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Baby on the way, could do with some advice

Hi all, this is my first time posting on the forum but another sleepless night has made me think that I need to turn somewhere.

Our situatuon.

We are both in our mid twenties and have pretty good jobs, she works in the public sector and I'm a Business Development Manager. Her salary is around £32,500, my income can vary due to the nature of my job but my base salary is £30,000 with commission this becomes around £50,000 per year which gives us a household income of over £80k.

We bought our first house together with a small deposit (5%) this year, borrowing around somewhere in the £160k range on a purchase in the £170ks.

We were both moving from my parents house and had nothing to start with so have spent all the money we had managed to save on furnishing the house.

Rough monthly outgoings:
Mortgage £800
Council tax £165
Utilities £60
Water £35
Home insurance £20
Pet insurance £20
Life insurance £30
Phone and broadband £30
Sky £45
Car £165
Car tax £15
TV licence £12
Mobiles £80
Sofa £17

We have a joint current account into which we both pay £850 per month which covers these bills and we use the money left over to pay for food for us and the pets. We don't have any issues with this and stay within this budget monthly.

We both drive, I paid for both car insurance policies annually on interest free credit card to avoid extortionate monthly insurance interest. I also smoke which is a total waste of money.

Since moving into this house any savings we had have been spent, we got the house how we want it and have also bought everything for the child we are expecting at the beginning of March next year.

Based on incomings and outgoings it looks like we are fine but we aren't.

Before my partner and I knew she was pregnant - literally just before - I proposed. I overspent on the engagement ring, it cost circa £8k. In addition to this I have learnt how to drive, bought and insured a car. We've had weekends away and holidays etc and have built up a bit of credit card debt.

With our imminent drop in household income I'm scared that we've overdone it. That we've built up too much debt and won't be able to sustain things.

Currently I owe £4,800 (I've paid off £7,500 over the last few months) and my partner owes £500 which should be paid off pretty soon. The debt is heading in the right direction and my problems may seem trivial compared to others but if we can't manage now how are we going to once our household income drops substantially?

I really wanted to have a buffer, to have some money for us to fall back on but it looks like we are going to be going into this with debts. Has anyone got any suggestions? Is there anything I'm not doing that I should be or I am that I shouldn't?

Any help of suggestions would be greatly appreciated.
«134

Comments

  • Kitten868
    Kitten868 Posts: 1,785 Forumite
    Sixth Anniversary 1,000 Posts
    I went nuclear and only lived in the money I would have. Income above smp went on debts but your debt is tiny so this can go to savings very soon. It sounds fine.
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  • GwylimT
    GwylimT Posts: 6,530 Forumite
    1,000 Posts Combo Breaker
    Your debts are small and you have quite a while to pay them off so don't panic. You do however need to stop smoking well before baby arrives (assuming you smoke outside with external house door shut)as otherwise you will be giving little one smoke filled cuddles.
  • MrsSave
    MrsSave Posts: 1,817 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper
    Have a look at the sticky at the top of the debt free wannabe board for the link to complete a full soa, and post it here. People will be able to advisefar better then.

    Do you know what kind of maternity package your wife will be getting? They vary drastically. I've started my maternity leave this week and I'm getting 90% of my salary for 6 weeks, and then basic maternity pay for 33 weeks. Some will get basic for the whole 39 weeks, some get a lot more.

    As someone mentioned, try living now as if you were on the maternity wage. Save the rest which can act as a buffer. You say that you've bought everything you need, that's great so no added expense there now. But, I'd plan on how much you intend to spend each month after the baby arrives. Nappies and wipes add up, fingers crossed your partner can breastfeed (I can't and formula is currently around £9 a tub), baby groups are great, but they do add up. I'm not saying don't do them, what I'm saying is budget for them.

    Your wages are good and your debts are smallish. I think that as long as you budget (and stick to it) you'll be completely fine.

    One more thing to add, though. Please try to stop smoking. For financial and health reasons (especially when you're going to have a newborn around).
    Starting a new debt free journey
    Starting Debt: £5,250
    Current Debt: £4,995.50
    Amount Paid: £254.50 Percentage Paid: 4.84%
    Emergency Fund: £350
  • Presumably all your payments are up to date? Are the debts on 0%

    Have you looked at your wife's maternity leave provision? Is it state maternity pay or better? Her income will not suddenly drop off a cliff. My daughter got 90% pay I think for 3 months then half pay.

