My debt-free plan - £35,236.02...

NelliePie

As many others have said, you're in the hard part now - figuring out exactly what goes where and accounting for every penny. A spending diary can help you see where it goes. Once you know what you actually spend you need to set a REALISTIC, ACHIEVABLE budget that allows a little wiggle room if possible. Going too hard too fast on the cut backs will be counter productive as it's not maintainable. You're in the for the long hall as the habits you form now debt busting are transferable for money management for the rest of your life. Not every suggestion given will work for you - find out what doesn't and stick to it religiously, it will be hard at first but come naturally eventually.

enthusiasticsaver

crunch_time wrote: »

Hi Beebop!

Lovely to have you on the forum! You can totally get this under control. It will feel like wading through treacle to begin with but you can do this.

Your below comment resonated quite deeply with me.



Its the same in our house. We have a good income too. Husband just got a pay rise meaning from July we should have about £3600-£3700 a month! I used to have it in my head that when we were on that sort of money we would be able to afford x, y and z as people on that sort of salary can. Truth is now I would rather have money in the bank.

Follow the advice from people on here and dont give up. You can do this!

I've subscribed!

Crunchy xx

This is the reason high earners get into financial difficulties as much as or sometimes more than low earners purely because they have a higher availability of credit, the sense of entitlement that you should be able to spend what you want because you earn a lot and when things go wrong the higher outgoings mean a sudden reality check. I also think there is a nonchalance among those who earn high salaries that their debt situation is fine and nothing will ever change and they will always manage to get another balance transfer or loan and will go on in that way until there gets to be a crunch point. That will normally be a job loss, sickness, death, maternity leave or retirement.

When people talk about taking on debt as borrowing from your future self this illustrates the point beautifully. If you earn a high salary and don't have debt you can pretty much lead a no worries lifestyle with lots of availability of cash for holidays, hobbies, meals out etc. If you have a salary of almost £3.5k a month and £1.5k is going on debt repayments then you need to lead the lifestyle of a much lower earner.

[Deleted User]

Welcome BeBop!

You have made the hardest step already - admitting you have a problem. The fog of depression will soon clear and you'll start becoming determined to change things.

When I had my LBM, I started with modest cutbacks, but have since cut back a lot of things I thought I could never do without. And I'm actually enjoying life a lot more without all those extra things!

Could you reduce the hours the cleaner does as a compromise? Maybe half it? I too work full time and have a dog and a pre-schooler, and we manage just fine without one. Nobody expects the house of a full-time employed family with young children to be spotless! (If they do, then it's their problem...)

With regards to the gym, you could always cancel your own membership and give husband a sort of "use it or lose it" ultimatum? If he starts using it, then great. If not, it goes. That would only be fair I think.

And if you do want to go to the cinema, you can always use discount codes etc on the day, rather than paying regularly just in case you may want to use it.

Has your husband seen your SOA? My OH was originally unenthusiastic about cutbacks, but has since really got on board as he's seen how quickly our debt has gone down - and how quickly little things add up!

I agree keep the pet insurance. We've had £1500 vet bills before and were so glad to have it!

One thing to look forward to - in a couple of years, your LO will qualify for the 30 free hours and then you'll pay a lot less for childcare, if anything. You can always restart savings for him then. Right now, he's not going to be needing those savings for another 17 years at least, so there's always time to catch up later when you're debt-free. We're not doing any savings while we have debt with interest. I'm planning to start a generous uni fund for my son when we've got the debt part sorted. You've still got so much time!

I've subscribed to your diary so I can follow along! Best of luck, you can do it!

[Deleted User]

Also - do you really need 2 cars? Could you make do with 1? Could you swap one of them for a smaller/more economical car at least? Just some things to consider as these can amount to huge savings!

BeBopTalulah

Day 3

Today is more positive

While I work out our budget and the finer details, there is nothing to stop me making practical changes to reduce spending.

The freezer drawer is full of made up rolls for DH to take to work. Previously, I would have bought the nice rolls, ate half of them over a couple of days, then binned the stale ones

The grocery shop on Monday went well. I made a meal plan using mostly what we already have, and spent £20 out of the £65 in my grocery envelope.

