SOA - Help Please!

Sparkles87

Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 630
Partners monthly income after tax....... 1550
Benefits................................ 80
Other income............................ 535
Total monthly income.................... 2795

Monthly Expense Details
Mortgage................................ 380
Secured/HP loan repayments.............. 274
Rent.................................... 725
Management charge (leasehold property).. 120
Council tax............................. 159
Electricity............................. 40
Gas..................................... 20
Oil..................................... 0
Water rates............................. 65
Telephone (land line)................... 14
Mobile phone............................ 70
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 8
Groceries etc. ......................... 250
Clothing................................ 0
Petrol/diesel........................... 150
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 60
Childcare/nursery....................... 0
Other child related expenses............ 50
Medical (prescriptions, dentist etc).... 50
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 10
Life assurance ......................... 0
Other insurance......................... 15
Presents (birthday, christmas etc)...... 25
Haircuts................................ 20
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2525


Assets
Cash.................................... 0
House value (Gross)..................... 115000
Shares and bonds........................ 0
Car(s).................................. 15000
Other assets............................ 0
Total Assets............................ 130000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 83000....(380)......4.95
Hire Purchase (HP) debt ...... 15000....(274)......4
Total secured & HP debts...... 98000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Big loan.......................15000.....282.......0
Small loan.....................5000......196.......0
Cards..........................6000......200.......0
Total unsecured debts..........26000.....678.......-


Monthly Budget Summary
Total monthly income.................... 2,795
Expenses (including HP & secured debts). 2,525
Available for debt repayments........... 270
Monthly UNsecured debt repayments....... 678
Amount short for making debt repayments. -408

Personal Balance Sheet Summary
Total assets (things you own)........... 130,000
Total HP & Secured debt................. -98,000
Total Unsecured debt.................... -26,000
Net Assets.............................. 6,000

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

I can break down the cards but clearly, things really don't balance. Can I cut £400 from the SOA? I can't see where but open to ideas.

The £535 is for rent towards our home and we rent elsewhere, which is why there's both costs there.

The car is a huge expense, but we have no money to buy even a very cheap car outright and OH needs a car to get to work so we can't cut it altogether so I don't know realistically how much we'd save if we changed it. Unless we got a cheaper finance car?

Any advice would be great

HappyMJ

So you have tenants in your house and you rent a house of your own either larger or smaller than your own property or closer to work or family. It doesn't matter I do the same. You don't have buildings insurance.

You also have children yet no life insurance to pay the loans off in case the worst happens.

You don't have a TV licence. Hopefully you don't watch or record TV as it's being broadcast.

You have a car yet no insurance, road tax, maintenance (even a new car needs some maintenance) and you've got nothing for parking costs.

You've got nothing set aside for clothing. I replace my shoes reasonably often so I put £25 per person a month aside for them and some socks and underwear which also doesn't seem to last too long. Also a new shirt and trousers every now and again.

It's not that bad but I'd put in the missing items.

The only item I can see to cut is the presents. You'll have to tell everyone that they are not getting any for a while.

edit: My SOA also looks the same with an awful overspend each month but you can clear it. The HP on the car isn't going to last forever, the mortgage will be paid off eventually and big loan and small loan only have a few years left to run. I use a credit card to make ends meet and using a spreadsheet despite a £500 overspend each month my net worth actually increases each month due to most of the debt repayments being capital in nature.

The amounts you've listed for big loan and small loan are they the original loan amounts or what is outstanding today?

rockm87

Hi!

Can I ask about your living arrangements? Why is it you live elsewhere to your mortgage? Is this saving you/ making you any money?

You need to increase your income, can someone work part time? deliver takeaway in the evening? night shift stacking shelves?

I'd take a look at the car payment, can you trade down? sell it?

bexster1975

Hi

Don't know how to cut £400 but would say water rates are high per month. Is that over 12 months? Mobile costs are extortion and are a prime candidate for trimming.

I echo comments about car costs.

You spend about half your income on rent/mortgage/debt/ management charges. Unless these can be reduced you are not left with a huge amount to play with

Bexster

andyfromotley

Hi sparkles,

i don't quite share the same view as happy.

Your SOA is a disaster!! You are insolvent to the tune of over £400 every month!! This is a FINANCIAL EMERGENCY!! You are adding to your debt by nearly £5000 every year just to stay where you are. This will of course increase your outgoings even more to service this growing debt. This is a classic Debt spiral which could easily drag you under. You must act now to remedy this.

