Who's eating my money?

MummyDrusilla

Hi,

I've been lurking over the last few months and am now taking the plunge to commit to being free of our debt. Well actually we took the plunge a couple of months ago but I need some moral support to know that there is light at the end of this very very very long tunnel we seem to be entering.

A bit of background: My husband and I have a 1 yr old son. I went back to work in July but due to my "lovely" ex-boss, I didn't receive any SMP after 3 months into my Mat. leave. We had to really tighten our belts and live off cc's for 6 months. I have just received the remainder of my SMP from HMRC a couple of weeks ago. Unfortunately this is now going towards my husband's 10/11 tax bill after his 6 months of self-employment. So our monthly repayments have increased considerably and our income has gone down (I was working a 35hr week prior to mat leave, I now work a 14hr week. My husband works full time). As you can see, we take home a decent wage. I feel wretched that we earn a healthy salary but we're still struggling. It scares me that we are paying an interest-only variable rate mortgage but can't switch to anything else as we have no capital for a deposit (Ours was a 100% mortgage bought at the end of 2007).

I have done a SOA which incorporates my husband's and my debts combined:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 3

Monthly Income Details
Monthly income after tax................ 1230.56
Partners monthly income after tax....... 2063.27
Benefits................................ 81.2
Other income............................ 0
Total monthly income.................... 3375.03

Monthly Expense Details
Mortgage................................ 578.9
Secured/HP loan repayments.............. 398.9
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 133
Electricity............................. 101
Gas..................................... 0
Oil..................................... 0
Water rates............................. 21
Telephone (land line)................... 28.57
Mobile phone............................ 42.82
TV Licence.............................. 12.12
Satellite/Cable TV...................... 26.62
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 0
Petrol/diesel........................... 300
Road tax................................ 20.42
Car Insurance........................... 218.36
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 30
Other child related expenses............ 9.5
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 26.26
Buildings insurance..................... 10
Contents insurance...................... 8.82
Life assurance ......................... 108.09
Other insurance......................... 0
Presents (birthday, christmas etc)...... 5
Haircuts................................ 25
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Professional Fees....................... 0
Total monthly expenses.................. 2314.38


Assets
Cash.................................... 0
House value (Gross)..................... 225000
Shares and bonds........................ 0
Car(s).................................. 27000
Other assets............................ 2000
Total Assets............................ 254000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 277886...(578.9)....2.5<
PCP............................21803....(398.9)....0
Total secured & HP debts...... 299689....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
GOLD MC........................1104.92...25.03.....0 an extra £80.34 goes on this every month after another loan ended a couple of months ago - we decided to continue to pay this out to clear the debt quicker
BLUE MC........................2848.39...64.15.....0
BARCLAYCARD....................4307.87...96.92.....0
OVERDRAFT 3....................1585.91...0.........0
OVERDRAFT 2....................2234.04...0.........0
OVERDRAFT 1....................1906.46...0.........0
2ND PROF LOAN..................3198.48...111.7.....0
BANK OF SCOTLAND CC............3701.3....37.01.....0
PROFESSIONAL LOAN..............1084.51...43.04.....0
HOUSE LOAN.....................9654.93...153.1.....0
Total unsecured debts..........31626.81..530.95....-


Monthly Budget Summary
Total monthly income.................... 3,375.03
Expenses (including HP & secured debts). 2,314.38
Available for debt repayments........... 1,060.65
Monthly UNsecured debt repayments....... 530.95
Amount left after debt repayments....... 529.7

Personal Balance Sheet Summary
Total assets (things you own)........... 254,000
Total HP & Secured debt................. -299,689
Total Unsecured debt.................... -31,626.81
Net Assets.............................. -77,315.81


I'm not sure of the rates of interest right now but I know that I have listed the unsecured debts in order of highest debt first (I did the homework a few months ago and not sure where I wrote down the interest rates!).

The summary on this shows that we should have £500 surplus at the end of the month. But we don't and I feel a bit rubbishy that this money is disappearing somewhere cos we certainly cannot afford it. I think I've estimated and calculated correctly. :question:

I meal plan every fortnight or so. We have no takeaways and have perfected home made takeaways. We don't go out. We don't rent dvd's or go to the cinema. When we need clothes, we spend our xmas/birthday money. All of DS's clothes are 2nd hand and bought in bundles or are hand-me-downs. The only spending we really do is on the food shop and fuel for our cars. The rest of our outgoings goes out on dd's. I have started ebaying things but it's just pocket money really.

What am I doing wrong? Or is this it and we're just in it for the long haul?

wannabee_in_credit

There may be a couple of corrections to make to your soa.
I assume it's 2 adults in the house. Just wondering why 3 cars because that's costing a lot. Also, is your life insurance really over £100 a month?
I ran into lots of debt after time off having my children. It took me a while to properly see the light, but I'm in a dmp and finally making some progress with my debts. It can be done. I would advise that you keep a spending diary. It's amazing where the odd tenner here and there goes and what it adds up to. I'm astounded by how much I was spending on little bits and bobs here and there.
Good luck, you'll get there.

camuk81

Why 3 cars can I ask,

The elec seems a touch high is this combined can you shop around,

Can the mobile phone be reduced?
Is it an option to shop around for the car insurance?

MummyDrusilla

Oh I forgot to explain the 3 cars. We bought a cheaper run around in October to replace (thanks to bank of FIL) and are trying to sell the replaced one but of course the month after christmas really isn't the best month to sell a car . It's on autotrader, pistonheads, we're putting up ads in the local shops/post office and we've got ads on facebook. It's costing a fortune in insurance after the new rules came in - this may explain some of the money being eaten.

Actually the mob phone is just mine - DHs isn't in there so I need to add on his. I'm in the middle of my mob contract so I can't change this yet can I?

