My LBM (finally

MLAB

After almost 10 years of thinking I can 'manage' the family finances (wife and 2 children), I've realised that I've had blinkers on for far too long and so hoping this is the start of a new chapter to being debt free...


I've taken the plunge and done a SOA:


Statement of Affairs and Personal Balance Sheet[/b]


Monthly Income Details
Monthly income after tax................ 2465
Partners monthly income after tax....... 710
Benefits................................ 476
Other income............................ 0
Total monthly income.................... 3651
Monthly Expense Details
Mortgage................................ 773.9
Secured/HP loan repayments.............. 38
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 128
Electricity............................. 30
Gas..................................... 35
Oil..................................... 0
Water rates............................. 47
Telephone (land line)................... 10
Mobile phone............................ 50
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 350
Clothing................................ 50
Petrol/diesel........................... 100
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 40
Other travel............................ 0
Childcare/nursery....................... 150
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 5
Contents insurance...................... 15
Life assurance ......................... 37
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 20
Entertainment........................... 160
Holiday................................. 100
Emergency fund.......................... 0
Sky / BT (incl phone / internet)........ 95
Lloyds curr acc charge.................. 25
Specsavers.............................. 22
Gym..................................... 25
Total monthly expenses.................. 2358.9

Assets
Cash.................................... 1500
House value (Gross)..................... 175000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 176500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 132000...(773.9)....5.75
Hire Purchase (HP) debt ...... 1100.....(38).......0
Total secured & HP debts...... 133100....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Manc CU loan 1.................12000.....375.......0
Manc CU loan 2.................12000.....375.......0
Lloyds cc......................8630......100.......0
Lloyds overdraft...............3000......28........0
Tesco cc ......................9800......102.......0
Barclaycard cc 2...............4041......91........0
Barclaycard cc 1...............7145......133.......0
Total unsecured debts..........56616.....1204......-

Monthly Budget Summary
Total monthly income.................... 3,651
Expenses (including HP & secured debts). 2,358.9
Available for debt repayments........... 1,292.1
Monthly UNsecured debt repayments....... 1,204
Amount left after debt repayments....... 88.1
Personal Balance Sheet Summary
Total assets (things you own)........... 176,500
Total HP & Secured debt................. -133,100
Total Unsecured debt.................... -56,616
Net Assets.............................. -13,216



We have a lease car through work, so insurance and servicing, etc all included. this works out at around £350 per month, which is expensive, but we are in year 1 of a 3 year lease.


All credit card amounts are on 0% deals at the moment. The mortgage is with Northern Rock on the SV rate of 5.75% - would love to remortgage but passing any affordability checks I'm guessing would be a struggle and so haven't tried as realise what mortgage rejections can do to the credit rating.


Things I know I need to action:


- My mobile phone bill is £38pm and should be able to cut this at least £12pm


- Sky bill has been creeping up and so need to sort this


- I pay £65 pm for both gas and electricity with Scottish Power. No idea what my usage is and sure my account is in credit. So will look to compare and change provider if worthwhile


- Gym membership - not in a contract so could cancel without charges




Other things I know I need to sort:


- Overdraft charges are running at £28 pm plus £25 Lloyds premier acc charge on top.




I'm hoping that a work promotion will increase my income by £300 pm from October 2016, so hoping for some more breathing space come the end of the year.


Any advice would be greatly appreciated.


Thanks
Mike

Tixy

Hi

Good news that you are showing a small surplus. Does that feel right to you? Have the debts been going down over the last year? or up?
Are you still spending on any of the cards? How recent are the loans?

Great that a lot of the debt is on 0% at the moment, but obviously not so great how high the total balance compared to your income. But being on 0% means that its a great time to really work on hammering down the balances.

You've identified some good starting points. Hopefully there is £100 to save across those items.
I'd try to look to shave say another £100/month from some of the discretionary spending categories (entertainment/holidays/ presents / clothes etc).

If you could get that surplus to £300 per month to put to your debts on top of minimum payments, and then further increase that if you get the promotion then you could start to make some inroads.