    The best thing you can both do now is make a plan to pay off the debt which you seem to be doing, start up a savings buffer again so you have some reserves and tighten your belts as far as you can. Your mobiles are expensive, sky is not an essential and see if you can better deals on insurances. At least you recognise you have overstretched and have good incomes to hopefully correct before your baby born but many go into pregnancy with some debt so as long as you can meet minimum payments on your reduced income and hopefully have on 0% interest it is not the end of the world. Stop the weekends away, holidays, the smoking and unbudgeted spending from this point forward and you will feel the benefits in your finances quite quickly.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

    Click on this link for a Statement of Accounts that can be posted on the DebtFree Wannabe board: https://lemonfool.co.uk/financecalculators/soa.php

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  • Statement of Affairs and Personal Balance Sheet

    Household Information

    Number of adults in household........... 2
    Number of children in household......... 0
    Number of cars owned.................... 2

    Monthly Income Details

    Monthly income after tax................ 2900
    Partners monthly income after tax....... 1850
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 4750


    Monthly Expense Details

    Mortgage................................ 780
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 18
    Council tax............................. 165
    Electricity............................. 30
    Gas..................................... 25
    Oil..................................... 0
    Water rates............................. 35
    Telephone (land line)................... 30
    Mobile phone............................ 80
    TV Licence.............................. 12.12
    Satellite/Cable TV...................... 42
    Internet Services....................... 0
    Groceries etc. ......................... 300
    Clothing................................ 0
    Petrol/diesel........................... 100
    Road tax................................ 15
    Car Insurance........................... 0
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 25
    Buildings insurance..................... 20
    Contents insurance...................... 0
    Life assurance ......................... 22
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0
    Haircuts................................ 0
    Entertainment........................... 0
    Holiday................................. 0
    Emergency fund.......................... 0
    Total monthly expenses.................. 1699.12



    Assets

    Cash.................................... 0
    House value (Gross)..................... 180000
    Shares and bonds........................ 0
    Car(s).................................. 13000
    Other assets............................ 10000
    Total Assets............................ 203000



    Secured & HP Debts

    Description....................Debt......Monthly...APR
    Mortgage...................... 161500...(780)......3.24
    Total secured & HP debts...... 161500....-.........-


    Unsecured Debts
    Description....................Debt......Monthly...APR
    credit card....................4800......48........0
    overdraft......................400.......0.........0
    Total unsecured debts..........5200......48........-



    Monthly Budget Summary

    Total monthly income.................... 4,750
    Expenses (including HP & secured debts). 1,699.12
    Available for debt repayments........... 3,050.88
    Monthly UNsecured debt repayments....... 48
    Amount left after debt repayments....... 3,002.88


    Personal Balance Sheet Summary
    Total assets (things you own)........... 203,000
    Total HP & Secured debt................. -161,500
    Total Unsecured debt.................... -5,200
    Net Assets.............................. 36,300
  • All debts are at 0%.

    We are both tied into mobile contracts so don't have a choice on what we pay.

    I've taken a look at maternity pay, it is;

    Ordinary maternity leave of up to 26 weeks which will be paid leave as follows:

    • first 4 weeks of absence: full pay inclusive of Statutory Maternity Pay (SMP);
    • next 2 weeks: 90 per cent of a week’s salary inclusive of SMP;
    • next 12 weeks: half pay plus £139.58 SMP (not exceeding full pay);
    • next 8 weeks: £139.58 SMP.

    Additional maternity leave of up to a further 26 weeks, 13 of which will be paid at the SMP rate of £139.58 per week, with the remaining 13 weeks unpaid.

    My partner is intending to take 12 months off.
  • Statement of Affairs and Personal Balance Sheet

    Household Information
    Number of adults in household........... 2
    Number of children in household......... 0
    Number of cars owned.................... 2

    Monthly Income Details
    Monthly income after tax................ 2900
    Partners monthly income after tax....... 1850
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 4750

    Monthly Expense Details
    Mortgage................................ 780
    Secured/HP loan repayments.............. 163
    Rent.................................... 0
    Management charge (leasehold property).. 18
    Council tax............................. 165
    Electricity............................. 30
    Gas..................................... 25
    Oil..................................... 0
    Water rates............................. 35
    Telephone (land line)................... 30
    Mobile phone............................ 80
    TV Licence.............................. 12.12
    Satellite/Cable TV...................... 42
    Internet Services....................... 0
    Groceries etc. ......................... 300
    Clothing................................ 0
    Petrol/diesel........................... 100
    Road tax................................ 15
    Car Insurance........................... 0
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 25
    Buildings insurance..................... 20
    Contents insurance...................... 0
    Life assurance ......................... 22
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0
    Haircuts................................ 0
    Entertainment........................... 0
    Holiday................................. 0
    Emergency fund.......................... 0
    Total monthly expenses.................. 1862.12


    Assets
    Cash.................................... 0
    House value (Gross)..................... 180000
    Shares and bonds........................ 0
    Car(s).................................. 13000
    Other assets............................ 10000
    Total Assets............................ 203000


    Secured & HP Debts
    Description....................Debt......Monthly.. .APR
    Mortgage...................... 161500...(780)......3.24
    Total secured & HP debts...... 161500....-.........-

    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    credit card....................4800......48........0
    overdraft......................400.......0........ .0
    Total unsecured debts..........5200......48........-


    Monthly Budget Summary
    Total monthly income.................... 4,750
    Expenses (including HP & secured debts). 1862.12
    Available for debt repayments........... 2877.88
    Monthly UNsecured debt repayments....... 48
    Amount left after debt repayments....... 2839.88

