SOA - any advice gratefully received

js8285

Hello,

Sorry this is so long!

I have never posted on here before but i have been reading through the tips and advice for some time now, and putting as much as i can into practice. I am really struggling to make ends meet and i'd be so grateful for any advice anyone can offer. I've posted my SOA below. I have tried so hard not to default on any payments and have managed it so far (though had the odd late payment). I think my biggest issue is that we have next to nothing left over each month so when something comes up (e.g car tax, school trips/uniform, vet bills) i put them on a credit card as i don't have the money. This practice is also why the loan has increased over time - car died couple of years ago so had to increase the loan. I know we can't keep doing this when 'ad-hoc' things come up so something has to change, i'm just at a blank as to what to do now. So if anyone out there has any advice i'm open to anything!

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1100
Partners monthly income after tax....... 1100
Benefits................................ 80
Other income............................ 400 Rent from property
Total monthly income.................... 2680

Monthly Expense Details
Mortgage................................ 450
Secured/HP loan repayments.............. 0
Rent.................................... 680 i know this is high, it is only a 2 bed flat, but it's an expensive area. Tied in for another 6 months yet but will look out for cheaper property after that, though realistically won't get anything much lower.
Management charge (leasehold property).. 0
Council tax............................. 137
Electricity............................. 50
Gas..................................... 90 this is high as it includes overpayment for a build up from last winter, therefore can't change supplier.
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 0
Mobile phone............................ 50 that's 2 contracts
TV Licence.............................. 12
Satellite/Cable TV...................... 60 that's phone/tv/internet (needed for work)
Internet Services....................... 0
Groceries etc. ......................... 240 this is food, toiletries, pets
Clothing................................ 0
Petrol/diesel........................... 160 High but no other alternative for me getting to school and work on time (eg bus/car share)
Road tax................................ 0
Car Insurance........................... 50
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 100 This is just after school club so we can both work full time. (in the school holidays it's much more so we have serious money problems in August)
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 15
Contents insurance...................... 15
Life assurance ......................... 8
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 40
HMRC overpayment........................ 15
Total monthly expenses.................. 2212


Assets
Cash.................................... 0
House value (Gross)..................... 85000
Shares and bonds........................ 0
Car(s).................................. 750
Other assets............................ 0
Total Assets............................ 85750


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 75000....(450)......0
Total secured & HP debts...... 75000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Loan...........................10000.....220.......11.9 was 10K now about 8K with 4 years to go
Barcalycard....................3000......80........27.9
First Direct CC................1600......50........0
Halifax Overdraft..............600.......40........0 i pay £10 a week, they charge £1 a day so it's a very slow way of paying this off - is there another way?
Halifax CC.....................1000......20........0
Total unsecured debts..........16200.....410.......-


Monthly Budget Summary
Total monthly income.................... 2,680
Expenses (including HP & secured debts). 2,212
Available for debt repayments........... 468
Monthly UNsecured debt repayments....... 410
Amount left after debt repayments....... 58

Personal Balance Sheet Summary
Total assets (things you own)........... 85,750
Total HP & Secured debt................. -75,000
Total Unsecured debt.................... -16,200
Net Assets.............................. -5,450

RE the first direct and Halifax Cards - these are both 0% for another 6 months or so, after this i plan on putting both balances onto my Barclaycard who are always offering me 0% on balance transfers.

RE the Mortgage - i've checked the rate and for a buy to let i'm on as good as i can be. I do make a £50 loss on the rent each month but i don't want to increase the rent in case my tenants move out. I will increase it to £450 if the tenants move on as it's been that much for 3 years now. Also, we can't live in that house as we moved to another area for work. Can't sell and buy something here (and stop the high rent) as house prices are almost double here.

I'm so worried about our situation that i've been thinking about consolidating it all into a secured loan, i know it is a risk and i know it'll mean paying over a longer term, but i'm so worried that something big will happen one month and we'll not be able to pay the rent as we have nothing saved.

I think that's it, can anyone please help???

RAS

Hi

Do you have landlord's insurance? Cost of gas safety certificate each year?

Is the mortgage interest only? If not, how much is the interest, because you can only set the interest and expenses against the income.

Normally I can see stuff to skin from a budget but yours is pretty tight. However if you need the phone tv/internet for work, that is a work expense and should not be in your domestic budget. If however you have some stuff for work and some for please (like cable channels), get rid ASAP>

You are paying way more than 27% on the OD so you need to find a way to shift that.

