Not sure where to start...

ifonlyihadnt...

Hi all

I would be really grateful of any advice, we have so much debt and are finding it a struggle to pay each month. I have cut back groceries etc to a bare minimum and cancelled unnecessary subscriptions. The things that are left are on contract (we have 5 mobiles on contract, for me, husband and 3 teenagers). I am in my final year of study to be a nurse and have had to cut back the hours I work to keep up. We don't have enough money left over to pay extra on debts, yet can't get rates etc frozen because we have enough money to pay minimum. The SOA is fairly accurate although it doesn't include pocket money and a software subscription my husband needs, so an extra £80 to add on expenses. It feels like I can never see a way out...


Statement of Affairs and Personal Balance Sheet

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 4
Number of cars owned.................... 1

Monthly Income Details[/b]
Monthly income after tax................ 400
Partners monthly income after tax....... 1900
Benefits................................ 232
Other income............................ 365
Total monthly income.................... 2897

Monthly Expense Details[/b]
Mortgage................................ 275
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 140
Electricity............................. 100
Gas..................................... 40
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 25
Mobile phone............................ 80
TV Licence.............................. 12
Satellite/Cable TV...................... 51
Internet Services....................... 0
Groceries etc. ......................... 550
Clothing................................ 20
Petrol/diesel........................... 160
Road tax................................ 25
Car Insurance........................... 36
Car maintenance (including MOT)......... 15
Car parking............................. 0
Other travel............................ 88
Childcare/nursery....................... 0
Other child related expenses............ 30
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 40
Buildings insurance..................... 15
Contents insurance...................... 24
Life assurance ......................... 0
Other insurance......................... 22
Presents (birthday, christmas etc)...... 50
Haircuts................................ 30
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1863


Assets[/b]
Cash.................................... 0
House value (Gross)..................... 240000
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 241000

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 205000...(275)......
Total secured & HP debts...... 205000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
credit card....................12500.....300.......26.9
credit card....................3800......95........16.9
credit card....................3500......100.......23.9
Hitachi capital................1300......70........0
hmrc...........................1000......118.......0
overdraft......................1500......0.........0
overdraft......................1400......25........0
Total unsecured debts..........25000.....708.......-


Monthly Budget Summary
Total monthly income.................... 2,897
Expenses (including HP & secured debts). 1,863
Available for debt repayments........... 1,034
Monthly UNsecured debt repayments....... 708
Amount left after debt repayments....... 326

Personal Balance Sheet Summary
Total assets (things you own)........... 241,000
Total HP & Secured debt................. -205,000
Total Unsecured debt.................... -25,000
Net Assets.............................. 11,000

katsu

So where does the extra £240 a month go? That is the missing crucial step to identify.

Can you reduce the satellite any further?

Cut down on gifts. Can you get someone in the house doing surveys in spare time to earn amazon vouchers to go towards gifts or discretionary spending?

katsu

Oh and good luck. You can do this - meeting minimums means you are reducing your debt slowly.

When do you qualify as a nurse so get a proper wage again?

peteuk

Ifonlyihadnt -firstly welcome to the DFW board.

Im not sure if you have seen the discussion about SOA V Debt Dairy, but I would say a Debt dairy is the next step for you to see where exactly the money is going. You can jot it down as you go along or us a free software package to help.

Your SOA says you've £326 to use at the end of the month (minus the £80 not accounted for).

Back in 2005 we went to CCCS (now step change) and organised a Debt Management plan.

What a debt management company would do is take the SOA and work out how much you can afford to pay your debts with and then apportion an amount to each of the debts. It may mean changing banks so that you can pay off your overdrafts but it will help in the short term (bearing in mind it will screw up you credit score)

PLEASE DONT EVER PAY FOR THIS SERVICE, Step change is a free debt management charity! You may get calls and emails from companies who will promise to cut you debts, why pay for it when you can get it free or even diy.

One question is are you up to date with your important payments mortgage, council tax, fuel and water rates ect.

Also you've a debt to HMRC (I assume overpayment of Child tax credit) have you disputed the overpayment, also I assume as you appear to be paying it back you no longer claim or qualify for CTC)

Obviously once you qualify and register (£130 per year for the privilege) your wage will hopefully improve and you'll feel different about the debt.

I know I have mentioned step changed, but there are other free advice services available, Citizens advice for one will be able to help.

Good look with the final year and I hope you sort out your finances. Weve had a ten year dmp which is finally coming to its bitter end!

peaceandfreedom

Hi Ifonly - you've taken the right step in coming here and trying to sort out your debts.

Since I presume you don't have the 200+ quid your SOA says you have left over (after the expenses not on the SOA), you need to start keeping a spending diary to see where your money goes - it is surprising how much cash disappears on seemingly small items. Nothing on your SOA sounds excessive to be honest so it's those unaccounted-for costs that are doing the damage. You have 0 for entertainment, which seems unlikely and you also need to consider having some kind of emergency fund to help smooth out cashflow.

