In debt but manageable?

Poinsetta

Hi, newbie here so apologies for any errors.

I have spent all day making a budget for next year as I am feeling a little uncomfortable and completing the Statement of Affairs that someone had posted the link to for another member in their thread a few days ago.

A bit about me. I am in my late 40s, single with a boyfriend and a full time job. I am Mum to one who is no longer financially dependent on me. I have two cats and two fish!

I have spent my adult life in rented accommodation and about 5 years ago started worrying what I would do in my old age (fingers crossed I get there!) and so started saving for a deposit to buy my own place. To do this I rented a very small furnished flat in London (where I have always lived) because the rent was cheaper than a flashy flat but it meant I could save each month. I also gave up my car and the associated costs with that.

Roll on 5 years and I now own (or rather the bank owns) my flat. I have sacrificed living in London and moved out a bit. The consequence of this is, my fares have over tripled in cost.

I am in debt but it's manageable but is it in the long term? I have a decent job and have been there almost 10 years. Due to my age, my mortgage is over 21 years so my payments are high.

I have 3 credit card debts and one loan along with all my other outgoings. With the exception of my Halifax Clarity card which I pay off every month my other two cards are at 0% until early 2017 and early 2018. I am making small overpayments on both the mortgage and loan to reduce the terms. I have no pension provision so need to pay off asap so I can start saving for that at some point. My budget spreadsheet tells me one story but the Statement of Affairs I have completed on here tells me another and I am not sure where I am going wrong.

I have a small savings account which I am keeping back for emergencies. I live in a new build property so the appliances are covered by various guarantees for a year or two.

I don't have any of the latest gadgets and am on a SIM only contract. I don't subscribe to any TV packages either. In fact, I don't watch TV very much at all. My downfall is I love to buy DVDs and I do have a hobby that can cost me a couple of hundred a year.

I guess I am so used to logging on and seeing a fairly decent amount in my savings and that has now almost gone. Also, every year for the last 5 (this is now 6) I have been using 0% cards on either purchases or balance transfers and I may not be so lucky next year now my commitments are showing up on my credit report. One of the credit cards takes into account I will be purchasing an annual train ticket next week.

I would welcome any advice on how to avoid getting myself into trouble further down the line as I have come so far compared to how I was 5 years ago.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 2269.17
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 5
Total monthly income.................... 2274.17

Monthly Expense Details
Mortgage................................ 806.5
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 103.92
Council tax............................. 115.72
Electricity............................. 30
Gas..................................... 31
Oil..................................... 0
Water rates............................. 17
Telephone (land line)................... 27.75 (this includes broadband)
Mobile phone............................ 10
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 400 (this includes everything from cat food, fish food, groceries, toiletries and household bits)
Clothing................................ 20
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 196.33
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10 (my company pay for eye tests and contribute to my glasses)
Pet insurance/vet bills................. 0 (not taken this out yet as they are kittens)
Buildings insurance..................... 0 (this is included in my management charges)
Contents insurance...................... 6.85
Life assurance ......................... 0 (the costs of this were very high so opted not to buy into it)
Other insurance......................... 0
Presents (birthday, christmas etc)...... 75 (I need this as I have lots of special one off family celebrations next year)
Haircuts................................ 9.8
Entertainment........................... 25
Holiday................................. 0
Emergency fund.......................... 0
(Unnamed monthly expense)............... 0
Total monthly expenses.................. 1884.87


Assets
Cash.................................... 2145.95
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 212145.95


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 147126...(806.5)....3.19
Total secured & HP debts...... 147126....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................4163.28...93.67.....0 £675 of this is 0% until January 2017, the remainder February 2017)
Halifax Credit Card............3397.21...82........0 (until August 2017)
Halifax Loan...................7124.92...140.4.....4.8
Mortgage Overpayment...........0.........23.46.....0
Loan Overpayment...............0.........19.51.....0
Total unsecured debts..........14685.41..359.04....-


Monthly Budget Summary
Total monthly income.................... 2,274.17
Expenses (including HP & secured debts). 1,884.87
Available for debt repayments........... 389.3
Monthly UNsecured debt repayments....... 359.04
Amount left after debt repayments....... 30.26

Personal Balance Sheet Summary
Total assets (things you own)........... 212,145.95
Total HP & Secured debt................. -147,126
Total Unsecured debt.................... -14,685.41
Net Assets.............................. 50,334.54

theoretica

The great thing is that your final number is positive, even if it is only £30. To check how the outline matches reality I suggest you keep a diary of all your spending for a few months (and maybe look back at past statements to try and work out where your money had been going.

