first step(s) on path to being debt free

zaksmum73

Hi - I am new here, having only just faced up to the fact I have to do something about my debt.
A brief introduction and history - I am parent to a teenager, a toddler and step parent to 2 more teenagers (all boys) I live with my partner in a rented house we moved to after having to sell my own property with negative equity to have room for a new baby. My partner is self employed and went bankrupt before I met him (as a result of debts from a divorce)

I earn good money but 10 yrs ago my partner left me with huge debts - about £15k which I struggled to get to grips with. I even resorted to using my company amex card for food shopping at times (a disciplinary offence, though luckily my boss was very understanding) I've never sorted those debts and spent many years as a single parent building up more and not clearing any.
For the last year I have been struggling month by month - either using cards to pay for shopping etc or using savings to top up the account each month. It's been getting worse and last month I realised I had to do something as the situation was spiralling. I wrote all my debts down and calculated them to be £46.5 THOUSAND pounds :mad:. I was sickened with myself for getting into this mess and took action. I was lucky that my father in law gave me a gift of £15k which wiped out a third of it - I am forever thankful to him. I am taking steps to sort out the rest. Here is my SOA

Monthly Incomings:

My salary - £2692
Partners salary - £500 (very variable and sometimes is nothing, sometimes is £800)
Benefits - £134.80

Total - £3326.8
Monthly Outgoings:

Mortgage/Rent - £675
Council Tax - £114
Gas - £30
Electric - £52
TV License - £12.37
Sky £34.00
Phone & broadband - £45
Food - £400
Car Insurance - £27.94
Van insurance - £60
Petrol - £80
Life Insurance £13.88
Healthcare £15.71
Water - £38.87
Mobile phone - £30 for two
Bank account charge - £17


Total: £1628.77

DEBTS
Virgin – Balance £14,700 APR 30% (now cleared as result of gift from family)

Lloyds Credit Card – Balance £2439 APR 30%
MINT Credit card - Balance £3619 APR 25%
Halifax Credit Card - Balance £5355.15 APR 29.9%
Lloyds loan - Balance £20306.94 APR 9% will be cleared 2014

I have changed my shopping and cookings habits to save money.
I am reviewing the credit card shuffle option to see how to move the debt around to reduce interest payments. I am persuing 3 PPI claims. I have changed energy supplier and am getting rid of Sky and moving to freeview once my contract ends.
I plan to change my bank account (mine has a £17 charge) once I have cleared the overdraft on it.
I am planning to use my £2600 savings to pay off some debt and then use my monthly disposable income to rebuild those savings and better budget for Xmas, birthdays etc
It feels like I've got a long way to go, but I am making progress. I'm not sure where I'd be without the £15k gift, for which I am truly thankful

I am only really just getting my head around this site and the tools on it, but will make time to find other ways of reducing my debt

Tixy

Hi and welcome, and well done for facing up to things.

First thing I would say about yoru SoA is that you probably need to do a version which includes all the things you don't pay for everymonth, obvious ones are road tax, car maintenance etc and then things like clothes, haircuts, presents etc. If you can work out an annual cost and then include 1/12 in your budget then you get a realistic figure left that can be put towards debt repayments each month, without having to put those costs that crop up back on credit cards.

Your elec looks very high - is some of your heating elec? or is there any other reason why it would be high? are you paying off any arrears? I see you have now changed supplier but its unusual for it to be so much higher than gas.

I'd probably suggest redoing your SoA using the makesenseofcards calculator http://www.makesenseofcards.com/soacalc.html and then once that is done you can use the snowball on the same site to work out how long it will take to become debt free if you put all you can towards the debts each month - it can be motivating to have a goal to work towards (or work to reduce)

zaksmum73

Thanks Tixy - actually those gas and electric figures aren't quite right
I'm on dual fuel with npower so the total monthly cost (i just got a new bill, today, which I checked before posting this) is £82.
Works out at £200 for 6 months on electric and £218 for 6 months on gas.
I've been on the site you recommended and done the SOA with the 'extra expenditure' included and also 'snowballed'
If I stick to this, i can be clear of this debt in 21 months, which is AMAZING and definitely something to aim for
Now I just need the discipline to stick to it and not go out to buy new shoes / goodies

I also need to convince fiance that chocolate expenditure should also be reduced

Tixy

21months is a great debt free date (short enough that some small chocolate expenditure could be allowed hopefully!).

And just think in less than 2years you'll have all that monthly income spare to spend on anything you like, with none needing to go to debt repayments. You can upgrade to posh chocolate and posh shoes then!!