General overhaul of finances help needed please

procrastination_over

Firstly I would just like to say that I have observed so much on all these forums and the way people help each other is amazing and inspiring.
I don't have major debt as such but I do want to sort out and organise my finances to safe guard our future as we are ok for the moment so no real money worries but we are only living for now.. Basically a major over haul of what I've been putting off for ages.
In particular:
Mortgage.
Pensions.
Start some regular savings.
Life Insurance/Critical Illness
Payoff credit cards

So I thought that there would be some people on here who could offer me some advice on particular things as I am unsure which way to go with them, which is why I've been putting them off. So here is my SOA

Monthly Incomings:

My salary - £355.66
Partners salary - £2029.60
Child Benefit - £120.80
Child Tax - £42.24

Total - £2548.30

Monthly Outgoings:

Mortgage - £552.92 Two parts £424.48 and £68.44 (see below)
Council Tax - £153.08
Gas - £49
Electric - £40
TV License - £11.37
Phone - £17.00 (£12 BT and average 18866 £5.00)
Food - £200
Car Insurance - £25
Petrol - £80
Life Insurance £15.40 (see below)
Gym £51 (I know not necessary but I can afford it and do use it, its for me and my daughter)
Water Rates £27.54 (meter)
House Insurance £26.07
Son savings £20
Virgin CC £50 (see below)
Capital One £50.00 (see below)
Friends Provident £40.32 (see below)
Mobile £21.00 (this is on T-mobile Flex plan so I get £180 per mth credit so I’m happy with this)
H S A £8.66
Aol Broadband £9.99
Car lease £274.23 (I know some people with think this is extravagant but we feel it’s the best way )

Total: £1722.58

So 2548.30
-1722.58
=£825.72

I already shop around for my insurances etc and use Quidco for everything. My partner has just started slowly getting into Matched Betting. I have cut down my shopping drastically thanks to Old Style board.

Mortgage - This needs sorting as we changed it to interest only while I stayed at home for 3 years to look after our baby and go back to college. The mortgage is made up of 97,000 for the original and another 10,000 for home, improvements (the 10,000 segment is repayment tho as that’s the only way they would lend it us) but the other £97,000 is interest only. Our house is valued at approx £260,000. So its served its purpose being int only for a few years but I’ve started back part time now so bringing in a small income. So would like to change this.
We are on a Tracker Mortgage of 0.04% above Bank of England base rate until March 08. We pay £424.48 interest only for the £97000 and £68.44 for the £10,000

Friends Provident - This £40.37 we pay is for a £29,000 endowment which we took out years ago on our first house. I know endowments are rubbish but I think we have left it too long and have had too many warning letters to complain about this so I thought we’d just let it run its course and see what happens with it being such a small amount per month. What do people think?

Life Insurance - At the moment we have cover of £100,000 joint policy with Norwich Union costing us £15.40 per mth. I don’t think this is enough and also think we need critical illness cover too, any suggestions? I know what people think of endowments but would that not be the cheapest way of getting critical illness cover as some endowments include this and also you are saving up so the critical illness is not dead money if you know what I mean? Critical illness cover is very expensive other wise and you obviously don’t get your money back at the end of the policy. Am I making sense, sorry??

Capital one Credit Card - We owe this £1218.80 we pay them £50 per mth and the interest rate is 0%.

Virgin Credit Card - We owe this £1200.08 we pay them £50 per mth and the interest rate is 2.9%

Pensions I need to dig out our pension details. I don’t currently pay into one, just have a very small one frozen from when I worked for the local authority. And my husband pays into a company one to Standard Life but he only pays £68.72 into it.

Savings - We don’t currently pay into any savings only the £20 for our son and the endowment we have. We would like to change this and start saving.


My husband is a higher rate tax payer if this makes any difference to anything?
Any help would be appreciated as I’m on a mission to sort all these areas out and would like to do the best for each not just rush into it and regret it later if you see what I mean.

Thanks

emzig123

Hiya, the SOA looks quite good, obviously the gym could be gotten rid of but if you feel you can afford it then keep it. What is happening to the spare £800 at the moment? are you saving it or does it get frittered away? If you keep a spending diary you can keep a track of where it is going.

procrastination_over

I would say we are generally spending it we could definately make better use of it. For example the mortagage or savings thats why I need to make an over haul and sort the future finances.

emzig123

OK, so in that case, if you put a set amount to the credit cards or savings each month and then have a set amount to spend you can easily get rid of those credit cards very quickly. The SOA looks very good but you need to identify EXACTLY where that money is going. well done, you are doing very well!