Could you tweak your £5 other income upwards?

I have a few comments below - mostly about accuracy.

Poinsetta wrote: »

My downfall is I love to buy DVDs and I do have a hobby that can cost me a couple of hundred a year.
Where are they on the SOA? Both in the entertainment £25? Can you sell on the DVDs you are done with to pay for more?

One of the credit cards takes into account I will be purchasing an annual train ticket next week.
Are you double counting this both under credit card and travel? Some employers offer a salary advance for this (works out as an interest free loan) might yours? Are you paying it off at a rate it is all gone by the end of the year?

Groceries etc. ......................... 400 (this includes everything from cat food, fish food, groceries, toiletries and household bits)
This I think looks a tempting target - how much is keep for the fish? The felines? Do you take packed lunches or buy? The oldstyle board here could probably help if you need ideas, but considerable savings could likely be made here.

Other travel............................ 196.33
See above, is this also in with your credit cards?

Tall_order

I would definitely look at groceries. We are a family of 5 and our monthly grocery spend (including cat, hamster, toiletries, cleaning etc) is less than £500 and we shop with Ocado.
Other than that I'm sorry I can't help as I am also a newbie

-Sarah

Poinsetta

Thanks for your replies.

Theortetica, yes I have double accounted for the train ticket so thanks for pointing that out. I will adjust this. I also made a mistake on the Halifax 0% deal which finishes in August 2017 and not 2018.

The cats probably cost me about £40 monthly. As I don't have a car and to save delivery charges I bulk buy cat litter. I don't see this changing as I don't have a garden.

Fish food is about a fiver.

I do take in lunch around 3 out of 5 days so will look at upping that all week.

I will do as you have suggested and start a spending diary to see where my money is going. I am not sure there is much point in reviewing what I have spent recently as most of it was spent on one off costs such as moving and buying furniture and flooring as I didn't have anything to speak of.

My food shopping is also done online (because of no car) twice a month and then do small top ups as and when needed. I will have another look at this to see if I can cut back anywhere.

The DVDs I buy are very cheap. They are not blockbusters but mainly pre 1955 films so not sure what their resale value will be. I will stop buying them for now and also put my hobby on hold until I have a better understanding of my outgoings and I did put them under entertainment.

I did receive two or three gift sets for Christmas from work colleagues so will see if I can sell those.

ViolaLass

That food shop is huge!

We are a family of three with two cats and we spend under £200 a month to feed everyone (plus toiletries etc).

Your loan is on a higher rate than your mortgage. Stop overpaying the mortgage and send that money to the loan.

HappyMJ

Poinsetta wrote: »

Thanks for your replies.

Theortetica, yes I have double accounted for the train ticket so thanks for pointing that out. I will adjust this. I also made a mistake on the Halifax 0% deal which finishes in August 2017 and not 2018.

The cats probably cost me about £40 monthly. As I don't have a car and to save delivery charges I bulk buy cat litter. I don't see this changing as I don't have a garden.

Fish food is about a fiver.

I do take in lunch around 3 out of 5 days so will look at upping that all week.

I will do as you have suggested and start a spending diary to see where my money is going. I am not sure there is much point in reviewing what I have spent recently as most of it was spent on one off costs such as moving and buying furniture and flooring as I didn't have anything to speak of.

My food shopping is also done online (because of no car) twice a month and then do small top ups as and when needed. I will have another look at this to see if I can cut back anywhere.

