sleepwalking into debt

mikey46

wow, thanks for all the responses!

couple of things on the SOA that may help explain it;

gas & elec - this is an monthly average worked out by looking at my bills over the past year. (I couldnt see any other way of including a sensible number here). It does look high over the year.

-I haven't done comparisons so will look into this (currently with telecom plus/utility warehouse). thank

total income - yes should be £2500 - sadly I think the amount of debt at the end is correct (i did the SOA then tinkered with it once pasted...but did adjust the end figure to 2500)

cars - really really don't want to go to one car!... but it is really expensive... will think long and hard.

emergency fund - this is the cash included in the savings listed later on i.e. £2500 so is included in SOA. I started this around 2 years ago , but have been into it a couple of times to cover replacement dishwasher and washing machine etc. (I was aiming for 3 months eq. salary in this fund, but actually only achieved 1 month ).

note: i was reading something Martin put in his MSE money tips-about emergency savings being old school-so i will probabaly use some of this to reduce debt on one of the cards when the 0% ends.

car tax - thanks for spotting this rdchick- it is incorrect (forgot to divide properly over the 12 months). 2 cars and tax (because higher Co2) for each is ca. £460. actually should be about £40/month

council tax - same as above-forgot about feb&mar when it isn't paid..still, might be better to keep at £180 as i'm sure it won't be long before it gets there!

ALL,
really thanks for the response - i could probabbly quite easily focus on the groceries and clothing - which might be the least painful in the short term.

@ firewyrm - I felt really supported by your comments-thanks and good suggestions (as are all the others as well). note that i too have a small peugeot for a run-around -but mine is 1996 and sadly tax ain't £35!

maybe it is time to ditch the 2nd car.

lots to think about..will update on my progress and new SOA in future.

thanks to all,
Mike

niccatw

Hi Mike

Lots of people have already given you excellent suggestions on where things can be reduced, so I'll leave those.

Have you spoken to your wife about the situation? I am single and have no dependents so obviously my situation is very different to yours, but what I have found over my debt-busting time is that I had to take a long, hard look at me, my lifestyle and things that were important to me.

It will be easier (and hopefully quicker) if you can get all of your family on board with any changes you need to make (even if your kids are pretty young) and that means working out what's important to you as a family. That way you can set a more realistic budget. For example, if you agree you're all foodies, you might agree a higher grocery budget is necessary. But if you agree that one day out a month is what you want, then every-one might be more willing to do their bit to reduce the grocery budget to make sure there's more leeway in the entertainment budget, if you see what I mean.

You'd (I include your wife in this) hugely benefit from keeping a spending diary for as long as you can. As has been said, it's rather scary!!! But it does let you see what's being frittered and what's necessary. Or pull out all your bank statements for the last year and see where it's been going. I was horrified at the amount I was taking from the cashline - none of which I could account for!

I've found you need a good balance between debt-busting and maintaining your emotional wellbeing to keep focused on reducing the debt. If you go all-or-nothing too quickly, you might you get a back-lash from you family, or burn out quickly and old habits have a tendency to creep back in when your not looking.

If you haven't already, have a look at some of the debt free diaries - very inspirational. And you're bound to find one that resonates with you and how you and your family like to live your lives.

mikey46

I have really only just done the sums myself... so whilst she is aware we have debts, i don't think she knows quite how much yet.

I will sit down and we will sort this out together.

