Advice and Motivation needed for a newbie

Emma45622

Morning all,

My partner and I have been remaining in the most positive frame of mind we can while scaling back and tackling or debt. Today I'm having a slump day and feeling a bit lost as how I can further reduce our outgoings.

We currently go into our overdraft (up to £1350) every month.
This past month we lost £350 in working tax credits and this made quite the impact to our monthly income and this the use of the overdraft increased.

We pay £300 a month to a family member until Sept for a loan for a car but our main debt is our overdraft.

We have cut out all recreational spending. We only go out for dinner when we have Clubcard Boost vouchers. We don't buys coffees, go to the pub, clothes, anything. We only buy clothes if the children really really need something.

We have been reducing our grocery spending to £280 a month for a family of 4 and 1 cat.

I am about to ring Virgin to leave our bundle package and switch to just broadband.

Our biggest expenses our rent and childcare monthly.

Any tips for scaling back and cutting costs any further?
Unfortunately using public transport to get to work is only possible for my partner and actually works out more expensive and I physically can not bike to work, I have 2 cugildren to drop at childcare first and have to go on dual carriageway to get to work.
I've just switched gas and energy provider.

We put a set amount normally £30 a week of fuel in our shared car and this will last to get us both to work etc.

Profligate

Hi Emma,

It will be much easier for people to comment, and for you to have a clearer view of your financial situation, if you do a full income & expenditure (a SOA). There's a link here:
http://www.stoozing.com/calculator/soa.php (format for MSE)

Good luck

Emma45622

Thanks Profilgate, here goes...


Total unsecured debts..........1350......9.........- [/b]


Monthly Budget Summary
Total monthly income.................... 2,095.25
Expenses (including HP & secured debts). 2,414.37
Available for debt repayments........... -319.12
Monthly UNsecured debt repayments....... 9
Amount short for making debt repayments. -328.12

Personal Balance Sheet Summary
Total assets (things you own)........... 1,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -1,350
Net Assets.............................. -350

Profligate

Hi Emma

Not sure what's happened above -but that SOA is missing an awful lot of detail!

Each relevant category needs to be filled in eg groceries, car insurance etc etc
Did you format for MSE? Can you repost?

Emma45622

I did Profligate,

I think there were some issues copy and pasting as I'm currently on my phone, I will pop on the PC in a short while and try again.

Emma45622

Take 2...

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 536.25
Partners monthly income after tax....... 1422
Benefits................................ 137
Other income............................ 0
Total monthly income.................... 2095.25

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 795
Management charge (leasehold property).. 0
Council tax............................. 128
Electricity............................. 30
Gas..................................... 47
Oil..................................... 0
Water rates............................. 58.23
Telephone (land line)................... 0
Mobile phone............................ 53
TV Licence.............................. 12.12
Satellite/Cable TV...................... 47.98
Internet Services....................... 0
Groceries etc. ......................... 283.5
Clothing................................ 2
Petrol/diesel........................... 160
Road tax................................ 12
Car Insurance........................... 53.68
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 199
Other child related expenses............ 100
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 9.13
Life assurance ......................... 0
Other insurance......................... 14.99
Presents (birthday, christmas etc)...... 20
Haircuts................................ 0
Entertainment........................... 5.99
Holiday................................. 0
Emergency fund.......................... 0
Sofa.................................... 37.75
Family Loan............................. 300
Total monthly expenses.................. 2414.37


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 1000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Overdraft......................1350......9.........17.9
Total unsecured debts..........1350......9.........-


Monthly Budget Summary
Total monthly income.................... 2,095.25
Expenses (including HP & secured debts). 2,414.37
Available for debt repayments........... -319.12
Monthly UNsecured debt repayments....... 9
Amount short for making debt repayments. -328.12

Personal Balance Sheet Summary
Total assets (things you own)........... 1,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -1,350
Net Assets.............................. -350

dionysia

This looks very difficult for you, I'm sorry. I think the shortfall between income and expenses is the immediate issue, rather than paying off the overdraft. Is there any chance of explaining the loss of your tax credits to your family member who loaned you money and asking to reduce or preferably pause those repayments?

Otherwise - how much more do you owe on the sofa, when do those payments finish? Car insurance of over £600/year looks a lot given the car is only worth £1000, could you look for a better deal?

Profligate

Emma45622 wrote: »

Take 2...

Statement of Affairs and Personal Balance Sheet

Thanks Emma. I've put some comments alongside

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 536.25
Partners monthly income after tax....... 1422
Benefits................................ 137
Other income............................ 0
Total monthly income.................... 2095.25

