On track for debt free now have baby due...

Kitten_Pie

Hi All,

I was hoping to get some constructive critisism.

I was on track to be debt free in December (fingers crossed) however we have now discovered that I am expecting (we have been trying for a while)

I am worried that with the possibility of my wage going down that we won't be able to afford all our bills. As you can see below my husband pays a large amount of our joint bills but can't afford to take on any more. I therefore need to reduce my outgoings as much as possible.

It is also likely that we will have to move as we live in a one bedroom flat, depending on whether we can sell and what we can get for the flat if anything, otherwise another option is to move into the rental flat which is a two bedroom but the travel costs will then go up quite substantially.

I am still hoping that my loan will be paid off in december - I believe that my insurances are quite high so will see if the other board can help reduce these.

We will be sitting down and going through our finances but wanted to have an idea of what I can do to get things more affordable.

Any other suggestions, I have put comments where I think explanation is required. Sorry for the long post.

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0 (1 on the way)
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1597
Partners monthly income after tax....... 0 (We currently have separate bills and accounts)
Benefits................................ 0
Other income............................ 500 (Rental income from another flat)
Total monthly income.................... 2097
Monthly Expense Details
Mortgage................................ 330 (For rental flat)
Secured/HP loan repayments.............. 0 (Finally paid off)
Rent.................................... 0 (The morgage for the flat we live in is paid by my husband)
Management charge (leasehold property).. 17
Council tax............................. 0 (Paid by husband)
Electricity............................. 0 (Paid by husband)
Gas..................................... 0 (Paid by husband)
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 35 (This is the most, it is generally under £30 will be looking to reduce this as I don't use all the minutes)
TV Licence.............................. 12.37
Satellite/Cable TV...................... 0 (Paid by husband including house phone)
Internet Services....................... 0
Groceries etc. ......................... 250 (with this we include presents for birthdays and christmas which we buy throughout the year)
Clothing................................ 50 (not always used)
Petrol/diesel........................... 40 (may go up a bit due to prices but this has been pretty constant)
Road tax................................ 13
Car Insurance........................... 60
Car maintenance (including MOT)......... 13
Car parking............................. 0
Other travel............................ 130 (train to get to work, used to get the bus but now work further away and train is the only option)
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 18 (contact lenses, to be cancelled)
Pet insurance/vet bills................. 0 (husband pays)
Buildings insurance..................... 25.52 (landlord insurance)
Contents insurance...................... 0 (included above for rental flat, husband pays for the flat we live in)
Life assurance ......................... 20.62 (for rental flat)
Other insurance......................... 48.1 (for flat we live in)
Presents (birthday, christmas etc)...... 0 (included in food bill)
Haircuts................................ 0 (Get a hair cut about once a year and go to the free places in London)
Entertainment........................... 0 (Tend not to go out, if we do it is to friends where we take over wine which is included in food costs)
Holiday................................. 0 (haven't been on holiday for 3 years, and don't think we will for a while)
Emergency fund.......................... 0
Account Charge.......................... 12 (I go into my overdraft of a month which is why this charge is here, will look at changing my account to a basic account.)
Gym..................................... 38 (this will be cancelled)
Pension................................. 25 (would rather increase than decrease)
Total monthly expenses.................. 1137.61

Assets
Cash.................................... 3000 (savings - currently put about £350-£450 a month into this pot)
House value (Gross)..................... 115000 (Flat we live in has mortgage of 170,000 and has been valued from 170,000-200,000)
Shares and bonds........................ 0 (we have bonds of £5k but want to keep this as purely emergency money)
Car(s).................................. 3000 (again an estimate, from we buy any car)
Other assets............................ 0
Total Assets............................ 121000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 70000....(330)......5 (Rental Flat)
Total secured & HP debts...... 70000.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Natwest Loan...................6000......325.......11 (was originally 10,000 and pay £350 a month - to overpay by more I have to go into the branch each time which isn't easy)
Total unsecured debts..........6000......325.......-

