stupid thing to do

[Deleted User]

Dunno if this should be in here or mortgage free wannabe - we are only in the huge mortgage state though due to debt!!

When we bought our house in 2002 we had a mortgage of £115K and the house we bought for £135K as we had that much in equity in our previous house. So we kept picking up debts along the way and kept adding them to our flexible mortgage. We didn't realise this as we were young and stupid. We are now 31 and expecting our first baby so we have started to look at things a whole lot more and realise we need to get this debt down now as its a millstone round our neck - then if i decide to give up work or go part time it can be done.

We are not in any trouble or anything our house is worth £270K so worst came to absolute worst we could sell up and move smaller but while we can manage to overpay this and stil live the lifestyle we have become accustomed to we really dont want to. We love our house.

Annoyed that we did this as any loans we had that we were struggling with could have been paid off by now - instead we added them to mortgage grrrr. Wish I had found this site in 2002.....

SOOOO i wanted to post my SOA and hope that anyone can see anything obvious we have missed.

Income -
Me £1462 per month
Hubby £1581 per month
Total - £3043

Outgoings -
Mortgage £1300 (this is about a £170 per month overpayment)
Gas - £39
Electricity - £38
Council tax - £162
TV licence - £12
Sky TV (inc broadband) £38
Life insurance £16
Landline - £12.50
Water - £38 (this should drop soon we had to pay more cos we filled the swimming pool last year)
Lottery - £9
Home insurance - £36
RSC/political party memberships - £5
My spendo - £275 (to include mobile phone and savings for hols and christmas etc)
OH spendo - £275 (as above)
Private healthcover - £86
Savings for car insurance/mot etc - £100
Household bits and bobs - £50
Shopping - £200
Petrol - £200
Savings for baby - £25


Any thoughts???

bobbie78

your car costs does that include tax, insurance, mot, tyres etc as that might want to be slightly higher.

Do birthday pressys/xmas come out of your spends for each other otherwise you might want to budget some money for that each month.

You might want to look at dithering dad's sticky on the pay off your mortgage board as well as the old style boards to reduce spending on food etc as I'm guessing your income will nearly half depending on how much time off you end up having once you have the baby.

Also have a look on yahoo groups for your local freecycle group where you should be able to get some baby stuff for free.

Storm

shelvis wrote: »

Income -
Me £1462 per month
Hubby £1581 per month
Total - £3043

Outgoings -
Mortgage £1300 (this is about a £170 per month overpayment)
Gas - £39 Utilities combined seem high - check you're on the cheapest supplier, switch to low energy lightbulbs, turn things completely off, not on standby etc
Electricity - £38
Council tax - £162 Wow! Check you're in the right council tax band - can't remember the website at the moment, but someone will be along soon with it I'm sure
TV licence - £12
Sky TV (inc broadband) £38 This can be reduced to £15 minimum package, or cancelled and go freeview
Life insurance £16 Is this the cheapest you can get?
Landline - £12.50
Water - £38 (this should drop soon we had to pay more cos we filled the swimming pool last year)
Lottery - £9 This can go - try www.whatsthecost.com for an indication of how much you'd win over a year!
Home insurance - £36 Is this the cheapest?
RSC/political party memberships - £5
My spendo - £275 (to include mobile phone and savings for hols and christmas etc) This could be reduced
OH spendo - £275 (as above) Ditto
Private healthcover - £86 Do you really need this?
Savings for car insurance/mot etc - £100
Household bits and bobs - £50 What bits & bobs? Does this actually get spent each month or put aside for if appliances break etc?
Shopping - £200 This could be reduced
Petrol - £200 This is high - can you cut out some journeys, car share or walk? Read Martin's article about getting the cheapest fuel & driving economically
Savings for baby - £25
£2916.50

So, presuming that the mortgage is the only debt you've got you should have £126.50 left each month - and with the £170 overpayment you're £296.50 in the black each month at the moment - but what sort of maternity pay are you going to get, are you intending to go back full/part time etc? Your SoA at the moment will cope with you 6 weeks at 90% of salary, but if you only get SMP for the rest then some things are going to have to give. Ideally you want to get your basic outgoings down to the minimum you'll be getting on SMP + benefits (check www.entitledto.co.uk to see what you'll get a week in child benefit & tax credits) so that you can either save towards the baby stuff now or make the mortgage overpayments.

