Any advice for a financial incompetent please?

seabed

Hello Everyone,

I am looking for some advice please.

We are in a bit of a mess with too many credit cards and paying out a fortune every month just to stand still which is bad enough, however, our circumstances are due to change with child no2 on the way in Feb and myself starting a Uni course next week for one year.

My partner has a good job in the finance sector with a salary of £67K and received a bonus last year of about £23K before tax. I have been looking after our son but he has now gone into p/t childcare.

We should be able to easily manage but have given in to expenses such as the "need" for a holiday and had bad luck with dry rot etc which cost us £10K which also went on the cards.

Anyway, question is should we try and consolidate debt with a loan? I ave completed an SOA below which will hopefully help.

Any advice is gratefully received.

Cheers.


Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 3650
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3650

Monthly Expense Details
Mortgage................................ 735
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 139
Electricity............................. 40
Gas..................................... 50
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 20
Mobile phone............................ 55
TV Licence.............................. 12
Satellite/Cable TV...................... 30
Internet Services....................... 0
Groceries etc. ......................... 600
Clothing................................ 150
Petrol/diesel........................... 90
Road tax................................ 12
Car Insurance........................... 30
Car maintenance (including MOT)......... 70
Car parking............................. 0
Other travel............................ 40
Childcare/nursery....................... 400
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 22
Contents insurance...................... 34
Life assurance ......................... 0
Other insurance......................... 32
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 300
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2861


Assets
Cash.................................... 0
House value (Gross)..................... 155000
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 156000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 175000...(735)......4.79
Total secured & HP debts...... 175000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
virgin cc......................2700......60........18.65
barclaycard....................6900......160.......6.8
capital one....................173.......5.........24.09
Bank of Scotland Loan..........13000.....288.......11.5
Lloyds.........................5640......117.......24.4
egg2...........................3081......75........17.9
egg1...........................5600......120.......17.9
Total unsecured debts..........37094.....825.......-


Monthly Budget Summary
Total monthly income.................... 3,650
Expenses (including HP & secured debts). 2,861
Available for debt repayments........... 789
Monthly UNsecured debt repayments....... 825
Amount short for making debt repayments. -36

Personal Balance Sheet Summary
Total assets (things you own)........... 156,000
Total HP & Secured debt................. -175,000
Total Unsecured debt.................... -37,094
Net Assets.............................. -56,094

Tixy

Hi and welcome

Regarding the arrival child no2 - will your partner be off on maternity and without income, or is it you having the child and so partner's income will continue?

You only seem to be just a very small amount short each month from making minimum payments, and I think there are probably sufficent areas you can reduce spending to free up quite a bit more for debt repayments.

Will you get any income at all in relation to your course? any bursary? student loans? financial assistance you can apply for? (a student loan if you are eligible is a lot cheaper than consumer credit debt).

seabed wrote: »

Hello Everyone,

I am looking for some advice please.

We are in a bit of a mess with too many credit cards and paying out a fortune every month just to stand still which is bad enough, however, our circumstances are due to change with child no2 on the way in Feb and myself starting a Uni course next week for one year.

My partner has a good job in the finance sector with a salary of £67K and received a bonus last year of about £23K before tax. I have been looking after our son but he has now gone into p/t childcare.

We should be able to easily manage but have given in to expenses such as the "need" for a holiday and had bad luck with dry rot etc which cost us £10K which also went on the cards.

Anyway, question is should we try and consolidate debt with a loan? I ave completed an SOA below which will hopefully help.

Any advice is gratefully received.

Cheers.


Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 3650
Benefits................................ 0 are you getting child tax credit?
Other income............................ 0
Total monthly income.................... 3650

Monthly Expense Details
Mortgage................................ 735
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 139
Electricity............................. 40 have you shopped around recently for gas & elec to see if you can get cheaper with a different supplier or a better tariff?
Gas..................................... 50
Oil..................................... 0
Water rates............................. 0 don't you pay this? or is it with council tax?
Telephone (land line)................... 20
Mobile phone............................ 55
TV Licence.............................. 12
Satellite/Cable TV...................... 30 you could consider stopping this and using freeview
Internet Services....................... 0
Groceries etc. ......................... 600 this is very high for 3. There are families on here who manage on £250 for families of 4 with pets. Whilst it might take some big changes you should be able to easily reduce to £300 over a couple of months. Lots of tips on the oldstyle section of the board and here - Supermarket Shopping: Downshift & more, halve weekly bills
Clothing................................ 150 This is very high, wear what you have for now and reduce this to essentials only for the year.
Petrol/diesel........................... 90
Road tax................................ 12
Car Insurance........................... 30
Car maintenance (including MOT)......... 70 this looks very high compared to the miles you do - what does it cover?
Car parking............................. 0
Other travel............................ 40
Childcare/nursery....................... 400 can partner get nursery vouchers as salary sacrafice to reduce the tax they pay?
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 22
Contents insurance...................... 34 B&C look high compared to the house value - shop around to see if you can get a better deal at renewal
Life assurance ......................... 0
Other insurance......................... 32
Presents (birthday, christmas etc)...... 0 you need to budget for this
Haircuts................................ 0 and this
Entertainment........................... 300 you need to reduce this whilst you are not working.
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2861


