There and back again... Diary of a debt.

cat4772

I'm Cat and this is my diary of a debt journey. Initially, we will descend into debt and then work our way out of it.

I've been here before, sort of, in 2006/7 and 2008/9 sorting DHs debts out. In April 2009 they were manageable when DD1 was born and we had a plan that was working so I let MSE guidance and support slide. As a big [STRIKE]shock[/STRIKE] surprise DD2 arrived in July 2011 and I spent all the pregnancy worrying about money and analysing all financial possibilities. In reality, I have to return to work so we have to incorporate childcare for two children into the picture. Unfortunately we will not be eligible for CTC or WTC
Now our darling girl has joined our family, it is time to take action, even if that action is to watch the debt increase. I'm going to try to come up with a plan so that it doesn't increase more than it needs to.

I'm 39 and married to a spendthrift with two adorable and delightful daughters born April 2009 and July 2011. We have a mortgage, home improvement loan and car loan. DH bought a timeshare/holiday points club back in 2008 (admittedly, our financial picture back then was blinkingly good) and we paid cash for it but the annual charges are high. We have given notice that we will not pay the points fee next year so this should save us some money.

At the moment our finances are slowly sinking into debt, but when I return to work in 4 months, our finances will deteriorate rapidly. All this is in my head as I haven't yet done an SOA. There are some key dates in my head but in general our descent into great debt will increase until September 2014 when DD1 starts school full time. Then the debt will either stay the same for a while or marginally reduce until December 2014 when the mortgage is paid off and we will have money to throw at debts.

I'm off to look at our budgets, do an SOA (and forecast SOAs for our key dates) and come up with a plan.:j

cat4772

Over the past couple of days I've looked at budgets. I've tweaked, pared and cut them a lot. Was discussing plans for debt accumulation and reduction with DH and after the frugality of a few years ago we have realised that we need to do things as a family so we need to have £10 weekly family fun pot. This might all be spent in a week or part of it spent and the remainder saved towards a bigger day out. We've also budgeted for £15 for babysitting each week. This should only be for the next few months and then this will reduce to £15 babysitting per month; again, we've discussed that going out as a couple is important for us!

The excel spreadsheet tells me that our debt will increase by £13500 to the end of August 2014 when our finances will even up and we have a small surplus. Of course if HM government gives out more child benefit or increases thresholds for CTC or WTC our finances could improve beforehand.

When I return to work, between April and October, our finances look

Catherine £1,400.00 this is estimated down but I can't remember how much it normally is.
Wayne £1,516.00, again this is estimated down as he's paid weekly
Ch. benefit £140.83
mobiles -£40.00this will reduce to £30 in May when I take a new reduced contract but this is for two mobiles
TV licence -£13.00
Internet -£8.00
Phone -£13.00
Cleaner -£44.00 This is used for 4 hours cleaning per month
Electricity -£28.00
Gas -£28.00
Water -£32.00
Council Tax -£105.00
Home Ins -£37.00
Mortgage -£718.00
Boiler maint -£6.00
Mortgage ins -£67.00 under review this month
Shopping -£217.00
catherine -£130.00
Wayne -£130.00
car tax -£3.00
car ins -£42.00
car maint -£25.00
credit card -£200.00 under review this month - asking them to reduce APR so reducing amount to repay
car loan 16 -£218.00
Pension (w) -£58.00
DD1Savings -£11.00
DD2Savings -£11.00
familysaves -£22.00
Baby sitting -£65.00
Childcare -£500.00
Travel ins -£7.00
Sky -£26.00
Days out -£44.00
Dental plan -£12.00
meClothes -£9.00
DHClothes -£9.00
DD1Clothes -£7.00
DD2Clothes -£7.00
ClublaCosta -£120.00
Holidays -£125.00
Christmas -£42.00
Total -£115.17

my parents will be looking after the girls in the first few months when I return to work but they aren't young (late 60s) so I said I'll pay for a cleaner to clean their house once a week. They are going to save me a fortune as without them our finances would be dire!

I'm looking at reducing our outgoings by reducing APR on credit card and reviewing insurance needs for mortgage insurance. We both smoked when we took the policy out and we are both non-smokers now!

cat4772

Food shopping budget this week was £50, but I went with a list and spent:
£26.66 in Asda
£1.90 in Wilsons (for pork pies for DD and DH)
£0.95 in woodhead for a nasty chicken pasty
This gives me an underspend of £10.49 which I'll put towards paying off the credit card.

Cat.xx

Squidge123

Hi Cat

Didn't want to read and run.. you seem to be really focussed on where you're headed. I'll be subscribing to your diary.

Good luck!

cat4772

I'm feeling a little downbeat today. I have just telephoned the children's mutual to cancel our direct debit of £31 into our DD1's child trust fund. I know that in 5 years or so, we will be able to restart these (and start a fund for DD2) but I'm sad that we have had to stop this in the short term.

oh well, next stop will be the mastercard to ask them to reduce interest and give us an interest free period similar to new customers! Then I need to cancel the bodyline / local authority leisure centre cards. and find out how to cancel the direct debit for the cross stitch magazine I have delivered but don't have inclination to read, let alone time to stitch!

