Pension or pay debts?

andyfromotley

Do the figures you have quoted on the SOA already include your wifes contributions to that you talked about?

andyfromotley

lowely wrote: »

Thanks Mike and Brightspark. It's always pretty horrific when youf irst confront it.

My SOA is below and is pretty horrible reading. When my wife starts working, that will pay for the nursery bills (which we don't pay yet), half the holiday fund, half the entertainment, half the groceries and the 180 on other travel. Any help or suggestions are massively appreciate. I feel quite depressed and pretty crap reading this to be honest!

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

Monthly Income Details
Monthly income after tax................ 2860
Partners monthly income after tax....... 0
Benefits................................ 30
Other income............................ 0
Total monthly income.................... 2890

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 1350 You need to move asap. I see your comment about being tied in for a year, speak to the letting agent and see if there is any wriggle room in this, often there is if it suits the landlord. Are you in a four bed house? Given your children are young you can get a in a two bed
Management charge (leasehold property).. 10
Council tax............................. 170 Change to 12 monthly payments instead of ten as suggested.)
Electricity............................. 57 Too high. £114 for both? Aim for £80.
Gas..................................... 57
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 15
Mobile phone............................ 40 Change to sim only ASAP, no more than 15pm, but consider ditching.
TV Licence.............................. 12
Satellite/Cable TV...................... 70 nope
Internet Services....................... 10 You can get phone and internet for less than 25. aim for £15
Groceries etc. ......................... 430 no more than £300 max
Clothing................................ 100 £30pm for kids only. You and the mrs have plenty of clothes.
Petrol/diesel........................... 250 As you have identified bike to work, where is the other £70 pm going?
Road tax................................ 17
Car Insurance........................... 50 shop around and drive it down.
Car maintenance (including MOT)......... 85 Too much, 45 pm should be fine
Car parking............................. 0
Other travel............................ 180
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 100
Buildings insurance..................... 10
Contents insurance...................... 0
Life assurance ......................... 10
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50 25 pm
Haircuts................................ 15
Entertainment........................... 200 £50 to treat the kids once or twice a month
Holiday................................. 100 Not with this debt
Emergency fund.......................... 0
Pet food................................ 50
Total monthly expenses.................. 3498


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 600
Other assets............................ 0
Total Assets............................ 600

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................7850......237.......0
Loan...........................25000.....500.......7.5
Total unsecured debts..........32850.....737.......-


Monthly Budget Summary
Total monthly income.................... 2,890
Expenses (including HP & secured debts). 3,498
Available for debt repayments........... -608
Monthly UNsecured debt repayments....... 737
Amount short for making debt repayments. -1,345

Personal Balance Sheet Summary
Total assets (things you own)........... 600
Total HP & Secured debt................. -0
Total Unsecured debt.................... -32,850
Net Assets.............................. -32,250

Hi lowley,

Holy cow!! You have a FINANCIAL EMERGENCY!!!

Unless you make radical changes then Mrs and Mrs Lowly Ltd are heading toward insolvency.

Two things are clear, you need to move to somewhere cheaper ASAP. Its pain now for gain later. Looking at you council tax are you in a 4 bed place? Get yourself to a cheap 2 bed place for a couple of years. (yes I've done it, my kids shared a box room, we were really happy in that house!!)
You need to increase your income, promotion, tuition, marking, bar work pizza delivery, whatever. Your income needs to go up!

The savings i have listed above total £854 still leaving you way short.

Consider a childminder rather than nursery, they tend to be loads cheaper.

Getting rid of the car could save you another £120 or so. Neither of you need it for work so theoretically you could do it.

But unless you move and increase your income then you seem to be in deep trouble. Do all of these things and you could pull through it.

Other options include, reducing your pension as you discussed. I believe that you will end up bitterly regretting this. I kept mine going through all of the really hard times, (interest rates at 13.5% my mortgage was £1050, my take home pay £1100!!! Boy was i tempted) but i didn't and as a consequence am retired before 50!

You may want to consider some sort of debt relief, discuss this and the implications of it with one of the charities, step change has a good rep. But clearly its going to impact your goals. Although with this budget you have to question how realistic those goals are TBH.