And as your debts decrease then you should increase your chance of getting a better mortgage deal.

Pixie5740

You don't have to make a mortgage application to see if you could re-mortgage. Contact an independent mortgage broker and see if there's a better mortgage than your current one out there for you. Mortgage brokers have a good idea of which lenders you're likely to be successful with before making an application.

Pixie5740

I got rid of Sky about 2 years ago and replaced it with Netflix which works out a lot cheaper. I also use Quidco to get cashback when switching suppliers. Every little helps.

What do you get for your £25 account fee? Does it provide value for money?

MoneyMission2015

Your entertainment is a bit high. What does this pay for?


Also groceries could probably be cut down a bit if you meal plan, batch cook, use Lidl/Aldi and switch from brand names to supermarkets own line. I have recently started buying Asda's own baked beans, rather than Branston or Heinz and my OH and daughters haven't even realised even though in the past my OH and eldest daughter have been adamant they would be able to notice if it wasn't Branston beans

heartbreak_star

You need to start an emergency fund to be able to avoid spending on credit in said emergencies.

Could you forgo a holiday for a year to build up £1200?

HBS x

MLAB

Hi both, thank you for your advice - I would say that in a typical month, a small surplus is about right.


A large chunk of the debts are being paid off via the loans, so we have £24k left over next 18 months. Rest of debt on credit cards is slower as just paying the minimum payments, albeit on 0% deals.
Hoping that once the loans a paid off, that I will be able to use this money to wipe the credit cards off much quicker.



The account fee includes gives zero interest on first £500 of o'draft and includes holiday insurance, but otherwise nothing of any benefit to us.


Just called my 02 and got my mobile phone bill halved - so first small step done.


Thanks.

MLAB

The entertainment is what it stands at current spending levels. . . roughly works out at £20 each per week for me and my other half. some months it's more like £100 in total, but again don't really have a grip on this yet. I also need to get my other half to take this seriously as all finances are seen to be my department! so need her buy-in to make this work - any practical suggestions would be gratefully received!


Emergency fund is something that I'm going to set up a standing order into my ISA - as tried doing this in the past, but always ended up dipping into it for 'non-emergencies'


Thanks

MLAB

also food bills have started to come down in the last few months, as been going to Aldi rather than Tesco and noticing a big saving there already

Tixy

With the loans - is the current balance £12k each? and the repayments £375 a month each? If so thats going to be longer than 18months to clear them?

In terms of getting your partner on board - you might want to use a snowball calculator (same site as the SoA), to work out how long it will take to repay the full £56k of unsecured debt based on this SoA, and then talk them both through with her.

Hopefully she'll agree she doesn't want to be paying off the debts for the next 5years or so and will get on board with making what cut backs you can.

For the snowball to work accurately you need to put in the interest rates for the loans, and then for the cards enter when the 0% ends and what the standard rate is.

andyfromotley

MLAB wrote: »

After almost 10 years of thinking I can 'manage' the family finances (wife and 2 children), I've realised that I've had blinkers on for far too long and so hoping this is the start of a new chapter to being debt free...


I've taken the plunge and done a SOA:


Statement of Affairs and Personal Balance Sheet[/b]