    Personal Balance Sheet Summary
    Total assets (things you own)........... 203,000
    Total HP & Secured debt................. -161,500
    Total Unsecured debt.................... -5,200
    Net Assets.............................. 36,300
  • You need to fill in the blank rows too like the car insurance (if you pay it yearly divide by 12 and set it aside so you can pay in full). What about entertainment (smoking needs to go in there unless you intend stopping immediately (highly recommend this)and haircuts, presents etc and most important of all an Emergency fund for cash savings. You have lots of disposable income and if the debts are on 0% you have some leeway on how fast you pay them off. This is definitely fixable.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

    Click on this link for a Statement of Accounts that can be posted on the DebtFree Wannabe board: https://lemonfool.co.uk/financecalculators/soa.php

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  • spadoosh
    spadoosh Posts: 8,732 Forumite
    Ninth Anniversary 1,000 Posts Name Dropper Photogenic
    Your wage is more than mine and partners pre baby. We now earn less than half your sole wage while oh is on maternity. And your OH has a considerably better maternity package. We expect to be a couple of thousand pound in debt by the end of the maternity bearing in mind that we are also getting married while she is on maternity which will take some of the debt.

    Our outgoings arent that dissimilar. Either youre neglecting some costs or you are unduly worrying. So do a comprehensive budget of everything you spend to the penny or understand youre probably worrying too much.


    EDit: congrats on the baby btw! Its ace!
  • I left some things out such as car insurance as they are paid for the year and including in the credit card balance. Car insurance for the two of us is circa £2200 for the year, this figure is included in my credit card balance. If this is included here then putting it into my monthly outgoings would be wrong wouldn't it? Wouldn't it duplicate the debt?

    I have underestimated some costs and after doing some analysis have changed figures to be more reflective of the actual amounts.

    i guess the concerns I have are around my income potentially dropping as well. If there were to be a recession or if my performance were to drop at work my income could also substantially decrease. I don't envisage the latter, in fact I would expect that it would increase over the coming years but the recession is something I have zero control over but would have a huge impact on my earning potential.

    The issue I have with the Statement of Affairs is that it doesn't really fit me. My income can change substantially, one month I may be paid my base salary of £2,500 gross, the next I could get £10,000. This makes it more difficult to budget. When we want to do something we just do it, there isn't any real saving for it. Probably explains why we've found ourselves in this situation.

    Congratulations to you too Spadoosh, maybe I am just one of life's pessimists and see potential threats everywhere. I guess we aren't in the worst position but when i look at the figures we have coming in I actually find it embarrassing that we are in any kind of debt.

    Statement of Affairs & Personal Balance Sheet

    Summary

    Monthly Budget Summary Amount(£)
    Total monthly income 4,750
    Monthly expenses (incl. HP & secured loans) 2,635.12
    Available for debt repayments 2,114.88
    UNsecured debt repayments 48
    Amount left after debt repayments 2,066.88
    Personal Balance Sheet Summary Amount(£)
    Total Assets (things you own) 205,000
    Total Secured & HP Debt -170,000
    Total Unsecured Debt -5,200
    Net Assets 29,800
    Household Information

    Number of adults in household 2
    Number of children in household 0
    Number of cars owned 2
    Income, Expense, Debt & Asset Details

    Income Amount(£)
    Monthly income after tax 2900
    Partners monthly income 1850
    Benefits 0
    Other income 0
    Total monthly income 4750
    Expenses Amount(£)
    Mortgage 780
    Secured/HP loan payments 163
    Rent 0
    Management charge (leasehold property) 18
    Council tax 165
    Electricity 30
    Gas 25
    Oil 0
    Water Rates 35
    Telephone (land line) 30
    Mobile phone 80
    TV Licence 12.12
    Satellite/Cable TV 42
    Internet services 0
    Groceries etc. 300
    Clothing 0
    Petrol/diesel 160
    Road tax 15
    Car Insurance 0
    Car maintenance (including MOT) 10
    Car Parking 0
    Other travel 0
    Childcare/nursery 0
    Other child related expenses 0
    Medical (prescriptions, dentists, opticians etc.) 0
    Pet Insurance/Vet bills 25
    Buildings Insurance 20
    Contents Insurance 0
    Life Assurance 22
    Other Insurance 0
    Presents (birthday, christmas etc.) 50
    Haircuts 20
    Entertainment 300
    Holiday 150
    Emergency Fund 0
    Total monthly expenses 2635.12
    Secured & HP Debt Description Debt(£) Monthly(£) APR(%)
    Mortgage 161500 (780) 3.24
    Hire Purchase (HP) Debt 8500 (163) 4
    Secured & HP Debt totals 170000 - -
    Unsecured Debt Description Debt(£) Monthly(£) APR(%)
    credit card 4800 48 0
    overdraft 400 0 0
    Unsecured Debt totals 5200 48 -
    Asset Description Value (£)
    Cash 2000
    House Value (Gross) 180000
    Shares and bonds 0
    Car(s) 13000
    Other assets (e.g. endowments, jewellery etc) 10000
    Total Assets 205000
    Comments on the results

    You have sufficient monthly income to meet your expenses and your minimum monthly debt repayments with £2066.88 left over. You can use this to pay off your debts more quickly or to build/top-up an emergency fund. Whatever your results show, it always pays to seek advice or comments from others. Why not post your SOA details on our Debt Management discussion board or on your preferred discussion forum elsewhere.
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