Help paying off debt

enthusiasticsaver

Do you have a B and Ms near you? My daughter and son in law get their cat food etc from there as they say that is cheapest. Good news that the loan finishes this year as you can then focus on getting the debt down significantly. Do you have anything you can sell to reduce the debt? Once your emergency fund is £1k (after 5 months if you cut entertainment down to £200 per month) then use the extra £200 towards paying debt along with any of your surplus you can do without. Check out the snowball calculator and it will tell you your debt free date.

Debtslayer

young234 wrote: »

Hello, I'm a bit embarrassed about the state of our finances, we've been a bit rubbish with money and moved house last year plus I've been on maternity leave twice in the last 3 years. I'm back at work now and we have come to our senses and want to clear our debt. I'm not sure what to tackle first. We've paid £600 off so far on one of the overdrafts and reduced the limit. The credit card has another 12 months interest free. Thank you


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

Monthly Income Details
Monthly income after tax................ 910
Partners monthly income after tax....... 1644
Benefits................................ 137
Other income............................ 0
Total monthly income.................... 2691

Monthly Expense Details
Mortgage................................ 690
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 121 - Is this over 10 months or 12?
Electricity............................. 50 - Check comparison sites to see if you can get cheaper; if you're not in contract
Gas..................................... 50 - As above
Oil..................................... 0
Water rates............................. 33
Telephone (land line)................... 0
Mobile phone............................ 65 - This is high; change to sim only if not in contract (or as soon as you're out of contract)
TV Licence.............................. 12.5
Satellite/Cable TV...................... 20
Internet Services....................... 0
Groceries etc. ......................... 345 - This seems a bit high; try to cut it by the £45
Clothing................................ 40
Petrol/diesel........................... 80
Road tax................................ 25
Car Insurance........................... 33 - Make sure you shop around at renewal time and use cashback sites
Car maintenance (including MOT)......... 0 - You need to put something in here
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 20
Buildings insurance..................... 15 - Check comparison sites to see if you can get cheaper (with contents insurance) - £360 a year for these two is high; should be able to get for at least half this amount)
Contents insurance...................... 15 - See above
Life assurance ......................... 30
Other insurance......................... 0
Presents (birthday, christmas etc)...... 40
Haircuts................................ 0
Entertainment........................... 400 - This is huge!! - What does this money get spent on? You need to cut this right down while paying off debts.
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2084.5

Assets
Cash.................................... 0
House value (Gross)..................... 200000
Shares and bonds........................ 0
Car(s).................................. 2000
Other assets............................ 0
Total Assets............................ 202000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 162000...(690)......0
Total secured & HP debts...... 162000....-.........-
Unsecured Debts\
Description....................Debt......Monthly...APR
Loan...........................2140......260.......0
Overdraft......................3400......50........18.9
Overdraft .....................800.......30........18.9
Credit card ...................2700......30........0
Watch..........................486.......27........0
sofa...........................800.......50........0
Total unsecured debts..........10326.....447.......- [/b]\


Monthly Budget Summary
Total monthly income.................... 2,691
Expenses (including HP & secured debts). 2,084.5
Available for debt repayments........... 606.5
Monthly UNsecured debt repayments....... 447
Amount left after debt repayments....... 159.5
\
Personal Balance Sheet Summary
Total assets (things you own)........... 202,000
Total HP & Secured debt................. -162,000
Total Unsecured debt.................... -10,326
Net Assets.............................. 29,674

Hi
I've made some comments above where you could hopefully make some savings. The massive one that stands out is Entertainment at £400 per month :eek:


If you stopped this for 2 months you could have paid off one of the expensive overdrafts.
Could you get a 0% credit card (one that allows money transfers) to pay off the expensive overdraft?

byjimini

Hi there,

Sorry to butt in, but I noticed your mobile phone at £65 per month. My brother was with O2 and paying a large amount each month, we since discovered he could pay off his phone and leave them without penalty for the airtime, moving to a far cheaper £10 per month deal with Giffgaff.

This was before Christmas, and freed up £60 a month to use paying down other debts, hopefully this might help you too.

sourcrates

byjimini wrote: »

Hi there,

Sorry to butt in, but I noticed your mobile phone at £65 per month. My brother was with O2 and paying a large amount each month, we since discovered he could pay off his phone and leave them without penalty for the airtime, moving to a far cheaper £10 per month deal with Giffgaff.

This was before Christmas, and freed up £60 a month to use paying down other debts, hopefully this might help you too.

You can only do this if you are out of contract.

Most mobile contacts are for 2 years now, if you leave mid contract, you have to pay the exit fee consisting of the remaining monthly line rental.

