Spending more than I earn and don’t know what to do!

enthusiasticsaver

The soa seems realistic but you need emergency fund and contents insurance.

A lot of disposable income goes on the car with high insurance and I guess one of the loans? Is it possible for you to do without it?

If not the crux of the matter is you earn too little and your wife doesn't work and you have too much debt to service within your income. I think if there is no way to increase your income or decrease outgoings drastically and getting rid of the car looks to be the only way you could bring them down then a DMP should be considered. As you have a monthly shortfall the quicker this is done the better.

You should ring stepchange which is a free service and can arrange it for you. You won't be able to get credit for some years but that is no bad thing. I think in your situation I would default asap (stop making repayments) and save up an emergency fund instead. Open up a new bank account unrelated to your existing debts and divert salary and child benefit to that and draw up realistic budget. Include emergency fund and contents insurance. £225 should be ok for groceries for 3 and nothing else looks abnormally high. I think I would aim for £150 monthly debt reduction.

Is there any indication of your wife being able to work at some point? How old is your child?

KxMx

Is the SOA realistic or aspirational?
I'd suggest keeping a spending diary, then you can see where the money is going, as opposed to where you think it's going.

[Deleted User]

Firstly I just want to say thanks for all the responses they are greatly appreciated as I have felt so far that I have been fighting this on my own and its good to hear other options.

I currently work in the financial sector and unfortunately if I default on any credit or get any CCJ's I will lose my job by failing one of the regularly performed background checks.

I can't get rid of my car because I need to travel a fair distance and there is no public transport near where I work during my shift hours.

The reason my insurance seems high is because I had a crash that was my fault which pushed up my premium and I live in a high risk area for car theft.

Also, I though of selling the car for a cheaper more economical car but if i sold my car I would get less for it due to bumper damage (Bumper & grille needs replacing, quoted £1500 for replace and respray), it is not too noticeable and doesn't bother me but it is cracked and wouldn't be sold in this condition. So thinking about it I would probably get £3000 which is a lot less than I initially paid for it buy another car and maybe save on fuel and a bit on insurance and road tax but could have to pay out more in repairs due to it being an older car with more mileage on so I been planning on keeping the car but just trying to drive as economical as possible.

Internet is the cheapest I can get in my area given the installation costs, line rental and routers for other cheap providers.

As for my mobile I still have a fair amount of time before I can cancel my phone contract or change to a sim only tariff but in about 11 months I will do so.

I haven't got an contents insurance because I have always thought I cant afford it but I suppose I also cant afford to lose everything and buy everything back again but I have looked into it and it is only £10 per month.

I have just switched my gas & electric and my bills should go down from around £85 to £50! So that is £35 saved just today which I am very happy about.

I am going to try and look for ways to cut my grocery bills down to a minumum as I feel if we cook all meals from scratch, make a shopping list to stick to and waste less food (Often goes off and goes out of date due to no meal plan).

[Deleted User]

I completely agree, the SOA is correct bills wise but as for spending I am just starting to track my spending on the Home Budget app on my phone and will build a better picture of where i need to save. I know one thing I have been working on is eating out, take away's and food waste. I am trying to make a meal plan to stick to as most of the time we eat out because we either don't know what to cook or left it too late,

Fosterdog

PedigreePanda wrote: »

Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 1600
Partners monthly income after tax....... 0 is this just temporary?
Benefits................................ 150
Other income............................ 0
Total monthly income.................... 1750

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 480
Management charge (leasehold property).. 0
Council tax............................. 113 if this is over 10 months try getting it spread over 12 instead to bring it down to £95 a month
Electricity............................. 40 great that you’ve found a better deal already
Gas..................................... 45
Oil..................................... 0
Water rates............................. 53 this is very very high, if you are on a metre cut back usage, if not it would be worth getting one
Telephone (land line)................... 0
Mobile phone............................ 30
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 27
Groceries etc. ......................... 225 this could be less for two adults and one child, head over to the old style board for ideas
Clothing................................ 20 only buy essentials and wear what you’ve got for now.
Petrol/diesel........................... 200
Road tax................................ 17
Car Insurance........................... 92
Car maintenance (including MOT)......... 20
Car parking............................. 20
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 34 look into prepaid certificates, they usually work out cheaper
Pet insurance/vet bills................. 30
Buildings insurance..................... 0
Contents insurance...................... 0 as you’ve realised you need this
Life assurance ......................... 0
Other insurance......................... 11 what is this? Is it needed?
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10 cut this back a bit, get it cut less often, use colleges where students do cheap cuts
Entertainment........................... 26
Holiday................................. 0
Emergency fund.......................... 0
Prescriptions .......................... 11 is this on top of the other £34 a month?
Overdraft interest ..................... 30
Total monthly expenses.................. 1567


