Advice on debts to pay

am1981

Hi,

I am new to MSE and am looking to pay off remaining debt and also keeps costs to a minimum.

I attach my SOA, the internet, tv and phone is all put in the TV section. We only have one car (company car) between us and no children.

We are both 30 and would likes kids in the next couple of years and want to be debt free asap.

I appreciate that we are in a different financial position to a lot of people posting on here, but we have had massive debt in the past, mainly in respect of being students and post grad fees etc and it is only now that our debts have become more manageable.

Any advice would be appreciated.


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.................... 0
Monthly Income Details
Monthly income after tax................ 3350
Partners monthly income after tax....... 3200
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 6550
Monthly Expense Details
Mortgage................................ 1300
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 147
Council tax............................. 108
Electricity............................. 50
Gas..................................... 50
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 0
Mobile phone............................ 65
TV Licence.............................. 12
Satellite/Cable TV...................... 50
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 100
Petrol/diesel........................... 150
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 30
Other travel............................ 105
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 7
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 20
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 70
Entertainment........................... 700
Holiday................................. 350
Emergency fund.......................... 200
company car............................. 400
labour.................................. 5
o2...................................... 25
dad..................................... 160
love film............................... 10
Total monthly expenses.................. 4394

Assets
Cash.................................... 1500
House value (Gross)..................... 275000
Shares and bonds........................ 7500
Car(s).................................. 0
Other assets............................ 20000
Total Assets............................ 304000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 191000...(1300).....0
Total secured & HP debts...... 191000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
student loan...................4300......320.......0.1
natwest........................6000......63........12
barclaycard....................400.......10........30
other..........................7400......200.......0
halifax 2......................1100......20........0
halifax........................900.......0.........0
Total unsecured debts..........20100.....613.......-

Monthly Budget Summary
Total monthly income.................... 6,550
Expenses (including HP & secured debts). 4,394
Available for debt repayments........... 2,156
Monthly UNsecured debt repayments....... 613
Amount left after debt repayments....... 1,543
Personal Balance Sheet Summary
Total assets (things you own)........... 304,000
Total HP & Secured debt................. -191,000
Total Unsecured debt.................... -20,100
Net Assets.............................. 92,900

mr2jay

Hi there - good call on getting debt free, I am just starting the same journey myself

OK, my main method of tackling the debts and getting rid of them as quick as possible is not to look at the largest one but look at the one with the highest APR. Make the minimum payments on all the others and hit the high APR one first until it is gone, then moving on to the next highest one. That way, you are paying as little interest as possible.

There is a tool that I was pointed to (which I have no idea how to find again) called a snowball calculator. Use this tool and it will work out the quickest way to get debt free with the disposable income you have

wannabee_in_credit

To me it looks fairly obvious that you could cut your entertainment and holiday budget back a bit and throw that at the debt. £700 is loads to spend entertaining in a month - and I see that you have it, but some of that to the debt would clear it.
You still show a quite large surlpus each month as well, so do you really have that? That would clear the debt quickly. If you don't have that left, then keep a spending diary to see where it's going. Quick tenner here and there soon adds up.
Good luck...

talana

To be honest with that sort of soa, I'm not sure what on earth you're wanting to hear.

Amount left after debt repayments....... 1,543

£1543 surplus every month. Chuck that at the debt, debt-free in roughly a year.

Nothing else to discuss that I can see. I'm sure you don't need people to point out the blindlingly obvious savings possible from the soa.

FireWyrm

I can see (off the top of my head) another £1200 a month to spend on debts as well as the £1500 you claim is also spare. At £6000 a month income, I'm not sure what you want us all to say. Its an amount that most of us can only dream of. You're obviously intelligent enough to get jobs which command such wages, so it's really just an exercise in common sense at this point. If I can find nearly £3000 a MONTH which you could be using to pay debts, there's your answer. I could have you debt free in under a year without breaking a sweat.

And while wer're at it...what's that 'other' asset which is £20K? Sell it. Problem solved.

am1981

Hi guys,

Thanks for your preliminary thoughts.

At the moment we are ploughing any money we don't spend into debt repayments but we never seem to be paying it off quickly enough.

We are paying almost 6.2% on our mortgage but we can re-mortgage in nov and am looking at 5 yr fix at 3.59%.

Mr2jay - thanks for the snowball calculator tip, i'll look one up.

wannabee - the £700 entertainment also covers lunches at work, takeaways, restaurants etc - I may have actually overestimated but I take your point. I think we could make more use of vouchers/deals etc.

talana - we are chucking all excess funds at the debt, am also looking for tips on utilities etc.

Firewym - the other £20k is basically jewellery gifted to my wife and some watches of mine (which i wouldn' sell in a million years!).

talana

talana - we are chucking all excess funds at the debt, am also looking for tips on utilities etc.

Your utilities are perfectly reasonable and not the issue.
Gas £50, Elec £50, Water £30. Alright, maybe you could shave a tad off, but it would be peanuts compared with your optional spends.

Entertainment........................... 700
Holiday................................. 350
Emergency fund.......................... 200

Stop living the high-life for a wee while if you're serious about this. £700 per month on restaurants, takeaways etc...seriously?

FireWyrm

am1981 wrote: »

Firewym - the other £20k is basically jewellery gifted to my wife and some watches of mine (which i wouldn' sell in a million years!).

That's allot of jewellery...I trust it is insured and in a safety deposit box.

OK, so even if you dont sell the jewellery, I can still find nearly £3000 a month to chuck at debts. That's 7 months and you're debt free. I'm really not sure what other hints you need here.

paulmapp8306

um - whats been said.

pay off the higher interest debs first - pay the barclaycard one next month - save for a further 3 months (with tight living to save £2000/month which is easily achievable on that) and pay off the NatWest one.

TBH, after that Id leave the debts alone paying minimum payment as there all interest free (practically) unless there on an interest free period - if they are save in an account and pay them off only when interest becomes payable.

Everything else you have available use to overpay your mortgage which (appart from the BC ant NatWest loan) is by far your highest interest rate.

katejo

talana wrote: »

To be honest with that sort of soa, I'm not sure what on earth you're wanting to hear.


£1543 surplus every month. Chuck that at the debt, debt-free in roughly a year.

Nothing else to discuss that I can see. I'm sure you don't need people to point out the blindlingly obvious savings possible from the soa.

Your surplus each month is virtually my whole take home pay. Why do you need £700 per month for social/leisure? I could not afford anything like that and I have no debts to pay off except the mortgage. Over half my take home pay just covers bills.

wants.to.be.debt.free

You have £1543 suplus

Every month pay what you say you pay £613 (some will be interest and some will be off the outstanding debt)

FROM YOUR SURPLUS:

Month 1) pay extra £400 to Barclaycard, £1100 to Natwest
Month 2,3,4) £1500 to Natwest each month
Month 5) £400 to Natwest, £1100 to student Loan
Month 6,7) £1500 to Student Loan each month
Month 8) £200 to Student Loan, £1300 to other
Month 9,10,11,12) Other £1500 each month
Month 13) £100 to Other, £1100 to Halifax 2, £300 to Halifax
Month 14) £600 to Halifax

DEBT FREE!!!

( You will probably be deft free in less time as not all your minimum payments will be for interest)

Good Luck