Baby Steps

Jumex

Background:
My wife and have been together for 6 years and married for nearly one. During this time we’ve both gone from graduates and lived a plentiful life through our early and mid-20’s. We’ve had numerous holidays, bought our first house, a lovely (but not too OTT) wedding, a fantastic honeymoon, a new car. Throughout we’ve not wanted for much, had nice meals out, spoilt each other and family with gifts etc.

My current debt is made up of 4 parts,

1. Credit cards – these were used to pay for our honeymoon, and I’ve put off each month paying this off.
2. Hire purchase – my car has 2 years and 8 months left on hire purchase, at £163ish a month
3. Mortgage – a fairly high % but also a sky high early redemption charge. Meaning we can’t ditch and fix. I do wish we opted for a shorter term on our first mortgage product than 4 years, but the payments are more than manageable and we’ll get it right next time.
4. Student loan – although not a traditional debt, I’m still paying this off to the tune of £217, it should be cleared in the next 2-3 years.

All of this has been manageable, but I’ve not made much headway recently. I’ve never missed a payment and have a clean credit record.

Lightbulb moment
My OH and I are expecting our first born at the end of November 2015, for the last few months we’ve been adding up the costs of having a baby and the first few years, and it’s a lot, we’ve often asked ourselves how do those less fortunate than us manage to get by? We make a fairly comfortable amount for a couple in their mid/late 20’s.

What have I done so far
In terms of making additional payments not much.

We’ve reduced our monthly outgoings, switched Sky tv for YouView, cancelled gym memberships, tried to eat out less (this will reduce even more shortly!) we’ve found it relatively easy thus far.

We’re in a good position with 3 months to go before the due date, the vast majority of baby stuff is purchased, with only smaller items left to get!


What do I want to achieve:
I’d like to clear my Tesco credit card before November. I have a terrible habit of paying the minimum amount and then transferring to another 0% deal before my current deal is up. I never pay more than I should, but the debt will take an eternity to clear!



I’m hoping by writing down my musings and with the support of forumites I can get my self on track and be debt free at some point!

What I owe at the moment:
Tesco CC - £2,340 (0% until Nov-15)
MBNA Credit Card - £3,117 (0% until Jan-16)
Hire Purchase - £5,053 4.9% apr (I think!)
Mortgage - £142,479
Studnet Loan - around £8000, I dont get updates very often on this!

Jumex

So I managed a no spend day yesterday, I worked a bit later and avoided the resistance to buy a cake to sit and watch the GBBO with in front of the TV.

The OH made shepherd’s pie, with enough to be frozen and reheated next week. We’ve recently started the habit of cooking more from scratch and cooking a double batch so we have enough for two dinners. Any recommendations on other recipes?

So far we have tried:
Chilli
Bolognese
Sausage Casserole
Shepherd’s Pie

I don’t think I can achieve a NSD today as the OH is meeting friends for dinner tonight and I have nothing in the house for my dinner. I’ll have to pick something up on the way home.

Jumex

So on review of direct debits and the such, I have achieved the following recently.

Sky - Was £60.87 a month. From September will be £16.40. I still have broadband from sky but managed to get 12 months free and only have to pay the line rental.

Gym membership - Was £25. Now £0. I used the gym for a bit, but I've always been a bit of a runner so I can keep healthy that way.

Swiftcover - £49. From September £0. My wifes car insruance direct debit is paid for the year. Where the baby is due in November we wont be renewing, she only drives ocassionaly and it's not likely she'll be doing much driving from October to February, after which I'll add her to my renewal.

Although not all of these savings are realised yet, it'll reduce the monthly out goings by £118.47 a month.

I really should dig through all my finances are work out exactly my money goes! I feel it just drips away each month.

roxy7699

You seem like you're doing great.
Do you think you would have a different attitude to payino off the cards if they had interest to them.
You could always post a so a to see if more can be saved.

I need to bring back nsd

Jumex

Hi Roxy.

I almost certaintly would treat it differently if they have rates attached to them.I think I was fairly nonchalant about it whilst i'm not being charged for my debt.

Didn't quite get your last bit about post a to see if more can be saved?

Jumex

Yesterday wasn't a NSP but was very much a PSP (planned spend day). I had to pop to the supermarkets for food for dinner for last night, tonight and food over the weekend. I did most of my shop in Lidl, being a bit nerdy I looked up the Tesco prices online for the list I had made, on pretty much all the items I could find I saved money, the highlight being a medium chicken for £2, that'll do nicely for Sunday lunch.

Jumex

However, my weekend is going to be a bit more expensive. I'm hoping I can strike a balance between living well and being frugal.

On Saturday morning we're going for a early morning dog walk with some friends. Me and the OH don't have a dog (2 cats) but it'll be nice to get up and see some countryside. Late morning we have family visiting and we're going out for lunch and to feed the ducks in the afternoon with my 2 year old niece. In the evening we're going out for food to celebrate our friends getting engaged.

Sunday will hopefully be a NSP

Monday we've got more friends to visit with their 6 month old baby, again lunch out and about and probably a coffee too.