Car insurance has just been renewed. I shop around every year to reduce payments.

Elec is gas and leccy combined - just put it in the one box.

Not sure about life insurance but we saw an IFA in November who is looking into perhaps reducing that for us. It's a joint policy so covers us both.

Just realised I forgot to put my Prof fees in - they are £65 every quarter for each of us i.e. £43.33 per month..

camuk81

Does the mortgage company offer a payment holiday option or could you go intrest only.

This is no an ideal long term option however the reduced amounts may be able to allow you ton increase/ clear debts elsewhere?

Try shopping for the gas and elec.

Has the landline got broadband included can either of these be shopped around for.

Can you speak to the council to pay over 12 rather then 10 months

MummyDrusilla

We're already on interest only mortgage.

I did a gas and elec comparison in November and we were on the best. I think we may be over paying but am inclined to leave this as we're in the coldest months now and am expecting a larger bill so will use the excess payments to pay the higher bill.

Broadband is free through my mob contract. I'm not sure if we're still under contract with the landline as I changed deal in September. Have a feeling it was a 12 month min contract?

Not sure about the council. Not heard of this. But wonder which would be better - a smaller amount better off each month or having a payment holiday for 2 months and knowing I'll definitely pay the money that we would have paid out to them towards a cc debt? Not sure????

Thanks for all the suggestions so far

Teacher2301

Well done for posting the SOA - scary numbers in there but I will try to ask some questions to get you to think about what you do and perhaps don't need, so you can shave off some ££ and put more towards the loans.

1. Prof fees are tax deductible - get a P87 or a P810 from the tax office - you can reclaim these up to 31st Jan 12 for the last six years.
2. If you can do with out sky/ satellite or cable - cancel if you are out of contract - put this money towards the highest interest rate loan (however if you're in contract - stay in until the end) - can you afford to have this luxury? (If reception is bad then maybe perhaps)
3. Pet insurance is high - I only pay £12 for 1 dog - how many pets do you have, how old are they? Do you need insurance for an older pet when the clauses are so poor for older pets?
4. Are all CC and MC rates at 0%? If so, well done then next thing is to find out when the 0% rate ends and pay off those first - you probably have a decent credit score to get so many cc's - so probably getting new ones may not be a problem - just don't get any more for now - pay off the ones you have and then cancel the cards asap
5. Do you have joint life insurance? Joint life insurance depends on lots of factors but that is still a high figure...I used Aviva online and got a decent quote - try using Quidco to get some quotes and see what you get? using an IFA isn't always the best option and the do get referral fees for things so don't always be fooled by their independence at times!
6. You have money left over at the end of the month so your position isn't too bad. But I know how you feel that you seem to think you have more than you actually have in your pocket but don't forget that you spend money on the things that aren't included...newspapers, coffees, lunches etc which all add up. A simple solution is to have £100 a week in cash and bin the debit card in a draw in the kitchen. This way you only have what you can spend for that week in your purse/ wallet - anything left over goes towards the £100 for the next week. (or whatever you want!) You don't have to have £100 pick another suitable value but the theory is the same.

MummyDrusilla

I rang the tax office a few years back and they've included my professional fees as part of my tax coding so they aren't deducting tax off it.

Sky is the last thing to cancel and I'm digging my heels in a little with it!!!! I know that sounds stupid cos it's £25 a month that can be going elsewhere. I need to think about that one more. We have incidentally already cut it in half and have just seen the new reduced payment come out of our bank account.

Pet insurance is for 2x3yr old cats. Never shopped around actually. Is it worth doing?

No the cc's and loans aren't 0%. The highest (the blue MC) is around 25% so I'm paying that off as aggressively as I can. I will then move to the next highest. We only have 1 0% cc and that's the BoS. I have a black mark on my credit file (apparently a missed payment on a store card 6 years ago) which I discovered when I tried switching cc's last year. I'm scared to try and switch again - I don't know how being rejected for a cc affects your credit file? DH switches his cards when his 0% rate ends.

Yes we have joint life insurance. That's interesting about the IFA. Thought independent was independent! He actually hasn't got back to us about it so perhaps I should just get quotes.

Money left over at the end of the month? What's that? Don't buy lunch. Don't have coffee out. No newspapers, magazines or anything like that. I literally do not buy anything that's not part of the food shop or fuel for the car. I do all food shopping online so I'm not tempted by off-list items.

Teacher2301

Credit agencies only hold details for 6 years anyway - so give it a few more months and your 'black mark' should disappear.

Definitely shop around for insurance - use go compare etc etc etc for the best deals - spend time on this to get the right policy.

IFA's - that's just my cynicism but shopping around and using a cash back site means you get the benefit rather than them but do read al T&C's carefully if you follow your own route.

TRy the £100 thing for a month and see what you have at the end...I'm the same! I used to get just £50 out a week and this just went! I have no idea where...some weeks it works others it doesn't. Birthdays are the worse though!

MummyDrusilla

I'll certainly look at those other insurances. Didn't think they were insurances to really shop around for. DH has it in his head that you don't shop around for life cover as the premium will only get worse as you age. Which I've always found logical so didn't question it.

You talk sense about the IFAs! We had a bad experience with the IFA who sold us our mortgage so I don't question your cynicism!!!

The problem with the £100 a month thing is that I don't spend cash. I spend online and even then, I don't really spend. I understand what you're saying but I really don't know how that would help cos I honestly don't spend money day to day. However, I will keep a spending diary. I need to know where this money is going.

lemonpopsicle

Hi,
You should definitely shop around for pet insurance, that seems high. Our dog was insured with DL from the start and I never checked but when we had our LB moment i did - the premium went form £24 a month to £9 for better cover:j