Absolutely dire situation

chaplin80

Finally plucked up the guts to post here.

We are both 35 with one child but out debt situation is awful. We had our LBM a few months ago and we have managed to clear some. We owe well over 50K which is horrendous. We are willing to do everything that we can to get out this hole but I just don't know if this is doable. SOA posted below and any comments more than welcome!!!


Monthly Income (after tax) £2,740.00
Partner's Monthly Income £1,050.00
Benefits £82.00
Other Income (e.g. maintenance payments) £-
Other £500.00
Other £-
Other £-

Total £4,372.00

Enter your monthly expenditure
Amount (£)
Mortgage payment £497.00
Secured/HP loans £-
Rent £-
Management Charge (e.g. on leasehold property) £-
Council Tax £103.00
Electricity £80.00
Gas £50.00
Oil £-
Water Rates £34.00
Telephone (land line) £15.00
Mobile Phone £60.00
TV Licence £14.00
Satellite/Cable TV £30.00
Internet Services £10.00
Groceries etc. £200.00
Clothing £50.00
Petrol/Diesel £160.00
Road Tax (car) £5.00
Car Insurance (including breakdown cover) £70.00
Car Maintenance (including MOT) £30.00
Car Parking £-
Other Travel £-
Childcare/Nursery £120.00
Other child related expenses £-
Medical (prescriptions, dentists, opticians etc.) £-
Pet Insurance/Vet bills £-
Building Insurance £25.00
Contents Insurance £10.00
Life Assurance £35.00
Other Insurance £-
Presents (birthday, christmas etc.) £50.00
Haircuts £15.00
Entertainment £50.00
Holiday £100.00
Household Emergency Fund (e.g. for repairs) £-

Total £1,813.00

Enter SECURED debts and Hire Purchase (HP) debts

Enter ALL your mortgage, secured and HP debt details here.

Debt description Debt (£) Monthly payment (£) Annual Rate (%)

Mortgage £80,000.00 £497.00 2%


Total £80,000.00 £497.00

Enter your UNSECURED Debts e.g. credit cards, Loans etc.

Debt description Debt (£) Min Pay (£) Annual Rate (%)

Credit card 1 £12,000.00 £240.00 10%
Credit card 2 £6,000.00 £130.00 7%
Loan £2,400.00 £179.00 4%
haliax £3,500.00 £40.00 0%
Catalogue £500.00 £40.00 0%
wife barclaycard £5,800.00 £140.00 0%
wife mbna £3,000.00 £50.00 0%
wife car finance £6,500.00 £135.00 0%
creation 1 £4,500.00 £45.00 0%
creation 2 £4,500.00 £110.00 19%
creation 3 £2,500.00 £55.00 18%
flybe £4,650.00 £50.00 0%

Total £55,850.00 £1,214.00

Enter the value of your assets

Value (£)
Asset
Cash £6,000.00
House value (gross) £145,000.00
Shares & bonds £-
Car(s) £9,000.00
Other assets (e.g. endowments, jewellery) £-


Total £160,000.00


Warning Messages Summary of Monthly Income, expense and surplus

Total monthly income: £4,372.00

Expenses (incl. HP & secured debts): £2,310.00

Available for debt repayments: £2,062.00

Unsecured debt repayments: £1,214.00

Surplus (shortfall if negative) £848.00

Personal Balance Sheet Summary

Assets £160,000.00

Secured & HP Debt £80,000.00

Unsecured Debt £55,850.00

Net Assets £24,150.00

redpete

I reckon the mortgage is double counted in the SOA so it should show that you have £1345 available to pay off debts (on top of the minimum payments) - I guess you don't?

You need to find out where all that missing money is going. All the listed spending seems reasonable (apart from maybe £60 on a couple of mobile phones which is more than it needs to be).

With around £100 a month to throw at the debts then use snowballing to pay off the debts with the highest APR and move down the list as they are cleared.

greensalad

Your outgoings look fairly reasonable. There are places you could trim, but nothing alarming (except for holiday which is far too much).

