My SOA and debt diary

Ignatius_A

OK, let me introduce us. I'm the dad, working in IT.

The OH doesn't work. She's on DLA and incap. benefit awaiting a second hip replacement (other side). She also suffers from depression, which has been a contributing factor to our current predicament.

(NB: impending crisis here, as once the op is done and recovered from it's likely we'll lose DLA)

We're both mid to late 30s, and have 2 primary school kids. Neither of us smoke or drink (well, I don't and she can't due to medication) though we have had a tendancy to eat out too much in the past)

My lighbulb moment :idea: came at the beginning of this month, when OH finally reached the point where she had no option but to inform me that we were in debt to the tune of 37k :eek: (only 15k of which I was actually aware of previously.) She is still alive, and i think they'll drop the attempted murder charge eventually! (Joke!:p )


I'm going to present my initial SOA now, and then talk about the steps i've already taken to try to bring things under control.

Income

Salary                  1750
Incap. Ben               385.80
Dis. Living Allowance    248.40
Child benefit            120.80
                        ------
Total                   2505.00

Expenditure

Council Tax               106.47
Mortgage                  406.84 (House worth approx 120k, mortgage approx 55k)
Water                      38.91 (Rated, not meter)
Car Insurance 1		   57.36 (Direct Line)
Car Insurance 2		   40.00 (Direct Line)
Compassion UK	           18.00 (We sponsor a child in brazil - not prepared to drop this)
Gas&Elec                   98.00 (Scottishpower, moved 12 months ago by uswitch recommendation)
Virgin Media		   85.00 (BB/TV/phone - incl 24h talk package as OH in during the day)
household Insurance	   36.84
endowment                  40.00 (dedicated to mortgage of 2nd house - about 10k short :( )
Hospital Saturday	    8.93 (OH)
TV License	           11.37
Joint life policy          14.51 (covers current property in case of death of either) 
OH life policy              4.42 (Covers value of 2nd house if OH dies)
My petrol		  120.00 (44 miles/day to work + any extras)
OH Petrol                 100.00 (with mobility issues, she needs car for everything)
church                     40.00 (Far short of what I would want to give)
Ironing	                   40.00 (£10 per week approx)
School Lunches		   80.00 
kids Swimming lessons      40.00
Fixed long-term savings    65.00 (Only way to provide a pension for OH)
Education	           40.00 (My job depends on keeping up with current technologies)
His spends                 45.00
Her spends                 45.00
Birthday/christmas         45.00
Holidays                   70.00 (we go camping for the forseeable future!)
Food & Clothes            100.00
                          ======
                         1808.65

not bad - so far. But then you have to add unsecured debt:

                 Balance      Interest      Min Payment    Actual Payment
Marbles          11050         19.9%          195               200
OH Overdraft      1000         15.9%                             20
Barclaycard       1700         14.9%           38                50
Joint Overdraft    450          9.9%                             15    (inc 10 account fee)
Unsecured loan   12500          9.9%          259.10            259.10
Family loan      10400            0%          200               200
                                              ======            ======
                                              692.10            744.10

Total outgoings 	

2552.75


Shortfall of £47.75

(There is also no provision as yet in this plan for car servicing/mot/tax/repairs)

Up until now, the shortfall (and a fair amount of other spending on top) has been made up by cash taken from the cards, family, and from the income from the 2nd house
(We let that house, and I like to keep it as a separate entity from our own finances where possible.
Due to there being no money in that account now,:rolleyes: I also need to find £180 this month for (annual) commercial buildings insurance - anyone know how to bring this down? - it seems to have increased considerably this year...)

Actions taken so far:

1) I have announced that we will no longer use the ironing service. Instead, I will be doing the ironing - It will give me a chance to catch up on some TV watching. - at least that's what I'm telling myself

2) I have sent off for statements from 3 Halifax bank accounts which OH had been managing (2 of hers, one joint) I suspect there will be a fair lump to recover from these.