(sorry I can't be much help on planning for the future!!)

Mozette

Definitely keep a spending diary, you will be amazed at what you spend on trivia - since I started keeping one, for example, Starbucks are a good £200 a month down! But a few quid a day didn't seem so bad... though if I'd saved that £200 a month, I could've bought another car when mine died just now! It doesn't have to be a matter of depriving yourself, but if you just think about what you're spending and why, and wouldn't you really prefer to reduce your debts or start some savings? Then it's up to you!

chevalier

Not sure what to suggest so I thought I would provide some links

Here is the one to Martin's article about life insurance
http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1062326514,64086,

and this is about mortgage life assurance

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1099917811,37970,

this is the article about endowment misselling. I still think you should complain about this. People got back a LOT of money in some case

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1138020285,19271,

this is the guide to remortgaging
http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1106239308,24268,

and this is about how to check you are in the correct banding for council tax

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1160141972,18232,


Hope this helps
chev

liz105

if you owe £2.4k on credit cards and have around £800 p/m left over why not pay off the cards in 3 big hits??? they'd be gone by the summer.

tyllwyd

If you are spending your 'spare' £800 every month, then I'd say you definitely need to draw up a tighter budget and find out where the money is going. There should be money there to put into your mortgage and pensions - otherwise, you will be storing up problems for yourselves in 10 or 20 years time.

Have you got a recent projection from Friends Provident to say what your endowment is currently worth, and what it will be at the end of the term? Even if it achieved £29000 it would leave you well short of what you need to pay off your mortgage. Have you got any plans about how you will save for that? Would you prefer to change to a repayment mortgage, or possibly take a bigger risk option and save separately in something like a stocks and shares ISA?

You can get a forecast for your state pension entitlement from thepensionservice.co.uk. I think you and your husband need to have a good look at your personal pensions. What kind of a pension is his Standard Life one - a money purchase one probably? Does his employer contribute? And how many years do you have in your pension - what kind of income is that predicted to give you?


To be perfectly honest, I'm not sure you are asking the question on the right board. Your debts aren't huge, and your SOA doesn't look extravagent. Maybe you should be asking on the savings and pensions boards for more specific advice.

Edited to say - whoops, should have been thepensonservice.gov.uk, obviously!

procrastination_over

Thanks so much for the replies so far.
I will look at all the links suggested.
I will keep a spending diary and see if I can control that 'spare' £800.
I'm worried about the fact my mortgage is on interest only and that our pensions are inadequate and I generally don't feel protected so I'm definately going to see each of these areas through and get them sorted one by one. If you don't mind Id like to keep this thread updated so I can see what I've achieved and where I still need to work on. Anymore advice along the way will be greatly appreciated.
Thanks

procrastination_over

Ok I've posted on the Mortgage and Endowments forum and I am waiting for their replies. I've been on the advised by Martin site for endowment claiming and Ive printed the letter and I am going to send that off even though I don't really think I've got a chance because I've left it far too long, but if I don't try etc etc.

chocolatefish

Hi OP

A couple of things...

One good way of making sure that the GBP800 doesn't just disappear every month is to set up standing order payments to wherever you want to save it, to go out straight after payday. Our budget is set up this way - we start with our income, have all our bills, mortgage, savings etc come out asap after payday, and a week after payday the only money left in the account is that which has been allocated to groceries or our own spending 'treats'. There simply isn't any money left to be frittered away. Basically you need to set your budget account up so that there is no 'spare money' in it - every penny to be accounted for and have a destination. It's kind of daunting if you are used to undisciplined spending at first, but the thrill of seeing your savings build up / debts disappear makes up for it!

Secondly, I can see why you didn't know where to post this! IMHO this site lacks a board for people who are not in debt, but who do want to apply some DFW principles to their financial lives. I don't have any debt but I scour this board for ideas on how to make the best possible use of the money I do earn. There is a 'Budgeting and Current Accounts' board here but it tends to be dominated by people talking about bank accounts, not budgeting. The Motley Fool has a Living Below Your Means board which is kind of what you are looking for. But I guess we'll just have to keep mooching around a number of different board and piecing it together!