Assets
Cash.................................... 0
House value (Gross)..................... 155000
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 156000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 175000...(735)......4.79
Total secured & HP debts...... 175000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
virgin cc......................2700......60........18.65
barclaycard....................6900......160.......6.8
capital one....................173.......5.........24.09 should be able to pay off this month just by reducing groceries a bit.
Bank of Scotland Loan..........13000.....288.......11.5
Lloyds.........................5640......117.......24.4
egg2...........................3081......75........17.9
egg1...........................5600......120.......17.9
Total unsecured debts..........37094.....825.......-
If you can free up another £400 from your budget above, which should be achievable then you could use this to snowball repayments on your debts and clear them much sooner.
£400 might feel like a lot but if you can save £250 from groceries, £50 from clothing and £100 from entertainment you would still have genrous budgets in all those 3 areas


Monthly Budget Summary
Total monthly income.................... 3,650
Expenses (including HP & secured debts). 2,861
Available for debt repayments........... 789
Monthly UNsecured debt repayments....... 825
Amount short for making debt repayments. -36

Personal Balance Sheet Summary
Total assets (things you own)........... 156,000
Total HP & Secured debt................. -175,000
Total Unsecured debt.................... -37,094
Net Assets.............................. -56,094

I think if you are prepared to make some changes to your budget and accept you need to cut back on non essentials then you should be able to significantly increase your debt repayments each month. If you upped repayments to £1225 a month (so £400 extra on top of what you pay now) then you could clear all your debts in 37months.
I wouldn't look at consolidating but I would look at whether partner can get a new 0% card to move the lloyds debt across to, as it has the most expensive rate, and maybe the virgin as well if he could get a high enough limit.

What are the limits on the cheaper credit cards - the barclaycard? and the egg cards? another option might be to consider balance transferring the lloyds card across to barclaycard.

Have a look at the snowball calculator (same site as the statement of affairs) to see the best order to pay off your debts to minimise the interest you pay.

Butti

Hi seabed,

Really no need to panic but really a need to act.

Consolidate? No really lets not. Lets first look at where you can cut and where you need to expand.

Groceries £600. Really £150 or thereabouts per week. Action required here on food planning and meal planning. You should be able to cut this down to about £300/400 per month. You will need to plan and you will need to cook but that will be better for you and your family anyway. Shopping at about 7.30pm and using the freezer will also help.

Mobile phone £55. Have a look at the tariff. Can you cut?

Clothing. Partner needs clothes for work, child needs clothes but you can probably get some from friends or charity shops. Apart from essentials I would really try not to buy clothes. Wear out what you have first.

Childcare Does your OH have access to childcare vouchers.

Expand haircuts unless you plan to all live like hippies!

For the credit cards look at the snowballing calculator (bottom sticky on the message board). List your cards by APR. Tackle Cap One and LLoyds first but keep an eye on Virgin. It will probably go up to 32% at some point so you want to be nibbling away at that one too.

Good luck,

B x

seabed

Thanks, really helpful advice so far.

Got to nip out but will respond later. For info I am male and it is my partner who works. She is applying for childcare vouchers as the wee man has only just gone in to nursery. We currently don't have any tax credits due to her salary.

Cheers for now.

Tixy

Sorry my mistake, I meant child benefit not tax credit.
How long will partner be off work on maternity? What pay will she get from her employer whilst on maternity?
Would you be able to get a parttime job round Uni hours whilst she isn't working?

wotsthat

Why are you starting a university course next week when you'll be having another baby in February? (EDIT - missed your comment - why not delay university for a year and get those debts down - maybe even a P/T job that fits in with childcare).

Could you cut up the cards and transfer the balances to a better rate? The Lloyds card at 24.4% is super-expensive. Why not take your child out of childcare and pay that £400 towards your debts (starting with Lloyds CC)?

You've put nothing towards holidays - if that's one of your weaknesses what are the chances that you'll be disciplined enough to keep to this?

To put the mess you're in into context you're paying around £326/ month interest on the credit cards alone plus another £124/ month on the BOS loan. That's 12% of your partners pay! Expect little help from your current lenders as they are raking it in and you can afford to pay.

Get rid of Sky - it's crap and you don't need it.

£55/ month on a mobile 'phone and £300/ month for entertainment but you seem to be skipping Christmas this year - enough said!

I don't think you've got a handle on what a mess you are in. Your partners in the top few % of UK earners and you can't manage even on that. One advantage is that, should you both decide to get a grip, you will be able to make an impact reasonably quickly.

Butti

Whatever happened to NOT BEING judgemental Wotsthat?