Sorry its all grim reading mate, and no doubt seems completely unpalatable, but you will get yourself out of this one way or another, you and your wife have to figure out the best route for you. Is she on board with all of this?

rising_from_the_ashes

Forget the pension for 5 mins .... you need to get the books balanced first!

lowely wrote: »

Household Information[/b]
Electricity............................. 57
Gas..................................... 57
Satellite/Cable TV...................... 70
Groceries etc. ......................... 430
Clothing................................ 100
Road tax................................ 17
Car Insurance........................... 50
Car maintenance (including MOT)......... 85
Other travel............................ 180
Pet insurance/vet bills................. 100
Presents (birthday, christmas etc)...... 50
Entertainment........................... 200
Holiday................................. 100
Pet food................................ 50

Assets
Car(s).................................. 600

OK - your car is worth £600 but it's costing you over £150 / month (excluding fuel) .... that doesn't stack up I'm afraid

Can you do without it? Is there public transport / how much would the odd taxi costs when needed (shopping can be delivered - if your wife is at home during the day it will be really cheap - and also a good way to just buy what is needed without anything extra sneaking in the trolley!)

What is the other travel?

Groceries - can save £130 here ....

Sky - sorry needs to go. Even a switch to basic package will save £50 / month

£300 on holiday and entertainment ..... sorry needs to go until you're back on your feet - cut to £50 (total)

Pet food - how big if your dog?

I feed mine a decent kibble with good quality wet foods mixed and it comes out at under £1 / day incl all her treats!


If your wife is planning to return to work the figures need to stack up ..... this needs to produce a decent additional income to make it worthwhile (if you're just going to break even then is it really worth it?)

You could 1/2 the grocery bill with some dedication and making meals from scratch etc

lowely

Ahhhhhh.....I guess this is a light bulb moment. Thank you all for your help with this - it really is much appreciated.

I think I've been confused with my numbers as I was on my mobile. I have got home and looked at the numbers on my MSE budget planner spreadsheet and it is quite a bit different. We have also negotiated a "term time only" payment on the nursery when my wife goes back in September which will make a huge difference.

However, that being said, the help on here has been invaluable and I'm certainly going to take it all on board as I cut things down urgently! I will go through everything and re-post!

L

SeduLOUs

Feel free to post a more realistic SOA if you want to when it's ready, but possibly not necessary as I think people have given general ideas across the whole board so I'm sure you've got plenty to work with.

Best of luck!

Brightspark87

hi if you need to redo you SOA happy to help

Sellurgranny

hi, just read through your thread and although you might feel horrified about your amount of debt i dont think you need to panic unduly. Yes it might seem alot when its lumped together but there are plenty of people here with just as much debt and less income (me being one of them). I think as long as you can put money saving practices in place, you'll be truly surprised at how quickly debt can be paid down.

I personally chose to look at other ways of earning money such as car boots and selling stuff on ebay. I also used the snowball calculator to get an overview of how much my debt was costing me.

Im a single parent so my income isnt going to change much so being wiser with the ££££ss I do have, is what has helped me.

Debt is a bit like pregnancy weight i reckon.... it take 9 months to get fat..iit isnt going to disappear overnight! Same with the debt.

Good luck with your dfw journey

Surg x

SheilaE

Your pension contribution looks high, so what is your income? are you paying AVCs in addition to your final salary contibution ?. Maybe you should look at your whole household budget and see where you can cut costs. Are you entitled to any tax credits?

tgroom57

Agree you need to get spending under control.

Your dog is a liability but dogs are omnivores and will happily eat cooked carrots mixed in with their food. I fed mine Original Chappie tinned - it's fish based so easy to digest. I do wonder if your £100 insurance for the dog might be better in your own savings account- to be paid out if /when necessary. otherwise the money on insurance is lost. Will she really need more than £1,200 at the vets this year?

I disagree about the car. With 2 small children a car makes a big lifestyle difference. Shopping, holidays are all much easier with a car. By all means cycle to work, but you will be glad of the car come winter. Plus with a car you can do car boot sales- I always found buying much more profitable than selling!

Agree partly with the mobile > sim only deal. Make sure you are happy to keep your current phone longer than your mates, and past the next 'upgrade' point. Mine is on £20 a month sim-only, and more minutes etc than I ever use ie a good safety margin.

Holidays and entertainment - are the children old enough to go camping? A 3 bedroom tent off ebay cost us £60 and -plus the car- kept us in cheap holidays for several years.

Good luck with rejigging the budget.

SeduLOUs

tgroom57 wrote: »

I do wonder if your £100 insurance for the dog might be better in your own savings account- to be paid out if /when necessary. otherwise the money on insurance is lost. Will she really need more than £1,200 at the vets this year?

It's a big risk I wouldn't take. I ran up a £600 vet bill for a fairly minor cut to a paw on glass in the park. My friend's bill ran into several thousands when her dog accidentally swallowed a stone.

There's also the public liability aspect - £1,200 wouldn't go very far if the dog bit someone or damaged someone's property.