Aim high - help us hit the target

mr2jay

Morning all - been a while since I have been on here....

OK, so I have come here for some advice and have set myself a challenge to try and get us both debt free and have enough of a residual income coming in each month to get to the point where we are pretty much self sufficient.
I am well aware that the best way to make money is to spend money (seems odd but the phrase speculate to accumulate comes in here)

So, a background. Somehow, we have ended up with every penny coming in is going out again. I earn a very respectable £610 per week after tax and NI and my partner is a lady of leisure as we are trying for a family (another reason to grab things by the horns now and take full control)

Our outgoings are in the region of £2635 per month with an income of £2650 which surprises the hell out of me. That is allowing £20 per week for each of us to cover general expenditure and we are also behind on the Council tax which I am paying £100 a week to clear the balance.

Our rent is £795 a month (which is high) but this is for a home we both love in an area that we feel welcome as safe so in my opinion it is money well spent.

Once the balance of the council tax is clear for 2012/2013, this will instantly save £433.33 a month as that takes us up to the end of 2013 at least six months early, so we have that extra for the next 6 months.

The credit cards we have, one I am treading water with but the other I am paying off at about double the minimum payment and have already noticed a drop in the minimum payments each month. Once I have hit that one down to about half it's balance, I will shift emphasis to the second one.

We claimed back the PPI on the credit cards successfully last year (which got us started in our new home) so have exhausted that avenue for a financial "boost" My partner has written to the Inland Revenue regarding a tax rebate as she hasn't worked in 7 months and I am waiting for a long fought battle with an insurance company after I suffered a whiplash injury last year in a car accident (before anyone judges, I have spent 6 months in physiotherapy and I can assure you, if you have ever genuinely suffered from this, it is not a nice thing to live with)

I intend to use these "boosts" to clear the council tax, freeing up money per month to invest in both savings (I do have a savings account I squirrel away a small amount where I can) and in stocks (we currently hold a portfolio worth about £120 spread across 5 companies which I intend to build on, both in high risk AIM stocks and long term dividend stocks all of which bought at the largest dip in the stock market making the shares a lot cheaper than they would normally be. All of which are now in profit, although hardly enough to write home about)

So, how can I make our money create money? My partner is free to do home based work (she is currently entering hundreds of competitions per day but I think all we have won is a bottle of ketchup and a can of ginger beer).

Our long term target is to buy a property cheap at auction, where we can rent it out, creating a "bricks and mortar" asset as well as a monthly income.

I bow down to your knowledge and expertise and ask for any tips where we can drop our monthly outgoings and make what money we have work harder. I understand that there is no such things as "easy money", I just would like to know how to make the most out of our cash.

Thanks

joedenise

Firstly, well done for realising you have a debt problem and for posting. That is always the hardest step.

The first thing you need to do is to fill out an SOA (Statement of Affairs). You will find this at https://www.makesenseofcards.co.uk. Format for MSE and then copy and paste it into this thread.

Others can then help you cut back where it looks like you are overspending. The usual suspects are groceries, Sky, mobile phones, utilities etc.

You may not be paying your CCs off in the best order. On the same site you will also find the Snowball calculator. Input the details of all your debts and it will show you the best order to pay them off in so that you pay the least interest.

Sorry for the long post.

Denise

mr2jay

Thanks for your reply - OK, done that form and here are the results

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 2643.33
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2643.33
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 795
Management charge (leasehold property).. 0
Council tax............................. 433.33
Electricity............................. 42.5
Gas..................................... 42.5
Oil..................................... 0
Water rates............................. 45
Telephone (land line)................... 15
Mobile phone............................ 75
TV Licence.............................. 13
Satellite/Cable TV...................... 15
Internet Services....................... 15
Groceries etc. ......................... 346.7
Clothing................................ 0
Petrol/diesel........................... 130
Road tax................................ 20
Car Insurance........................... 45
Car maintenance (including MOT)......... 33.33
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 60
Haircuts................................ 0
Entertainment........................... 173.33
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2299.69

Assets
Cash.................................... 40
House value (Gross)..................... 0
Shares and bonds........................ 120
Car(s).................................. 1500
Other assets............................ 0
Total Assets............................ 1660

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Lloyds.........................4449.48...88.8......21.9
Virgin.........................3569......120.......16.8
Overdraft......................2500......0.........19.3
Total unsecured debts..........10518.48..208.8.....-

Monthly Budget Summary
Total monthly income.................... 2,643.33
Expenses (including HP & secured debts). 2,299.69
Available for debt repayments........... 343.64
Monthly UNsecured debt repayments....... 208.8
Amount left after debt repayments....... 134.84
Personal Balance Sheet Summary
Total assets (things you own)........... 1,660
Total HP & Secured debt................. -0
Total Unsecured debt.................... -10,518.48
Net Assets.............................. -8,858.48
Created using the SOA calculator. Reproduced on Moneysavingexpert with permission, using IE browser.