Now to my revised SOA -

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.................... 2

Monthly Income Details
Monthly income after tax................ 1400
Partners monthly income after tax....... 2600
Benefits................................ 80
Other income............................ 0
Total monthly income.................... 4080

Monthly Expense Details
Mortgage................................ 536
Secured/HP loan repayments.............. 313
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 146
Electricity............................. 49
Gas..................................... 0
Oil..................................... 125
Water rates............................. 0
Telephone (land line)................... 23.5
Mobile phone............................ 86.79
TV Licence.............................. 12.37
Satellite/Cable TV...................... 6.99
Internet Services....................... 0
Groceries etc. ......................... 320
Clothing................................ 0
Petrol/diesel........................... 240
Road tax................................ 31.06
Car Insurance........................... 44.63
Car maintenance (including MOT)......... 0
Car parking............................. 5
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 6
Pet insurance/vet bills................. 36.65
Buildings insurance..................... 0
Contents insurance...................... 33.15
Life assurance ......................... 86.52
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 8
Entertainment........................... 200
Holiday................................. 0
Emergency fund.......................... 0
Landlord Contingency.................... 20
'Other'................................. 200
Spotify................................. 9.99
Cleaner................................. 80
Printer ink............................. 3.49
Charity................................. 5
Landlord Insurance...................... 33.27
Union/Professional...................... 14
Total monthly expenses.................. 2675.41


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 110906...(536)......0<
Mortgage 2.....................42000....(313)......0
Total secured & HP debts...... 152906....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
CC1............................4770.92...50.55.....0
CC2............................5941.44...133.......7.9
CC3............................2850......57........0
Parental Loan..................300.......0.........0
Student Loan...................1605......199.......1
Loan 3.........................1619.84...92.35.....4.9
Loan 2.........................6570.36...251.8.....9.9
Loan 1.........................1526.55...197.4.....11.9
Overdraft 2....................1003.91...40........18
Overdraft 1....................1800......20........18
CC5............................3953......90.92.....18.9
CC4............................2900......65.25.....0
Total unsecured debts..........34841.02..1197.27...-


Monthly Budget Summary
Total monthly income.................... 4,080
Expenses (including HP & secured debts). 2,675.41
Available for debt repayments........... 1,404.59
Monthly UNsecured debt repayments....... 1,197.27
Amount left after debt repayments....... 207.32


Created using the SOA calculator
Reproduced on Moneysavingexpert with permission, using other browser.

This updated SOA is assuming we cancel both the gym and cinema membership immediately. I will have a proper discussion with DH when he gets home, show him this, and show him that this WILL NOT WORK unless we do cancel them. DH came home and announced that he has cancelled the cinema membership and the gym while at work :eek::D I have not allowed for any planned saving/pot-building expenses, because I think we can use the £200 'Other' for these for now, as so far we haven't spent all of this each week. I feel that I can roll over the excess each week and keep this for the every day extras or unexpected items.

Your comments and feedback have really kept me going today, thank you. I'm going to try and write down what I took from all of them.

Are you liable for tax on the rental income and have you allowed for this as there seems to be no savings for this?


I think I would look into selling the second property as it seems to me if you lost your tenants you would be in a right pickle. Running buy to let properties requires a buffer both for maintenance and gaps in tenancies or failure to pay by tenants. There have also been recent tax changes which may mean that you have an HMRC bill outstanding too.

I pay tax on my rental earnings each year. I don't have an accountant as it's a fairly straightforward calculation which I input online and I just pay the tax then and there (historically either on a credit card or perhaps from bank account if I had the funds).

We have a definite plan to sell the second property, and have meetings/viewings booked with our letting agent and tenants to get valuations and decide what (if anything) needs done. Then it will be sold as fast as possible. It's something we've planned prior to having a LBM, as we were planning some house renovations - that is the furthest thing from my mind at this moment, I promise! Even if I accepted an offer for the minimum I would expect, I stand to walk away with around £20k. This would obviously be a game-changer. This will be the difference between us beating this or potentially getting into some serious trouble (the kind that has been keeping me awake at night)

Its the same in our house. We have a good income too. Husband just got a pay rise meaning from July we should have about £3600-£3700 a month! I used to have it in my head that when we were on that sort of money we would be able to afford x, y and z as people on that sort of salary can. Truth is now I would rather have money in the bank.

and

This is the reason high earners get into financial difficulties as much as or sometimes more than low earners purely because they have a higher availability of credit, the sense of entitlement that you should be able to spend what you want because you earn a lot and when things go wrong the higher outgoings mean a sudden reality check.

Yes and yes. It's about a perception of what other people earn/do that has made us this way. You see someone with a nice car, and you just assume based on their occupations what they earn and how they paid for it. We have no idea if the Jones' saved for 10 years to pay cash for that car! If that makes sense....

Keep your chin up!! this bit is definitely the worst.....but you can do this!
Did you take a look at YNAB? You can backload this with 3 months or more of spending and get an accurate reflection of your budget - as well as start to figure out how to move money around.

I did try YNAB, and signed up for a free trial. However, I really didn't like it. It just didn't work for me. There is also no way I could pay for something like that right now. Thank you though

Welcome BeBop!

