Help us cut back & how to plan a budget on zero hour contract?

chazsucks

Hi guys,

I hope someone can help, we're just trying to kind of plan / budget etc and finding it really hard because my partner is on a zero hour contract and it varies WILDLY how many shifts he gets given every month. For example last pay cheque he got £1,200 because they offered him loads of shifts, and he worked basically full time. But the next pay cheque will be tiny, like £200 because he's only been given three shifts. At the same time he is applying and attending interviews for permanent positions, but he hasn't been offered any yet so he's continuing with this as it's the only work he has at the moment.

I have also filled in a SOA so you can have a kind of idea of our expenses and maybe give us some tips to help cut back?

We've cut back dramatically in the last few months and I have recently declared my car SORN so I don't have to pay insurance, tax, petrol etc for the time being, but I can't sell it as I do genuinely need it and will have to take it off SORN in a couple of months

The £450 benefits stated below are child benefit and child tax credits.

Just some background, although I've explained here before somewhere ... we were living with my dad before whilst I was studying at university and my partner left his work to stay home with the kids whilst i did my degree (as it's an NHS degree the placement hours are like full time shift work hours). My dad passed away in June last year. We were paying him a fixed amount every month to include utilities etc. We had no debt other than my student loan. When my dad died my uni let me defer for a year as I was having some trouble with anxiety, depression and insomnia and wasn't fit to be on placement by recommendation of my GP and mental health services.

So since then I've been at home, and my partner has been working and trying to find *permanent* work whilst not actually working. I've also been decluttering and selling a lot of stuff on ebay and local sites to help pay the bills, but we've still managed to get into debt with gas, electricity and council tax in this time. This is our SOA (I put 200 for this month as it's how much my OH got paid, when he gets paid more than our outgoings it goes towards paying the debts and paying my nan back who helped us pay for the funeral or on solicitors fees)


Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 200
Benefits................................ 450
Other income............................ 0
Total monthly income.................... 650

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 190
Electricity............................. 70
Gas..................................... 80
Oil..................................... 0
Water rates............................. 70
Telephone (land line)................... 35
Mobile phone............................ 20
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 20
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 250
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 50
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 985


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


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 180000...(0)........0<
utilities......................2000.....(0)........0<
NHS Bursary....................2000.....(0)........0<
Student loan...................9000.....(0)........0
Total secured & HP debts...... 193000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-


Monthly Budget Summary
Total monthly income.................... 650
Expenses (including HP & secured debts). 985
Available for debt repayments........... -335
Monthly UNsecured debt repayments....... 0
Amount short for making debt repayments. -335

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -193,000
Total Unsecured debt.................... -0
Net Assets.............................. -193,000

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

I haven't included home insurance or tv licence, because we paid for them annually so we aren't paying by month. I'm not sure if this is the correct way to fill it out?

There's no rent or mortgage on the SOA because we are still going through probate and our mortgage company have given us a 'payment holiday' until it is complete. My dad was paying £750pm interest only mortgage and there's still nearly 200k left on the mortgage so as soon as we go through probate we will be selling the house, moving somewhere cheaper and downsizing.

We are on a gas meter, and use as little as possible, our boiler is currently broken so no heating or hot water so the gas for the last week or so has been a lot less but that is the usual amount if we put the heating on in the morning and evening. We recently switched gas/electric company for one that is slightly cheaper (we used to pay £100 per month electricity). We turn everything off when we're not using it, and have even taken some of our bulbs out so it doesn't use as much electricity if have the lights on in the evening.

We are on a water meter, we're pretty good with water. We share showers and the kids share baths, we use the water to flush the toilet afterwards.. our dishwasher is broken so we wash up by hand.

The £35 for telephone is for our internet / tv / broadband. My dad used to pay more but they offered this deal when we were going to leave and it's on their lowest package. When the deal finishes we will probably leave them and find a cheaper package for broadband / home phone and just use netflix etc for tv.

£20 mobile phone is for both me and my partner we are on sim only contracts so this includes calls, texts and 3g and worked out cheaper than when we were PAYG

Food shopping we spend around £50 per week, we've cut that down a lot. We buy mainly asda smart price stuff, reduced items and some bits from farm foods like the toilet roll is a great price I'm honestly not sure how we could cut this further but would welcome any ideas.

The travel cost fluctuates per month but this is average now that we don't have the car and rely on our oyster cards.

£20 for clothes again changes per month but this is average I'd say, mainly for the kids but occasionally for me or my partner. We buy all our clothes secondhand but I buy the kids shoes new when they need them as I worry about growing feet being in correctly fitting shoes!