And you need money for road tax, car maintenance and clothing.

National_Debtline

Hello there,

The figures you have listed are pretty reasonable, and you've already identified where you might be able to reduce some of them down as time goes by.

There are areas within the budget, though, that you have no allocated any money for. It's likely that you will need money for clothing, birthdays, car maintenance, haircuts and entertainment etc.

Whilst your financial statement seems to imply that you can meet your minimum payments you may find that a more realistic budget could cause you to have less money available than what's needed to meet your contractual monthly instalments.

If you can find a way to meet your minimum payments and effectively budget still - any surplus should be used to overpay on the debt with the highest interest rate - Barclaycard. If you discover that your new budget doesn't give you sufficient to meet your minimum payments you may need to consider alternative options.

Consolidating is generally advised against. The key reason is that you are turning unsecured into secured debt. A secured loan is a mortgage. Failure to meet those instalments could end in repossession. You may also end up paying a considerable amount in interest as generally consolidations are over a long period - typically 15-25 years.

The alternative could be to offer reduced payments to your creditors - either via self-negotiating or via a Debt Management Plan. You may be able to get your interest and charges frozen with either of these options though it's also likely that your credit file will be affected.

You may find our self-help guide 'Dealing with your debts' useful:
http://www.nationaldebtline.co.uk/england_wales/debt_advice.php#4

Hope you find this information helpful.

Best wishes,

David @ NDL.

japmis

Definitely consider upping the rent to cover your mortgage, especially if the rent hasn't increased for 3 years. That's more than reasonable.

js8285

Thanks to both of you.

RAS -
Landlords insurance is included in the buildings insurance.
The annual gas safety is something that usually ends up on the credit card.
The mortgage is repayment, i'll look into the interest only amounts
Need phone and internet for work, don't need the tv of course but my husbands argument is that he works full time and sees nothing from his wages, the cable channels are his one luxury. We have done the 'we're leaving you' thing and got it half price for a year, so i think it's about £25 a month. However i do totally agree with you and it's on my list to cancel after the 12 months is up!

National debtline -
Yes i can meet my payments currently but only by paying for things on credit cards. This is why i've not put things like clothing, birthdays and car maintenance on, because i can't actually afford them so i don't buy them unless i have to,and if i do have to it ends up going on a credit card. I don't mean i put things on the cards all the time though - i don't buy clothes for myself, it's just school shoes/trousers when my son's have worn out. I don't get my hair cut and cut husband/son's myself. Car tax goes on credit card. Entertainment and going out is only when i get birthday/xmas money as a present.
So do you mean i should re-do the SOA putting the above things that i'd normally put on a credit card, into the household expenses?
Thanks for that link - will look now.

I have spoken to Halifax about the overdraft and they said i could speak to their collections department who may be able to freeze the £1 a day interest. They did say it wasn't advisable and will affect my credit history. Doe anyone know - if i do this how badly would my credit be affected, would it go down as a default? And would i need to go through all my SOA info to tell them i can't afford to pay the interest?

MallyGirl

js8285 wrote: »

Need phone and internet for work, don't need the tv of course but my husbands argument is that he works full time and sees nothing from his wages, the cable channels are his one luxury. We have done the 'we're leaving you' thing and got it half price for a year, so i think it's about £25 a month. However i do totally agree with you and it's on my list to cancel after the 12 months is up!

I understand his point about the TV but ultimately you can't afford it on your income. He does not get 'nothing' from his wages - he gets a roof over his head, food on the table, clothes etc..
I had a similar 'discussion' with my DH when I picked up 'value' pants for him instead of nicer ones.

There is little else to pare down in your expenses - apart from £50 pcm on mobile phone which you should look into - so unless you can increase your income with overtime/2nd job then you need to make expenditure sacrifices to get this under control.

Your car insurance seems high for a car worth £750 - are you very young/new driver? If not then shop around - and once you have the best deal see if you can get cashback by buying it through one of the popular portals. Every little helps.

I would also have a serious think about your BTL - it is making a loss. Is there equity in it that you could release by selling up? Certainly look at converting to interest only for a bit.

good luck

js8285

Japmis - Yes will definitely consider putting it up soon, i'm just reluctant at the minute because the tenants are currently on a rolling month contract so i'm worried about them giving me a months notice if i put the rent up.

Mallygirl - So glad it's not just me with the DH's ideas. Mine doesn't even get value pants - he has to ask his mum for them as an xmas present!

