000......113.......0
Natwest CC.....................1250......50........0
Barclaycard CC.................2000......80........0
Income Tax.....................3300......0.........0
Tax Overpayment................500.......50........0
Old Elec Bill..................126.......42........0
O/D............................2250......0.........0
Old Acct.......................1000......50........0
Santander CC...................1500......50........0
Total unsecured debts..........14926.....435.......-

What are the APRs on the credit cards etc?

You should be able to reduce grocery bill. Why not withdraw £100 cash a week (or maybe £400 when you are paid) and use this only for groceries and see if you can cope with this. This would mean you meeting all your outgoings with your income every month.

Tixy

Hi Mike

My guess would be that you cannot get anymore credit because of the amount you already owe (compared to your income).
Obviously you are showing a small shortfall at the moment, I'll make some suggestions as to where you can change things to get rid of this.

silentmike486 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.................... 2 would it be feasible to manage with one car?
Monthly Income Details
Monthly income after tax................ 2450
Partners monthly income after tax....... 0
Benefits................................ 600
Other income............................ 0
Total monthly income.................... 3050
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 271
Rent.................................... 750 is this competitive for where you live?
Management charge (leasehold property).. 0
Council tax............................. 198 have you ever done the online check to see you are in the correct band?
Electricity............................. 20
Gas..................................... 30
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 0
Mobile phone............................ 90 can either of you switch to a cheaper deal or if in contract can you drop to a reduced tariff?
TV Licence.............................. 13
Satellite/Cable TV...................... 33
Internet Services....................... 76 this seems very high - does it include something else as well or a particular reason to be so much? if not switch to a much cheaper deal
Groceries etc. ......................... 500 this is high for 3 people. Plenty of people of here manage on £250 for a family of 4-5 & pets. Perhaps work on cutting this to £300 and see how you get on.
Clothing................................ 50
Petrol/diesel........................... 130
Road tax................................ 25
Car Insurance........................... 127 do you shop around at renewal time? does one of you have points or a high IG car?
Car maintenance (including MOT)......... 20 this seems quite low for 2 cars
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 117 could your reduce the hours at nursery?
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 70 what pets? is this a competitive deal?
Buildings insurance..................... 0
Contents insurance...................... 18
Life assurance ......................... 10
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
Child Trust Fund........................ 10
RAC..................................... 12.75
Total monthly expenses.................. 2655.75

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

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0<
Car 2..........................2000.....(111)......0<
Car 1..........................1500.....(80).......0<
Engagement Ring................400......(80).......0
Total secured & HP debts...... 3900......-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Loan...........................3000......113.......0
Natwest CC.....................1250......50........0
Barclaycard CC.................2000......80........0
Income Tax.....................3300......0.........0
Tax Overpayment................500.......50........0
Old Elec Bill..................126.......42........0
O/D............................2250......0.........0
Old Acct.......................1000......50........0
Santander CC...................1500......50........0
Total unsecured debts..........14926.....435.......-

Monthly Budget Summary
Total monthly income.................... 3,050
Expenses (including HP & secured debts). 2,655.75
Available for debt repayments........... 394.25
Monthly UNsecured debt repayments....... 435
Amount short for making debt repayments. -40.75
Personal Balance Sheet Summary
Total assets (things you own)........... 8,000
Total HP & Secured debt................. -3,900
Total Unsecured debt.................... -14,926
Net Assets.............................. -10,826

Worth finding out all your APRs so you can decide on the best order to tackle your debts - and once you have those you can start feeding the figures into the snowball calculator to work out a debt free date.

There are quite a lot of cutbacks you can make to get rid of the monthly shortfall. Then any extra you can cut back on to increase debt repayments will decrease the time until you become debt free.