You have made the hardest step already - admitting you have a problem. The fog of depression will soon clear and you'll start becoming determined to change things.

When I had my LBM, I started with modest cutbacks, but have since cut back a lot of things I thought I could never do without. And I'm actually enjoying life a lot more without all those extra things!

Could you reduce the hours the cleaner does as a compromise? Maybe half it? I too work full time and have a dog and a pre-schooler, and we manage just fine without one. Nobody expects the house of a full-time employed family with young children to be spotless! (If they do, then it's their problem...)

With regards to the gym, you could always cancel your own membership and give husband a sort of "use it or lose it" ultimatum? If he starts using it, then great. If not, it goes. That would only be fair I think.

And if you do want to go to the cinema, you can always use discount codes etc on the day, rather than paying regularly just in case you may want to use it.

Has your husband seen your SOA? My OH was originally unenthusiastic about cutbacks, but has since really got on board as he's seen how quickly our debt has gone down - and how quickly little things add up!

I agree keep the pet insurance. We've had £1500 vet bills before and were so glad to have it!

One thing to look forward to - in a couple of years, your LO will qualify for the 30 free hours and then you'll pay a lot less for childcare, if anything. You can always restart savings for him then. Right now, he's not going to be needing those savings for another 17 years at least, so there's always time to catch up later when you're debt-free. We're not doing any savings while we have debt with interest. I'm planning to start a generous uni fund for my son when we've got the debt part sorted. You've still got so much time!

I think reducing the cleaners hours is a great suggestion. I have to compromise and I think I could half her hours without a problem.

I also think that waiting until our DS is out of paid childcare before saving is a huge nugget of sense! Effectively the child benefit is paying towards his education/care now, and once he's into free care hours (and we're on top of this debt!) we can revert back to our saving plan. I may be able to convince DH to stop paying into DS's savings, but he won't agree to taking out what we've put in so far. I can compromise on that too

Also - do you really need 2 cars? Could you make do with 1? Could you swap one of them for a smaller/more economical car at least? Just some things to consider as these can amount to huge savings!

If I could manage without my car I would, and have considered it before while on maternity leave. We live rurally, no bus stops for around 2 miles. I have no objection to walking 2 miles, but on a day-to-day basis/considering emergencies/getting things from A to B it just wouldn't work. DH commutes an hour each way, and I drive about 20mins to work and ferry around DS. My new job will require a 40 min commute from me (for better earnings and promotion potential). I used to cycle about 9 miles to work before I had DS, so I think we could definitely make an effort to reduce our fuel expenses by doing more on foot and bike. There are definitely savings to be had here.

Scott-Weiland

BeBopTalulah wrote: »

Day 3

Today is more positive

While I work out our budget and the finer details, there is nothing to stop me making practical changes to reduce spending.

The freezer drawer is full of made up rolls for DH to take to work. Previously, I would have bought the nice rolls, ate half of them over a couple of days, then binned the stale ones

The grocery shop on Monday went well. I made a meal plan using mostly what we already have, and spent £20 out of the £65 in my grocery envelope.

Now to my revised SOA -

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.................... 2

Monthly Income Details
Monthly income after tax................ 1400
Partners monthly income after tax....... 2600
Benefits................................ 80
Other income............................ 0
Total monthly income.................... 4080

Monthly Expense Details
Mortgage................................ 536
Secured/HP loan repayments.............. 313
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 146
Electricity............................. 49
Gas..................................... 0
Oil..................................... 125
Water rates............................. 0
Telephone (land line)................... 23.5
Mobile phone............................ 86.79
TV Licence.............................. 12.37
Satellite/Cable TV...................... 6.99
Internet Services....................... 0
Groceries etc. ......................... 320
Clothing................................ 0
Petrol/diesel........................... 240
Road tax................................ 31.06
Car Insurance........................... 44.63
Car maintenance (including MOT)......... 0
Car parking............................. 5
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 6
Pet insurance/vet bills................. 36.65
Buildings insurance..................... 0
Contents insurance...................... 33.15
Life assurance ......................... 86.52
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 8
Entertainment........................... 200
Holiday................................. 0
Emergency fund.......................... 0
Landlord Contingency.................... 20
'Other'................................. 200
Spotify................................. 9.99
Cleaner................................. 80
Printer ink............................. 3.49
Charity................................. 5
Landlord Insurance...................... 33.27
Union/Professional...................... 14
Total monthly expenses.................. 2675.41


