Finally woken up - addressing my debt

Hazel001

So, I've finally decided to take control and get rid of my debt - I've hidden my head in the sand for so long and it hasn't reduced since I first looked at it a number of years ago. I've got a secure job, I can pay all my bills so I don't know why I'm failing to address the issue. Admittedly I've recently had a large reduction in income, but I think this has made me look more carefully at budgeting - hence the wake up call.

It's not a huge amount of debt, but I feel it's stupid to leave it hanging around my neck, especially as the money I'm paying out to cover it - will eventually be in my pocket.

So, bit deep breath - here is my statement of affairs - putting it out there for all to see makes it more real. In 24 months I'll be out of a fixed rate mortgage, so I'll be able to make savings there. My son is at University and I currently support him to the tune of £85 a month, when he finishes (and hopefully gains employment), then I'll get that back in June 2015. :j

I've reduced my bills as much as possible, moving to a water meter, haggling down my sky bill by 50% for 12 months, reducing the pet insurance and my biggest saving, haggling my car insurance down by 50%.:T

I'll be moving away from a contract mobile at the end of December 2013, when my contract ends and I'm looking at the possibility of having a lodger next year.

Phew - that feels so much better, the inspiration from this forum is wonderful, and I'm looking forwad to reducing my debt month by month.

Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 1332
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1332

Monthly Expense Details
Mortgage................................ 468
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 94
Electricity............................. 34
Gas..................................... 34
Oil..................................... 0
Water rates............................. 16
Telephone (land line)................... 28
Mobile phone............................ 31
TV Licence.............................. 12
Satellite/Cable TV...................... 35
Internet Services....................... 0
Groceries etc. ......................... 80
Clothing................................ 10
Petrol/diesel........................... 60
Road tax................................ 16
Car Insurance........................... 18
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 70
Medical (prescriptions, dentist etc).... 13
Pet insurance/vet bills................. 15
Buildings insurance..................... 15
Contents insurance...................... 0
Life assurance ......................... 56
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 60
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1165


Assets
Cash.................................... 0
House value (Gross)..................... 220000
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 4000
Total Assets............................ 227000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 51000....(468)......5.7
Total secured & HP debts...... 51000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
MBNA...........................793.......25........5.9
Barclaycard....................1200......28........0
Bank overdraft.................2000......25........0
Total unsecured debts..........3993......78........-


Monthly Budget Summary
Total monthly income.................... 1,332
Expenses (including HP & secured debts). 1,165
Available for debt repayments........... 167
Monthly UNsecured debt repayments....... 78
Amount left after debt repayments....... 89

Personal Balance Sheet Summary
Total assets (things you own)........... 227,000
Total HP & Secured debt................. -51,000
Total Unsecured debt.................... -3,993
Net Assets.............................. 172,007[/B]]

pogg000

no mortgage?

Hazel001

Have updated with the mortgage - whoops, missed that bit.

StressedSteph

Hi Hazel

Welcome to the MSE website.

I have only just come back here to tackle my debt too and its a long journey. But if you stick around here everyday you will get the enthusiasm to keep going and get this debt beat.

I am not majorly qualified to help but one of the best things someone told me to do is to keep a "Spending Diary". Eveytime you spend even 1p you write it down in the book. Hopefully the act of having to write it down may make you think of whether you really NEED it or not and also it lets you look back and see where you are overspending, as even a £2 coffee adds up by the end of the month.

Stick around and I am sure lots will be here to help more soon.

StressedSteph

Max_Maxwell

The two figures that stand out are Groceries @ £80 and Life Assurance @ £56. Are these correct? If you genuinely are a 'supersmart-shopper' and spending only 80pm then you get my admiration.

But the life assurance is high. Does it include other benefits such as health or earnings replacement?

Hazel001

In relation to the supermarket shopping - it is my aim to stick to £80 a month, I'm not 100% certain that I'll be able to achieve it straight off, but with clever cooking and purchasing (and eating cheap meals, no alcohol and reducing my purchases of cleaning/cosmetic products) I think it can be achieved - I have a friend who feeds a family of 4 on £200 a month, so it must be achievable, by bulk cooking and freezing and only purchasing what I need.

The life insurance is two items, one is straight life insurance(£26) and the other is critical illness cover (£30). The reason I want to maintain these is to ensure if anything happens to me my son is financially secure (he's 19 and at University for another 2.5 years) - I have no other family and he is estranged from his father's side of the family - so I'm all the financial support he has whilst at uni. Once he's started out in life earning his own living then I can revisit these policies.

I've realised how easy it is to overspend on things you don't really need. So I'm also going to address my food wastage - like throwing away uneaten food, so I'm not going to even buy it. Buying frozen veg, tinned fruit etc does reduce the wastage - plus you can still eat healthily.

I'm also going to cycle to work 2-3 days a week, added bonus will be the excercise this provides (free) and reduces the cost of fuel even further. In our modern world I think we feel the need to have 'everything' - when in actual fact we don't need a lot other than our health, enough food, a warm safe home and an income to cover the essential bills in life. If I wasn't in debt my monthly disposable income would be around £450!

So I'm feeling really proud of myself that I've owned up to myself that I've caused my current situation - and addressing it at last!:)

Max_Maxwell

OK, that makes more sense now. £56 for life assurance alone would be far too much. And I agree with the critical illness cover so look after that and don't let it go unless you absolutely have to. It's hugely more expensive the later in life you take it out. The earlier you buy it the cheaper it will be longer term.

1StepDebt

If you're considering cycling to work 2-3 days per week, why not sell the car and cycle every day.

You'd then be able to pay off all the loans except for £993 on the interest free overdraft.

You'd then have your currently available £89, £53 that is no longer required for the minimum payments on the paid off loans and £94 in car related expenses. That's £236 available towards the overdraft.

When you get the loan paid off, you could put this £236 (and the £25 current minimum payment on the overdraft) into a regular savings account and save up for a new car.

By Spring of 2014, you'd have a newer car and no debt.