Advice

sheraz2

I know someone very close to me who paid off £70,000 debt in 16 months with an income of £5,000 a month (no interest, it was borrowed from family members). Living on bare minimum with a family and the kids never really noticed.

"The kids would never forgive us if we sent them to state schools"

Sometime I wonder how I survived :rolleyes:


Every suggestion you are given, you seem to knock it back or want a cheaper alternative. I could understand if it was neccesities that you want cheaper alternatives for, but Sky +

Bloke_with_a_simple_life

HEllo Saz

Quick couple of questions:

1. Your partner's monthly income of 5400.00 - is this gross or net of tax? THe tax saving of £1000 may not be enough to cover the tax payable on this. And therefore, the £1000 may be too low and should be increased.

2. THe BT & Broadband costs - you ca switch to get an all inclusive packages from around £20 per month. Look at this link for advice http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1095003038,99872,

3. Need to cut down on your foodbills and change you shopping habits. (What do you include in "household stuff" - clothes, school uniforms, family outings, doing things etc etc etc?) THe £500 food & household and £150 miscellaneous figures need to be broken down further to give a better overview of things (I may eb wrong, but I suspect this figure is just an estimate)

4. If you are on an interest and capital repayment mortgage then you don't need a endowment.. look into selling/cancelling/cashing in the House endowments saving you £127.94

5. As you are in sizeable debt - why do you have a Scot Widows Saving plan of £50. Stop contributing and tHis can save you money.

6. OH Pvte Pensions - £250.18 - this cannot be afforded at the momnt as you are in so much debt - this will have to be postponted until you are in a safer financial place and is a luxury. IT will be essential in the future - but not yet.

8. Car loans - My car loan - £265
OH car loan - £385 - you may have to down size - how many months are left on the loans? are there any balloon payments at the end of the loan period so you "own" the cars? What make/model of cars are we dealing with here?

9. Kids saving & pocket money £55 - - How maey & how old are the kids and what is the break between SAvings & pocket moey? By savings - do you put the moey in to a savings fund/bank accoun? Again - at the moment - this is a luxury you canot afford.

10. Pets insurance @ £29 plus £35 on pet food. You canot afford these pets and need to look to finding new homes for them. If you cannot live without a pet - look for smaller pets (hamsters etc).

11. School fees - £1700 - I see the sentiments with the desire to send children to fee paying schoool and this is a private decision which you think is an essential. However, based on this need - you MUST need to cut back expenditure elsewhere - icluding mortgage payments. The thing about life is you cannot have everything and cannot afford everythign - and therefore you eed to make choices. If this is more importat than aything else, then this needs to be at the top of your list of things to keep. You may eed to have a smaller house to pay for this ad do without all the other luxuries you enjoy but cannot afford to pay (sky plus, pets, £500 food bill).

This is what my parents did to send me and my sisters to private schools - didn't have a car for several years and used buses all the time, didn't do package holidays, did't have videos, didn't frivilously spend on unneeded luxuries, did do things cheaply but together as a family. THey knew what was important to them and us - and prioritised money and time accordingly. They knew that they could not afford and therefore could not have everything. No harm or problem with this approach.

12 - Mortgage of £2300 - can you afford this and school fees currently. A smaller house or in a different locality may be needed soon.

13. No mention of payments for family outings, or activities. Do you spend money on doing things together as a family?

14. If you are to do teacher training in September - how long will this take, what is the cost, what is the loss of income whilst you study? I think you may have to find a job briging in more money first - and put off going to study until you are more financaily secure.

Good luck.

FerociousDave

Sorry, bit late - in response to : £8,000 a month and in debt!

That's how loan companies and modern consumerism works though - the more you have, the more you need!

bikerqueen

come on people she said she was reluctant to post because of her income and now I can see why. I'm sure they work bloody hard for it so lets not have a go just based on numbers. Overspending, yes, but there's no call for jealousy based digs. Or is there an income limit on when you can ask for help on this forum?

david_hellier

Having read some further comments and responses from saz the last thing they need to do is work more. That does not solve the basic problem of overspending. The biggest overheads, school fees and mortgage need to be tackled, otherwise nothing will change. A spending diary at this stage is pointless as they have nothing to spend!

immoral_angeluk

Ok, here's how I see it. Sorry if I seem blunt but the fact is that you are over spending each month and can cimply not afford to keep up the lifestyle you are maintaining. Cutting down your outgoings is a lot simpler to do than increasing your incomings and has a more instant effect. Please don't go down the route of remortgaging/interest mortgages etc as this will not help your situation at all. You need to reduce your outgoings because you are getting into real trouble trying to maintain a lifestyle you simply cannot afford. Anyway here goes.

Monthly Incomings:
My money - self employed and fluctuates but around - £100 Can you get a full time job?
Partners salary - £5400
Partners gross extras - £2000 (average)
Benefits - £115 (child benefit)

Total - £8,105

Monthly Outgoings:

