Life whilst paying back debt

StartingOut

Apologies if this is a long one - I want to get everything down. I joined a while ago when we had our lightbulb moment but didn't really post. At the time we were really struggling and had to come to agreements with our creditors. They all agreed repayment plans and a couple defaulted us.

Since then a career development loan has entered repayment (which I'd ignored when we were first looking at our debt) and by my calculations we've paid off around £10,000 of the other debts (although this could be a little bit more).

Between us, there have been a few promotions/payrises - the lastest of which was December, so we are in a much better place money wise. So, I am re-looking at our SOA and to see how quickly and the best way we can pay this off.

I'm going to post my SOA as it will stand once all of the things we are putting in place will happen (which will be in the next few months). One of the things that I can't do is decide what budget to allow ourselves for things like entertainment etc. We do not go out a huge amount - due to having to little ones and no family living near us to help out with childcare. But because we have two little ones, we do like to do a few things with them - like kids cinema at the weekend, maybe a trip to the shops for a bag of sweets, a visit to the local playcentre, events at school etc and I don't want them to miss out due to our stupidity at getting into debt. I think we are paying a hefty load off our debt at the moment and are prepared to pay some more, but would like to have a small slush fund to do a few things that are fun for them.

The payments that we send our creditors were agreed two years ago and have increased from when we started. Any extra we pay will be to pay off the overdrafts. Two of the credits cards have defaulted (CCs 1 and 3) and one of the loans has been defaulted (loan 1) so we thought we'd concentrate on the loans/cc that haven't defaulted. Does that sound sensible?

I think I'm quite happy with our outgoings - currently in the process of cancelling virgin and getting freesat, will reduce our mobiles to £10 a month once we can, looking for cheaper house insurance (these are all reflected in the SOA).

We also lease a car through one of our work salary sacrifice schemes (the way our car was behaving, this really did work out the best thing for us), so the only vehicle cost is petrol (as the lease covers insurance, road tax, servicing, maintenance, tyres etc) and both of us take childcare vouchers which pays for our childcare needs and a little bit of a backup for emergencies. (Our income on the SOA reflects the reduction in salary for the car and the vouchers - plus student loans that come out at source).

The £200 a month emergency fund, is to build up a pot of cash for emergencies, once we are happy with that, we will look at putting it towards the debts. The £40 present saving etc is something we've done for years and as we have to travel at Christmas - covers all presents, food, travel etc.

So after all that, I wondered if anyone had any thoughts on how to apportion out the remaining money we have at the end of each month - nearly £700. Would you throw it at the debt or would you give yourself an allowance for a few little things from it?

Does anyone think that we have things missing from our SOA or is there anything else we can reduce down further?

One final things - mortgage is interest only at the moment which will change once all of the debt is paid off.

Statement of Affairs and Personal Balance Sheet Household Information

Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 1678
Partners monthly income after tax....... 1322
Benefits................................ 134
Other income............................ 0
Total monthly income.................... 3134

Monthly Expense Details
Mortgage................................ 353 (interest only)
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 118
Electricity............................. 45
Gas..................................... 45
Oil..................................... 0
Water rates............................. 49
Telephone (land line)................... 0
Mobile phone............................ 20
TV Licence.............................. 12
Satellite/Cable TV...................... 0 (just cancelling our provider)
Internet Services....................... 16 (internet and phone)
Groceries etc. ......................... 300
Clothing................................ 10
Petrol/diesel........................... 60
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 60
Childcare/nursery....................... 0 (paid for with CC vouchers)
Other child related expenses............ 10
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 0
Buildings insurance..................... 15
Contents insurance...................... 20
Life assurance ......................... 20
Other insurance......................... 0
Presents (birthday, christmas etc)...... 40
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 200
Total monthly expenses.................. 1418

Assets
Cash.................................... 0
House value (Gross)..................... 140000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 140000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 115000...(353)......0
Total secured & HP debts...... 115000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Loan 1.........................11000.....225.......0
Loan 2.........................12500.....356.......0
Overdraft 1....................4980......184.......21
CC3............................3600......75........0
CC2............................2700......70........0
CC1............................1500......70........0
Overdraft 2....................1370......40........18
Total unsecured debts..........37650.....1020......-

Monthly Budget Summary
Total monthly income.................... 3,134
Expenses (including HP & secured debts). 1,418
Available for debt repayments........... 1,716
Monthly UNsecured debt repayments....... 1,020
Amount left after debt repayments....... 696

Personal Balance Sheet Summary
Total assets (things you own)........... 140,000
Total HP & Secured debt................. -115,000
Total Unsecured debt.................... -37,650
Net Assets.............................. -12,650

sistafromanothermista

:wave:
The amounts you pay currently on the debts, are they the minimum amounts?

I would definitely throw everything you can at the debts as the quicker the debts are paid off, the quicker you can start living again!

As you can see from my sig, we're in a fair amount of debt too and are currently overpaying £550 a month on the debts.
I'm sure we could pay a little more but as DH loves to cook our shopping bill is always a bit higher than it could be! (£360pm)
:T on you getting yours to £300pm :T

Good luck!!!

wannabee_in_credit

Just want to wish you good luck with your debtbusting. Someone wiser than me will no doubt be along to advise. I would say live your life whilst paying the debts off. I want my debts gone asap, but haven't cut my cloth so small that I can't have an occasional family day out. At the moment I will be debt free in a little over 3 years. If I tighten my belt a little more then perhaps I can take 6 months from that, but at the moment I don't want to. I'll review my situation again come September when my youngest starts school and I'm no longer paying hefty nursery fees. And again after Christmas when I've finally paid my car off (although now it's almost 8 years old it's starting to need a bit of maintenance here and there).