Has anyone else got any nice B/H weekend plans? Is there anyone out there?

twiggy86

Hi Jumex - I'm out here!

Well done on having your LBM!

I did wonder if rather than overpaying on your student loan you could either make overpayments on your mortgage (appreciate you said there's a high early redemption charge but didn't know if you meant you couldn't overpay) or save the money until you can switch your deal and then pay off a chunk? Or alternatively pay it off the CCs. I think the general consensus is not to overpay student loans, however if that is what you want to do, then do carry on!

Re going out for lunch and dinner - can/would you drink water to save on the drinks bill? Possibly that would seem a bit unfestive at an engagement celebration!

And Roxy meant a Statement of Affairs - http://www.stoozing.com/calculator/soa.php. Basically you post your budget and us kind folks look for possible areas that you could cut back on. Or you don't have to post it, but it may help you for budgeting. It made me realise there was lots of areas I didn't save for but come around every year! E.g. car tax, MOT, Christmas, home insurance and car insurance ( both paid for annually).

Oh and nothing nerdy about checking out the prices! That sort of behaviour is very much encouraged around these parts!

Hope that helps!

Jumex

Hi Twiggy,

In all honesty the student loan is the last thing i would tackle, the interest rate is so low to other debts I’d be silly to pay it off before other debts. My current thinking is clear the CC’s focus on the car, then the mortgage and if any spare money is left the student loan.

I can overpay my mortgage by up to £500 a month without incurring a fee.

In terms of going out and not drinking, I don't think I'll ever be that money saving! For me i think there's a balance between saving and enjoying yourself. The money I save on shopping/sky tv/gym should afford me an occasional pint or two. In all honesty I think my day to day life is fairly cheap, I don't have expensive hobbies etc. My OH will probably end up having a water or two as she isn't drinking (being pregnant and all) and is intolerant to citric acid, so most fruit drinks of limits!

I'll have a stab at the SOA, I'm sure there's annual things I just pay for as and when but it would be better getting into a habit of saving a set amount each month for them. I might find some time this afternoon with my afternoon off. Maybe do a before, now and target for each one?

twiggy86

I personally set myself a budget each week which I can spend on what I like guilt free. Well actually I have set budgets for everything, so this way I get a bit of freedom (which I also think you need) without dipping into any of my other budgets. Yes maybe this means the debt goes down slower but its interest free (well apart from the mortgage obviously!) and if I don't do it this way I feel I'm more likely to just go out and splurge because I'm fed up with not having a life!

Jumex

Hopefully this is done correctly? I've assumed some of the costs for things like birthdays etc, and I’m sure I’m missing things out but I can't think of anything major.

A few areas that are likely to attract attention.

1 - Mobile phone costs. Both me and the O/H have a while to run on our contracts and neither of them are cheap. In fact we already get 20% off the bills from the Vodafone EAP scheme.

2 - Life insurance & Critical illness I've always felt that £43.15 is a lot for cover for a 29 year old male and 27 year old female both who are non-smokers? Even more so given the scheme was taken out when we were 27 & 25!

I think I can reduce the food bill further, we did lazy shopping before. I quite enjoy cooking and I'd like to think I’m good enough to make more from scratch rather than being lazy!

Let me know what you guys think?


Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 2553.32
Partners monthly income after tax....... 1130
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3683.32

Monthly Expense Details
Mortgage................................ 835
Secured/HP loan repayments.............. 162.94
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 121 (I pay this 10 months our of 12, so techinically a little lower)
Electricity............................. 30
Gas..................................... 35
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 16.4
Mobile phone............................ 89.32 (cost for 2 mobiles)
TV Licence.............................. 12.12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 260
Clothing................................ 0
Petrol/diesel........................... 80
Road tax................................ 9.17
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 5
Pet insurance/vet bills................. 10.22
Buildings insurance..................... 15.84 (Included contents)
Contents insurance...................... 0
Life assurance ......................... 43.15 (Life and critical illness cover)
Other insurance......................... 0
Presents (birthday, christmas etc)...... 80
Haircuts................................ 12
Entertainment........................... 0
Holiday................................. 50
Emergency fund.......................... 20
Total monthly expenses.................. 1927.12


Assets
Cash.................................... 2856.09
House value (owned equity)..................... 34000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 36856.09


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 142500...(835)......5.49
Hire Purchase (HP) debt ...... 5043.....(162.9)....4.9
Total secured & HP debts...... 147543....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Tesco..........................2340......25........0
MBNA...........................3117......31.17.....0
Total unsecured debts..........5457......56.17.....-


Monthly Budget Summary
Total monthly income.................... 3,683.32
Expenses (including HP & secured debts). 1,927.12
Available for debt repayments........... 1,756.2
Monthly UNsecured debt repayments....... 56.17
Amount left after debt repayments....... 1,700.03

Personal Balance Sheet Summary
Total assets (things you own)........... 36,856.09
Total HP & Secured debt................. -147,543
Total Unsecured debt.................... -5,457
Net Assets.............................. -116,143.91

Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using Firefox browser.