Dan's desperate dash towards solvency

worriedDan

In September our income will increase a fair bit due to my wife returning to full time work, plus my annual increment. I am also continuing to do my additional work at evenings/weekends. My parents are paying me back £130 per month based on some money that I loaned them some years ago.
I have decided to do an updated SOA for September onwards. I have tried to be realistic with out living costs and also the amounts that we need to put aside for emergencies/Christmas etc.

I have decided not to include a figure for entertainment, holidays or unsecured debt payments as I want to see how much is left after essential spending. More comments after SOA !!!8211; see below

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 3690 this is my main income, plus the additional work that I do
Partners monthly income after tax....... 1222
Benefits................................ 82.8
Other income............................ 130 This is the money that my parents pay me back from an old loan
Total monthly income.................... 5124.8

Monthly Expense Details
Mortgage................................ 507
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 105
Electricity............................. 40
Gas..................................... 69
Oil..................................... 0
Water rates............................. 33
Telephone (land line)................... 15
Mobile phone............................ 40
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 12
Groceries etc. ......................... 250 This seems to be what we spend on a normal month, including all clearning products and toiletries, plus a few beers and a bottle or two of wine
Clothing................................ 50 !!!8211; never sure what to put here
Petrol/diesel........................... 160 !!!8211; This is what we spend during term time. It drops significantly in school hols to around £80 but decided to use the higher figure
Road tax................................ 5
Car Insurance........................... 92 !!!8211; this is for 2 cars, plus breakdown insurance. I have 6 points so can!!!8217;t get my any lower just yet!!
Car maintenance (including MOT)......... 50 !!!8211; based on 2 MOT!!!8217;s, 2 services and wear and tear repairs, tyres etc
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 75 before/after school provision
Other child related expenses............ 61 swimming lessons, beavers, martial arts.
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 25 !!!8211; pay £25 for building and contents
Contents insurance...................... 0
Life assurance ......................... 35
Other insurance......................... 5
Presents (birthday, christmas etc)...... 100 - this is too much, however I have don!!!8217;t want any Christmas debt, so keeping this at a higher amount until the new year
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 50 !!!8211; our boiler isn!!!8217;t great and I think that we may need some new radiator at some point soon.
HMRC payment............................ 122 !!!8211; this ends just after Christmas !!!128522; !!!128522;
Total monthly expenses.................. 1923


Assets
Cash.................................... 15000 !!!8211; wifes money from family !!!8211; please see my earlier posts for more info !!!8211; we can!!!8217;t touch this just yet.
House value (Gross)..................... 200000 !!!8211; based on other houses in the area
Shares and bonds........................ 0
Car(s).................................. 8000
Other assets............................ 0
Total Assets............................ 223000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 68000....(507)......1.8
Total secured & HP debts...... 68000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR not lisitng debts at this stage as I wan't to find out how much is left after essential living costs. Total unsecured stands at around £47K currently.
Total unsecured debts..........0.........0.........-


Monthly Budget Summary
Total monthly income.................... 5,124.8
Expenses (including HP & secured debts). 1,923
Available for debt repayments........... 3,201.8
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 3,201.8

Personal Balance Sheet Summary
Total assets (things you own)........... 223,000
Total HP & Secured debt................. -68,000
Total Unsecured debt.................... -0
Net Assets.............................. 155,000

So it appears that we will have £3201.80 left after we have covered our living costs and saved a little for emergencies/Christmas.

Our minimum debt payments are around £1250 so this reduces that figure to £1951

If we overpay our debts by £750 we will be paying 2K per month. This reduces the !!!8216;surplus!!!8217; to £1201

We certainly don!!!8217;t need £1201 per month for entertainment and holidays. I am thinking of allocating £300 per month for entertainment and £200 for holidays. This leaves £701

So do we save the £701 per month and additional emergency savings, or do we knock it off the debts??