I am puzzled by your mortgage payment of £275 on a 205,000 mortgage - is this interest only?

Are any of your teenagers old enough to get themselves a part-time job? Most bigger places have a lower age limit of 16 but it may be possible to get casual work (waiter/waitressing etc.) while younger. Would help if they could earn their own cash for their mobiles, clothes and other expenses - also teaches them the value of money. It is sooooo much easier to spend other people's money .

I think your monthly budget of £15 for car maintenance is too low - that would be wiped out by one fault, and then you have tyres, MOT etc. Are you actually saving that 15 quid or do you just have to fork out when something goes wrong? It would be a good idea to try to put aside money for this kind of expense so you are not hit for six when a big bill comes in. I budget £80 per month for the car - this includes tax, insurance and MOT (circa £30 of that) as well as maintenance costs.

Groceries could probably be reduced a bit if you do meal planning, though I know you have a lot of people to feed and teenagers have hollow legs!

I use YNAB to manage my budget and it has transformed my money management. I've also spent a lot of time reading Mr Money Moustache, though he's a bit hardcore . You might also find Dave Ramsey's approach helpful.

Good luck!

ifonlyihadnt...

Thank you all, I have to go and watch my son play football now but when I get back I will reply to some of the questions. Thank you so much for taking the time to reply x

Jon_B_2

For me the mortgage concerns the most. How are you paying only £275 on a £205000 mortgage?

Sellurgranny

Hello & welcome.... you've come to the right place for help and advice on how to handle your debts, this really is a brilliant forum.

The thing that stood out for me most apart from your very low mortgage payment was yourr grocery budget. £550 still seems rather high for 6 people. I manage pretty well on a weekly budget of £50 for 4 of us - 1 adult & 3 teens. I know teens are very hungry most of the time so I do empathize there! I work full time and still manage to cook from scratch for probably 5 out of 7 nights. Do the kids take packed lunches to school/college? I know I couldn't afford for mine to have school dinners every day so its just a once a week treat for them (and me coz it means I dont have to do packed lunches).

Anyway, when there isn't much 'give' in the budget and you've cut everything else, I've found meal planning and cooking from scratch to be a good way to save £££s.

Im sure you'll receive lots of helpful advice here in any case. Good luck and keep plugging away at that debt.

SurG x

ifonlyihadnt...

Hi, thank you all for replying. I have had another look at my SOA and realise I have missed off another debt, it is a catalogue debt of 1000 which is £55 a month. I also pay out for my daughter's gymnastics and cheerleading, my son's football and Spotify subscriptions for the two older children which adds about £60.
In response to some of the questions; the mortgage is interest-only (I know this is not good). The hmrc debt was from overpaid tax credits, we did challenge it at the time but to no avail, it is from years ago and was originally £15,000, it finishes next year and has only about £1000 left. I don't save for car expenses, I tend to just panic when the car goes wrong, in the past I would put repairs on the credit card, I need to put money away for the car each month.
I do plan meals, we cook from scratch and everybody takes lunch boxes, we shop at Lidl. I'm not sure I could reduce it further but I will have a go. My 3 older children are 16, 14 and 12 and all boys, the oldest being 6ft 5", so they do eat a lot!
I think I am still guilty of spending any spare money rather than putting it towards debt. When I have a spare £10 it seems such an insignificant figure to put towards thousands of debt. It does seem that whenever I get some extra money which I could put towards the debt something happens like the shower breaks, or the fence falls down etc...
If I do get some spare money eyes should I put it towards the Barclaycard first as that has the highest Apr?

Thank you again

thegreenone

Hi,
My only comment would be that your pet is more insured than you are. £40pm! You have an interest only mortgage and no life insurance? God forbid anything should happen to you or your husband but please think about the consequences. Please renegotiate your pet's insurance and find some money for yours.


As for that odd £10 - buy a 99p savings tin from one of the card shops on the high street and stick it in. It soon adds up. I bought two tins for my boys at the beginning of the year and put £5 per week each. DS2 was given his on his birthday in July - it had £120 in it. DS1 will get his on October. I have started two more for Christmas.

Jon_B_2

Wow. There is really too much for my mind to comprehend.

I have a child of my own and I understand that you don't want them to go without, but you are in real financial difficulty. Spotify subscriptions etc for children aged 14/16 is just going to have to be culled. The 16yo can find a part time job now. It's what I and many others done to pay for those luxuries.

The most critical thing for me here is that you appear to have no repayment vehicle in place for your house and no protection of you or your husband were to die.

On an interest only mortgage you are essentially kicking the can down the road to make a repayment mortgage more and more expensive down the line! You really cannot avoid this any longer.

You might look at the 25k unsecured debt and worry. This is not what you should be most concerned about...

You need real help here and without prying too much, you need to open up to your family to the predicament you face. If you are putting on a brave face your children who by now at least will be smart enough and intelligent enough to adapt to the new "world" you will have to embark on to get your life back on track.