Thanks for clearing up who's who Seabed. I did wonder. Good luck with the course and try to get some relevent experience during it because it's tough out there!

B

wotsthat

Butti wrote: »

Whatever happened to NOT BEING judgemental Wotsthat?

The OP admits freely that they are a financial incompetent (thread title); based on the evidence that they've presented I agree.

I'm concerned that, despite what is staring them in the face, the main question is whether to get a consolidation loan or not.

Is there anything I've written that you fundamentally disagree with or are you just here for the group hugs?

seabed

hello again,

thanks again for all the advice. Some harsh but all very fair as we have got ourselves in some mess.

I would say though that the SOA figures were estimates of our current spend rather than what we intend to spend, for example, the entertainment figure of £300 includes 2 gym memberships equalling £150 which were cancelled this morning but unfortunately they have a 3 month cancellation period so last payment will be in December. Similarly the vehicle maintenance allowance was an estimate of what we've been spending recently on the car after a few unfortunate incidents. There is clearly a bit of room for cutting there (hopefully)

I do need to budget for things like haircuts and christmas but we will most definitely not be going on holiday for a couple of years! The mobiles are a pain and a silly waste of money. One has one year left the other 2 of a contract with Virgin, I need to look into breaking those if possible.

With regards to childcare UNI etc I have already delayed this course by a year so am keen to go but the good news is that the teaching element only goes to April with a dissertation required after that so scope for p/t work then. However, I need someone to care for my son when I am there, although we can cut his hours when my partner is off from Jan. She is planning to take about 6-8 months off and receives 10 weeks full pay then statutory pay after that although last time she did get a lot of tax back and we will hopefully receive a decent bonus in April to see us through until her return to work.

Thanks for reading this, it is embarassing actually writing it out but comments so far have given me good guidance that another loan is not the way to go!

Cheers

RAS

seabed wrote: »

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 3650
Benefits................................ 0 - Child benefit?
Other income............................ 0
Total monthly income.................... 3650

Monthly Expense Details
Mortgage................................ 735
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 139
Electricity............................. 40
Gas..................................... 50
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 20
Mobile phone............................ 55 - try to reduce your packages if you cannot end the contracts
TV Licence.............................. 12
Satellite/Cable TV...................... 30 - get rid.
Internet Services....................... 0
Groceries etc. ......................... 600 - £200 is quite doable and gives you loads to pay towards your debts.
Clothing................................ 150 - sorry but undies and new shoes for the little one. Even then consider NCT sales and e-bay or charity shops
Petrol/diesel........................... 90 - ow much can this drrop when sheb stops working?
Road tax................................ 12
Car Insurance........................... 30
Car maintenance (including MOT)......... 70
Car parking............................. 0
Other travel............................ 40
Childcare/nursery....................... 400
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 22 - these two seem expensive, when are they next due?
Contents insurance...................... 34
Life assurance ......................... 0 - you need this.
Other insurance......................... 32
Presents (birthday, christmas etc)...... 0 - you need to budget for this
Haircuts................................ 0
Entertainment........................... 300 - has to go £20
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2861


Assets
Cash.................................... 0
House value (Gross)..................... 155000
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 156000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 175000...(735)......4.79
Total secured & HP debts...... 175000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
virgin cc......................2700......60........18.65 - limit?
barclaycard....................6900......160.......6.8 Limit? Was this a balance transfer? Have you used it since?
capital one....................173.......5.........24.09 - get rid of this first
Bank of Scotland Loan..........13000.....288.......11.5
Lloyds.........................5640......117.......24.4 - this is the next one to hit
egg2...........................3081......75........17.9 - limit?
egg1...........................5600......120.......17.9 - limit?
Total unsecured debts..........37094.....825.......-


Monthly Budget Summary
Total monthly income.................... 3,650
Expenses (including HP & secured debts). 2,861
Available for debt repayments........... 789
Monthly UNsecured debt repayments....... 825
Amount short for making debt repayments. -36

Personal Balance Sheet Summary
Total assets (things you own)........... 156,000
Total HP & Secured debt................. -175,000
Total Unsecured debt.................... -37,094
Net Assets.............................. -56,094

You must have laods of stuff knocking round the house that you no longer use, on that sort of income. Collect it together, e-bay, amazon, car boot and clear that cap 1 card. Then close the thing.

seabed

Hi,

it is very kind of people to take the time to help with this, anyway...


CC limits are as follows for those who were asking:

Unsecured Debts
Description....................Debt......Monthly.. .APR....Limit
virgin cc......................2700......60........18.65 - £10k
barclaycard....................6900......160...... .6.8 £9.1K was a BT, not used since
capital one....................173.......5.........24.09 - £4K
Bank of Scotland Loan..........13000.....288.......11.5
Lloyds.........................5640......117...... .24.4 - £12K
egg2...........................3081......75....... .17.9 - Not sure
egg1...........................5600......120...... .17.9 - £6.5K