The DVDs I buy are very cheap. They are not blockbusters but mainly pre 1955 films so not sure what their resale value will be. I will stop buying them for now and also put my hobby on hold until I have a better understanding of my outgoings and I did put them under entertainment.

I did receive two or three gift sets for Christmas from work colleagues so will see if I can sell those.

There's no need to sell Christmas presents or your collection of DVD's. Anyway, you probably won't get much for them (maybe 50 pence each) and their value to you is much higher. I have an Amazon Fire Stick and watch everything for free so physical DVD's have zero value to me.

You have nothing down for TV licence. Do you not watch live TV at all? That's fine but then not spending on a TV license justifies the need to keep your DVD collection up to date so you can watch something so I would put down £13 a month for TV licence (£3 a week should be fine) and use that money to buy DVD's with which anyone would consider fair.

Although your cats are still kittens you really must either consider insuring them or putting an amount equivalent to pet insurance aside each month. I would put away no less than £20 per month per cat and put that figure under Pet Insurance/Vet bills. If you don't spend it that's fine keep it for future cat expenses and if the cat dies before you've spent it all then use it for your next pets. The category "Pet Insurance/Vet Bills" also includes vaccinations, flea treatments and regular worming.

You also have nothing down for holidays. It's my opinion that everyone working should save towards a week away. Bankrupt people are allowed £20 per person per month so I would put that figure aside. As you can figure out that won't get you much of a holiday but it is something set aside for to get away on a short weekend break and de-stress at least once a year.

Your SOA looks quite good. You're not in financial difficulty. You can tweak your spending on the edges and meet your expenses and you have 0% offers on your cards. Keep the interest rates low and you won't pay out much in interest.

Life insurance for single people with no dependants is pointless so you are correct not buying into life insurance. You have £50,000 net assets to pass on to your offspring if you were to die tomorrow which should be more than enough.

Yet another edit: Personally I would not overpay the mortgage and I would overpay the 0% credit card that expires first. The sooner that's paid off then the less risk there is that you will be paying 15% plus interest on the outstanding balance when the offer expires. Generally you can't borrow money back that has been overpaid on to a mortgage but you can borrow back the overpayments you've made on a credit card so it gives you more flexibility.

weebit

Definitely stop overpaying the mortgage until all your other debts are clear. Overpay the loan by all means, then tackle whichever credit card has the highest interest rate.

£400/month on groceries does seem like a lot for a single person. I spend in the region of £250 for 2 people (and looking to reduce this further) so you could easily reduce this by half. Consider the down-shift challenge where you buy the cheaper options of foods. e.g. if you're buying big-brands such as Heinz and Kellogg's etc, then try the supermarket own-brand instead. Also, don't forget to try down-shifting toiletries like shampoo. if you're paying £4 for a bottle of a branded shampoo, try the Boots own-brand equivalent for £1.50. You may find you like it even more than the branded one - I did!

Tall_order

I also bulk buy cat litter, and cat food (I use zoo plus for the cat litter and ocado for my cat food)

Would you be willing to show us some of your shopping lists?
Do you have a lot of food wastage?
Do you have to pop out to the shop to get things to make meals?

(Sorry if I'm rambling, these are things that often happen to us so thinking aloud )

- Sarah

Poinsetta

Thanks again for all the replies.

Happy MJ, I took your advice regarding the kittens and yesterday I opened up a 'cat fund' savings account and transferred £40 from my emergency fund to kick start it as I know I have to pay for at least one op, jabs and their various worming and flea treatments.

I have cancelled my mortgage over-payment so I can put the money to my credit card debt. I am keeping the over-payment to my loan for the time being.

Weebit, thanks for your suggestion about brands. I am not really brand loyal. I see tons of offers but they are not relevant to me.

Tall Order, yes I do have food wastage because one person cannot eat the offers (I normally feed the foxes and strays with it).

Thanks again.

ahomemadetouch

in regards to food wastage - can you buddy up with a friend to take advantage of the offers. or freeze left overs