Hopelessly_Hopeful

Hi

How long are the 0% interests for?

With current information I'd say you need to concentrate on ODs first

HHx

rising_from_the_ashes

How long is your mortgage on interest only for?

Was this an arrangement with your lender due to debts or did you run into problems with the mortgage too & this was an agreed solution?

Ideally, you want to be trying to get it back to "paying it off" ASAP


Personally, I'd throw everything possible at the debts ...... maybe allow yourself £50 / month which should cover a trip or 2 to the cinema (go when deals are on, take your own drinks, popcorn etc) or a takeaway etc

Best of luck

StartingOut

Thanks for the replies. The payments are all agreements with the creditors who have frozen the interest except for the overdrafts. So both overdrafts and loan 2 are the amounts that appear to make sense for the debts (and taking into account the other payments). I think that we are now paying over the minimum for the credit cards but as these were agreements we've not really considered that. They all still appear happy with our arrangment - I think that is because we've increased the payments as time has gone on and have continued to pay (and they aren't really insignificant amounts).

The 0% rates are for as long as the agreements are kept up. I have 0% on loan 2 as it is a fixed term loan with the interest already added (if that makes sense).

I think we will try and throw some more of the remaining money at the debts but allow ourselves some to do a few bits - eg my parents live quite far away from us, so it is nice to go and see them - the extra money allows us to do this, but if at the end of each month we have money left over, then we'll put that towards the overdrafts.

We've really struggled like most people over the last few years - 2 lots of maternity leave, huge childcare bills, cost of living increases, a salary freeze for the other half for a while - that now, due to the promotions and recent payrises, we are actually in a good place (would have been even better if we weren't spending £1k each month on debts!) and can see that it will end soon. We are never ever doing this again.

StartingOut

rising_from_the_ashes wrote: »

How long is your mortgage on interest only for?

Was this an arrangement with your lender due to debts or did you run into problems with the mortgage too & this was an agreed solution?

Ideally, you want to be trying to get it back to "paying it off" ASAP


Personally, I'd throw everything possible at the debts ...... maybe allow yourself £50 / month which should cover a trip or 2 to the cinema (go when deals are on, take your own drinks, popcorn etc) or a takeaway etc

Best of luck

It was when I was on maternity leave and we were looking at our outgoings and also remortgaging as our deal had come to an end. The bank suggested it. We've never been in trouble with the mortgage - it has always been paid (just interest only for 2.5 years). The plan is that we'll start repaying once the debts are cleared - but at that point we will probably be renting it out due to a relocation that is due to happen, so the plan is that the rent we'll get will be enough for it to cover the repayment mortgage.

Hopelessly_Hopeful

Hi

How about splitting the different and paying £340 extra to OD. You can get quite a bit out of £340.

How long are you planning to build the emergency fund for?

I agree with principle of balancing paying debt off with needing to life life too but debt situation in terms of interest may change

HHx

hotwinter

so you have nearly 700 you could pay of your debt but would rather spend it?

im sure the parents will understand that you got bills to pay, you should be putting every bit of spare cash into these bills. in the long run you will be alot better off and happier for it

StartingOut

hotwinter wrote: »

so you have nearly 700 you could pay of your debt but would rather spend it?

im sure the parents will understand that you got bills to pay, you should be putting every bit of spare cash into these bills. in the long run you will be alot better off and happier for it

I agree, I absolutely do not want to spend the £700 - I was just wondering what might be a sensible amount to put for 'entertainment' in the SOA. Parents would understand not seeing them, but they'd be upset about not seeing the grandchildren for a long time, so it is nice to be able to spend some time with them - it only costs us the petrol and a few spends when we go (and we go max 3 times a year).

HH - £340 sounds a huge amount doesn't it?! I'd doubt we'd spend that much even if we weren't cutting down! It sounds like a plan to pay a bit more than that off the OD say £450 (concentrating on the highest (amount and interest) one) plus anything left over from the £250 "spends" goes into it too. Might set myself a challenge to have much as that left as possible each month!

Have just seen your question about the emergency fund - I'm not sure really. We are pretty lucky in that there should be no emergencies with the car unless we need to pay an emergecny excess, the boiler is pretty new - applicances seem to be doing ok - but are 7 years old now, so that might change. We've never ever put money away for a rainy day, so it would be good to have a bit of backup. Maybe until we have £1000 but that is a finger in the air figure.

Hopelessly_Hopeful

StartingOut wrote: »

I agree, I absolutely do not want to spend the £700 - I was just wondering what might be a sensible amount to put for 'entertainment' in the SOA. Parents would understand not seeing them, but they'd be upset about not seeing the grandchildren for a long time, so it is nice to be able to spend some time with them - it only costs us the petrol and a few spends when we go (and we go max 3 times a year).

HH - £340 sounds a huge amount doesn't it?! I'd doubt we'd spend that much even if we weren't cutting down! It sounds like a plan to pay a bit more than that off the OD say £450 (concentrating on the highest (amount and interest) one) plus anything left over from the £250 "spends" goes into it too. Might set myself a challenge to have much as that left as possible each month!

That sounds a sensible approach.

You can't buy back time

HHx