Make a list of baby stuff you need and then see what you can get from places like freecycle, Ebay, NCT sales etc

Check your insurances are the best deal & sign up to www.quidco.com to get cashback too.

Apologies for the long-winded post. Good luck & congratulations!

CLAPTON

I would suggest you really need to work out proper estimates of both income and spending budgets for
a. the period of maternity leave... how much will your income be etc and
b. and similar for the period after you return to work... I'm assuming that with your current mortage you will need to return to work. You will need to take into account any reduction in income if working parttime and any child care costs.

Then start living on those budgets right now and saving any money released.
Until you do that its really impossible to say how it will work out but you and his spending of 275 each and 86 health cover will have to be dratically reduced .. think no holidays for a while, only essential xmas presents etc and save this money.

[Deleted User]

Storm wrote: »

Gas - £39 Utilities combined seem high - check you're on the cheapest supplier, switch to low energy lightbulbs, turn things completely off, not on standby etc - i did the whole switch with Uswitch thing about a year ago and this was cheapest we dont leave anything on standby and all bulbs are low energy. They do seem high though so i might check again now all the rates have lowered.
Electricity - £38
Council tax - £162 Wow! Check you're in the right council tax band - can't remember the website at the moment, but someone will be along soon with it I'm sure - Tell me about it!!! Its so expensive and I can't see what I get for this money sometimes :rolleyes: its the right band though I can't ask too many questions in case it goes up! My house was finished 2002 and we were first owners so it had to be assessed then. So expesive though it makes me very cross-
Sky TV (inc broadband) £38 This can be reduced to £15 minimum package, or cancelled and go freeview Yes this is going to be reduced to the '2 mixes' now on your advice. We only ever watch SKyone, E4, FX and Paramount anyway.
Life insurance £16 Is this the cheapest you can get? Not looked at this for many a while I might have to check it out. Always figured it wasn't much money so left it but if i have learnt anything on here it's every little counts!!
Lottery - £9 This can go - try www.whatsthecost.com for an indication of how much you'd win over a year! Scared to stop this as i have regular numbers
Home insurance - £36 Is this the cheapest? It was at the time but like so many other things we never bothered checking it after the first year it is up for renewal in december so will give it another look
My spendo - £275 (to include mobile phone and savings for hols and christmas etc) This could be reduced
OH spendo - £275 (as above) Ditto - Yeah we realise that we won't be going out nearly as much after the baby is born so after christmas this is changing to £200 each on discussion
Private healthcover - £86 Do you really need this? - I have spent a lot of time in hospital over last 3 years with 3 seperate problems. The NHS took so long to diagnose me it left me unable to have children (supposedly! I was due for IVF in June but concieved a miracle baby by suprise in April!) we did think this was a good use of our money to get diagnosed and treated much quicker if anything else happened but now I wonder if we put that amount in the mortgage with the ability to draw down if it is cheaper to save for private treatment that way?? Will look at the figures you have made me think thank you
Savings for car insurance/mot maintanance etc - £100 -
Household bits and bobs - £50 What bits & bobs? Does this actually get spent each month or put aside for if appliances break etc? It's mainly for house improvements and stuff we dont draw it it goes into a pot and if we want something big like a matress etc this is our savings for it. Might be better in mortgage though??
Shopping - £200 This could be reduced i know this is terrible for 2 of us! trying to reduce by grocery challenge will see how we get on.
Petrol - £200 This is high - can you cut out some journeys, car share or walk? Read Martin's article about getting the cheapest fuel & driving economically This SHOULD improve. I have swapped my little sports 2 seater for a sensible 1.4 litre fiesta diesel. I worked out I was using 13p a mile and can reduce to 7.5p a mile i pick up the new one on thursday paid for with mine trade in and a bonus from OH work. SHould also reduce tax. I work 30 miles from home in Buxton with no transport links so cant do anything about walking
Savings for baby - £25
Make a list of baby stuff you need and then see what you can get from places like freecycle, Ebay, NCT sales etc This is great plan i will have a look what is out there. I already got most of my maternity clothes from a mate who had a baby in january and is same size as me (hurrah!). She has also kindly given me a list of all baby things I can have as she has done with them so that means less to buy and am hoping grandparents will chip in....

