17K to clear ASAP! Panic Stations!

Gibbeth

Hi Folks,

New member, new topic, so introductions first (for the nosier of you ;P)

I’m Andrew, 24, from Cumbria.

I’m married, since 6/7/13! And we have a little one, DD, 14 month.

Homeowner, but unfortunately got suckered into a shared ownership.
That was almost 3 years ago, so 2 years left before interest kicks in on the 30% of the house I borrowed.

I’ve learnt enough from reading other DFW posts that a SOA is crucial, so here goes:

On a monthly basis, after tax:

IN
My Income: £1850 (also after childcare vouchers)
SO Income: £600-800 (part-time, fluctuates between 2-3 day weeks)
Benefits: £86
____
Total: 2536

OUT

Mortgage £440
Gas & Electric £110 (£180 in arrears, DD amended to correct over 12 months)
Water £40
Sky (TV, Phone, Net) £50
TV Licence £12
My Mobile £45
SO Mobile £40
Council Tax £139
Land Rent £21
Life Insurance £26.2
House Insurance £25.8
Food £300
Petrol £300
____
Total 1549

DEBTS
TV £33
Loan £160 £6481 9.6% APR
Credit Card £ 70 £8200 12.9% APR
Catalogue £800 25.99% APR
My Student OD £480 0% APR
OH Student OD £940
OH Car Loan £269
____ _____
Total 532 16901

No. on left is monthly repayment, whereas balance is shown on right. As much information is given as available at hand.

I would say my LBM was a while ago, but with the wedding coming up, I tried to limit damage to CC by saving frantically for that, but non-the-less, I would say 50% of the CC is from the wedding =(.
I tried to consolidate different student debts of both my own and wifes, and that’s where the loan comes from. Needless to say, it hasn’t really worked, and if I’d been on here last august, maybe the picture would be different.

The amount of debt just gets me down. From the outside, it looks like were quite a successful couple, nice house, gorgeous daughter, and relatively good jobs, but I feel like with the jobs we have we should be better off. Each month we’re scraping by, paying minimum off debts, which will never clear them. The SoA doesn’t include the “unexpected” costs of things like car maintenance etc. which always catch us out.

I’m eager to get DF, but struggling to get buy-in from wife, who is constantly wanting takeaways, new clothes or treating the little one (often unnecessarily). Its not that I begrudge her the nicer things in life, its just trying to get through to her that the sooner we get this black cloud from over our heads, the more we’ll enjoy life guilt-free.

Any advice would be great, and please don’t hold back with the obvious, (Sky, Mobile bills) as its more for me to convince her with!

Ta in advance!!!

~Beanie~

Hi

According to your figures, you have £455 a month left over after paying bills and debts. I assume that as you say you are 'scraping by' that you don't actually have this?

You have missed quite a few things that you need to budget for which could be where your surplus is going: car maintenance (as you've mentioned), holidays, birthday/Christmas presents, haircuts and clothing are a few I can think of.

Maybe try filling in this SOA, it contains more of the things that you need to include: http://www.stoozing.com/calculator/soa.php

You could also try filling in a spending diary, where you write down every penny that you spend during one month. It will soon show you where your money goes!

lvm

£300 in petrol but no car tax or insurance...

annmaria2

Hi

Well done for acknowledging your debt :T
So here it goes on my side.
Mobile phone bills are very high its almost £90 per month for both of you , I am with virgin mobile and i pay £22 for unlimited everything. Shop around and switch if you can.
Also I have noticed you have bundle - tv, net & land line. does it include line rental charge? Do you really need landline when u both have mobile phones? Get rid of it if you really do not need it.

Get rid off take away meals, start planning your meals and plan your weekly budget. I know it will be hard but you can really save even more on your food shopping. Also do packed lunches - saves loads of money on monthly basis.

Whatever you save put into highest APR card or overdraft (this can be revoked immediately! and bank can demand full repayment).

Anything you can sell on ebay, CD's,clothes etc. etc

You really have to look into your finances much closer and make a decision on serious budgeting now before you drown even more.

you have not mentioned : car insurance, car mot, car maintenance i.e. tyres, car oil etc etc; birthdays, clothes shopping, Christmas budget?, entertainment? etc

Hope this helps...and good luck.