Assets
Cash.................................... 0 there should be something here if you are saving £20 each a month in car maintenance and presents, unless they haven’t been save but spent and unaccounted for
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 4000
Other assets............................ 0
Total Assets............................ 4000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Overdraft......................2750......0.........20
Credit Card....................2500......60........30
Loan 1.........................2650......130.......15 how long left?
Loan 2.........................5000......91........15 how long left?
Total unsecured debts..........12900.....281.......-


Monthly Budget Summary
Total monthly income.................... 1,750
Expenses (including HP & secured debts). 1,567
Available for debt repayments........... 183
Monthly UNsecured debt repayments....... 281
Amount short for making debt repayments. -98

Personal Balance Sheet Summary
Total assets (things you own)........... 4,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -12,900
Net Assets.............................. -8,900

My comments on your SOA in red. Luckily you are not too far off where you need to be to meet your minimum payments especially now you have saved on gas and electric. It’s worth going through clothes and sorting other items and selling anything no longer needed on eBay. Another £20 could easily come off the water bill and £50 off your groceries spend, and spreading council tax over 12 months will free up more. Once they are all sorted you’ll have enough to meet minimum payments and start paying off the overdraft, then overpaying on card and loans.

If you are not sure where all of the money is going try keeping a spending diary accounting of every penny for at least a month, you start to realise how quickly the coffee, meal deals, bars of chocolate etc. all add up.

angela110660

Regarding food spends - could you sit down together and look at some good food websites for ideas and recipes? Try Jack Munro for good, cheap recipes and there are loads of other great websites for ideas. Make sure to do a stock check of what you already have in the cupboards as a start point too - there are websites where you can enter items to plan a recipe. If you prefer a cook book then the library is usually helpful or even charity shops. Good luck on your food money saving.

theoretica

PedigreePanda wrote: »

I have just switched my gas & electric and my bills should go down from around £85 to £50! So that is £35 saved just today which I am very happy about.

That is great, getting exactly the same stuff for less money! I suggest you work through all your insurances to check they are as cheap as possible, and read the guides on here for any tips.

PedigreePanda wrote: »

. I know one thing I have been working on is eating out, take away's and food waste. I am trying to make a meal plan to stick to as most of the time we eat out because we either don't know what to cook or left it too late,

Oh yes, buying food and throwing it away is not good use of your hard earned money. If you check regularly and spot food that needs to be eaten soon you can make sure it is eaten, or cook it and freeze it. Then you would have frozen meals you could reheat rapidly rather than going out or getting takeaways. I also find it useful to always have stuff in to make a fast meal- if I don't know what to eat I either have whatever will go off next, or pasta.

patman99

Is there anyone else in your area that travels part/all of your journey to work?. There are sites you can register at to advertise your journey and if someone can benefit from sharing your car, they can book a seat.

They then pay you for the journey.

Also, if your spouse can use a computer, she can do surveys to earn extra money.

Does your spouse have any useful skills that could earn her a few quid?.

People will happily pay for someone to iron or repair their clothes.

enthusiasticsaver

If you can't default due to your job then increasing your income is the only way realistically you will get out of this mess. You can reduce bills and have made a start but unless you can move the overdraft and credit card to 0% most of those minimum payments you are making are going on interest. This means the debt will take a long long time to go down. A second job for you or your wife making some money somehow is the best way to sort this. Do you have anything to sell?

You also need some emergency savings. What would you do if the car broke down?

System

Bin the pet insurance, the whole thing is a massive con in the main because the excess they make you pay is pretty much designed to cover all but the worst bills you'll ever get. Everyone I know with pet insurance has never been able to make a claim even though their pets have been to the vets because the bill has been less than the excess.