Check your insurances are the best deal & sign up to www.quidco.com to get cashback too. Is this same as Greasypalm?? I have been member of that for some time

I get 6 months maternity leave at full pay - and yes with a mortgage like ours I have to go back to work!! I would have liked to take the full 9 (with 3 months at statutory pay) but i might not be able to afford this.

Will keep plodding along with trying to get mortgage down/savings up. Thanks for your advice everyone

lynzpower

have you factored in how much childcare is if you have to go back to work to find the mortgage/debt.

I feel a must pick up on what Clapton says and draw you to it again. It is fundamentally important you follow that advice and slice down as far as you can.

Me & my Oh have tiny outgoings compared to you, and very little debt - and similar salaries, however, we have worked out we cannot even pay the rent & bills with one of us not working. or working for effectively very little, given the outgings on childcare. Its not unusal to see people on this site earning 1300 spending 1000 on childcare , 80 on travel to get to work and thus coming out with 220 for the month. therefore , I think its very important you starttphioning around abnd working out how you are going to afford all this.

You simply will go under if you do not take your outgoings right to the bone.

youve been given great advice here, do listen

Lynz
x

[Deleted User]

Yesa thats a good point. We have only really thought ahead as far as Jan 2009. We have worked out if i take my 6 months at full pay and then 3 at stat (which is what we want to do if we can afford it which is why we are trying our best now) then I will ahve enough holidays to take 2 days off work till the end of the year. My mum doesn't work fridays so she has offered to have the baby then and my OH's mum said she would have the baby 1 day a week also which leaves 1 day to pay childcare which we admit we have NO idea what the costs will be of that at all. I guess we need to start looking round.

After the baby is 1 then our mate said childcare is a bit cheaper, if I can't afford to go part time (which looks unlikely) I can do all my hours in 4 days in a compressed working pattern which would leave me home one day a week and with the MIL and my mum that means 2 days in childcare - but again we have no clue what the costs are so we need to find that out thank you for bringing it to my attention again.

One thing my friend and I discussed was when my baby is 1 (and hers will be 2) that we each have each others kid one day a week. She is going back part time and if i do the compressed hours it *might* work. Wouldn't do it while my baby was under 1 though I think it would be way too much every week. Not sure if this is viable plan or not but it is something we have kept in mind.

rayday2

There are lots of emmotional issues to do with childcare that you cannot comprehend until you have a baby in your arms! Family and friends are not always the best option, there comes all sorts of possible disputes, money, family wanting a life, there ideas of childcare completely different from your own believe me its a minefield of emmotions!

To me I would put on hold getting rid of your mortgage- what difference can you make in 6 payments that is going to benefit you when the baby comes and that is all you have a maximum of 6 months!

I would make cutbacks to outgoings now there are lots that you can shave off your budget get used to living more economically and save the extra money you were going to throw at the mortgage to live on in the early days when baby is here.

lynzpower

the other thoughts I have are, your outgoings come to 138.50 left every month.

Where is this going?

Do you regularly spend 275 a month each? this Id suspect you could find a 400 saving per month easily right there!

lynzpower

but the bottom line is rayday, that if OP does find that she doesnt wish to return to work - then he hubbys income will only just cover the mortgage on his own.

rayday2

They will have to see when the baby arrives how they feel, babies can throw you a curve ball. I have known two friends both women who were the main wage earners both earned between 35-40k and once the babies came along one gave up work and downsized the other took a lower position and went down to 2 and a half days. As a parent you have to make decisions that feel right you only get one crack at the whip! On the other hand other women pratically run to work for the adult company!

If the house has equity they still have options whatever the future holds.