You have £2,062 available for debt repayments per month, so why isn't repayment happening? What's happening to this money. You need a firm budget to stick to.

Snowballing these amounts shows you can pay your debt off in 29 months if you stick to repaying £2,062 a month. Not bad at all.

I would focus on quick-wins with the smaller catalogue debts and credit cards first, just to get a few clearances under your belt. Then I would focus on reducing payments based on highest interest rate first.

pmlindyloo

I am sure that you have realised having done your SOA that this is completely doable.

However, since you have posted on here something is not working.

Usually this is because your SOA is incorrect!

So, you need to keep a spending diary to see exactly what you are spending each month. It is amazing what little extras add up to. Suspect the food bill is just an estimate (smiley face)

If you are willing to go all out on your debt you are going to have to get your spending under control - so no clothes for a while, no holiday, no presents. Up to you. Otherwise keep the spending diary and see what you can cut down on without it being too painful.#

Hope your OH is on board with this!

Ebe_Scrooge

If you really want to hammer the debt as soon as possible, these are things that look "cuttable" to me :


Mobile Phone £60.00 This looks very high, switch to a cheaper contract, or SIM-only.
Satellite/Cable TV £30.00 You don't need this, Freeview is fine.
Clothing £50.00 This can be trimmed right down.
Presents (birthday, christmas etc.) £50.00 Ditto for this
Haircuts £15.00 Can this be reduced ?
Entertainment £50.00 This can be cut back a lot
Holiday £100.00 Go without a holiday for a year.


Some of these cuts may be unpalatable, but how badly do you want to get rid of the debt ?

[Deleted User]

entertainment and holidays will have to go if you're serious; that's 150 per month saving straight away

TBagpuss

As others have said, on the figures you've posted, you have over £2,000 you can use to reduce your debtm so it should be possible to clear it in a reasonable time.

On the outgoings, you could cut back on the holiday and entertainments spending - those are not necessities, stay home, or visit family , for a year or two.

Start with the debts with the highest interest rates. If your SOA is correct you have £1,345 each month available for debt repayment, so you could clear your most expensive card, the Creation 2 one, in 4 months, Then do the same with the next most expensive, and so on.

Before you start, do as RedPete says and do a spending diary. Write down evey penny you each spend every day for a month. That way, you can see what you are each actually spending and work out whether your SOA is accurate and if not, wehre you can make cuts.

Good Luck

mildredalien

As others have said, this SOA looks reasonable and you have plenty left over for making debt repayments which puts you in a great position. However, if you've racked up £50k+ debt on this income then something has gone wrong somewhere!

Is this an 'intended' SOA or does this reflect your actual spending over the last few months? I'd trawl through all bank and credit card statements for a few months and work up an SOA based on actual spending in each category, then you can see clearly what needs to be cut back on or controlled. Really you need to figure out where that £1800 that seems to be left over each month has been going!

For example, areas that you might want to look at are:
- grocery budget (do you really spend £200 and does this include any other household goods?)
- what does your £50 on entertainment include?
- you have a child and childcare costs but nothing for other costs associated e.g. toys, outings
- what is the extra £500 a month income? Is that a fixed income or based on commission etc. that could change or stop?

A lot of people will suggest cutting back on everything not essential while you are repaying debt and that is definitely the best way to go to clear ASAP - £100 every month on holidays when you already have a nearly £5k debt with flybe seems excessive to be honest! However, you have a decent potential surplus if you can get to grips with your spending, stick to a budget and stop racking up more debt. You can clear this and not feel absolutely deprived if you are clever about what you spend on and what you cut back on.

glentoran99

£200 a month shopping? That seems very low to me, two adults and child for £50 a week?


What about Child Benefit have you included that in your income?

chaplin80

Thanks for posting. The truth is that our spending has been totally disorganised and out of control. The surplus that we should have has been spent on holidays, weekends away, meals out and general nonsense. This is now changing but I have to be honest about why I am in this mess. I can make no excuses.

chaplin80

[QUOTE=

Hope your OH is on board with this![/QUOTE]

She is on board although I have agreed to organise the repayment plan. We are both committed to clearing the debts.