Monthly Budget Summary
Total monthly income.................... 2,097
Expenses (including HP & secured debts). 1,137.61
Available for debt repayments........... 959.39
Monthly UNsecured debt repayments....... 325
Amount left after debt repayments....... 634.39
Personal Balance Sheet Summary
Total assets (things you own)........... 121,000
Total HP & Secured debt................. -70,000
Total Unsecured debt.................... -6,000
Net Assets.............................. 45,000
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

walby1993

The thing that jumped out at me is the £3000 savings and your adding an extra £350-450 a month to this. If you put this into your loan then you should easily have this paid off by the time the baby is due. Also, £60 seems a little high for the car insurance. I pay £42 a month but it would depend on what car you had, previous accidents etc. Looking at what you currently have left each month and taking off the loan repayments (assuming you get this paid off by the time baby is due) you would be able to take a £960 a month drop in wages. Would you be going part-time? Who would look after baby?
Might be worth posting an SOA for your husband as well to see if any savings could be made there.

Tixy

Hi

Congrats on your new bump.:j

Is husband also looking at what cutbacks he could make? eg if he could reduce say the telephone/sky cost, would that then mean he could pay the TV licence instead of you (or whatever).

Do you pay tax on the rental property income (less costs)? have you included this in your budget anywhere?

Kitten_Pie wrote: »

Electricity............................. 0 (Paid by husband) is he shopping around for gas & elec? checking suppliers and things like online tariffs etc
Gas..................................... 0 (Paid by husband)
Water rates............................. 0 does husband pay this?
Satellite/Cable TV...................... 0 (Paid by husband including house phone) is he considering trying to get cheaper?
Groceries etc. ......................... 250 (with this we include presents for birthdays and christmas which we buy throughout the year) could you estimate how much is true groceries and how much is spent on presents etc. The figure looks quite high at the moment but thats without knowing the split. Re presents will you be able to tell friends/family you will be cutting back on these in the short term due to baby and reduced earnings for you.
Clothing................................ 50 (not always used)Is this for you or you and OH? If just for you hopefully could be lowered quite a bit (although obv you will need some maternity clothes. Do you have friends/families who can contribute hand-me-downs for baby when they arrive?
Car Insurance........................... 60 does look quite high, when is renewal? have you read through the MSE tips on reducing this?
Other travel............................ 130 (train to get to work, used to get the bus but now work further away and train is the only option) is the car required if you commute by train? does OH also have a car?
Buildings insurance..................... 25.52 (landlord insurance) shop around to see if you could get cheaper
Contents insurance...................... 0 (included above for rental flat, husband pays for the flat we live in) is he going to shop around for this?
Life assurance ......................... 20.62 (for rental flat) for flat? do you mean bought with the mortgage? if so shop around for cheaper.
Other insurance......................... 48.1 (for flat we live in) looks high, hopefully should be able to reduce this by shopping around
Presents (birthday, christmas etc)...... 0 (included in food bill)
Haircuts................................ 0 (Get a hair cut about once a year and go to the free places in London) cool there are free places in London to have hair cut? shame I'm such a long way away!
Account Charge.......................... 12 (I go into my overdraft of a month which is why this charge is here, will look at changing my account to a basic account.)
Gym..................................... 38 (this will be cancelled)
Pension................................. 25 (would rather increase than decrease)
Total monthly expenses.................. 1137.61

Assets
Cash.................................... 3000 (savings - currently put about £350-£450 a month into this pot)
House value (Gross)..................... 115000 (Flat we live in has mortgage of 170,000 and has been valued from 170,000-200,000)
Shares and bonds........................ 0 (we have bonds of £5k but want to keep this as purely emergency money)
Car(s).................................. 3000 (again an estimate, from we buy any car)
Other assets............................ 0
Total Assets............................ 121000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 70000....(330)......5 (Rental Flat)
Total secured & HP debts...... 70000.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Natwest Loan...................6000......325.......11 (was originally 10,000 and pay £350 a month - to overpay by more I have to go into the branch each time which isn't easy)
Total unsecured debts..........6000......325.......-

Monthly Budget Summary
Total monthly income.................... 2,097
Expenses (including HP & secured debts). 1,137.61
Available for debt repayments........... 959.39
Monthly UNsecured debt repayments....... 325
Amount left after debt repayments....... 634.39

Personal Balance Sheet Summary
Total assets (things you own)........... 121,000
Total HP & Secured debt................. -70,000
Total Unsecured debt.................... -6,000
Net Assets.............................. 45,000
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

Amount left after debt repayments....... 634.39 so £350 to 450 of this goes towards savings, £25 to the loan, where does the rest of it go? are you overpaying your debts at all? can you use the extra to make sure you clear your overdraft (so its not overdrawn the day before payday!).

