sleepwalking into debt

mikey46

Hello DFWs,

I'm new to posting, so please bear with me, but thought i'd join and try to tackle my debt problem, and get some ideas.

A year ago my wife stopped work so that she could spend more time with our children (and look after our youngest who was 2yrs old). I looked at our outgoings (briefly) at the time, and thought that this would be do-able on my salary alone...

one year year later and i have realised that i have been sleepwalking, or possibly even deliberatly ignoring our increasing debts. (I think maybe i am not alone in this)

A SOA below gives the financial situation:

Statement of Affairs and Personal Balance Sheet
Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 2300
Partners monthly income after tax....... 0
Benefits................................ 200
Other income............................ 0
Total monthly income.................... 2400
Monthly Expense Details
Mortgage................................ 750
Secured/HP loan repayments.............. 241
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 180
Electricity............................. 60
Gas..................................... 60
Oil..................................... 0
Water rates............................. 45
Telephone (land line)................... 15
Mobile phone............................ 10
TV Licence.............................. 14
Satellite/Cable TV...................... 0
Internet Services....................... 12
Groceries etc. ......................... 600
Clothing................................ 100
Petrol/diesel........................... 200
Road tax................................ 50
Car Insurance........................... 60
Car maintenance (including MOT)......... 60
Car parking............................. 0
Other travel............................ 10
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 20
Life assurance ......................... 20
Other insurance......................... 27
Presents (birthday, christmas etc)...... 30
Haircuts................................ 10
Entertainment........................... 30
Holiday................................. 30
Emergency fund.......................... 200
Total monthly expenses.................. 2869

Assets
Cash.................................... 2500
House value (Gross)..................... 260000
Shares and bonds........................ 3000
Car(s).................................. 5000
Other assets............................ 0
Total Assets............................ 270500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 95000....(750)......2.5
Hire Purchase (HP) debt ...... 10000....(241)......7.9
Total secured & HP debts...... 105000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
(Unnamed debt).................8200......25........4
(Unnamed debt).................4000......50........4
Total unsecured debts..........12200.....75........-

Monthly Budget Summary
Total monthly income.................... 2,500
Expenses (including HP & secured debts). 2,869
Available for debt repayments........... -369 :eek:
Monthly UNsecured debt repayments....... 75
Amount short for making debt repayments. -444
Personal Balance Sheet Summary
Total assets (things you own)........... 270,500
Total HP & Secured debt................. -105,000
Total Unsecured debt.................... -12,200
Net Assets.............................. 153,300
Created using the SOA calculator link removed
Reproduced on Moneysavingexpert with permission, using IE browser.[/font]

In summary... we have been living as if we still had a second income and i need to take charge of the problem.

things i have done so far (last week):

- moved £4000 of debt from overdraft (18%APR) to 1 year 0% credit cards (4% balance transfer fee).
- stopped paying money into the emergency fund

however this does not bring me back into the black (still -minus £169/month). I think the most lilkely cause of my initial assumption that we would be alright on my salary alone was that i had forgotten to include many one-off costs, that if you break down into monthly figures show you can't really afford it.

so...i now plan to do something about it.

i realise my salary is better than many and i am fortunate that there are a few things that i can do immediately to reduce monthy debt increasing, but still am i debt, and it is currently getting worse so could do with some support-as i feel pretty low about all this at the moment.

ideas, suggestions pls.

oh and well done to everyone i have read who is tackling their debt-you guys obviously woke up earlier than i did!

Mike

backinbusiness

You mentioned your emergency fund, but also the groceries and clothing jumped out at me instantly too.

I am sure there is scope for massive reductions here, particularly the groceries.

Good luck op

FireWyrm

mikey46 wrote: »

Hello DFWs,

I'm new to posting, so please bear with me, but thought i'd join and try to tackle my debt problem, and get some ideas.

A year ago my wife stopped work so that she could spend more time with our children (and look after our youngest who was 2yrs old). I looked at our outgoings (briefly) at the time, and thought that this would be do-able on my salary alone...

one year year later and i have realised that i have been sleepwalking, or possibly even deliberatly ignoring our increasing debts. (I think maybe i am not alone in this)

A SOA below gives the financial situation:

