Getting Debt-Free despite Struggling with MH problems

wordswords

I have quite a lot of debt:

£7000 ''normal' debt' - paying this off at £335 / month
£6000 'debt to a family member' (no interest on this one, and can perhaps vary the payments a bit' - paying this off at £50 / month
£127000 'mortgage debt' - paying this off at £600 / month - not really significant to me at the moment, my mortgage is coming up for renewal though so I have to work on my credit rating.

The good thing is my income is quite high at the moment - I work as a software engineer and I have a lodger. However I struggle with mental health problems so I am prone to overspending sometimes. The debt I am currently paying off was accumulated over a year when I just bought loads of stuff I didn't need because I was depressed. I also have a partner who I support, although she is very money conscious and actually saves me money in the long run by cooking and preparing packed lunches for work.

Income:

~£3000 / month

Loans:

£85 / month - ends in March - a loan I took out for the bathroom refurb we urgently needed when I bought the house
£145 / month - ends in 3 years - my main loan that I'm paying off
£100 / month - ends in 12 months - a loan I took out to pay off my overdraft, it is a high interest loan so I want to be paying this off soon. I had £1000 in overdraft money and this loan will actually save me money in the long run so long as I don't go back into my overdraft, because I will avoid paying ridiculous Santander overdraft fees.
£50 / month - sending money back to my mum because she helped me with my house deposit.

wordswords

Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 2900
Partners monthly income after tax....... 200
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3100

Monthly Expense Details
Mortgage................................ 600
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 80
Electricity............................. 40
Gas..................................... 40
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 0
Mobile phone............................ 30
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 43
Groceries etc. ......................... 700
Clothing................................ 50
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 150
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 12
Pet insurance/vet bills................. 0
Buildings insurance..................... 50
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 150
Haircuts................................ 15
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 30
Total monthly expenses.................. 2092


Assets
Cash.................................... 0
House value (Gross)..................... 150000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 150000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 127000...(600)......3
Total secured & HP debts...... 127000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Main loan......................5000......145.......6 I think
Bathroom loan..................500.......100.......10
Overdraft loan.................1000......100.......30
Total unsecured debts..........6500......345.......-


Monthly Budget Summary
Total monthly income.................... 3,100
Expenses (including HP & secured debts). 2,092
Available for debt repayments........... 1,008
Monthly UNsecured debt repayments....... 345
Amount left after debt repayments....... 663

Personal Balance Sheet Summary
Total assets (things you own)........... 150,000
Total HP & Secured debt................. -127,000
Total Unsecured debt.................... -6,500
Net Assets.............................. 16,500

wordswords

So in theory.. we should have quite a bit of surplus cash to address our debt problems.

I tend to spend quite a bit a month on things for myself, I tell myself it is to stop me becoming too depressed and to reward myself for working a job I hate. I guess this is a familiar story to some. I spend from 150-250 on myself each month (!). I am really into music, and this goes into building up my studio with music equipment. Sometimes this feels too much but other times it doesn't feel enough.. basically it boils down to how much of a bad month I'm having and what I feel like I need to do to compensate.

The rest of the money seems to go on things that just come up. Rail trips to see my parents or friends, things that need to be bought for the house, we are having some redecorating and painting done at the moment, some of which we are doing ourselves, so that adds up.

RISKS

These are the things that worry me:

1) I get fired from my job, made redundant or it becomes totally untenable and I quit. This could happen. I am in a bit of a precarious position at the moment but my employer is a secure public sector organisation and so far this hasn't been an issue but I'm always worried about it. I am in IT so hopefully the future is fairly secure for finding another role.

2) My lodger leaves. He is contributing 370 to the income. I would have to get someone to replace him. He has mentioned that he is not really happy living in the area but has no plans to leave anytime soon. This means I have to do up the house a bit as it's in quite a state of disrepair. If he leaves I would have to find another lodger and I want that to happen sooner rather than later so I'm trying to make the place attractive.

wordswords

So some good news..

1) My mum unexpectedly came into some money, and she gave me £1000 towards clearing my debts.

I have used the £1000 thusly so far:

£30 - paying off remaining phone device plan
£100 - paying off Santander overdraft completely
£266 - paying off enough of my First Direct overdraft to get me into the £250 'interest free' overdraft, so I won't be charged £5/month and can use that extra overdraft money in an emergency if I have to.

That leaves me about £600, of which I am planning to put £500 to totally pay off my bathroom refurb loan which will save me £85 a month.

2) I also was given a job offer this month for something which I would technically rather do than my existing job, but on quite a bit lower pay. I think some kudos is due that I said 'no' to that job offer, even though I don't like my current job and think it would be better, mainly because I want to pay my debts off more quickly. It took quite a bit of resolve and I'm proud of myself for making that decision.

3) We have also done some painting around the house and it looks much better. We still have to sort out the living room, study and the lodger's room, but overall it looks a much more pleasant place to live, and if my lodger did choose to move out then it is more likely we would find someone to replace him.

wordswords

I have been monitoring my credit rating with Equifax, Experian and Noodle. I now have a 'good' credit rating on Experian, although that service doesn't include peer to peer lending companies such as ratesetter which I currently have two of my loans with. With noodle I have a generally average credit score, and I have an average credit score with Equifax.