3) I have obtained an MBSA credit card which gives me 0% balance transfers (3% fee) for 12 months. - limit 6300

4) I have transferred the 1700 from the Barclaycard to the MBSA. I hope to transfer another 4400 from marbles to MBSA and then obtain a 6% balance transfer for 6 months deal to transfer 1900 from the marbles to the barclaycard. The intention is to make the minimum payments on these 2 cards, allowing me to attack the marbles balance with the rest of the available cash. :cool:

5) I'm also investigating use of 82ask to make some extra cash, and trying to get my head around the concepts of matched betting to see if I dare give it a go...

Anyway, pleased to make your acquaintances. It looks like i'll be around for some time to come. The snowball site reckons I've got about 60 months to go - but it doesn't know about the halifax fees request yet

Midnight_Sky_2

Hi and welcome,

well done for posting. I'm not great at SOA's but other, more knowledgable people will be along in a minute to give you some advice.

Off the top of my head - School Meals - £80 :eek: that's half my monthly shopping bill for three adults and a (constantly visiting son and daughter-in-law). Cut back and make them take packed lunches.

Virgin Media - Seems really high - are you sure this is the best deal you can get?

Ironing - well, you are now going to be doing the ironing so you've already saved £40 :T

His and Her spends total £90 per month - can you tighten your belts and reduce this?

Just some ideas to get you started.

Good Luck and keep posting.

Midnight

CLAPTON

if possible to say without seeing the full financial facts.

You need to add absolautely all your costs so you need to add the car related costs specially as you have two.

also you need to include the second property.. i dont understand what you mean that you like to keep it separate..well thats ok but does it cost you money or is there net income. theres no pint recommending drastic cutbacks if he have rental income stream that solves all your problems.

how much is the second house worth and what is the mortgage?

Ignatius_A

OK, little more info

The 2nd house is currently long-term let, so at the moment it should be making a profit - however letting is not a guaranteed revenue stream. When the tenant moves out there's expenses in keeping the mortgage up and preparing the property for the next tenant. Sometimes getting a tenant in takes a few months, over which you have to pay the mortgage. (main reason for leaving any profit in a dedicated account) I'm satisfied if it breaks even overall

The house is currently worth about 60k, has a 27,300 interest only mortgage with about 8 years to run. The endowment is about 10k shortfall, so I really want to keep any profit in a separate account to look after that. (Basically, I try to treat it as a business of its own that has neither impact nor benefit on the family finances) It does have to go through my tax return. In the past it has run at a loss and I've got tax credit i'm currently claiming back against income. (Cost of interest can be claimed back as a business expense)It's currently running at a profit. It varies.

I'm not worried so much about the shortfall. When the mortgage becomes due I'll have at worst a 10k debt secureable against a 60k+ house - shouldn't be a problem. - I'll probably convert it to a flexible secured loan

In terms of car maint, I have no details on what that really costs. I get servicing and things done by my brother the trained mechanic - so services & repairs cost parts & a tenner for him. The wife's car requires no tax (advantages of being in receipt of DLA) I'd guess with a finger in the air at about £30 pm. I need more time to get a handle on this as it's something I've never had to add up.

Hope this helps

CLAPTON

a 37k is a considerable amount of debt.

do you know how this debt was build up. has the spending that lead to this now been corrected.
on paper you only have a £50 shortfall (excluding the rental property) which if so should be easy to correct.
at the moment you have only identified 40 savings so i dont see how the snowball calculator can give 60 months to
clear the debts... does this include the ODs too?


however, your overall situation is quite good with several areas of savings if you wish and the potential equity in the second property.

Smashing

Charity begins at home - you can't afford your own outgoings, so your money would be better put towards your debt. You can always start payment again when you are in a better financial position.
Your shortfall could be made up by simply cancelling your charity/church contributions. If you really won't get rid of the child sponsorship then at least knock the church donation on the head. We'd all love to give more, but it's not always practical.

School meals are costing a small fortune - taking packed lunches would be far cheaper.

His/her spends - what does this cover? Could be reduced for the time being.

Ignatius_A

Midnight_Sky wrote: »

Hi and welcome,

well done for posting. I'm not great at SOA's but other, more knowledgable people will be along in a minute to give you some advice.

Off the top of my head - School Meals - £80 :eek: that's half my monthly shopping bill for three adults and a (constantly visiting son and daughter-in-law). Cut back and make them take packed lunches.