Statement of Affairs and Personal Balance Sheet
Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 2300
Partners monthly income after tax....... 0
Benefits................................ 200
Other income............................ 0
Total monthly income.................... 2400
Monthly Expense Details
Mortgage................................ 750
Secured/HP loan repayments.............. 241
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 180 Wow, are you sure? That's allot.
Electricity............................. 60
Gas..................................... 60
Oil..................................... 0
Water rates............................. 45
Telephone (land line)................... 15
Mobile phone............................ 10
TV Licence.............................. 14
Satellite/Cable TV...................... 0
Internet Services....................... 12
Groceries etc. ......................... 600 Yikes....I spend between £100 - £170 for 2 adults and 2 children.
Clothing................................ 100 Every month?
Petrol/diesel........................... 200 Car share? Public transport? Ditch one of the cars?
Road tax................................ 50 Downsize the car you dont use that often? I have a little peugeot for going to work in and my tax is £35 a year
Car Insurance........................... 60 Definately hit the comparison sites....
Car maintenance (including MOT)......... 60 Every month?
Car parking............................. 0
Other travel............................ 10 ? What's this for
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 20
Life assurance ......................... 20
Other insurance......................... 27 And again, do you need this?
Presents (birthday, christmas etc)...... 30 Hmm, halve this?
Haircuts................................ 10
Entertainment........................... 30 Maybe halve this
Holiday................................. 30 And again
Emergency fund.......................... 200 What type of emergency that isnt covered by insurance? Or are you just being cautious? Do you really save this every single month?
Total monthly expenses.................. 2869

Assets
Cash.................................... 2500
House value (Gross)..................... 260000
Shares and bonds........................ 3000 Cash this in and pay off some of the HP debt?
Car(s).................................. 5000
Other assets............................ 0
Total Assets............................ 270500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 95000....(750)......2.5
Hire Purchase (HP) debt ...... 10000....(241)......7.9 Not good. Can you shop around for a better rate? For instance, I just put £5K onto a 0% credit card for 20 months. This was because I was just running to stand still....probably couldnt move it all, but it might improve your circumstances slightly.
Total secured & HP debts...... 105000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
(Unnamed debt).................8200......25........4
(Unnamed debt).................4000......50........4
Total unsecured debts..........12200.....75........-

Monthly Budget Summary
Total monthly income.................... 2,500
Expenses (including HP & secured debts). 2,869 Yeah, I know what you mean. I've kept a spending diary for the last 6 months and it was horrific how much was just being frittered away on trips to the shop for milk! It's probably worse than you think. The only way to find out is to analyse it properly and objectively for at least a month if not several.
Available for debt repayments........... -369 :eek:
Monthly UNsecured debt repayments....... 75
Amount short for making debt repayments. -444
Personal Balance Sheet Summary
Total assets (things you own)........... 270,500
Total HP & Secured debt................. -105,000
Total Unsecured debt.................... -12,200
Net Assets.............................. 153,300
Created using the SOA calculator link removed
Reproduced on Moneysavingexpert with permission, using IE browser.[/font]

In summary... we have been living as if we still had a second income and i need to take charge of the problem.
Yup....know how that oges

things i have done so far (last week):

- moved £4000 of debt from overdraft (18%APR) to 1 year 0% credit cards (4% balance transfer fee).
Ahh...see above. You've done it already
- stopped paying money into the emergency fund
And again....

however this does not bring me back into the black (still -minus £169/month). I think the most lilkely cause of my initial assumption that we would be alright on my salary alone was that i had forgotten to include many one-off costs, that if you break down into monthly figures show you can't really afford it.
I'm willing to bet you 'lose' about £200 a month just nipping to the shops and unexpected petrol fillups.

so...i now plan to do something about it.
Join the club, you're in good company.

i realise my salary is better than many and i am fortunate that there are a few things that i can do immediately to reduce monthy debt increasing, but still am i debt, and it is currently getting worse so could do with some support-as i feel pretty low about all this at the moment.
Hey, you dont need to be appologetic about it. Your take home is the same as mine give or take. No-one will have a go because you have more than most...this isnt the Daily Mail

ideas, suggestions pls.
Many and various. Hit the Old Style thread for more information and ideas on top of what we've suggested.

oh and well done to everyone i have read who is tackling their debt-you guys obviously woke up earlier than i did!
If you call sleep walking for the best part of 10 years, early...why thank you.

Mike

My comments in RED

allydowd

mikey46 wrote: »

Petrol/diesel........................... 200

Car parking............................. 0

Other travel............................ 10

Buildings insurance..................... 20
Contents insurance...................... 20

Haircuts................................ 10

Buy hair clippers: http://www.argos.co.uk/static/Product/partNumber/4425540.htm?CMPID=GS001&_$ja=tsid:11527|cc:|prd:4425540|cat:health+and+personal+care+%2F+men%26%23180%3Bs+beard+trimmers+and+hair+clippers+%2F+hair+clippers+%2F
It's really easy to cut men's boy's hair with them and not too tricky to cut women's hair either. A one off purchase of £6.99 would save you money on haircuts in less than two months.

Have you shopped around for Buildings insurance and Contents insurance?

If you travel by train buy tickets through East Midlands Trains on the www.quidco.com website. You can buy the tickets wherever you live and collect locally. They pay up to 2.5% cashback.