There are things on the SOA which can go, mobile is ridiculous, presents, haircuts etc but that is not going to dig you out of this hole. You should consider

1. Car is an enormous expense. You need to find a way out of it and buy a super cheap car.
2. Your house has £33k in equity in it. Sell it, pay off your debt and buy a new car for cash. This will revolutionise your finances.
3. Your new rented housing costs are high. Especially the service charge. Rent somewhere cheaper (and nearer to your partners work.
4, I guess by your income that you are part time. Can you work full time.
5. Income is king, better jobs, promotion, second jobs, third jobs income income income.

These are big changes, but selling your house can solve your debt crisis. You cannot let things carry on as they are and tinkering with household bills aint gonna solve this one. (but you should of course attack them!) Just imagine how you will feel if you are completely debt free, living as cheaply as possible and have increased your income? You will have changed your life forever and be able to save huge amounts towards your goals. You can do it!

Hope this helps, andy

HappyMJ

andyfromotley wrote: »

Hi sparkles,

i don't quite share the same view as happy.

Your SOA is a disaster!! You are insolvent to the tune of over £400 every month!! This is a FINANCIAL EMERGENCY!! You are adding to your debt by nearly £5000 every year just to stay where you are. This will of course increase your outgoings even more to service this growing debt. This is a classic Debt spiral which could easily drag you under. You must act now to remedy this.

There are things on the SOA which can go, mobile is ridiculous, presents, haircuts etc but that is not going to dig you out of this hole. You should consider

1. Car is an enormous expense. You need to find a way out of it and buy a super cheap car.
2. Your house has £33k in equity in it. Sell it, pay off your debt and buy a new car for cash. This will revolutionise your finances.
3. Your new rented housing costs are high. Especially the service charge. Rent somewhere cheaper (and nearer to your partners work.
4, I guess by your income that you are part time. Can you work full time.
5. Income is king, better jobs, promotion, second jobs, third jobs income income income.

These are big changes, but selling your house can solve your debt crisis. You cannot let things carry on as they are and tinkering with household bills aint gonna solve this one. (but you should of course attack them!) Just imagine how you will feel if you are completely debt free, living as cheaply as possible and have increased your income? You will have changed your life forever and be able to save huge amounts towards your goals. You can do it!

Hope this helps, andy

It's fine....don't forget they are paying off £16,000 off the debt each year. They are getting wealthier by £11,000 each year without doing anything different.

edit: if they sell the house they lose the £535 of other income and reduce their expenses by £380 per month by paying off the mortgage. They could pay back all the debts including the remaining HP payments due on the car saving another £274 per month but they'd only have £6,000 in cash and now would only be increasing their wealth by £5,000 per year.

A negatively geared SOA against an investment property always looks really strange as there is a cash flow shortfall but trust me it does work.

I give the loans and the HP on the car 5 years maximum before everything is paid off without changing a thing.

[Deleted User]

Sparkles87 wrote: »

Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 630
Partners monthly income after tax....... 1550
Benefits................................ 80
Other income............................ 535
Total monthly income.................... 2795

Monthly Expense Details
Mortgage................................ 380
Secured/HP loan repayments.............. 274
Rent.................................... 725
Management charge (leasehold property).. 120
Council tax............................. 159 - This is a lot. If it's over 10 months, switching to 12 months will reduce it to £132-50pm.
Electricity............................. 40
Gas..................................... 20
Oil..................................... 0
Water rates............................. 65 - This seems very high. Have you considered a water meter?
Telephone (land line)................... 14
Mobile phone............................ 70 - Even if this is for all three of you, it's still :eek: Go PAYG/sim only, for about £10 per phone.
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 8
Groceries etc. ......................... 250 - This is high. You should be able to trim maybe £100 from it.
Clothing................................ 0 - Never?
Petrol/diesel........................... 150
Road tax................................ 0 - Nothing?
Car Insurance........................... 0 - Nothing?
Car maintenance (including MOT)......... 0 - Nothing?
Car parking............................. 0
Other travel............................ 60
Childcare/nursery....................... 0
Other child related expenses............ 50 - What are these?
Medical (prescriptions, dentist etc).... 50 - This is £600 per year, which is a lot. Is there a reason it's so high?
Pet insurance/vet bills................. 0
Buildings insurance..................... 0 - You own a property, but don't have buildings insurance? You may be in breach of your mortgage conditions.
Contents insurance...................... 10
Life assurance ......................... 0
Other insurance......................... 15
Presents (birthday, christmas etc)...... 25 - You can't afford this right now.
Haircuts................................ 20
Entertainment........................... 20 - You can't afford this right now.
Holiday................................. 0
Emergency fund.......................... 0 - You need something in here, especially as you are a home owner.

