Ready to get back on the sensible train

Kebby

Hi,

I've been lurking around these forums for quite sometime, but finally decided to sign up and start a 'debt free diary' to try and encourage and spur me on with hopefully a little support from you guys. So I guess I'll start out by giving you a bit of a background on where I'm at and where I hope this diary will help me to get too!

So I'm 24 and got married in August 2014 to my husband who is 26. I've always been extremely careful with money, but unfortunately this can't be said for my husband, and he's started to have a bit of a bad influence on me! We do like our luxuries in life, namely cars, houses and holidays (All the cheap things clearly..) Which so far we've been able to afford ok, however we got a little carried away and have overstretched ourselves this year. Hence where this diary has come from! I appreciate we've been very silly, but are ready to make a change and get back to a good place. Hoping we won't be judged too much for our stupidity!

My husband and I just moved into our second house (mortgaged) in March this year, it's absolutely beautiful and I love it but comes with a hefty mortgage amount. After having one car between us for around a year and a half, in April we got a bit too excited and 'treated' ourselves to a lovely new car on finance (doh!). We've now got 2 cars, one has no finance, and then this new one..which also comes with a hefty monthly fee. Adding to this, we didn't have the deposit needed for the car and put £3.5k on a credit card to pay for this.. and so the credit card debt begins!!

Since then, we've been racking up debt on the card from essentially over stretching ourselves. I think the main culprit has been holidays.. we've been to Amsterdam, Egypt & Florida so far this year and have a 3 week holiday to Australia just after xmas.. whilst we've not necessarily put these holidays on the credit cards, we've been putting everything we've got into savings every month to pay for these, meaning anything else we want to buy, or anything extra has ended up on cards - always with a 'we'll pay that off next month' attitude, and then something else crops up. Australia is going to be a huge huge amount, much more than we anticipated - although some has already been paid for, flights, a couple of hotels and we will have all of the spending money in cash. However, the beauty of booking.com and not having to pay for hotels until you actually finish the stay means we're likely looking at around £4.5k to go on the card by the end of January. We've had the attitude of it's a once in a lifetime trip (for us anyway) and not to scrimp on it.. in hindsight, probably not the best attitude - but hey ho, this is where we're at now, and I know we need to deal with it before things spiral out of control.

So to recap the debt we actually have is:

Mortgage - £295k (or there abouts) - £1,117 per month
Car Finance - Around £36k - £337 per month
Sofa finance - Around £1,600 I think? (0% interest for 4 years) - £30 per month
Credit cards (0% interest) - £8.5k at the moment - Expected to be around £12.5k by end of Jan. :eek:

I also have student finance, which is around the £8k mark - I don't treat this as debt because it's just something that comes out of my pay each month (£94 per month) - But I probably should take this more seriously!!

Our total bills expenditure comes to £2,792.36 every month - this includes putting aside £20 a month towards xmas presents, £100 towards our car pot which is for insurance, tax, servicing etc, and also putting £25 per month away towards house insurance costs when it comes up to renewal (all paid in full rather than monthly). I commute to work so we have £200 set aside for fuel every month, but thankfully no parking costs.

Flat basic pay between us is £3,700 a month

I can put up a full bills breakdown if that will help, but essentially we save £600 a month at the moment, and each have £150 'spending money'.

My husband gets a bonus without fail every month, but the amount varies so we don't include this in our costings, so this usually is used to pay off bits on the card. He also does do a lot of overtime, but again we do not rely on this as it can vary a lot (some months he can earn up to £1k extra in overtime). We're both expected to get a substantial bonus at xmas time, but again amount is unknown - so hoping this will help towards the Australia costs!

So our £600 'savings' is blocked off until after xmas for spending money for Aus - after that point it's free to start wacking off the debt :T

So my realistic goal short-term goal is to pay off our credit card debt and our sofa finance. But after writing this all down, I'm wondering if I should be concentrating on my student loan debt instead?? Any advice would be appreciated on this? Mortgage and car finance is just not on the radar, I'm happy to leave these be.

So where can we cut things down and start paying bits off? To me the first thing that shouts out is our food bill, it's around £400 a month, and just seems so unreasonable for just 2 of us. Have tried various things and shops, but can't seem to budge it down much! I know if we can cut this down it would help dramatically. The other problem we have is not having an 'entertainment' allowance which accounts for eating out etc, we just try and take this out of our food budget if there ever is anything left (very rare!!), so I think we need to figure something out in our monthly budget for this.

I've also been clearing out bits in the house and selling bits here and there, so I'm getting back on this with full force to try and get as much as I can.. it might only be £100 or so - but every little helps I suppose?

Thanks for reading this, it probably is very long and makes no sense but helps to have it all down there in black and white! Any advice (and no judgement!) would be greatly received. I'll be popping in every month to tally down where our totals are at and show our journey to being (somewhat) debt free. :j

Kebby

Sorry I think I've actually posted this in the wrong group - meant it put it into the diaries section.