Alternatively I could drop the additional work that I do, however I think that this would be irresponsible of me as it brings in £440 per month. I will be looking to drop this as soon as we are debt free though.

remote_control

Hi Dan,

Well done on all your hard work so far. Your SOA looks good, I was just wondering about benefits - is that child benefit? Has your income gone over £50k with your extra work? Just thinking you may end up with a bill to pay back if so!

worriedDan

Hi,

I have not received anything regarding Child benefit. Perhaps I sholud start saving it, just in case they ask for it back!

Gemsy81

Everyone gets child benefit regardless of income, it is child tax credits that are income dependent.

Personally, I would put the extra £700 odd towards paying off your debts. You have lots of wriggle room in your budget, and could you touch the £15k in an absolute emergency? If so, I would be concentrating on becoming debt free.

stepuptothepl8

Gemsy81 wrote: »

Everyone gets child benefit regardless of income, it is child tax credits that are income dependent.
.

Sorry, no. If you or your partner earns over £50K then you have to let hmrc know.

enthusiasticsaver

If you earn over £50k then you will have to pay tax on the child benefit which involves filling in a self assessment form. I think this has been ongoing for a few years now. I think it is when you get to £60k earnings that you end up having to pay it all back.

enthusiasticsaver

I would stick to paying £2k per month off the debts and save the remaining £700 for now as you have no emergency savings bar the £15k you say you cannot touch so this is no good as emergency fund. You also may have to fork out for a new boiler/radiator or repay child benefit money. If after a year it has built up and not been used then pay it off the debt.

The only caveat to this is if any of the £47k is on high interest rates it makes sense to get rid of this asap.

Suffolk_lass

enthusiasticsaver wrote: »

If you earn over £50k then you will have to pay tax on the child benefit which involves filling in a self assessment form. I think this has been ongoing for a few years now. I think it is when you get to £60k earnings that you end up having to pay it all back.

Yes, if you earn over £60k you will have to pay it back in full.

I saw your post saying they had not contacted you. That is because you need to tell them. The way it works is that even if you lose the benefit, you must stay registered so the lower earner (historically the mother) receives NI credits for the time the children are receiving it (up to 16th birthday or the end of further education) if the claimant is not working.

worriedDan

Hi everyone,

You may have noticed that I haven't posted for a while, I am afraid that all has not been rosy in the world of Dan. I have pondered over whether or not I should post this on here, but I have decided that I will. This forum really kept me going last year so I feel that it's best to be honest and take your comments.

About 5 weeks ago I found out that we had an addition 6K of debt that I wasn't aware of. WIthout going into loads of details, my wife has a CC that had a balance of 2K at the start of our DF journey. This was included in our debts. This was paid off last year.

I knew that my wife had used it for a few 'small' purchases online, but was under the impression that she had been paying these straight off. The early part of this year was chaotic for us with lots of stressful things going on at home/work. without my knowledge my wife was using this card. It started as the odd purchase but progressed. She used it for 2 hen do's that she attended, along with a few others semi expensive purchases, always with the intention of paying it off. I won't go into any more detail as I don't have her consent but it basically means 6K more to clear.

I am not angry or upset with my wife at all, In fact, I feel bad that she felt that she had to keep it from me. I was so stressed and anxious about money last year that was simply too scared to tell me that she was getting into a spiral with it, for fear that it would set me back into depression. I can also now see that the budget that we set up last year was largely led by me ,and was too restrictive and unrealistic.

We have sat and looked at what this means for our debt repayment, and whilst its not ideal it basically going to mean an additional 3 or 4 paydays before we eventually become totally debt free. The card is cut up so it can't happen again.

Sadly this does obviously affect our total amount paid off, however I am not dwelling on that. We know that we can pick ourselves up and get on with it. A year ago this would have broken me.

I expect that a lot of you will be shocked to hear this, particularly as it was me that initially struggled to speak to my wife regarding the debt. I would like to reiterate that I am not angry or upset with her.

karencks

Dan, I have just read the whole diary -what a journey you have been on and so many similarities to us.

I am sure you will sort out this hiccup