Mortgage- £2300 OUCH is all I can say to that!
Council Tax - £159
Gas -and Elec combined bill - £300 - (have done a Uswitch and should be a lot less now) Well done for using Uswitch hopefully you'll save a lot as this is very high!
TV Licence - £10.99
Sky £36- considering changing to Freeview but have Sky+ and would like an equivalent If you cancel your sky subcription you get to keep the sky+ box, and they give you the option to keep the recording features and use them for freeview if you pay £10 a month. Or you could just buy a freeview box/recorder.
Phone (BT) - £44.91
Phone - 18866, - £10 ?
Phone - Euphony- £12.49
Phone - Telecom U - £1.71 - not sure what this is! Why do you need so many phones? Cut it down and simplify it and you'll save a lot each month.
Daughter's mobile - £19 Can she not pay this out of her pocket money or go pay and go??
My mobile - £20 Can you reduce your tariff or ideally go pay and go?
OH and OD - PAYG probably £10 per month
BT Broadband - £23.53 Have you looked at combined phone/broadband packages? You can get cheaper than this
Tescos - food and household stuff - £500 Check out the moneysaving old style board for ideas on how to cut this down. This is a lot for 4 people.
Car Insurance me - £32.66 Is getting rid of one of the cars an option? If not are you getting the cheapest insurance deals?
Car Ins OH - £32.70
Petrol 2 cars - £150 Again, do you need to use 2 cars?
Life Insurance - £31.74 Personally I would cancel this for the time being until you get your finances sorted out.
House endowments (!) - £127.94 Not sure what this is for?? But it's a lot of money whatever it is!
Water - £59
Denplan - £14.26 Is this for both you and your husband? Are there cheaper deals?
Scot Widows Saving plan - £50 you can't afford to save this at the moment, you need the money to live on first, THEN save.
OH Pvte Pensions - £250.18
OH income protection - £56.11 Is this essential?
Kids savings and pocket money - £55 How old are they? Are they old enough to get part time jobs? Also see above comment about the savings.
Dog ins - £22 How many dogs? This seems high! Check out for cheaper deals.
Cat ins - £7 Again, are there any better deals?
My car loan - £265 How long left? Apr? Balance?
OH car loan - £385 Same as above.
House ins - £62 This seems very high, have you looked around for cheaper deals?
Gym membership - £45 - cancelling when a year up When is the year up? Can you not cancel before?
Virgin CC - £28.15 Apr? Balance?
Egg CC - £18.98 as above
A&L Loan - £428 as above
PC World laptop - £21.97 I take it this is finance? Apr? Balance? How long left?
Pet food £35 For how many pets? Will they eat own brand food?
School fees - £1700! Can you REALLY afford to send your kids to private school? This is a hell of a lot of money each month and comprehensives really are not that bad. If you won't change their school then you're going to have to cut back elsewhere so that you CAN afford to send them.
Tax saving - £1000 Do you need to save this much? How much is the tax normally?
Misc household - £150 What is this for??

Total - £8474.71

Net - -£369.71

That's not too bad actually! Yes hun, it is. The fact is the money you've got coming in doesn't cover your outgoings. That means that each month you will be getting deeper and deeper into debt. £369 may not seem a lot when you've got over 8k coming in but if you maintained that level of overspend you're getting 4 1/2k more in debt each year. You can't go on like this because you're going to end up in massive trouble. You need to start cutting back now to stop yourself going into the red each month. You need to live first before you can even start looking at sorting out debts because at the moment you're on a slippery slope! again I'm sorry if this seems harsh but if you can't afford to maintain the lifestyle you're living you HAVE to change your lifestyle, it's as simple as that.

Verbatim

The thing about debt is that most of us have a tendency to live up to our incomes. Then if there's a change of circumstances like redundancy and no savings the proverbial hits the fan.

So well done Saz on realizing stuff needs to change, the only thing is what stuff. Totally your decision and I see no point in people laying down how you should live. You have a high income and should be able to sort this out pretty easily. One fairly painless option is reducing your monthly spend at the supermarket from £500. The old style boards have suggestions but the basics are planning your meals, cooking them from scratch, only buying what is needed for them and sticking to budget. If you know this will be difficult draw out the cash you intend to spend and leave all switch and cc cards at home. After a week or so you'll know exactly how much the items will cost, (except that the ba***ards keep putting them up) and so it's easier to work out in advance. For that reason and because it's tough doing it all at once, you may want to aim to reduce your spend in stages.

Education is the finest thing we can give our children imho and no-one would want to take a child out of a school where they are happy, settled and doing well. Some independent schools have bursaries to help parents who can't afford the fees BUT these are usually means tested for low income families, or based on achieving academic excellence and are usually available only at secondary level.

Your budget is really not that far out and I'd say it's just a matter of getting some control over where you're overspending. The usual advice of starting a spending diary is useful and stops one buying odds and sods as you know it has to be recorded and added up!

I tend not to go for the insurance packages as I'm sceptical about the likelihood of them paying out in the circumstances of any particular claim. I do have rebuilding and contents insurance but that's it. I try to save for emergencies and like your husband for my tax bills which fluctuate wildly as they're based on income from property.

Hope you'll update on progress soon. Very best of luck to you.

WesternExpress

Well done for having the courage to face up to your problems. The way I see it is that you are trying to have the best for your family and in doing so are not quite making ends meet. I think that you need to sit down and consider what you really want. I know that there will be a lot of people who would say that you should just send your children to the nearest state school. I don't think you need to be that hasty as people with far less income than you have successfully sent children to private schools.

You appear to be paying rather a lot towards two cars. Can you perhaps trade one or both of these to cheaper and more economical models? I make it £865.36 a month that you spend on your cars. That is £10384.32 a year. (Or the same as sending another child to school.) I know that you won't be able to reduce this to nothing, but it is a large amount of money.

Your mortgage seems to be rather large. You may wish to consider downsizing house to lower your repayments and the overally amount of debt.

Do PM me if you wish to have any emotional support

Paige

Saz, Hi I am in roughly the same position as you, own business, high incomes and about 17k worth of personel credit card and overdraft debt. Our debts are just as valid as anyone elses on a lower income. We are all here for the same reason, how we got here and with how much is not relevant, it is all debt that has spiralled out of control. You are braver than me as I have not posted my SOA because of the amount of money we earn and I am worried about negetive comments.
One very positive thought is that by having high incomes we have the potential of clearing these debts quickly if we cut back and channel all of our energy into cost cutting Paige X

Paige

Saz, if you want to PM me for support, please do. Paige X