DFWB LAZER - help restructure my life

lazer-zxr

I'm new to the Moneysavingexpert, but am ready to be an active member.
I must admit, I am skeptical of the potential to save money, but I need to give it a go ... but dont know where to start.

S.O.A.

Income
£GBP£
Monthly Salary............2,658............after tax
Wife's Salary..............889..............after tax
Child Benefit Income....136..............before tax - tax deduction shown in expenses below
Solar Power income......40................tax exempt
Total Income................3,723

Expenditure

Home
Groceries...................520..............Incl food, cleaning products etc ... everything I can get at Asda.
Internet.....................20.................Locked in until July 2015, internet and line rental.
Property Maintenance...20...............Contracted in as part of our house agreement
Home insurance...........8
Council Tax.................145
Gas & Electric..............65
Water........................39
Mortgage...................960
Mortgage Overpayment ...175..............I know I should probably reduce this to pay S/T debt, but dont want to get out of this habit, as I had a hard enough time convincing my wife we needed to do this. It's an effort to reduce the secured loan.
Mobile telephones..........17
Life Insurance...............56.................Not even sure what we get for this from Legal and General??? Probably includes critical illness.
Hair cuts......................30
TV Licence.....................12...............Paid annually

Entertainment:
Going out.......................60
Hobbies.........................60
Caravan expenses...........44.............Paid annually
Holiday...........................50...............£600 annual for summer hols?
Swimming......................32

Transport:
Fuel..........................200
Public transport...........40................Wifes commute
Car Insurance...............32...............Paid annually
Car Tax.......................13................Paid annually
MOT & maintenance......10.................Paid annually

M&S Loan...................170
Yorkshire Bank Loan........207
Tesco Credit Card............300

Other:
Work Lottery Syndicates.....15 ...... the fear of the syndicate win keeps me in
Union.............................. 2
Child Benefit Tax..............90................Paid annually
Saving for one offs..........100
Other one offs / Treats......140
Presents...........................25

Monthly Expenses..............3,657


Monthly Income...............3,723
Monthly Expenses..............3,657
Net Income .......................66


Assets & Liabilities:

Debt: £GBP£ Balance
Mortgage Balance...............146,529
Secured loan on mortgage......23,564
Total Mortgage.....................170,093............Value of house is £180k, mortgage rate 4.54% as locked in at NRAM due to poor LTV.

Tesco Credit Card ................5761............(0% period 12 mnths remaining, currently paying £250 per month)
M&S loan...........................7,500.............(3.5% APR, 5yr term)
Yorkshire Bank Loan............13,000............(5% APR, 5yr term)

Total Debt...........................196,354

Total debt excl Mortgage ........£49,825

Current Account balances:
Account for annual spends.....950
Daily current Account...........400 (at end of Feb with all expenses deducted)
Savings..............................100

Value of house: £180k (was bought in 2006 for £215k, with a £205k mortgage)
Value of owned car: £800


My aims are .... obviously to be debt free (I assume mortgage doesn't count, but I'd like my secured loan on mortgage to be gone).
I'd like to start saving for my two children (under 5).

In July 2016, I'd like to purchase my company car for around £4k. (Hoping to somehow save for this)
I will then receive an increase to my salary of £426 after tax, if I replace our second car with a newer car 2 years old, and would use this £426 per month to run both cars and finance the replacement 2 year old car.

Right .... I feel like my life has just been unveiled to the whole world now..... feeling a bit exposed.

Can anyone suggest a way of restructuring my finances more efficiently, or summarise the position I am in.

Have I missed or under estimated anything?

What are my chances of becoming debt free? It seems like such a long road.
I would really appreciate some help or comments. Thanks for reading, and your support.

andyfromotley

Doesn't seem too bad to me. But there are obviously areas for improvement/saving.

The telco credit card. You are currently paying 300 pcm, this will leave you with @£2100 at the end of the term. You could put your mortgage overpayment to this, this will clear it at the end of the 12 months. You could then send the money to savings for you car purchase. (and reinstate some mortgage overpayment. Unless you budget for it this car purchase will not happen or will increase your debt.
Life assurance. Do not pay for things you don't understand. Dig out the policy, is it still relevant to your circumstances, can you cancel it and get it cheaper.

A combined £240 for one off/treats? This seems pretty hazy. What one offs? What treats? Pehaps aim for a £1000 emergency fund and then send the rest to debt repayment.

£540 for groceries and household seems high but i don't know how many are in your household. There are some on here who easily spend half of that, others even less. It depends how committed you are to reducing your debt.

It doesn't sound like you have left yourself enough for summer hols???