Goal: By the time I renew my mortgage in August next year, get my credit rating to 'good' so I am eligable for the best remortgage deals.

Bobarella

Loads of good news there Wordsworth.

wordswords

Thanks Boberella.

Updates:

I'm trying to get as much as possible in scheduled payments that go out of my account within a week of being paid.

Current total income: 2939
Current total scheduled monthly outgoings: 1793

That includes:

Dinner and packed lunch money for us both for a month: 208
Mortgage with 5% overpayment - 600
Personal Loan payment - 145 (about 3 years left)
Overdraft Loan payment (10 months left) - 100
Syth Loan payment (I bought a music instrument off a friend, 4 months left) - 60

With the 1145 that is left over from my scheduled payments I have three main funds:

200 - Taxi money fund - that is £10 per working day to get to work
200 - House money fund - general expenses and new household items that are not covered by the weekly shop
200 - Personal money - money to spend myself on myself.
60 - Emergency fund money saving account

That leaves 485 left for any unexpected suprises.

Since my last update:

* I have joined the gym at the end of my road which is 4 minutes walk away. This works out at 19.99 a month for unlimited gym, which I think is quite good. This has helped my stress levels at work and has given me a lot more mental stability. I can go from 9pm-10pm each night, which is great because it's mostly empty then.

* I have started selling off items that I don't need. For example I have a work phone so I'm selling off my personal phone. With my music stuff also the idea is to sell old equipment that I don't use before buying new equipment. Synthesizers don't deprecate too much so this is a good way of upgrading and trying out new gear without spending too much.

* I have been walking to the tram stop more in the mornings, which means I don't need to get a taxi to work in the mornings, which saves £10 each time. The number of times I do this will increase as the weather gets better and I get fitter and have more energy from going to the gym.

* I have been drinking less. Before, I wasn't a heavy drinker anyway - I wasn't drinking more than the NHS's recommended weekly limit at all. But now we just have one drink on Friday and / or Saturday night while at home. We try and keep it to one, although over the festive period this went up by quite a lot. However I'm aiming now for just one per night maximum - this is sociable and relaxing but doesn't make me start worrying / getting anxious and have a hangover next morning.

Goals

Overpay on the musical equipment loan to get that out of the way. Then I can direct that £60 a month to paying off the overdraft loan before the end of the year.

Bobarella

You are doing extremely well. Great update.

wordswords

Updates:

* I am part-way through a remortgage process, which should fix my mortgage for 5 years, and save me £80 / month over my current 2-year fixed deal. So this is good. Out of that, I am reducing the rent of my lodger (and freind) by £25 / month, as he has financial problems too. I also am choosing to opt in for some life assurance/critical illness cover, which will probably cost £50/month (I didn't have this before). So I annoyingly I don't actually save much, but at least my mortgage will be fixed for 5 years, considering brexit.

* I have transferred my web hosting for my blog to a much cheaper provider. It works out as 17.50 cheaper a month, so that's a 'win'.

* I took out another credit agreement, a small one, but this will go towards a pair of festival tickets and transport for said festival, that we are going to in July. That means I will be paying an additional £60/month until July, which is quite bad but I think it will be worth it.

Current Credit Agreement Repayment Projections (unless I pay off early)

So, current credit agreements/arrangements:

£60 / month - Until July - Festival Tickets
£60 / month - Until July - Synthesizer loan from a friend
£145 / month - Until Jan 2020 - Long term loan
£85 / month - Until March (!) - Bathroom loan
£100 / month - Until November - Paying off my overdraft loan
£50 / month - Until.. a long time.. - Repay parents for lending me money for a housing deposit

= £500 / month going out to debt repayments (!)

until..

April 2017 when it will be £415 / month

until..

August 2017 when it will be £295 / month

until..

December 2017 when it will be £195 / month

--

Must try to not take on any more credit agreements!!

Bobarella

Again some good things there. Kind of you to reduce your friend's rent too.

wordswords

Thanks Bobarella.

So.. some good news and bad news.

The bad news (at least financially) is that after 2 years, the girlfriend and I have decided we don't want a lodger anymore, and want the place to ourselves. So we've give him 6 months notice. That means there is £370 a month from my income that needs to be replaced.

The good news is that my mum has said that we don't have to pay off any more money to her - my debt to her will be taken out of my future inheritence. Which is very good as it frees up a bit of income now, £50 to be exact.

The other good news is that I've finally paid off the bathroom monies, so as for next month I will have £85 / month not going out.

So in total I will have £135 more a month and £370 less if the lodger leaves this month (which he won't). As shown above, if he leaves after July, then I will have £120 more a month, so that makes £255 more a month. So that is just a £125 shortfall. When I get the new mortgage in June my outgoings will reduce from £600 / month to £508 / month.. so in total it will only be £32 less a month difference!

I think we can make that work The girlfriend has said she wants to find some part-time work by July when she's fully moved over to England, so when that happens income will go up a bit too.

So yeah, good news mostly. If we really need to financially, we can always get a new lodger too, so we will still have that option if we need it.