Gibbeth

Thanks for your eager response guys.

Firstly, we NEVER have £455 left at the end of the month, and thats mostly down to the other things you've stated, car maint, birthdays, etc. But I struggle to manage to "plan" spending.
For instance, tyres are needed when there worn, not every 12 months etc, thats a cost that I cant 'allocate' to Marchs budget, so why bother? Or the unknown costs to get a car through its MOT (one is getting quite old now). I'd rather try and have the same "spare" money to pay when its needed rather than plan hoping thats how it works.
Obviously things like Car Tax are more obvious, and I should have included them. Car insurance, joint policy, was paid outright on CC, as APR was less than DD, but we haven't paid the equivalent off the CC. Stupid, I know, but that's why I'm here.

We've started a spending diary so hopefully that will help improve.

As I've said, the overdrafts are interest free, so I'm reluctant to pay them off with any priority.
I have thought that we'd tackle the catalogue, then the overdrafts, whilst paying minimum on credit card, which would let us focus on getting the credit card down. A couple of relatively "quick wins" to get the ball rolling before taking on the rest.

I am saving £20 a week with family towards Christmas, which I suppose is a significant amount to include in the SoA. Had forgotten about it really, will have to sit down again and include everything.

How do people set aside money for known future requirements. For example, I could put £30pm away to cover annual car servicing, but I'm not sure on the best way to do this? Seperate accounts? I do try to manage accounts closely online, so maybe this is the way to go.

I'll post a better SoA up when I get chance.

Cycrow

Gibbeth wrote: »

For instance, tyres are needed when there worn, not every 12 months etc, thats a cost that I cant 'allocate' to Marchs budget, so why bother? Or the unknown costs to get a car through its MOT (one is getting quite old now). I'd rather try and have the same "spare" money to pay when its needed rather than plan hoping thats how it works.

for things like that, work out the average it'll cost you in a year, then divide that number by 12 to get a monthly figure.

Do that for anything that you dont pay fixed monthly cost for, like haircuts and clothes

EG. i spent £10 on a hair cut and get roughly 3 a year, so i will be spending £2.50 a month on them. Rather than £10 one month and nothing the next few

FireWyrm

Natwest and many other banks allow you to open a free current account and then attach various (usually as many as you want) e-savings accounts to it. These act as 'pots' and usually, they come with their own account number and sort code meaning you can directly transfer to them. Personally. I have 7 savings accounts now each with their own specific purpose and DD from a main account.

Essentially, all my money comes into HSBC, it then gets disseminated by DD to variously Co-Op, Tescos, Nationwide, Natwest etc. My primary current account with Natwest carries a card associated and is used for 'running expense'. On the first of the month, I allocate £400 to it which appears around the 2nd. This is used for food and fuel only (£200 each purpose). This separates my running expense from my income and bills.

The rest of the savings accounts are for other purposes like yearly insurance savings, dental, glasses, MOT's, Garden and other longer term savings such as Christmas. Tesco have a terrible online banking app which means it's actually painful to get into the savings account - therefore the perfect place to keep money I dont want to be able to access easily.

HSBC, Co-Op, Natwest etc all have mobile banking aps and this also means I can see quickly what is in each account. I keep a paper running total as well as an electronic app on my phone and all transactions are logged - no matter how small.

Hope it helps.

LittleMissDetermined

If you don't know where the £455 goes I would really recommend you keep a spending diary to track what gets spent where. I have been doing this and, along with joining the 'payment a day' thread have really got to grips with my money.

You're right on the mobile bills and TV package... Freeview has lots to offer and best of all free! (possibly already in the telly you're paying for?)

As for the mobiles, if you're in the middle of your contract you may find you can reduce your tariff - I lowered min by £5 a month and actually got MORE minutes and data! (Crazy I know, I notice O2 didn't tell me I could get a better deal before I found it on the net!)

Another great suggestion is having online money pots to accommodate those unplanned spends which invariably end up on the credit card (MOT, car service, yearly tax etc) - I do this and squirrel the money out by DD as soon as I get paid so I don't notice it as much!