In other news, today's NSD went out the window when I realised that I had to buy MILs birthday card so ended up spending £1.58 on cards and £3 on flowers!!! In addition, I bought some mushrooms for tea tonight and also got half a melon for desert. I waved goodbye to another £1.32 but at least this went to my local greengrocer.

cat4772

So I'm back. And we are collating all the information to put together a complete financial picture but I wanted to record some notes, achievements, transitions and changes to our situation.

Key dates:
September 2013 - DD1 starts school
October 2014 - DD2 starts nursery (£140 a month saved)
September 2015 - DD2 starts school (£270 a month saved)
January 2016 - car loan paid off (£220 saved)

DD1 started school in September so we are paying less chilcare. £270 a month but we can't put this towards paying off a debt because It means that we are now breaking even with outgoings and income.

Debt:
Visa 19%apr, £10000 approx
Barclaycard 0% until oct 2015 then 14% life of balance, £5195
Dad £6500 - interest free loan used to clear outstanding mortgage
Overdraft £0
Total approximately £21695

cat4772

I still haven't managed to pull together all the financial information I need to get my financial house in order. However, I was very pleased to note that when I opened October's bank statement last night, our outgoings exceeded our income by £50! This is good news because I expected this to be somewhere in the region of £200 rather than £50; even better we haven't gone overdrawn this month so we will not have to pay any overdraft fees either.

I have some savings... enough to cover a third of my mother-in-law's funeral expenses. She isn't in good health so I am reluctant to use this to pay off debts as I am not confident that we would be able to get hold of the money to pay for the funeral at short notice. However, it is in a
high interest savings account (paying peanuts).

cat4772

So, I've finally gathered details of our family's financial health. At January 2014 it looks something like this:

Mortgage - £24423.43 (paid off in 2020, early redemptions until 2017)
Halifax CC-£9400 @18.95% paying £300 a month off, paid by Sept 2017
Barclays £4595 @0% paying £200 a month off, paid off Feb 2016
Car loan £5647.75 - paying £217 a month off, will be paid off in Mar 2016
Mum and dad -£6500 paid when other debt has gone

Total debt =£50576.18

Looking at what money should be freed up in the next couple if years, it is nearly £1k a month!

cat4772

Last week the !!!!!! hit the financial fan...

DH had been doing about 8-10 hours overtime a week but stopped this in October 2013. This resulted in our income dropping by £400+ a month... but our outgoings didn't:eek:. When we were on holiday last week, i had the magical words greet me from the cash dispenser: "insufficient funds available". that's right, we had exceeded our overdraft :eek:

I've reviewed our finances and was astounded that nothing really has changed...
Mortgage - £23036.44 (paid off in 2020, early redemptions until 2017)
Halifax CC-£8400 @18.95% paying £300 a month off, paid by Sept 2017
Barclays £3395 @0% paying £200 a month off, paid off Feb 2016
Car loan £4123.75 - paying £217 a month off, will be paid off in Mar 2016
Mum and dad -£6500 paid when other debt has gone
Overdraft £5000
Total debt =£50454

my income £1,550.00
DH income £1,660.00
Benefits £142.00
total income £3,352.00

mobile £58.00
TV £13.00
Internet £0
Home phone £0
electricity £45.00
gas £45.00
water £38.00
council tax £105.00
overdraft £92.00
home ins £30.00
mortgage - Nov 21 £320.00
boiler £6.00
mort life insurance - nov 21 £30.00
food shopping £282.00
catherine weekly £110.00
car tax £3.00
car insurance £34.00
car maintenance £21.00
Wayne weekly £110.00
halifax - sep 17 £300.00
Barclays - feb 16 £200.00
IMAC HP - feb 15 £142.00
car loan - jan 16 £220.00
Wayne pension £61.00
evie saving £22.00
ella saving £22.00
catherine £22.00
childcare £640.00
sky (phone, tv, broadband, line rental) £65.00
family days out £25.00
dental £12.00
LCC Gym £56.00
kids clothes £17.00
adult clothes £13.00
club la costa £125.00
Christmas £42.00
total expenditure £3,326.00

cat4772

That's £26 underspend for the month.

I'm looking to reduce the grocery bill to £65 a week (or less) which had recently crept up to nearly £100, so i have joined the old style boards again to help make economies.

I've created a Christmas spreadsheet and listed everyone I need to buy for and set a budget for them. Now i need to bring it under budget. I'll target the Christmas challenges (and freebies boards) and see what i can craft or make from scratch.

Weekly money: DH and i used to have £30 each a week, but we have reduced this to £25 (the other £5 is going to a holiday saving money account for our holiday next year). The £25 has to cover all expenses during the week; including £15 petrol money, playgroups and other incidental expenses.

Trixxibell

Hiya didn't want to read and run your doing well, could you not make further cuts. For example gym membership,sky (consider freeview) mobile costs (pay as you go). Easier said than done I know or phone them for a cheaper deal until you have paid some of your debts off?

Your food shop is high have a look at some of the threads for getting the most of the food budget.

I'm no expert, in debt myself but just some friendly advice xx good luck with your journey.