Your chances of becoming debt free are excellent, provided you live within your means, stop accumulating debt and pay down the debt you have. You definitely have enough income to do this. Budgeting and planning is the key.

lazer-zxr

Thanks for the feedback Andy. I'd never thought of it, but I'll definitely use the mortgage over payments to clear the credit card .
I'll check the life policy ... Though I don't know where the paper work is.
I'll use your idea of building a £1000 fund, then payback debts.
Our groceries are for a family of four. We need to look at reducing, but don't buy much branded stuff, but do eat a lot of expensive fresh produce.
Or holidays are usually on a campsite in our caravan, £600 is enough for this I feel.
Thanks again, it's really helped.

andyfromotley

Oh laser theres one other thing,

The purchase of a second two year old car, is that really a priority over debt reduction? (yr speaking to someone who just bought a 14 year old honda civic for £1500!!! But its paid for and should be good for years)

Bear in mind by this time you will have the £300 from the tescos card, the 175 from the mortgage payment, plus the £426 from not having a company car to throw at debt, thats £900 per month!! Throw that at the unsecured debt and watch it disappear quickly!! Only you can work out your priorities, but taking on finance for nearly new cars when you have existing debt is not the quickest way to be debt free. Food for thought?

I am a very recent convert to budgeting and use a program called Ynab after reading about it on these forums. I think its fabulous. it ensures that you have a plan for every single pound you have and really focuses the mind. There are others available of course. You might want to try it, because you clearly have the money to achieve your aims, now you just need a plan.

Oh check out the old style forums for loads of everyday saving tips, i'm sure you'll find loads of other savings to make.

The other point to consider is that you have racked up a substantial amount of debt, some of it looks fairly recent given the APR's on the loans. Why is this? is it just excess spending? In which case you really need to examine why you were living beyond your means as your SOA doesn't say you are? Without addressing that basic problem all the plans and budgeting in the world won't work.

Good luck mate.

lazer-zxr

Hi Andy,

thanks again for taking the time to reply. It's really helping me engage with this task.
Regarding YNAB, I would love to get something like this setup ... but ideally, I'd like a tool that both myself and wife can log spend on. Is this a feature of YNAB?

Regarding our cars, we currently run a 13 year old Citroen. but to qualify for the £426 cash, I need to have a car which is under two years old at the time of application to qualify. so I am stuck with buying a 2 year old car, albeit a very small economical one.

Some of the debt is recent, encouraged by the low interest rates, I have always wanted to be more environmentally friendly, and so have invested a loan in Solar panels. These payback over 7 - 8 years, but I have taken the loan over 5 years to pay for them. so debt to provide a future income.

The other recent debt from Yorkshire Bank, was a bargain house purchase from a deceased family member, in a joint investment with another family member. I didn't take out a mortgage, as it may have been complex with a joint purchase, and wanted the quicker payback of a short term loan. I have included the after tax rental income in my wife's salary .... again, debt to provide a payback and income.

Silly decisions or not .... they are made now ????

rockm87

Have you thought about switching supermarkets? I switched to Lidl (its even nearer than Tesco) and saved a fortune! and there fresh produce is better quality than T as well.

You can meal plan, and use the freezer to cut down costs too. I spend about £200 a month, for two adults and two cats (1 cat on a special medical diet), for food, toiletries and household products, just by careful planning.

lazer-zxr

Thanks rockm87, I'll check out Lidl (on my route home from work), and have a chat with my wife.

twiggy86

I've found it quite easy to half my food budget with not much effort. Apologies if you already do these things but I've found writing a meal plan, checking what's in the cupboards and writing (and sticking to) a shopping list really does work! Sounds very simple but I just never did it before! I'm spending less and throwing away less.

It also means I know in advance what meals there are that week rather than having to conjure up a meal out of random ingredients! On a Sunday I also batch cook something to stock up the freezer e.g. shepherds pie (which I bulk out with baked beans - always well received!)

Hope that helps and good luck!

rockm87

BBC have a programme on at the moment called 'eat well for less' , its on Iplayer, may give you some inspiration!

lazer-zxr

thanks guys, all good grocery tips, I'll watch some of that show this week on iplayer.

clippy_girl

i would also recommend switching supermarkets! i also eat loads of fruit and veg and i cook everything from scratch. i find asda tends to be cheap if you buy branded processed food as it has really good offers but personally I find it expensive for most other things. i shop in morrisons as when they dropped their prices a lot of their dairy and fruit and veg (majority of my shop) are the same prices as lidl and aldi but i like having more choice I also get lots of £5 vouchers for there! If you wife works part time perhaps she could spend some time batch cooking some meals eg pot of chilli or various sauces for the freezer. saves a lot of time as well as money