Above all, you have acknowledged that you need to take control of the debts and taking action to sort them out :T

You will of course need to get your OH on-board as it's a far tougher journey alone

And finally... Congratulations on your recent marriage!

LMD x

nicp60

Hi there,
Well done on the first step, it's hard to get things rolling, but when you do it's the best thing that you could ever do for yourself and your family. :j

I've put some comments below, I hope they're helpful and constructive, and don't come across as harsh - that's not my intention at all.

Gibbeth wrote: »

But I struggle to manage to "plan" spending.
For instance, tyres are needed when there worn, not every 12 months etc, thats a cost that I cant 'allocate' to Marchs budget, so why bother?

Why bother - that's why you're here in the first place I'm afraid. You must start planning for things like this.

Gibbeth wrote: »

I'd rather try and have the same "spare" money to pay when its needed rather than plan hoping thats how it works.

I found that once I completely took charge of my finances there was no 'spare money'. If there's spare money, then you've not budgeted correctly. Unfortunately most people will always live right to their means and not miraculously start underspending. With your current overspend and the possibility that your wife isn't on board, are you being realistic when you anticipate that all of a sudden you'll have money in the bank at the end of each month?

Gibbeth wrote: »

I am saving £20 a week with family towards Christmas, which I suppose is a significant amount to include in the SoA. Had forgotten about it really, will have to sit down again and include everything.

This is an excellent start - although I would question the need for that much. Over the year that's over £1000 - is that amount really necessary?

Gibbeth wrote: »

How do people set aside money for known future requirements. For example, I could put £30pm away to cover annual car servicing, but I'm not sure on the best way to do this? Seperate accounts? I do try to manage accounts closely online, so maybe this is the way to go.

Personally I used to use the envelope system, whereby I'd withdraw money each month for the car, xmas, food etc. I found it really fiddly and then used to raid the envelopes by the end of the month!!

I now use Barclay's phone app and have opened 3 different savings accounts. I just send a standing order to each of them each month. I have one for the car (£40 a month for MOT, tax and servicing), one for xmas, birthdays and gifts (£60 a month) and another general one for emergency savings, furniture (expecting a baby) and other bits (holidays etc). When that reaches a certain level, I'll clear it out to my ISA for long term savings. It took a couple of months for the ball to get rolling, but I now have a nice stash in each account and my car tax won't have to go on the credit card or send me into my overdraft.

I've gone from spending all my money each month and living right up to my income to saving almost £3k in 6 months spread over the various accounts. In that time I've also made some pretty big purchases (pram, cot etc). I haven't noticed any perceivable drop in lifestyle - I'm just much more on the ball about not frittering my cash.

I hope this helps.

Finally, I would urge to to try everything to get your wife on board. Being debt free is the best thing ever, and when you're both on the same mission you'll make sooooo much more headway!

Best of luck!

smancslad

Hi Andrew

You live in one of the nicest parts of England, so life isn't all bad!!!

You need to complete an SoA, but properly so you can account for everything that you might spend throughout the year.

As an example, every month I put aside £30 for xmas, £25 for birthdays, £12 for car tax, £25 for MOT/Service, £65 for holiday/spends, even down to money for the garden & house (£44), eating out (£30), car parking (£13) etc etc. Every month when I get paid all this money, plus my food and petrol money gets transferred into my e-savings account. I keep track of all these on an excel spread sheet. This money is also earning me interest each month. If I don't spend the full amount from each pot a month, then steadily it builds up over time.

This leaves only DD money (mortgage, phone bill etc) in my current account.

I do all my spending (except drawing out cash) on a cashback credit card, but ensure that I pay this off in full every month by taking money from each of the relevant pots in my esavings account. I'm also then earning money when I spend money.

It takes a bit of effort initially, but it is doable and is simple once you get the hang of it.

Once you've done an SOA properly then you'll know how much you've realistically got available to pay off your debts. At the moment you're just guessing and will get yourself into more of a mess by not knowing the facts.

Hope this helps and good luck.

Chris

Stroppypops

Not trying to make things worse but you also need to consider how you will tackle that 2nd loan in two years time. I also have two years until it starts accumulating interest.

Have you tried moving debt onto a 0% credit card?