Monthly Income Details
Monthly income after tax................ 2465
Partners monthly income after tax....... 710
Benefits................................ 476
Other income............................ 0
Total monthly income.................... 3651
Monthly Expense Details
Mortgage................................ 773.9 Wow, i agree that you could really do with getting this down. Try a mortgage broker. There may be something available for you. Obviously a killer 5 yr fix could save you hundreds every month.
Secured/HP loan repayments.............. 38
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 128
Electricity............................. 30 These arent bad but i note yr comments and if you havent changed in the last couple of years you will be able to save at least £10.
Gas..................................... 35
Oil..................................... 0
Water rates............................. 47
Telephone (land line)................... 10
Mobile phone............................ 50I see that you have cut these. Good work!
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 350 I dont think this is bad but there are some super savers on here who can feed the 5000 on £3.50. Make sure you are using Aldi/Lidl
Clothing................................ 50
Petrol/diesel........................... 100 Cut down on car usage and save yourself £10 oer month. Youll be amazed at how many unnesecary journeys most people do.
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 40
Other travel............................ 0
Childcare/nursery....................... 150 Are you using childcare vouchers from work?
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 5
Contents insurance...................... 15
Life assurance ......................... 37
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 20
Entertainment........................... 160 Quite a lot if you are looking to pay down your debt quickly.
Holiday................................. 100
Emergency fund.......................... 0 I see that you have £1500 in cash under assets. If that is savings for an emergency then thats fine. If not getting this to £1000 should be your no1 priority
Sky / BT (incl phone / internet)........ 95 Ouch. I would get rid of this. netfkix £5,99 and phone and internet £15.
Lloyds curr acc charge.................. 25 Do you use the overdraft that this pays for? Its really expensive equivalent to 5% per month. Get ris of this account as soon as you have cleared the od.
Specsavers.............................. 22
Gym..................................... 25 bye gym,
Total monthly expenses.................. 2358.9

Assets
Cash.................................... 1500
House value (Gross)..................... 175000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 176500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 132000...(773.9)....5.75
Hire Purchase (HP) debt ...... 1100.....(38).......0
Total secured & HP debts...... 133100....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Manc CU loan 1.................12000.....375.......0
Manc CU loan 2.................12000.....375.......0
Lloyds cc......................8630......100.......0
Lloyds overdraft...............3000......28........0
Tesco cc ......................9800......102.......0
Barclaycard cc 2...............4041......91........0
Barclaycard cc 1...............7145......133.......0
Total unsecured debts..........56616.....1204......-

Monthly Budget Summary
Total monthly income.................... 3,651
Expenses (including HP & secured debts). 2,358.9
Available for debt repayments........... 1,292.1
Monthly UNsecured debt repayments....... 1,204
Amount left after debt repayments....... 88.1
Personal Balance Sheet Summary
Total assets (things you own)........... 176,500
Total HP & Secured debt................. -133,100
Total Unsecured debt.................... -56,616
Net Assets.............................. -13,216



We have a lease car through work, so insurance and servicing, etc all included. this works out at around £350 per month, which is expensive, but we are in year 1 of a 3 year lease.


All credit card amounts are on 0% deals at the moment. The mortgage is with Northern Rock on the SV rate of 5.75% - would love to remortgage but passing any affordability checks I'm guessing would be a struggle and so haven't tried as realise what mortgage rejections can do to the credit rating.


Things I know I need to action:


- My mobile phone bill is £38pm and should be able to cut this at least £12pm


- Sky bill has been creeping up and so need to sort this


- I pay £65 pm for both gas and electricity with Scottish Power. No idea what my usage is and sure my account is in credit. So will look to compare and change provider if worthwhile


- Gym membership - not in a contract so could cancel without charges




Other things I know I need to sort:


- Overdraft charges are running at £28 pm plus £25 Lloyds premier acc charge on top.




I'm hoping that a work promotion will increase my income by £300 pm from October 2016, so hoping for some more breathing space come the end of the year.


Any advice would be greatly appreciated.


Thanks
Mike

Hi mike,

i have annotated your soa with some ideas that could save you about £175 per month. Much more with the mortgage. Even if you do nothing and stick to your budget then you will be ok as your loans get paid off and you can throw that money at the debt. HOWEVER that depends upon NOTHING going wrong. Not falling ill, losing your job, company going bust etc. You are living on a knifeedge in that regard. Igf that happened your situation will go bad very very quickly so you are right to be getting a grip and tackling this head on now.

However, my real question would be how did you build up this debt? If it was just death by a thousand cuts of overspending year in year out then you have a big struggle ahead of you. The challenge will be to base a budget around your SOA and stick to it come hell or high water. If you allocate £x for food say, then you must not spend one penny more than £x come hell or high water!!! And if you do you must sit and decide what other area of planned spending it is going to come from. This is the real discipline of living to a budget and paying down debt.

Good luck