Kebby

So just had a bit of a heart in mouth moment when checking our credit report for the SOA I'm pulling together (will post shortly). Looking at my husband's credit report and it showed an old credit card he had, which I actually thought had been cancelled, still had an outstanding balance on it!

I logged into find a £3.95 balance sat there *phew*. However, this balance has supposedly been sat there since October last year, and thankfully no charges or interest or anything have been added onto it, not sure why but I'm going to take the luck we've been thrown and run as fast as I can with it! Turns out the payment was from an ebay purchase where he'd accidently paid on Paypal and used the wrong card *doh*. A smacked wrist was given and we shall now proceed to pay the outstanding amount and cancel the credit card for good!

On this note, I also noticed I have an old Tesco credit card that I again obviously haven't cancelled, it's got nothing on it but worth while cancelling I guess..not sure if multiple credit cards, regardless of balance can have an affect on credit rating?

I'm just in the process of transferring our 2 used credit card balances, as the 0% interest has just expired on them both. They'll both be going onto one new barclaycard with 32 months at 0%, which will help put my mind at ease that we won't be racking up even more debt on them from interest charges. Once I've got the final balance figures after the fees and what not have been added on, I'll post it and then can start sending updates on how we get on with reducing the balance!

Kebby

So this is the SOA I've pulled together. The credit card balances are without the balance transfer fees at the moment, so I'll add this in once I've got these confirmed. The credit card is the first plan of attack with the sofa finance to follow after that.

I'd like to try and pay between £500-£1k off of the credit card before xmas, and then after we get back from Australia, our £600 savings every month will be dedicated to paying it off (+ extra of course if possible).

At the moment I think the areas for improvement will be our grocery shop - this does include toiletries, cleaning products etc. And I've also just noticed as our house is a new build we were automatically put with Eon - this doesn't appear to be a fixed rate tariff, so going to have a look around and see what we can do here as well!

Any other advice appreciated


Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 3

Monthly Income Details
Monthly income after tax................ 1850
Partners monthly income after tax....... 1850
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3700

Monthly Expense Details
Mortgage................................ 1117
Secured/HP loan repayments.............. 406.20000000000005
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 194
Electricity............................. 97
Gas..................................... 0 (included above as 1 payment)
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 0
Mobile phone............................ 60
TV Licence.............................. 12
Satellite/Cable TV...................... 58.12
Internet Services....................... 28.5
Groceries etc. ......................... 400
Clothing................................ 0
Petrol/diesel........................... 200
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 100 (all above included in this)
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15.5
Pet insurance/vet bills................. 5.22
Buildings insurance..................... 25
Contents insurance...................... 0 (included above)
Life assurance ......................... 10.8
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 0
Entertainment........................... 300 (this is our 'spending money' for the month)
Holiday................................. 0
Emergency fund.......................... 0
Lottery................................. 18
Total monthly expenses.................. 3082.34


Assets
Cash.................................... 1176
House value (Gross)..................... 381000
Shares and bonds........................ 0
Car(s).................................. 7000
Other assets............................ 0
Total Assets............................ 389176


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 292524...(1117).....3.9
Hire Purchase (HP) debt ...... 30292....(377.2)....5.8<
Sofa Finance...................1254.....(29).......0
Total secured & HP debts...... 324070....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Santander......................1553......0.........0
Barclaycard....................7005......0.........0
Total unsecured debts..........8558......0.........-


Monthly Budget Summary
Total monthly income.................... 3,700
Expenses (including HP & secured debts). 3,082.34
Available for debt repayments........... 617.66
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 617.66

Personal Balance Sheet Summary
Total assets (things you own)........... 389,176
Total HP & Secured debt................. -324,070
Total Unsecured debt.................... -8,558
Net Assets.............................. 56,548

Created using the SOA calculator
Reproduced on Moneysavingexpert with permission, using other browser.

Kebby

Sorry another post from me - the last of today.

Found out today my husband's bonus is £108 this month :j

However, we also found out we've got a last minute 'moving away' meal on Saturday night for my brother, and also another meal on the 17th for a birthday. So looks like the bonus is going to be used on those rather than paying the cards off as I had originally hoped

On the upside at least it stops no more being put on the cards if we can stick to the £100 budget for the 2 meals. I think keeping the husband to a cheap bottle of wine is going to be the biggest challenge at this point!!

Swash

Good luck on your journey Kebby. I'm not sure how you can move the thread to the diaries section? I'm sure someone else will know.
Looking at your satellite tv, your bill looks quite high. Could you not move to free view? Or a cheaper tariff?

rockm87

Hi and welcome!

well done for getting everything together and written down, seeing it in black and white really makes a difference.

I would definately work out how you slash as much as possible off your monthly outgoings, you could really do this with your groceries.

Meal plan, switch supermarkets (or downgrade your brands)

Go over to the 'old style moneysaving' boards for great ideas.