Have you worked out a repayment plan for the tax bill? contacted HMRC yet? Are self-employed? if so is that income figure at the top your income after tax?

silentmike486

Lisamckinney - our phone contracts are £45/month, my wifes is essential for our son, and my contract expires soon and I will go to PAYG
We're considering cancelling sky, but we use sky plus HD often. It might be the first thing to go!
Internet services includes home phone, and it will be the next thing we change (its with BT at the moment)
Groceries - Ive included nappies and wipes in this, and I was a bit liberal. We do use re-usable nappies most often. I will take you up on your £100/week suggestion
Car insurance - This includes my wifes insurance. I passed my test just under a year ago, and I shopped around and found Quinn the cheapest at £1100! Its up for renewal in march, hopefully for much less. Quinn have also charged me £111 to change address
I need to research APR's, Ill post them when I know

Tixy - Theres no way we can manage with one car, as I work away. My wife needs a car to ferry my son to and from hospital, and I also need one to get to the RNLI station
Rent is competitive, and were very happy in this house!
Council tax is definitely the correct band
MOT etc - I was a bit conservative, Im not sure on MOT prices, but I am an engineer and do the services for the cars
Nursery - He only goes once a week, as a break for my wife (my son is disabled hence the high benefits) and for his social development. Were keen for him to go more often but cant afford it yet
Pets - We have an 8 month old labrador puppy with severe hip dysplasia, she needs two hip replacements which are mostly covered by insurance. She needs royal canin food for the additives, or she will deteriorate in condition. Our other option is to have her put down weve also got a cat who had a series of blood tests, which is what were paying off.
Im not self employed, I work for a ferry company based in guernsey so they dont do PAYE, and im supposed to put money aside each month. Im contacting HMRC shortly, to arrange to split the bill over 11 or 12 months. so the figure at the top is before tax, as I pay it separately.

Thanks for your input, Ill suggest it to the wife!

[Deleted User]

silentmike486 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.................... 2
Monthly Income Details
Monthly income after tax................ 2450
Benefits................................ 600
Total monthly income.................... 3050

Monthly Expense Details
Secured/HP loan repayments.............. 271
Rent.................................... 750 (is this good for the area that you live in?)
Council tax............................. 198 (are you paying this over 10 months, if so ask if you can pay over 12, or use this amount during yout Ctax free months to everpay on one of your debts)
Electricity............................. 20
Gas..................................... 30
Water rates............................. 25
Mobile phone............................ 90 (this is very high, even for 2 phones - if you are stuck in a contract see if you can drop a tariff, if you are out of contract look at SIM only deals or PAYG)
TV Licence.............................. 13
Satellite/Cable TV...................... 33 (drop to the basic package or go freeview)
Internet Services....................... 76 (very high - check comparison sites - see if combining with TV and home phone would work out cheaper)
Groceries etc. ......................... 500 (this can be reduced a lot, this is very high. Drop branded goods for own brand, batch cook, use a list to shop and only buy what you use, meal plan - check out the Old Style board for hints, tips and cheap healthy meals, also try cheaper supermarkets - Lidl/aldi)
Clothing................................ 50 (reduce to essentials only)
Petrol/diesel........................... 130 (any way to reduce? Do you need two cars?)
Road tax................................ 25
Car Insurance........................... 127 (high, check comparison sites at renewal time for cheaper)
Car maintenance (including MOT)......... 20
Car parking............................. 10
Childcare/nursery....................... 117 (any way to reduce?)
Pet insurance/vet bills................. 70 (check comparisons sites - this seems quite high - how many pets? what kind?)
Contents insurance...................... 18 (check comparison sites at renewal)
Life assurance ......................... 10
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 20 (is this acurate?)
Child Trust Fund........................ 10
RAC..................................... 12.75
Total monthly expenses.................. 2655.75

Assets
Car(s).................................. 8000 Is it necessary to have two cars, you could sell one and pay off a chunk of debt as well as save on running costs)
Total Assets............................ 8000

Secured & HP Debts
Description....................Debt......Monthly...APR (need to know APR's)
Car 2..........................2000.....(111)......0<
Car 1..........................1500.....(80).......0<
Engagement Ring................400......(80).......0
Total secured & HP debts...... 3900......-.........-