Yeah - I thought it was a bit high too. basically we're looking at just over £6 per week per kid plus additions for an afternoon fruit snack and a morning glass of juice - I think I need to refine this a bit more, may be a high estimate. Taking pack lunches is a great idea in theory. In fact I take sandwiches to work most days. - key is most. It's not unusual for us to run out of fillings, and we can't just send them with cash to buy lunch on a one-off like I can. Overall I think they get better fed this way


Virgin Media - Seems really high - are you sure this is the best deal you can get?

Going to discuss this with the family. Phone deal I think we benefit from. I could go down to 2Mb broadband (Currently 4) and save a fiver. Swapping the TV to a lighter package would mean losing most of the kids' and the wife's favorite channels - not going to be popular. I'll try to compare with the lighter sky packages and use it as a lever to force a better deal out of the Virgin retentions department. After all, if I moved my phone to a BT package I'd eventually be able to migrate to free sky broadband

Ironing - well, you are now going to be doing the ironing so you've already saved £40 :T

His and Her spends total £90 per month - can you tighten your belts and reduce this?
* This IS the tightened budget, you should have seen it before:eek: *

Just some ideas to get you started.:T

Good Luck and keep posting.

Midnight

Thanks for the help

Ignatius_A

CLAPTON wrote: »

a 37k is a considerable amount of debt.

do you know how this debt was build up. has the spending that lead to this now been corrected.
on paper you only have a £50 shortfall (excluding the rental property) which if so should be easy to correct.
at the moment you have only identified 40 savings so i dont see how the snowball calculator can give 60 months to
clear the debts... does this include the ODs too?


however, your overall situation is quite good with several areas of savings if you wish and the potential equity in the second property.

Yeah, I think what was happening was generally living from day to day (i've got some money coming in Friday, that means I can do the shopping, have dinner at mcdonalds, buy the kids that new dvd they want and fill the tank) rather than planning the spending and knowing what money was needed where. When shopping was suddenly needed it came off the cards rather than from income. - it becomes something of a habit.

The 60 months includes the overdrafts, but assumes that we can make the payments listed in the SOA (Which as you point out, we're a little short of at the moment. - working on it.)

I'm hoping to meet the shortfall by increased earnings (there's occasional overtime at work, and a 5 to 6 weekly on-call rota that nets about £200.) As I mentioned I'm considering 82ask, matched betting, and may attempt mystery shopping.

Shineyhappy

Could you apply for a carers allowance?

ifstar

Both car insurances look a bit high, when it comes renewal time you could do with shopping about and also use Quidco for money back.

Virgin Media, before phoning them up have a look and see what you can get with Sky/BT work out how much it would be for a year/18months (sometimes the deals run for 18 months) then compare it to Virgin. You will probably find a few hundred quid of a difference so tell the customer services person this and give them the figures and say that the difference is a bit too much to justify even though you are happy with the actual services you get from them. If the person doesn't bite then you can always phone back in 10 mins and speak to someone different. Aim for them to drop your bill by about £20 pm.

I know you don't want to give up on your charity money, but you are spending more than you are bringing in so you need to make some changes you will just continue to get into more debt.

You should check out the snowball calculator on http://www.whatsthecost.co.uk/snowball.aspx as it will help you out. Looking at your SOA, you want to try and pay as much as possible onto the marbles card as it has the highest APR.

raq

hi there

Charity does begin at home and your needs and the childrens come first.

We are a family of 5 and spend £55.0 a week on food and that includes nappies and a tin of formula. One week I go to Asda then the following aldi, and we do eat extremely well. My motherinlaw cooks us a curry , chilli and some pies which I freeze.

Also when we where soooo stuck with money last year off came the sky, didn't have another mobile phone , changed deals with the one we got, and set up ebay. Always actioned bootsales so done one at christmas. For the time being the children doesn't have any pocket money, ( they are small so not aware ) as we are doing our best to clear the debt. Thankfully husband now in a well paid job so we pay 75% debt every week and 25% savings.

Also we have a big mortgage but not life insurance as we couldn't afford the £55.00 back last year. As soon as we do clear the debt we will be paying this. Debt is debt and the feeling is awful as us lot on here is aware, mine at the moment sits at 8,500.00. Thankgod the phone calls has stopped and we are now paying much more every week.

All the best and keep us posted
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