Where to start?

joncrip

Evening all!
We need to take control of our finances and our debts. Things aren't dire but they're certainly not healthy.
We owe about £35k in unsecured debts, paying out about £975 a month servicing them. £8k of that is a loan which is fairly recent and takes about £185 a month. The rest are credit cards.
I've done an SOA and been brutally honest, erring on the side of caution. It shows that we have about £300 a month left over at the moment. Where's the best place to start? Lowest balance cards? Highest APR cards regardless of balance? Highest balance cards?
We'd love to move house in the next couple of years, but we need to get this under control first!

GenerationRent

I'm new to money saving so I doubt I could give you much advice. What I do know, however, is that you should post your SOA to get the best help.

joncrip

Summary
Monthly Budget Summary Amount(£)
Total monthly income 3,314
Monthly expenses (incl. HP & secured loans) 2,030
Available for debt repayments 1,284
UNsecured debt repayments 965
Amount left after debt repayments 319
Personal Balance Sheet Summary Amount(£)
Total Assets (things you own) 112,000
Total Secured & HP Debt -103,000
Total Unsecured Debt -38,061
Net Assets -29,061
Household Information
Number of adults in household 2
Number of children in household 1
Number of cars owned 2
Income, Expense, Debt & Asset Details
Income Amount(£)
Monthly income after tax 1994
Partners monthly income 1240
Benefits 80
Other income 0
Total monthly income 3314
Expenses Amount(£)
Mortgage 500
Secured/HP loan payments 0
Rent 0
Management charge (leasehold property) 0
Council tax 91
Electricity 50
Gas 100
Oil 0
Water Rates 12
Telephone (land line) 0
Mobile phone 95
TV Licence 11
Satellite/Cable TV 100
Internet services 0
Groceries etc. 300
Clothing 50
Petrol/diesel 100
Road tax 30
Car Insurance 106
Car maintenance (including MOT) 30
Car Parking 0
Other travel 0
Childcare/nursery 30
Other child related expenses 40
Medical (prescriptions, dentists, opticians etc.) 0
Pet Insurance/Vet bills 50
Buildings Insurance 10
Contents Insurance 30
Life Assurance 45
Other Insurance 0
Presents (birthday, christmas etc.) 30
Haircuts 40
Entertainment 50
Holiday 0
Emergency Fund 0
Homecare 30
Gym 100
Total monthly expenses 2030
Secured & HP Debt Description Debt(£) Monthly(£) APR(%)
Mortgage 103000 (500) 2.73
Secured & HP Debt totals 103000 - -
Unsecured Debt Description Debt(£) Monthly(£) APR(%)
Barclaycard Anna 1 8876 210 14.9
Barclaycard Anna 2 6835 165 25.9
HSBC Anna 1 6500 200 0
Loan 8000 185 0
Overdraft 1600 0 15
Aqua 500 20 30
Creation 1200 30 35
Cap 1 1000 40 35
HSBC Jon 1460 35 32
Barclaycard Jon 1190 30 29
Santander Anna 900 50 0
Unsecured Debt totals 38061 965 -

Happytravelling

Start with your most expensive debt irrespective of balance. It might feel more rewarding to get rid of smaller balances but it will save you more money and therefore enable you to reduce your debt faster by paying off what costs you most.

Oh, and good luck :-)

Divingmad

Hi Jon,

Well done on making the first steps towards sorting your debts. I am only just starting on my own journey, but here's some thoughts....

OK, Looking at your SOA, you could reduce your shopping spend by batch cooking, using own brands etc, you could also look at the old style boards as they have some great recipes there.

You have satellite/cable, which is costing you £100 per month, do you use all the channels, or maybe you could contact your provider and negotiate a better deal.
Your car insurance works out at £1200 a year, is this correct?

You say you have £300 per month left over, is this accurate? You may need to do a spending diary for a month or so and work out exactly what you have left over, and more importantly, where you are spending small amounts during the week, after all small spends soon make a large hole in your budget.

With regards to which debt to tackle first, most would advise tackling the one with higher interest, as this is where you'll make savings. try looking at the attached link for snowballing your debts, which will give you an inkling of what you could save:

http://www.stoozing.com/calculator/snowball-calculator.php

I am sure the wise ones will be along soon with more great advice for you, so hope mine has provided some thought.

Regards

DM

Happytravelling

Me again! Here are a few options:
- Can you get a better deal on your gas and electricity (dependent on if you're on a deal with penalty for switching, may not be worth while right now). If you've just on a variable deal without penalties, definitely worth looking at and seeing if you can get cashback through a cash back site.
- £100 seems steep to me for TV. Could you switch it for a freesat box? You can get hd boxes that record, I paid around £140 for mine but no monthly charge. Could save £1050 per year.
- £100 for the gym is also quite steep- £1200 per year- are there any cheaper or free options? Obviously health is important but these is potential for saving
- Another potential area is your mobile phone- our 2 mobiles cost us £30 per month in total, but we keep data usage low as we use our home wifi
- The old style money saving thread has loads of tips on groceries, so you might be able to reduce this down

There are always things you can cut out, but you can't do it too intensely for too long else you'll give in and splurge- at least that what I find. Its just a case of finding which things you can go without and which you can't.

joncrip

Just tried the snowball calculator - how exciting! It reckons I could be free of everything but my loan in just over three years. Now THAT is something to aim for!

moohound

I agree with what others have said, ditch the gym and the tv package, it doesn't mean you can never have them in the future, just put them on hold while you shift the debt.

joncrip

Thanks for the advice! It's hugely appreciated.
The TV package is being reduced to get rid of Sky Sports - will save about £30 a month. It's not just TV, its broadband and home phone too. I need reliable and very fast broadband for my job, so that isn't really an option.
I'll ditch my gym (£40 a month) but the wife won't as she uses it regularly and takes our daughter swimming their a couple of times a week.
Just looking at switching gas and electricty suppliers - looks like we could save £22 a month by switching to Sainsbury's.
£100 a month seems like a huge amount to spend on gas - how does it compare to everyone else?

DawnW

Yes, £100 per month on gas does sound a lot. Do you have a very big house or something? Are you using the heating all the time, or are there arrears that make it so high? I pay £73 per month for both gas and electricity (and this is high - I have recently switched and they have overestimated my DD, so I will be reducing this) on an older, quite large 3 bed.

joncrip

Nope, no arrears. 3 bed end terraced - it's over 100 years old so it isn't the best at retaining heat. I topped up the insulation in the loft last year though and we've used a third less gas since then. Our daughter is 18 months old, so we try to keep the house warm enough, I'd say on a cold day the heating is on for about 5 hours out of 24. We have a seven year old combi boiler.