Make sure you have a 'emergency fund' and cut up the cards, you dont need them!

Upsidedown_Bear

Kebby wrote: »

Sorry I think I've actually posted this in the wrong group - meant it put it into the diaries section.

If you send a PM to fermi who is one of the Board Guides they can move it to the Diaries section
http://forums.moneysavingexpert.com/member.php?u=175491

asparagus1968

Hi,
I'd agree and look to reduce tv/internet and mobile phone deals.
Groceries is very high for 2 of you, do you buy lunches at work?Are they included?


Is it right you have three cars? But could you manage with one? Or at least do something with the one on HP?
Cut the spending money of £300 a month! you have had 3 hols already this year-that WAS your entertainment:)
having Australia is a lovely cutting back incentive-have a wonderful time.

Kebby

Hi everyone,

Thanks for all of your lovely comments! This might be a long reply but I'll try and respond to all your helpful comments in one go!

Sorry I realise I didn't properly explain our 'third' car. This is actually a 1978 mini that is my husband's and was purchased with some inheritance, it has been stripped and just sits in our garage at the moment as we have no money to do anything further with it at the moment! The only cost this involves is a small fee for insurance every year.

Unfortunately we aren't able to get down to just 1 car as I commute to work, and although the other half does occasionally ride to work, it's not ideal for him really. Before we moved we had just 1 car (+ the mini), and we struggled for a year and half with it, but after we moved it was just too far out to continue with this.

In terms of phone bills, I stupidly just took out another contract on mine for £42 a month :eek: Felt like a good idea at the time. In hindsight - not so much! Husband's is £17 a month, and this runs out in January so will be seeing what we can do there in terms of reducing and also Quidco as they tend to offer good rates for those!

100% agree on the groceries, it's my main plan of attack! We take lunch into work everyday from home, and only very very rarely will buy lunch. I struggle with why our food bill costs so much, we shop at Tesco generally but are very good with what we buy, mainly just chicken and veg, not many snacks etc - we tried lidl last week and did a decent shop for £86 which had lots and lots of meat - I've made a meal plan to last us until next Sunday using what we've got, so only have a tiny shopping list for next week with some essentials such as bread, milk etc - so fingers crossed we can keep going this way!!

Our 'entertainment' is our spending money of £150 each, so this covers hair cuts, birthday presents for friends, make-up (for me of course), any clothes we want to buy etc. I have actually been using £50 of mine towards our debt so only actually take £100 a month. I'm not entirely sure what you know who spends his on. Food I suspect!! (despite the lunches I make him). It's a constant battle with him, and I'm lucky if he only spends £150 and doesn't ask for more. I'm going to work as hard as I can on him with this, I could almost understand if he had something to show for it at the end of the month, but nothing comes from it and it's all gone! Really frustrating

And finally - The TV bill. A big bug bearer for me so I agree - the main cost of this is the bloody sports package we have! Can't remember the exact price but I'm pretty sure it's in excess of £20 a month just for that. Apparently this is a complete non-mover for the other half. I've tried and he just won't budge on it! We do have movies though and we don't watch these so going to see if Sky will reduce this for us - will let you know how it goes!

On the upside, I realised I'd calculated our outstanding Australia fee's wrong, and we're probably looking at an outstanding £3.5k not £4.5k as I originally thought :T I'm finishing up booking the very last bits this weekend so I'll have a definite figure soon on this which will be nice!

Will keep you all updated Thanks again for your help, it's great to know I've got support in what I'm doing!

Lacherlich

Hello!

I've just had a read through your diary, I can certainly relate to a lot of it! Like you, we have our nice house, 2 new cars and had an amazing holiday to Mexico this year.... but are now in quite a bit of debt! I used my credit card for my car deposit too, oops. We are looking at moving house soon also, and taking on a bigger mortgage - although not quite as large as yours but that's only because we cant actually borrow more due to our current debt! ha. But its a blessing in disguise I guess. Can I ask, is your house a new build - and did you use help to buy? I only ask as notice there is a large difference between your mortgage and house value.

Also... another nosy question - sorry, your car is £330ish a month.... and worth £36k? I have a Mercedes A class at £315 a month and that was worth £26k... so was curious as I pay nearly as much for a cheaper car? Sorry for prying. Just wondering if there are any better deals out there ;-)

We also found groceries to be a big outlay also, between two of us , im 27 and parter 32 we'd spend about £350 a month and the main reason was due to all the top-ups! Going in for milk and spending £30 a time. We now do a big monthly shop online, and only spend a £100. Then a few top ups in the week, but not as many which means we spend less. Might be worth a shot.

For your TV costs... we switched from SKY to Now TV and Netflix, much cheaper with all the same channels and movies included. You can also watch TV live on NowTv. Think the two only cost us around £30 a month. Plus we got Sky to give us a free 6 months of TV after we cancelled with them, so also have all the SKY channels on the box too!

Anyhow sorry for babbling! Thought I'd just drop by.