£40 per month is pet insurance for our dog and cat. It's actually mainly our dog that costs the most of that but it was the cheapest I found for the cover we needed.

We have no credit card debt, I have a credit card but don't use it because we have enough debt already .

gas and electricity around £2k
NHS bursary overpayment £2k
Council tax £1k
student loan £9k
mortgage £180000


And for other things not listed - we cut our own hair, we don't go on holiday or use childcare, our only entertainment is going round friends or families houses or them coming here or with the kids we go to free places like the park, museums etc

averageish

You sound like you have some financial prudence.

However, I would say that planning your budget is secondary in relation to checking your potential liability for your fathers mortgage and charges relating to a property sale. Are you/your partner named on the mortgage? Is the house in equity? Who inherits your fathers estate and what is its total value following any liabilities (including inheritance or capital gains tax)?

There may be a substantial claim on your fathers estate if the amount owing exceeds the market value of the house which may potentially leave you with nowhere to live. With an interest only mortgage, especially if payments are £750/mo, we are talking a relatively high value property. You really must get the relevant details on this as soon as possible.

Start there my friend and definitely, if doing an SOA, include a realistic amount for Rent/Mortgage. A payment holiday is exactly that, but interest continues to accrue in the background so it works out more expensive in the end....

On this level of income, I highly doubt you have a choice in moving/downsizing as the lender will likely not allow transfer of the mortgage as you clearly have no means to repay. I would start to look at council housing immediately, as buying or renting will be virtually impossible unless you have substantial savings. Get yourselves on the list.

This sounds bad, but it really depends on your individual situation with regards to the house and where it puts you.

Regarding your SOA. £250/mo for transport seems astronomical when the amount of income is £650, as does council tax and also the utility bills. Clearly unsustainable, frankly, they would be high even with an income of £1200/mo.

Basically, you are living in a house which you cannot afford to live in, which is sad, given the circumstances.

Sort the house situation out before the living costs, is my advice at the moment. £50 here or there will make no difference if you end up with a £10,000 legal/tax/agent bill to sell the house.

Try not to look just at your current situation, plan forwards and see what the situation might be following the sale of the house and distribution of your fathers estate.

My condolences for your loss.

PS. I am guessing you live in the South East. On such an income, you will struggle far more than if you considered a move up north. Food for thought.

chazsucks

averageish wrote: »

Planning your budget is secondary in relation to checking your potential liability for your fathers mortgage. Are you/your partner named on the mortgage? Is the house in equity? Who inherits your fathers estate and what is its value?

There may be a substantial claim on your fathers estate if the amount owing exceeds the market value of the house which may potentially leave you with nowhere to live. With an interest only mortgage, especially if payments are £750/mo, we are talking a relatively high value property. You really must get the relevant details on this as soon as possible.

Start there my friend and definitely, if doing an SOA, include a realistic amount for Rent/Mortgage. A payment holiday is exactly that, but interest continues to accrue in the background so it works out more expensive in the end....

On this level of income, I highly doubt you have a choice in moving/downsizing as the lender will likely not allow transfer of the mortgage as you clearly have no means to repay.

This sounds bad, but it really depends on your individual situation with regards to the house.

Regarding your SOA. £250/mo for transport seems astronomical when the amount of income is £650, as does council tax and also the utility bills. Clearly unsustainable, frankly, they would be high even with an income of £1200/mo.

Basically, you are living in a house which you cannot afford to live in, which is sad, given the circumstances.

Sort the house situation out before the living costs, is my advice at the moment. £50 here or there will make no difference if you end up with a £10,000 legal/tax/agent bill to sell the house.

Try not to look just at your current situation, plan forwards and see what the situation might be following the sale of the house and distribution of your fathers estate.

My condolences for your loss.

Hi averageish, thank you for your response. I am the only person named in my dads will and the house is the only thing he had of value. The mortgage is £180k. We've had it valued by 3 estate agents for probate and the value for current condition it's in around £500k

My dad owed £1k on a credit card, £1k on electricity and the mortgage £180k).

We can't sell the house until probate has finished with our solicitor (not sure how long it's going to take?!) but once that is sorted we should be able to sell it and use any money left after paying the mortgage, debts, solicitors fees etc to buy somewhere small like a flat. This is a large detached home and much more than we need or can afford so there's no real question about staying even if we could afford the mortgage.

Unfortunately I'm not sure what else we can do until probate is granted, other than try and do the best we can month by month right now . Obviously we cannot change the council tax.. the travel costs seem high but cheaper than paying for car insurance, tax, petrol etc. (when my OH would be using public transport anyway for work).