Teacher2

As others have pointed out, the thing which stands out the most as non essential spending is the 'entertainment' fund of £400 a month. However, you say this include haircuts which are non negotiable.

What I suggest is as follows:- try to trim the haircut bill (sorry) by only paying for yourself. See if you can, as I do, get a stylist to come to your home and you shouldn't be paying more than £20-30 every six weeks. Cut your OH and your children's hair yourself.

Then set aside £350 of your entertainments fund to repay your debts. Stack them in order of highest interest rate to the least. This will probably mean tackling your overdraft or credit card bill first. At £350 a month you will have paid off £4200 in your first year. Keep going until all the debt is gone and then divert at least £200 a month of that fund into savings to give yourself an emergency fund.

In future, do not be seduced into buying high ticket price goods like the sofa and the watch. You can, like I did, buy a very nice sofa from Argos for £250 and they deliver too. Or there's Freecycle where you will pay nothing at all. Tesco's Clubcard points give you three for one on Goldsmith's jeweller's vouchers so you can get nice items for nothing on an annual basis. I never have birthday or Christmas presents but get the Tesco's points instead.

Once you are debt free get into the habit of saving up for things and don't buy them until you have the full price. Buy bargains such as those offered on 'Black Friday'. I have not worn an item of clothing that wasn't discounted at least twice in sales (usually three times!) for decades - and I dress well. We saved for eight years before we got our kitchen updated and even then we went for a 'Kitchen Restoration' job where they replace the doors and trims for less than half the price of a new one. Get used to waiting, saving and getting 'bang for your buck.'

I would also advise you to do YNAB or buy an invoice/accounts book from W.H. Smith and keep a running check of all your incomings and outgoings. Update it as least weekly though daily would be a good idea until you are debt free.

The very best of luck.

supersaverg

It's not easy, but at least building a budget, as you have done, is a great start.


Good luck, stick at it.

sambuca9

Hi and welcome to the forum.

There are lots of very experienced people on here that will help.

The one thing I would say is that when I had my LBM, I now realise that it was not a complete lightbulb, maybe 30 watts ! I was still spending frivolously, although I didn't recognise that for a while. I would "treat" myself to a coffee after spending over £100 getting my hair coloured etc.

Several years later and almost debt free, I have coloured my hair at home for years and could never imagine paying the prices they charge at the hairdressers now and wonder how I ever did! The reason I am saying this is what feels like a real sacrifice at the beginning, often feels like common sense a little way down the line!

Anyway, good luck with your journey towards a debt free life.

m4rc

sourcrates wrote: »

You can only do this if you are out of contract.

Most mobile contacts are for 2 years now, if you leave mid contract, you have to pay the exit fee consisting of the remaining monthly line rental.

Depends on the contract and who it's with. I was with O2 on their 'Refresh' contract, 2 lines, moved to middle of nowhere and have no signal for miles, not their fault but means I simply can't make use of them. O2 reduced bills but not by much. So I settled the contract for the devices (they simply divided the cost by 24 with no interest when took out contract, I had paid off just over a year on each) and then closed the accounts, they credited me for the airtime I had paid in advance from previous month and that was the end of it. 2 sim only contracts for a tenner each from Vodafone as they have great reception here.

Sorry to hijack, just wanted to explain it is possible, saved me a lot of money.

young234

Thanks for everyone's help,

Just to clear up I haven't had my hair cut in 6 months it's my husband who has his hair cut once a week for £10 a go :mad: I've tried telling him before how outrageous that is but yeh, he still does it.
We have paid £150 off 1 overdraft and reduced it to £650 and I did the snowball thing and it's really helped to see things clearer. We had a talk and agreed next month to put all spare money to clearing debt (and the rest of the year!) so no entertainment budget other than £100 between us.
I'm hoping we can do this

Debtslayer

young234 wrote: »

Thanks for everyone's help,

Just to clear up I haven't had my hair cut in 6 months it's my husband who has his hair cut once a week for £10 a go :mad: I've tried telling him before how outrageous that is but yeh, he still does it.
We have paid £150 off 1 overdraft and reduced it to £650 and I did the snowball thing and it's really helped to see things clearer. We had a talk and agreed next month to put all spare money to clearing debt (and the rest of the year!) so no entertainment budget other than £100 between us.
I'm hoping we can do this

Once a week!! He must have the fastest growing hair ever :rotfl:


Well done on making a start though in reducing your debts.
Its not easy becoming debt free; but if you make the cutbacks now it will so be worth it when you make that final debt payment
Good luck