Now, one thing to bear in mind is that the council tax payments are for 5 months at which point the entire 2013 bill is cleared freeing £433 a month to go towards the credit cards, savings and generally easing the pressure.

Googlewhacker

I don't see to much wrong with where you are now, maybe reduce entertainment down to £100 but your budget seems fairly good.

Ultimately if you want more breathing space you need to renegotiate council tax repayments.

carrielovesfanta

Hi mr2jay,

One thing that stands out to me is your grocery spend. You could probably quite easily reduce this to £200 a month if it's just for the two of you. (I spend approx £120 a month for 2)

If your wife is staying at home at the moment, meal planning and cooking from scratch should be relatively easy. Have a look on the Old Style board for tips.

[Deleted User]

what stands out is "your partner is a lady of leisure while you try for a baby",is there any reason why she cant work whilst trying,most wanna be mums do,after all the "trying"is the easy bit

dancingfairy

Are you mobile bills competitive? Can you both downgrade a tariff or 2? Even if you both saved 5 pounds a month each it's a start.
Presents - do you need to spend that much on presents? At christmas can you just buy for the kids? or maybe do a donation to charity and say it is a shared present for all the adults? maybe you can handmake gifts/cards or buy in the sales?
Entertainment - what does this cover? Can you find cheaper things to do instead? go to a museum/for a picnic/walk/cinema only on Orange Wednesday, all restaurant meals to be on a 2 for 1 deal, that sort of thing?
Best of Luck
df

cutestkids

Hi

I agree with the other poster about your OH being a lady of leisure, why is she not looking for work if things are that tight each month.

You imply that she is not working as you are trying for a baby but unless she is unable to work for medical reasons then her having even a part time job would help the situation.

If you are struggling just now then having a baby will only make that situation worse.

I understand that a large amount of your council tax payment is arrears but you must have been having problems to get into arrears in the first place.

I really think your wife needs to look for some work even only part time.
As things stand you really don't have much room if anything should go wrong and you needed to find money

Barbeduk

Hi, first of all well done for being brave enough to post a SOA!

I agree with the above posts, you are spending way too much on your grocery spends at the moment. If you cut that spend straight away, you can immediately start paying more on the cards (which is what I've done).

Also, babies are cheap, they need nothing but milk, warmth, nappies and love. Kids on the other hand soak up all your disposable income like you wouldn't believe! So as a mum of 2 I would strongly suggest that your OH finds a job now so that you can be getting your finances straight whilst waiting for a baby to come.

Not working is a lovely idea, but the reality is that you're prolonging your debt unnecessarily.

mr2jay

Thanks for all your replies....

OK, I understand what you are saying about the OH but to be fair to her, she has been looking for work for the past 8 months but with no luck. She has had interviews, hounded the agencies etc but nothing has come of it. Ordinarily I would say to her "try harder" but knowing her like I do, she is giving it 110%. In fact, we are starting to look at ideas where she can work from home to create a little wealth.

As mentioned above, a lot of the outgoings each month (not including the rent) are paying council tax arrears. This has come about for 2 reasons. Firstly, when we moved into the area, they took forever to set up our account and as a result, they pushed a backdated bill onto us (swines!!!) and secondly, it is my own fault for spending money I didn't have. This stops here.....

We are starting to reduce our grocery bills, planning ahead and making some meals in bulk and freezing them (chilli is the favourite so far) as well as starting to grow our own fruit and veg. Obviously this takes a while to happen.

With the entertainment side, I split that into a budget of £20 per week each. This more covers "residual" costs such as a coffee when I am away in London for meetings and the such. Most of our entertainment consists of walks or mainly trying to create our partially self sufficient lifestyle.

The £60 a month on presents is splitting Christmas over the year. With 3 nephews and 2 neices between us as well and huge families both sides, playing Father Christmas isn't cheap although we are looking at producing home made foodie hampers for most of the adults this year which will save some cash.

I think it is a case of clearing the council tax (that will leave us free of that bill for about 6 months), then using 50% of the freed up money to push onto one of the credit cards, creating a "backup" fund in case something goes very wrong. I estimate that we will be free of the council tax before the end of August and have over £1200 free on a credit card by the end of September.

I think what I am now trying to do is to bring us back on an even keel as soon as possible, freeing up money that can be squirrelled away to start towards our future family. Once things are back even (I know it will be a fight), things will be so much easier.

mr2jay

Just an update.....

Worked out all my finances on a weekly basis through to the end of September 2012.

I have based this on an average of £600 a week (bearing in mind that I work on an hourly rate so get paid for what I do so this is a low estimate)

Council tax will be paid in full (up to March 2013) by 24th August 2012

Credit card 1 will have a minimum of £1000 paid off (including allowing for interest payments) by October 2012

All other bills will continue to be up to date by this point.

Anything extra will be split between credit card payments and savings account over this time meaning I will be building a nest egg AND paying more off the credit card.

My target is to have the council tax and 50% of the first credit card paid off and reduce the overdraft by £500 by the end of the year. Looking at my workings out, it is VERY possible....

Wish me luck