Total monthly expenses.................. 2525


Assets
Cash.................................... 0
House value (Gross)..................... 115000
Shares and bonds........................ 0
Car(s).................................. 15000
Other assets............................ 0
Total Assets............................ 130000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 83000....(380)......4.95
Hire Purchase (HP) debt ...... 15000....(274)......4
Total secured & HP debts...... 98000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Big loan.......................15000.....282.......0
Small loan.....................5000......196.......0
Cards..........................6000......200.......0
Total unsecured debts..........26000.....678.......-


Monthly Budget Summary
Total monthly income.................... 2,795
Expenses (including HP & secured debts). 2,525
Available for debt repayments........... 270
Monthly UNsecured debt repayments....... 678
Amount short for making debt repayments. -408

Personal Balance Sheet Summary
Total assets (things you own)........... 130,000
Total HP & Secured debt................. -98,000
Total Unsecured debt.................... -26,000
Net Assets.............................. 6,000

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

My comments in red.

Are all the unsecured debts really at 0%?

Have you defaulted on anything yet?

pleasedelete

They don't lose £535 of income if they sell the house- some of this will be taxable income? Do you pay the tax due on the rental monthly or yearly?

DawnW

pleasedelete wrote: »

They don't lose £535 of income if they sell the house- some of this will be taxable income? Do you pay the tax due on the rental monthly or yearly?

Tax would in normal circumstances be paid annually, after they have completed a self assessment at the end of the Financial Year. As with any business, some costs are tax deductable, mortgage interest, repairs costs, yearly boiler checks etc.

andyfromotley

HappyMJ wrote: »

It's fine....don't forget they are paying off £16,000 off the debt each year. They are getting wealthier by £11,000 each year without doing anything different.

edit: if they sell the house they lose the £535 of other income and reduce their expenses by £380 per month by paying off the mortgage. They could pay back all the debts including the remaining HP payments due on the car saving another £274 per month but they'd only have £6,000 in cash and now would only be increasing their wealth by £5,000 per year.

A negatively geared SOA against an investment property always looks really strange as there is a cash flow shortfall but trust me it does work.

I give the loans and the HP on the car 5 years maximum before everything is paid off without changing a thing.

Thanks happy, its fair to say that we take different approaches to this!

How do you suggest they cover the £400 deficit every month whilst they wait for this SOA to right itself?

(that sounded really snippy!! It wasn't meant to be i'm just interested in how your way would pan out)

andy.

HappyMJ

andyfromotley wrote: »

Thanks happy, its fair to say that we take different approaches to this!

How do you suggest they cover the £400 deficit every month whilst they wait for this SOA to right itself?

(that sounded really snippy!! It wasn't meant to be i'm just interested in how your way would pan out)

andy.

I use a 0% on purchases credit card and put the groceries and a few other things on the card adding up to around my cash flow shortfall. Then the cash that I've got from income I use to pay the minimum payments required.

After 2 years and 3 months at an overspend of £408 a month they'll owe and extra £11,016 more on credit cards but....they are paying out the following...

Mortgage................................ 380
Secured/HP loan repayments.............. 274
Big loan.......................15000.....282.......0 53 months to go
Small loan.....................5000......196.......0 25 months to go
Cards..........................6000......200...... .0 30 months to go

They are paying out £1,332 per month and after 2 years and 3 month they'll owe £35.964 less than they do now.

The sum of all the current debts plus the debt they'll incur by using the credit cards over the next 2 years and 3 months is (£26,000 plus £11,016). They would have paid £35,964 off the debt of £37,016 and only have £1,052 to go which will now be on credit cards which they can use the big loan and small loan payments that they were making which would by now be paid off or very near to be being paid off and redirect it to the credit cards which would be getting very near the end of the 0% on purchases period.

My guess is they've missed quite a bit off the SOA but everything will be cleared in 5 years. If they keep paying £1,332 each month towards their debts going into the future then the mortgage will also be well on it's way to being cleared much quicker.