Can you not set up to overpay your natwest loan online? would you be able to if you opened a natwest basic account (even if just so you move the money from your current account to natwest and then straight from that account to your loan)?

Looks like you should be able to fully pay off the loan before December if you use what savings you have and what you would put into savings by then.
If you can locate where the extra £200+ money goes each month then hopefully that could be used to pay off this loan as well.

Have you worked out what your income will be when on maternity? When you get a bit closer and hopefully have paid off the debts its probably worth trying a theoretical SoA for once baby is born and you stop work.

Do you think you and OH will combine finances once baby is born?

Kitten_Pie

Thank you for your help.

Yes Husband and I will be having a look through this jointly to see where we can make savings.

The £200 that is currently unaccounted is because I recently stopped smoking so should now have this extra which I haven't had before which will help. Problem with the loan is that they can't/won't add it to internet banking which makes it hard to overpay however the idea is to get the saving up so that I can wipe it out in one go at the end of the year.

i am not too worried about extra baby expenses as we have so many family and friends who will help with hand me downs. They already know that we won't be doing Christmas this year as we have to make savings which should help with the food bill. (About £50 currently goes on presents etc/ we don't have a freezer which means we can't buy in bulk - not even a little one at the top of the fridge)

Tixy if you are willing to sit for 4 hours and have a trainee do you your hair there are many places to get them free, colleges etc. The outcome is generally really good as well. The £500 rental income is after tax which I treat separately.

My car insurance was renewed in December, I paid in one lump to bring it down and did all the comparisons. Not sure why it is so high as it is a small car and I have no claims but no one seems to offer lower.

Thank you for your help.

walby1993

Hi Kitten Pie,

You say you have a small car so sounds like your definately overpaying for your car insurance. Mine is currently £42 a month for a T-reg Vauxhall Corsa and I have 4 years no claims. I have also had a look around for when mine is due for renewal and have had quotes for £30 per month.

HTH,

Walby

Million_Percent

Congrats on the pregnancy. My wife and I had our daughter last summer and we live in a one bedroom place. Unfortunately we don't have any chance of moving any time soon due to negative equity and other debts currently preventing us from saving a deposit for a new place. It's not easy but it is possible to manage in a one bed place with a baby. Ours is 9 months and we have just taken the step of deciding to sleep in the living room on a sofa bed. Up to now it has been fine all in the one room but it has now got to the point where everyone is disturbing everyone else and we have found that we all sleep much better with the new arrangement. You just have to do what you have to do. We wouldn't have it any other way...

Babies don't cost too much in the begining and don't forget you will get child benefit and depending on your income you may even qualify for child tax credits. Don't fall into the trap of buying mega expensive buggies, car seats, cots etc. Look on ebay and free ads for second hand stuff or just shop around for good deals. We got a buggy, cot and two car seats all brand new for under £250. Don't worry about clothes - your friends and relatives will buy plenty to keep you going. As for toys, look in charity shops - you can pick up great stuff for next to nothing.

Good luck with it all

Kitten_Pie

Thank you for your help. Sorry I haven't replied sooner but my home computer has finally given up.

Walby when my car insurance is due again I will see if the insurance forum has any advise however I went through the whole mse car insurance to do list and this was the cheapest. Even managed to get them down further by telling original insurer about the cheaper quote.

Obviously doing something wrong but can't think what.

Million Percent - thank you for bringing me back to reality. It is looking likely that we will be staying in the one bedroom flat and although not ideal I have to keep reminding myself that we are not in that bad a situation.
I am still holding out that we are not in negative equity and that we can sell our flat with a little left over for deposit - I think that I am living in the clouds.

Spent the weekend decluttering all our non essentials and going through what we can sell to create space and some extra cash. - Idea is to create space for baby and make it more appealing for potential buyers.

Taking my finance spread sheet and comments home tonight so we can sit down and go through our joint finances together. (Hopefully it won't be as bad as I fear)

Once again thank you all for your help.

Kind Regards
Hollyx