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 795 Steep. Can you get a smaller/cheaper property?
Management charge (leasehold property).. 0
Council tax............................. 128 Is this over 10months? Pay it over 12m to reduce the monthly amount
Electricity............................. 30
Gas..................................... 47 Can you cut this a bit
Oil..................................... 0
Water rates............................. 58.23 This seems quite high- are you on a meter or rates? If metered check out MSE's tips for cutting water costs http://www.moneysavingexpert.com/utilities/cut-water-bills
Telephone (land line)................... 0
Mobile phone............................ 53 2 phones? If in contract, ring and ask to be dropped to lowest tarrif as you are struggling financially. If not, check out MSE info on cheap mobiles - consider a PAYG sim only for £10 each
TV Licence.............................. 12.12
Satellite/Cable TV...................... 47.98 Again, ring and cancel or go to lowest tarrif
Internet Services....................... 0
Groceries etc. ......................... 283.5 With careful meal planning, and buying only what you need for meals & pack lunches, aim to spend maybe £50pw (£217 per month)
Clothing................................ 2
Petrol/diesel........................... 160 Any ways to reduce?. Martin has cheaper motoring tips on main site
Road tax................................ 12
Car Insurance........................... 53.68
Car maintenance (including MOT)......... 30 Good to see this allocated. You need to save for car costs
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 199 Seems quite high - do you need this provision given the smallish second income (suggesting that person does not work full time)
Other child related expenses............ 100 I don't think this is affordable at the moment, unfortunately
Medical (prescriptions, dentist etc).... 15 - can you look into pre payment prescription card?
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 9.13
Life assurance ......................... 0
Other insurance......................... 14.99
Presents (birthday, christmas etc)...... 20
Haircuts................................ 0
Entertainment........................... 5.99
Holiday................................. 0
Emergency fund.......................... 0
Sofa.................................... 37.75 This looks like a HP kind of deal...How long till it's paid off? Your budget is currently in deficit, in future try to avoid this kind of expense esp for a sofa - you can get decent second hand ones and give them a good clean and they would be fine.
Family Loan............................. 300 This really needs to be reduced. If you paid half of this, it would make your situation more manageable & easier to get back on track. How long till it's paid off?
Total monthly expenses.................. 2414.37


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 1000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Overdraft......................1350......9.........17.9
Total unsecured debts..........1350......9.........-


Monthly Budget Summary
Total monthly income.................... 2,095.25
Expenses (including HP & secured debts). 2,414.37
Available for debt repayments........... -319.12
Monthly UNsecured debt repayments....... 9
Amount short for making debt repayments. -328.12

Personal Balance Sheet Summary
Total assets (things you own)........... 1,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -1,350
Net Assets.............................. -350

Obviously your budget sheet is showing a deficit. Can you find at least £330 savings in the SOA above? I think you possibly can, but you and your partner will have to be on board, and it won't necessarily be easy. Can one of you consider another job? Or dropping the need for childcare? And of course, that big family loan cost is almost the size of your deficit....once that's paid off, things should be more manageable....

Good luck

Emma45622

Thanks for the advice guys.
The family Loan ends in September thankfully. They are very understanding and will be very flexible if we request. I had the opinion it may be better just to get it paid off as it's only 4 more payments.
My partner is a teacher and works stupidly long hours as it is, he can not take on anything else. I only work part time as our children our 3 and 1 so need to be around for them too and childcare costs make working anymore hours void sadly
I feel I don't know how we can make any more money at present.
We will be looking to cut costs on mobile phones when they come up for upgrade.
Our car insurance is high as I only passed my driving test 2.5 years ago.
I don't feel like we can reduce our food expenses too much more without the children going hungry.
Any specific suggestions for reducing spending would be greatfully received.

Emma45622

Oh and the sofa. We are just over 1 year into a 4 year pay off. Thankfully it's 0% interest

Profligate

Emma45622 wrote: »

Thanks for the advice guys.
The family Loan ends in September thankfully. They are very understanding and will be very flexible if we request. I had the opinion it may be better just to get it paid off as it's only 4 more payments.
My partner is a teacher and works stupidly long hours as it is, he can not take on anything else. I only work part time as our children our 3 and 1 so need to be around for them too and childcare costs make working anymore hours void sadly
I feel I don't know how we can make any more money at present.
We will be looking to cut costs on mobile phones when they come up for upgrade.
Our car insurance is high as I only passed my driving test 2.5 years ago.
I don't feel like we can reduce our food expenses too much more without the children going hungry.
Any specific suggestions for reducing spending would be greatfully received.

Hi Emma, with the greatest respect, I feel like you're not necessarily taking on board the reality of your situation. As it stands, you cannot afford your monthly expenses - you are short of over £300 pm.
I gave you specific ideas for cutting expenses, as did Dyonisia - I'm not sure what other specifics you are wanting.
There is definite room to cut back/cut down as previously stated - and you and your partner will both have to decide where you will make those savings....or you will continue to overspend by £300pm and continue to do this until sources of credit dry up. (Obviously, once you've paid back your family loan, your expenses will reduce, but you will accrue further debt to pay off the family loan.)

Re the family loan - I take it you owe £900? Why not take 9 m to pay this off. This will drastically improve things for you (although you'll still need to find further savings) and you can concentrate on paying back the overdraft which is costing you interest. If you continue to prioritise the family loan, it will mean you accruing more debt on your overdraft/ other costly credit .

Extra income - how about you getting some weekend work to raise more money?. I know it will eat into family time, and family time is important, but if you truly want to tackle your money issues, you could consider it.
And the sofa...is it really worth nearly £2000 to you as a family? That's a lot of money...

All the best to you