One of the mobile contracts is up for renewal in May so will make sure there isn't a fancy new phone but rather a very cheap package.

I'm 28 and 7 years driving - is that expensive for fully comp? If i remember rightly i think it went up a bit last time, it was just after the new rules about young men's premiums being higher than womens. I know i questioned it with my insurer anyway and it was something to do with that. But renewal is January so i'll look out for cashback, good idea thanks for that.

I know the mortgaged property is an issue, thing is what i really want to do when the loan is paid off, is sell up and buy a property here so that i'm not paying such a ridiculous amount in rent. If i sell my house there's no way i'll be able to do that as the equity would be my deposit. But then again if i keep living on credit cards that'll never be a reality anyway. Do you know what it entails when you go to interest only for a period? Do they add the repayment fees onto the end of your mortgage or something? Is it classed as a default or are they usually happy to do it for a while?

RAS

js8285 wrote: »

National debtline -
Yes i can meet my payments currently but only by paying for things on credit cards. This is why i've not put things like clothing, birthdays and car maintenance on, because i can't actually afford them so i don't buy them unless i have to,and if i do have to it ends up going on a credit card.

Hi

This is magical thinking.

If you can only afford clothing, credit cards, birthdays and car maintenance by putting it on credit card, you cannot afford your current payments.

Full stop. You cannot afford your current payments.

There are a couple of possibilities but you need to do some ferreting now and then come back.

Other wise it really is time to speak formally to the debt charities for advice.

1. Get your family to go round the house and identify anything and everything that you no longer use. Flog them; there will be car boots once Christmas is out of the way. Or use amazon; probably avoid e-bay cos os postal cost etc. Use that money to clear the Halifax OD.

2. Seek out the info about the possibility of going interest only on the house, if only for a year.

3. Check the EA's website and others for rentals in your old area. Then make a decision on the rent increase. We need more info before you decide however.

And please do not put Christmas on the credit cards; it really is not worth it.

ViolaLass

Is it possible to use one of your credit cards to pay the overdraft off? It's not ideal but it would get it away from the charges and onto a lower rate.

Sazzie23

Well done for coming on the forum,


I think you are in the debt trap, I suspect your credit rating may already have been affected. If nothing changes this will get worse and worse as your debt will increase and your credit available will get more expensive as it starts to increase your total outgoings.


Take action now before it gets worse. Freeview is great for free channels even if you have a poor signal. Pay as you go on a cheap mobile.


Tell friends and family you have built up a bit of debt and want to sort it out before it gets worse, or you are saving for a car - or whatever - this relieves a bit of pressure.


What I have learnt on the forums is, every little helps, even if you can only save 50p on the shopping, that 50p can be used to add to next week's 50p to buy that birthday card if you need to ..etc etc


|Good luck

National_Debtline

js8285 wrote: »

Thanks to both of you.

National debtline -
Yes i can meet my payments currently but only by paying for things on credit cards. This is why i've not put things like clothing, birthdays and car maintenance on, because i can't actually afford them so i don't buy them unless i have to,and if i do have to it ends up going on a credit card. I don't mean i put things on the cards all the time though - i don't buy clothes for myself, it's just school shoes/trousers when my son's have worn out. I don't get my hair cut and cut husband/son's myself. Car tax goes on credit card. Entertainment and going out is only when i get birthday/xmas money as a present.
So do you mean i should re-do the SOA putting the above things that i'd normally put on a credit card, into the household expenses?

Exactly.

js8285 wrote: »

I have spoken to Halifax about the overdraft and they said i could speak to their collections department who may be able to freeze the £1 a day interest. They did say it wasn't advisable and will affect my credit history.

That's their opinion - but this is about the best course of action for YOU. Please remember that you can't expect to get impartial advice from someone to whom you owe money.

js8285 wrote: »

Doe anyone know - if i do this how badly would my credit be affected, would it go down as a default?

I can't quantify the effect on your credit file as there isn't really any such thing as a credit "score". Whether you end up with defaults will depend on how far below the normal payments you fall and for how long.

Remember that a credit rating is never set in stone and that yours is already likely to have been affected by the sheer level of your current commitments, even if you have not defaulted on them.

js8285 wrote: »

And would i need to go through all my SOA info to tell them i can't afford to pay the interest?

Realistically, yes. Banks are highly unlikely to consider freezing interest without solid evidence of your financial difficulties - that is where a detailed SoA comes in.


Regards

Dennis @NDL