Unsecured Debts(you need to know the APR's of these to know how much they are costing you every month - and to know where to prioritise overpayments once you have sorted out your SOA to have a surplus)
Description....................Debt......Monthly...APR
Loan...........................3000......113.......0
Natwest CC.....................1250......50........0
Barclaycard CC.................2000......80........0
Income Tax.....................3300......0.........0
Tax Overpayment................500.......50........0
Old Elec Bill..................126.......42........0
O/D............................2250......0.........0
Old Acct.......................1000......50........0
Santander CC...................1500......50........0
Total unsecured debts..........14926.....435.......-

Monthly Budget Summary
Total monthly income.................... 3,050
Expenses (including HP & secured debts). 2,655.75
Available for debt repayments........... 394.25
Monthly UNsecured debt repayments....... 435
Amount short for making debt repayments. -40.75 (you will be able to make this up easily with some small changes to your SOA to prevent you getting further into debt. The more money saving changes that you make, the greater the surplus and the quicker you will be able to get out of debt)

Personal Balance Sheet Summary
Total assets (things you own)........... 8,000
Total HP & Secured debt................. -3,900
Total Unsecured debt.................... -14,926
Net Assets.............................. -10,826

Hi,

I have made some comments above, the areas that seem to have the biggest room for savings are, mobiles, groceries, internet, and satellite TV.

HTH

Domino9

cherry-picker

There are a couple of things that may be worth looking at.

The first is to look at those internet fees, you may be able to cut these in half by rolling your internet in with your TV contract.

The second is the childcare costs. As your child is 2 and a half, you will soon be entitled to 15 hrs free childcare at nursery. This is usually at the start of the term in which your child turns 3. Double check with your nursery as to the requirements for this and make sure that you get this funding as soon as you're entitled to it.

Also, I notice that you state that you have £600 in the form of benefits. As your child is over 2, you may be able to get some funding towards these childcare costs any way. The general government requirements are......

One parent receiving one of these benefits
Income support
Income based job seekers allowance
Child tax credit at the higher rate
Extra working tax credit relating to disability
pension credit

However, every council has it's own criteria that sometimes go above any beyond this so it's worth checking with your council whether there's anything available for you to help with childcare costs now. There may not be but it's worth checking.

A final option with childcare to save on costs is to see whether your employer is part of one of the childcare voucher schemes. If they are then you can essentially sacrifice a proportion of your salary in exchange for childcare vouchers which are redeemable at any registered nursey etc. The benefit with this type of scheme is that you buy the vouchers from your gross salary (so you therefore save on the income tax, saving 25% for a basic rate tax payer)

Tixy

silentmike486 wrote: »

Im not self employed, I work for a ferry company based in guernsey so they dont do PAYE, and im supposed to put money aside each month. Im contacting HMRC shortly, to arrange to split the bill over 11 or 12 months. so the figure at the top is before tax, as I pay it separately.

Thanks for your input, Ill suggest it to the wife!

If you pay the tax seperate then you really need to put in an expense heading for this years tax as well, so that by the time next year's bill is due you have the money for it (I know I'm talking about ideal situations here rather than what is practical but it is something to consider).
Hopefully this year HMRC will allow you to pay the current bill off in installments, because of the current economic situation they are being more lenient than they used to be with repayment plans, but they may well tighten up again so I would get used to trying to get your outgoings to equal your income after you have accounted for tax, which is a further £400 or so outgoings each month.

dancingfairy

hmrc have been known to make peoplke bankrupt and there are a afew ovre on the bankruptcy board that can attest to this so they take a certain priority. you might have to prioritise hmrc and do a dmp for the others - not sure how lenient hmrc are now.
df

tbourner

silentmike486 wrote: »

Pets - We have an 8 month old labrador puppy with severe hip dysplasia, she needs two hip replacements which are mostly covered by insurance.

Really!!! Where on earth did you get her from? Is she KC and were the parents not hip scored? Seriously bad news for a young puppy to have problems like that.

silentmike486 wrote: »

She needs royal canin food for the additives, or she will deteriorate in condition.

Did your vet tell you that (the vet that went to University sponsored by Royal Canin)?


As for everything else, try this thread:
https://forums.moneysavingexpert.com/discussion/2976812

And here's an old post of how we do things, might give you some ideas:
http://forums.moneysavingexpert.com/showpost.php?p=35229703&postcount=2