foxgloves

Hi, I stopped work earlier this year & so our income dropped by exactly a third. We financed this partly by setting a firm grocery spend per month (250) and not going above it, and by going down to one car, which we share. Running 2 cars on one salary just turned out to be a luxury when we looked at the figures. We took both of our cars & traded them in for one newer one. I'd already started work on reducing energy bills. We were paying £80 for gas & around £70 for electricity but decided to look carefully at what we were wasting in terms of boiling whole kettle for one cup of tea (me!!), leaving lights on all the time (partner!), leaving stuff on standby, failing to set timer to make use of lower night time tariff for running the washing machine, breadmaker, etc, plus a load of other smaller things. Within a year, our monthly payments had more than halved to £66 for both gas & electricity, so definitely worth you looking at this. Prior to me stopping work, we'd managed to pay off quite a lot of debt and so in the spirit of my new budgeting self (!), I made a spreadsheet & started reading the electricity & gas meters every Sunday night & logging it. Been doing for over a year now which means I can compare readings with same week previous year & check we are on track & not in line for any nasty surprises. Turning the heating down a little helps too so we wear an extra layer rather than sitting in hot house all winter in a t-shirt. There's loads you can do to try & get that big energy outlay down. Your grocery spend is simply huge!! Now I am not working, I see myself as the Chief Domestic Economist and put lots of planning into monthly menus, batch cooking, veg growing (husband shares this at weekends) and generally ensuring that no food is wasted. We also looked at products we regularly bought that we really don't need i.e kitchen roll and ready-made sauces in jars, that kind of thing, & just cut them out so that grocery bill is prioritising food, particularly good food ingredients that will s-t-r-e-t-c-h......the Old Style board (my spiritual home!) is full of ideas on this kind of thing. Shop around. All the bargains are not under one supermarket roof. Use proper butchers, etc, for cheaper (& tastier) cuts of meat. Also, see if you can ditch clothes spending, except for essentials, of course, like growing children & necessary shoes, for a year or so to enable the savings to be thrown at debts. Hope this is helpful....and good luck....we were only debt-free from May this year after 20 years of overspending, so like many on here, proof that even longstanding naughty spenders can be 'cured'. Best wishes.

mikey46

Hello all,

I think I forgot to click the 'thanks' buttons last time i posted (back in July-where does the time go???) ...anyway I have clicked these now.

Over the last few months I have looked at ways to reduce our spending and increase income if possible. I'm not posting up an SOA today, but will mention some main things we have/are doing:

1. My wife is working for 'sitters' (babysitting) - brings in about extra £100/month. (would be more but my shift work means a lot of the weekend work is out).
2. We are meal planning and doing less 'from memory' shopping lists - already have less waste/things we don't need/use.
3. I compared and then changed the tariff on our energy deal so we pay more fixed per month , but get a lower p/kwH - which saves about £150/year.
4. Got car insurance down from £550/year for 2 cars to £400...(have not got rid of the car though :-/ )
5. We started selling toys and other bits on ebay - my wife has now sold 100 items on it! (and the loft is staring to clear!)

At the moment the debt spiral has stopped - and we have lots of other things to look at , but we have made some changes that haven't pinched hard and give breathing space. Also we have sorted all our christmas presents etc -so we should be able to go into 2012 without the normal christmas hangover (financial at least :-)).

thanks for all the advice and i can see that this is do-able, especially if done little by little. I may get radical at some point-but i'm not really a radical kinda guy! so slow and steady it is...

good luck to one and all for the future.
cheers,
Mike

dancingfairy

Glad to hear things are going well. You could always post a new soa if you want more/new advice and so we can be nosey and see how well things are going for you
df

MrsTinks

Depending on how much time your wife has at home to herself when the kids are entertaining themselves/having a nap - tell her to get over to the competitions board... Plenty of people on here do quite well in comps - I know it's not in the country but my half sister in Denmark hasn't paid for a holiday for years and recently tried to give away 25kg of sweets because she won them but after a few bags felt so sick at the sight of them :rotfl: She also won a DS, a couple of iPhones etc one our brother got for his birthday and the phones she sold...
Heck if she can borrow the wifi when she's babysitting and bring a laptop along if you have one she could put in some serious hours when the kids are in bed

RexBanner

Good man Mikey, that's a good start.

I've a similar attitude to making sensible, incremental changes to put the situation right, rather than sack cloths and ashes for their own sake.

Good luck and keep it up.

Cherryjack

well done , fantastic news :-) i was gunna say you can definelty half the food shop if not more.. i think sometimes we all need to wake up and think''how much are we actually spending'' up until a few weeks ago i just paid when and as.. i being more sensible now and setting budgets