Find your cheapest local Petrol station at http://www.petrolprices.com/

If you shop at Tesco use https://www.tescopricecheck.com/PriceCheck/Pages/Default.aspx after every shop. It takes only a couple of minutes and you'll get vouchers back if your shop would have been cheaper at Asda.

rdchick

mikey46 wrote: »

Statement of Affairs and Personal Balance Sheet
Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 2 Do you really need 2?
Monthly Income Details
Monthly income after tax................ 2300
Partners monthly income after tax....... 0
Benefits................................ 200
Other income............................ 0
Total monthly income.................... 2400 Surely it's 2500?
Monthly Expense Details
Mortgage................................ 750
Secured/HP loan repayments.............. 241 What's this for?
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 180 Seems rather high?
Electricity............................. 60 Seems high, do you just pay this by direct debit?
Gas..................................... 60 see above
Oil..................................... 0
Water rates............................. 45
Telephone (land line)................... 15
Mobile phone............................ 10
TV Licence.............................. 14
Satellite/Cable TV...................... 0
Internet Services....................... 12
Groceries etc. ......................... 600 wayyyy too high, don't buy brands and go to the Old style board for better ways to feed you
Clothing................................ 100 try ebay and places as this is high
Petrol/diesel........................... 200
Road tax................................ 50 every month?!
Car Insurance........................... 60
Car maintenance (including MOT)......... 60 seems high?
Car parking............................. 0
Other travel............................ 10 what?
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 20
Life assurance ......................... 20
Other insurance......................... 27
Presents (birthday, christmas etc)...... 30
Haircuts................................ 10
Entertainment........................... 30
Holiday................................. 30
Emergency fund.......................... 200 trim this down big time
Total monthly expenses.................. 2869

Assets
Cash.................................... 2500 why not pay off some of the debt with this?
House value (Gross)..................... 260000
Shares and bonds........................ 3000
Car(s).................................. 5000
Other assets............................ 0
Total Assets............................ 270500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 95000....(750)......2.5
Hire Purchase (HP) debt ...... 10000....(241)......7.9
Total secured & HP debts...... 105000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
(Unnamed debt).................8200......25........4
(Unnamed debt).................4000......50........4
Total unsecured debts..........12200.....75........-

Monthly Budget Summary
Total monthly income.................... 2,500
Expenses (including HP & secured debts). 2,869
Available for debt repayments........... -369 :eek:
Monthly UNsecured debt repayments....... 75
Amount short for making debt repayments. -444
Personal Balance Sheet Summary
Total assets (things you own)........... 270,500
Total HP & Secured debt................. -105,000
Total Unsecured debt.................... -12,200
Net Assets.............................. 153,300
Created using the SOA calculator link removed
Reproduced on Moneysavingexpert with permission, using IE browser.[/font]

Just some pointers for you

x_Kaz_x

I'm not one of the experts, but here are a couple of my thoughts...

You should be able to cut your groceries by at least half with careful meal planning. We spend about £200 a month on groceries for a family of 4 (that includes buying toiletries, cleaning products, nappies, wipes etc).

Do you need 2 cars, if your OH doesn't need a car to get to work could she use your car when you're not using it? By selling one, not only would you have a lump sum to pay towards the debts but your insurance and maintenance costs and possibly petrol would reduce as well.

smartiedriver_2

I too noticed groceries were a massive expense. Can you shop somewhere cheaper, such as Aldi or Lidl? Or if you currently shop in Waitrose or Sainsbury, downgrade to Tesco or Asda? Can you change down a brand level - instead of buying Heinz buy Tesco's own, for example?

Your mortgage looks to be on a decent rate, as does the other secured loan, really, so not much scope therel, unless you could move to interest only for a period (unlikely, given today's lending). Could you re-schedule the unsecured debts onto a new loan which has lower repayments each month - albeit it would extend the term?

Can you transfer anything else to 0%? Or ask for a short payment holiday?

Do you really need to spend £100 every month on clothes? Buy necessities in the supermarkets (school uniform, kids clothes, plain t-shirts etc) and resist buying anything else for 12 months.

Obviously shop around on the comparison websites, see if you can get your utilities cheaper and your insurances. Be wary of cancelling any life or illness policies, however, as new policies tend to have more exclusions than old ones.

Cancel the holiday payment for a year - it's not much but it will help.

Could a family member or close friend watch the kids one day a week so that your wife could do some part time work? Or what about an ad-hoc job such as Avon selling or Body Shop parties?

Could you sell any old children's toys on eBay or at a car boot sale?

