Baby on the way, could do with some advice

MrsSave

With regards to things like car insurance, how do you plan on paying once this 12 months are up? You do need to put away money for these annual bills each month so that the money is sitting there ready for when the bill comes in.

If your income could vary so much, I'd work with using the base figure for the soa. Any months where you have more, then you've got extra money for debts/savings.

Have you checked to see whether you would be able to pay all bills for the months where your partner isn't bringing in the basic maternity pay, or the last 3 months where she won't be bringing in anything? If you can't, then you need to make sure that you have enough in savings for any shortcomings.

DomRavioli

You still have nothing in medical. Do you never see a dentist? get a prescription? have an eye test? Because you need to put something aside for these costs.

spadoosh

Im a conservative optimist. Plan for the worst while hoping for the best.

If i was in your situation i would only count guaranteed earnings. Any commision or bonuses can not be guaranteed and as such shouldnt be included in my budgets.

Im sure youll find you can manage perfectly well on your base salary. I get the impression youve enjoyed yourselves pre baby (exactly as me and OH did, not a good way to put it but its only after you realise how easy you had it!) and your spending habits will change a bit in future. We where always able to do what we want when we want, things have changed not neccessarily us not gettying what we want but what we want has changed.

We had plans of a fairly expensive wedding, now for the most part it seems like a chore and we've cut costs on thigns that we decided wasnt neccessary.

Recessions you have very little control over. The best thing to mitigate anything like that is planning and budgeting. Work out what your base line is for living (ie the bills that HAVE to be paid with a bit of food etc). And work towards having a 3+ month buffer in savings (the longer the better and more mitigated you are). People seem to think there banks should read £0 at the end of the month and this is a very dangerous place to be. You hav eno flexibility and no outs.

My conservative approach goes on the basis of being able to live off a NMW job. Should i lose my current job i should be able to live off a NMW job without sacrificing too much. My house is affordable on a NMW job (even with interest rate rises to the highest levels in my lifetime).

As said plan for the worst and hope for the best. Personally dont think your in too bad of a situation though even if you arent including the £30 you spend on dentists a year. Ok you could easily optimise your money and streamline expenses but youre not in a bad position at all. Just be sensible!

Debt_is_terrifying

I have private medical and dental cover through my employer which is deducted from my pay monthly, I pay a small additional premium so this covers my partner. As I have only included my net pay after all deductions I didn't think it was worth mentioning.

About the car insurance, that is a very good point. We have always lived in a way where if we needed or wanted something we would just get it. Now we have a mortgage and outgoings I suppose we have to approach things differently

anna_1977

why don't you complete an SOA with your partner's maternity pay at worse case scenario ?

Debt_is_terrifying

Spadoosh, hope the wedding goes well. Sounds like you have your affairs in order to be able to do that even whilst scaling back with your partner on maternity leave!

Really appreciate the advice, your cautious optimism feels like it is rubbing off.

Anna, great idea. I have done another SOA which is based on my base salary and my partner earning SMP. I have added £150 per month for the cost of the baby and have added the amount of weekly child benefit x 4.2 to make the figures as realistic as possible.

What do you think?

Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget Summary Amount(£)
Total monthly income 2,642.8
Monthly expenses (incl. HP & secured loans) 2,232.12
Available for debt repayments 410.68
UNsecured debt repayments 48
Amount left after debt repayments 362.68
Personal Balance Sheet Summary Amount(£)
Total Assets (things you own) 203,000
Total Secured & HP Debt -169,500
Total Unsecured Debt -5,200
Net Assets 28,300
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 2000
Partners monthly income 560
Benefits 82.8
Other income 0
Total monthly income 2642.8
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 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 150
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.) 0
Haircuts 20
Entertainment 200
Holiday 0
Emergency Fund 0
Total monthly expenses 2232.12
Secured & HP Debt Description Debt(£) Monthly(£) APR(%)
Mortgage 161500 (780) 3.24
Hire Purchase (HP) Debt 8000 (163) 0
Secured & HP Debt totals 169500 - -
Unsecured Debt Description Debt(£) Monthly(£) APR(%)
credit card 4800 48 0
overdraft 400 0 0
Unsecured Debt totals 5200 48 -
Asset Description Value (£)
Cash 0
House Value (Gross) 180000
Shares and bonds 0
Car(s) 13000
Other assets (e.g. endowments, jewellery etc) 10000
Total Assets 203000
Comments on the results

You have sufficient monthly income to meet your expenses and your minimum monthly debt repayments with £362.68 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.

anna_1977

Is your Council tax spread over 12 months or the standard 10? Have you checked the government website for benefits.

i think you just need to focus of paying off as much of the debt as possible now so you know you don't owe anyone. Then if you can start putting away for the car insurance for next year that will help. Make sure you shop about for utilities when they are due too

I think you'll be fine - good luck

Debt_is_terrifying

it is currently spread over 9 months, it should be over 10 but when we moved in it took a while for it to be organised and we missed a payment, they added the additional amount to the 9 monthly payments.

I really want for us to be debt free for when the baby comes, if we are I think we will be ok.

I'd ideally like to reduce our monthly outgoings but I shopped around for insurances etc and just don't know where savings can be made.

enthusiasticsaver

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?

It will need paying again next year unless you are going to put it on a credit card again. Putting a monthly amount away means it is sat there waiting to pay for it outright without resorting to a credit card.

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.

None of us know exactly what is in the future so all you can do is hope for the best and prepare for the worst. In my book that means no debt and a savings buffer. I think you feel the same way or you would not be so worried. Deal with this now and your fears will decrease.

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.

Do it on the worst possible scenario then. Your basic pay and your partners proposed maternity pay. See if you can live off that now and throw the difference between that and what you actually get towards the debt and your new emergency savings account. I can see you have actually done that and come up with a £360 approx. surplus so as I said earlier this is fixable. It is just a matter of different priorities and learning to budget better. I am sure you will be fine.

On_my_way

Hi

It is good that you are both taking control of this. The best thing you can BOTH do is seriously cut down on your spending and both try to pay as much off your debts as you can then you should be absolutely fine. Having a reined in Christmas will also help you both.

Good Luck