Thank you again for your reply x

ETA: Just saw your edit, we live in London. We're planning on moving further out when we sell the house but I have family members who rely on me (hence having to take my car back off SORN soon) so we can't move too far away. I would love to move up North, the house prices make my jaw drop.

averageish

chazsucks wrote: »

Hi averageish, thank you for your response. I am the only person named in my dads will and the house is the only thing he had of value. The mortgage is £180k. We've had it valued by 3 estate agents for probate and the value for current condition it's in around £500k

My dad owed £1k on a credit card, £1k on electricity and the mortgage £180k).

We can't sell the house until probate has finished with our solicitor (not sure how long it's going to take?!) but once that is sorted we should be able to sell it and use any money left after paying the mortgage, debts, solicitors fees etc to buy somewhere small like a flat. This is a large detached home and much more than we need or can afford so there's no real question about staying even if we could afford the mortgage.

Unfortunately I'm not sure what else we can do until probate is granted, other than try and do the best we can month by month right now . Obviously we cannot change the council tax.. the travel costs seem high but cheaper than paying for car insurance, tax, petrol etc. (when my OH would be using public transport anyway for work).

Thank you again for your reply x

ETA: Just saw your edit, we live in London. We're planning on moving further out when we sell the house but I have family members who rely on me (hence having to take my car back off SORN soon) so we can't move too far away. I would love to move up North, the house prices make my jaw drop.

Then it is "good" news. If I can use the term in such a way following your fathers death.

My original point still stands in so far as, what will the solicitors charge be for executing the will? What are the disbursements, inheritance tax and so on, assuming a successful sale at £500k? They can add up. Believe me I don't want to be a purveyor of doom, but its a time to be absolutely realistic. Honestly, I would under estimate and plan on receiving £400k for the house. The reason being, if you estimate low, you're never disappointed. Plan for worst case my friend!

You really need to know what you will be left with so you can plan you future. I would calculate all applicable costs, then you can look at your next move.

If you're after somewhere smallish, then there are some nice houses up north for £100k around various cites, that you could probably buy with cash. I'm sure Rightmove is a better source of information than I am though * just noticed you have family members relying on you, so this may not be applicable unless they fancy a move also!

With regards to your SOA, the simple fact is you can't afford to live in that property on a £650/mo salary, but you already know that.

No amount of budgeting will really help, you just need to move as soon as possible. Once you've calculated the size of the settlement you will receive, not estimated, but the lowest possible amount, plus a definitive timescale, then you could borrow to see you through.

Admittedly though, the only way of ensuring the above is to use some form of "we buy property" service. However, these may be suitable depending on your exact circumstances. It is never good value, but it might prevent you getting into debt. If you see what i mean?

Good luck.

akram1122

My original point still stands in so far as, what will the solicitors charge be for executing the will? What are the disbursements, inheritance tax and so on, assuming a successful sale at £500k? They can add up. Believe me I don't want to be a purveyor of doom, but its a time to be absolutely realistic. Honestly, I would under estimate and plan on receiving £400k for the house. The reason being, if you estimate low, you're never disappointed. Plan for worst case my friend!

catwoman73

Sorry for your loss.

It would appear that when probate goes through and you sell the house, you will be in quite a good financial position, as you will be able to either buy a property outright or put down a substantial deposit on one.

I have no idea how long probate takes and then it would take a few months to sell the house too.

Obviously it is never normally a good idea to borrow to fund living costs, but one solution in your case would be for you to borrow enough to tide you over for a year or two while you complete your studies, the house gets sold and you will then hopefully be working and earning. Do you have a relative who could lend you the money until the house is sold? I don't know if there are any commercial providers of such a service - the risk would be low as the loan could be secured on the property.

Do you still have a year of studying to complete? It sounds like you will be some kind of medical professional (doctor/nurse/midwife?) when you complete, so you should be able to find permanent, full time work that pays considerably more than your partner earns on the zero hours contract. Would he be able to be the children's main carer to enable you to work full time and minimise childcare costs?

On_my_way

Hi

Firstly, I have no idea about probate etc but I thought I would just say that it is good that you have already cut back and aren't as in debt as you could have been. Your skills are very useful for the time being, a lot of people have NO IDEA how to cut back like you have.

I hope your partner can get another job and/or more hours soon,

ReadingTim

It looks like you've cut back as much as you can, so you really have to look at the other side of the money saving/debt free equation: earn more.

Are there any other jobs your OH can do that fit in and around the existing job? Even bar work? What about you? Anything you can do? Plenty of students also have part time jobs... I also don't think moving 'up north' will help - while housing costs less, pay and numbers of jobs are correspondingly less than in London.