I hope just one of these suggestions helps. Good luck!

dreamdreamer

There's been some good comments above OP, like the above posters the clothing and groceries stuck out to me, so definitely check out the Old Style Board here. But the 2 cars also stuck out as it was dropping my car that really started to make a difference to my debt repayments. Your car costs are £370 a month, ditching one would halve that (roughly). Obviously this might not be practical if you live literally in the middle of nowhere, but in a town/suburbia/well-serviced village it might be viable for your wife to ditch her car as she's not working.

Anyway you're in good company here, we've nearly all been where you are now! Doesn't matter how good/bad salaries are, debt feels bad regardless!

allydowd

mikey46 wrote: »

Groceries etc. ......................... 600

You need to get radical here:

Read what Martin has to say about Downshifting carefully: http://www.moneysavingexpert.com/shopping/cheap-supermarket-shopping There is really very little difference between Hovis White Self-Raising Flour and Tesco Value Self-Raising Flour, except the price.

Look out for discount vouchers like these http://www.moneysavingexpert.com/deals/supermarket-coupons Last week I got a voucher from here http://www.philadelphia.co.uk which ended up making a tub of Philadelphia cheaper than the supermarket's own brand equivalent.

Don't waste food. Veggies past their best can be made into soup or frozen for later use. If you waste bread freeze it half a loaf at a time and take it out when you need it. You can also freeze cheddar cheese if you need to. If you make too much rice save it in an air-tight container for later. If you have left over yoghurt freeze it for an ice-cream type dessert. Buy an ice-lolly mould for a pound and make your own from lemonade or squash/diluting juice. Left over fruit can also be frozen. Go to your kitchen cupboards; I bet you can make a tonne of soups, casseroles and so on from ingredients you already have.

Use up all your existing toiletries before buying more.

allydowd

mikey46 wrote: »

Electricity............................. 60
Gas..................................... 60

Save electricity:

This time of year you should barely need the light on at all. If you're watching tv late at night, turn the light off.

Walk around and turn off all the unnecessary switches.

Charge your mobile at work (if permitted) or from your laptop.

Find something to do for entertainment with the children that doesn't use electricity; Make and fly a kite. Go play soldiers in a wood. Anything without a plug on it. Buy cheap videos/DVDs from the charity shop or rent from the library which is cheaper than the local Blockbusters.

Turn off the oven five minutes before the end of cooking time. They'll be enough heat to finish the food off at no cost.

Tebheag

mikey46 wrote: »

Hello DFWs,


A SOA below gives the financial situation:

Statement of Affairs and Personal Balance Sheet
Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 2 can you sell you car ?
Monthly Income Details
Monthly income after tax................ 2300
Partners monthly income after tax....... 0
Benefits................................ 200
Other income............................ 0
Total monthly income.................... 2400 Does not add up should be £2,500
Monthly Expense Details
Mortgage................................ 750
Secured/HP loan repayments.............. 241
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 180
Electricity............................. 60
Gas..................................... 60
Oil..................................... 0
Water rates............................. 45
Telephone (land line)................... 15
Mobile phone............................ 10
TV Licence.............................. 14
Satellite/Cable TV...................... 0
Internet Services....................... 12
Groceries etc. ......................... 600 Seems very high could be cut to £350 easily
Clothing................................ 100 Could you cut down to £50 or less
Petrol/diesel........................... 200
Road tax................................ 50
Car Insurance........................... 60
Car maintenance (including MOT)......... 60
Car parking............................. 0
Other travel............................ 10
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 20
Life assurance ......................... 20
Other insurance......................... 27
Presents (birthday, christmas etc)...... 30
Haircuts................................ 10
Entertainment........................... 30
Holiday................................. 30
Emergency fund.......................... 200 i see you have stopped this but where did it go is there saving you could use to pay debt ?
Total monthly expenses.................. 2869

Assets
Cash.................................... 2500
House value (Gross)..................... 260000
Shares and bonds........................ 3000
Car(s).................................. 5000
Other assets............................ 0
Total Assets............................ 270500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 95000....(750)......2.5
Hire Purchase (HP) debt ...... 10000....(241)......7.9
Total secured & HP debts...... 105000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
(Unnamed debt).................8200......25........4
(Unnamed debt).................4000......50........4
Total unsecured debts..........12200.....75........-

Monthly Budget Summary
Total monthly income.................... 2,500
Expenses (including HP & secured debts). 2,869
Available for debt repayments........... -369 :eek:
Monthly UNsecured debt repayments....... 75
Amount short for making debt repayments. -444 after reducing the food, clothing and emergency fund also inc the £100 extra income not added correctly I make it £156 left over each month
Personal Balance Sheet Summary
Total assets (things you own)........... 270,500
Total HP & Secured debt................. -105,000
Total Unsecured debt.................... -12,200
Net Assets.............................. 153,300
Created using the SOA calculator link removed
Reproduced on Moneysavingexpert with permission, using IE browser.[/font]



Mike

You are not alone things do not look too bad !