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 110906...(536)......0<
Mortgage 2.....................42000....(313)......0
Total secured & HP debts...... 152906....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
CC1............................4770.92...50.55.....0
CC2............................5941.44...133.......7.9
CC3............................2850......57........0
Parental Loan..................300.......0.........0
Student Loan...................1605......199.......1
Loan 3.........................1619.84...92.35.....4.9
Loan 2.........................6570.36...251.8.....9.9
Loan 1.........................1526.55...197.4.....11.9
Overdraft 2....................1003.91...40........18
Overdraft 1....................1800......20........18
CC5............................3953......90.92.....18.9
CC4............................2900......65.25.....0
Total unsecured debts..........34841.02..1197.27...-


Monthly Budget Summary
Total monthly income.................... 4,080
Expenses (including HP & secured debts). 2,675.41
Available for debt repayments........... 1,404.59
Monthly UNsecured debt repayments....... 1,197.27
Amount left after debt repayments....... 207.32


Created using the SOA calculator
Reproduced on Moneysavingexpert with permission, using other browser.

This updated SOA is assuming we cancel both the gym and cinema membership immediately. I will have a proper discussion with DH when he gets home, show him this, and show him that this WILL NOT WORK unless we do cancel them. DH came home and announced that he has cancelled the cinema membership and the gym while at work :eek::D I have not allowed for any planned saving/pot-building expenses, because I think we can use the £200 'Other' for these for now, as so far we haven't spent all of this each week. I feel that I can roll over the excess each week and keep this for the every day extras or unexpected items.

Your comments and feedback have really kept me going today, thank you. I'm going to try and write down what I took from all of them.



I pay tax on my rental earnings each year. I don't have an accountant as it's a fairly straightforward calculation which I input online and I just pay the tax then and there (historically either on a credit card or perhaps from bank account if I had the funds).

We have a definite plan to sell the second property, and have meetings/viewings booked with our letting agent and tenants to get valuations and decide what (if anything) needs done. Then it will be sold as fast as possible. It's something we've planned prior to having a LBM, as we were planning some house renovations - that is the furthest thing from my mind at this moment, I promise! Even if I accepted an offer for the minimum I would expect, I stand to walk away with around £20k. This would obviously be a game-changer. This will be the difference between us beating this or potentially getting into some serious trouble (the kind that has been keeping me awake at night)



and



Yes and yes. It's about a perception of what other people earn/do that has made us this way. You see someone with a nice car, and you just assume based on their occupations what they earn and how they paid for it. We have no idea if the Jones' saved for 10 years to pay cash for that car! If that makes sense....



I did try YNAB, and signed up for a free trial. However, I really didn't like it. It just didn't work for me. There is also no way I could pay for something like that right now. Thank you though



I think reducing the cleaners hours is a great suggestion. I have to compromise and I think I could half her hours without a problem.

I also think that waiting until our DS is out of paid childcare before saving is a huge nugget of sense! Effectively the child benefit is paying towards his education/care now, and once he's into free care hours (and we're on top of this debt!) we can revert back to our saving plan. I may be able to convince DH to stop paying into DS's savings, but he won't agree to taking out what we've put in so far. I can compromise on that too



If I could manage without my car I would, and have considered it before while on maternity leave. We live rurally, no bus stops for around 2 miles. I have no objection to walking 2 miles, but on a day-to-day basis/considering emergencies/getting things from A to B it just wouldn't work. DH commutes an hour each way, and I drive about 20mins to work and ferry around DS. My new job will require a 40 min commute from me (for better earnings and promotion potential). I used to cycle about 9 miles to work before I had DS, so I think we could definitely make an effort to reduce our fuel expenses by doing more on foot and bike. There are definitely savings to be had here.

I hear you re living in a rural area, my oh lives 6 miles from the nearest town small town, our village does not even have a post box, it has one village pub and that's it. It right next to a well known mountain biker lover forrest in the north east of England. We struggle as i dont drive, i do run quite abit but i am not capable of doing a Sean Conway impression to get some milk just yet.

Wise move re the cleaner halfing it I agree with that would free you up an extra 450 per year, paying that off one of your debts which be a great start.

enthusiasticsaver

Great strides you have made there and good that your husband is also on board.

I agree with all your plans to save out of the spare other money you have and that you delay saving for your child until the free childcare kicks in. I also agree that as a compromise on the cleaner you maybe look at reducing hours as a start.

Selling the 2nd property would be a game changer so I am glad you have decided to do that. Having £20k to clear at least some of that debt would be a fantastic plan and mean that you can clear the rest of the debt quicker then move to plans to renovate your current home.

Any spare money you have each month I urge you to clear the overdrafts first. They are 2 of your most expensive debts and are the only ones to be technically repayable on demand.

System

Good on your OH! Great news. All sounding much more positive xxx

[Deleted User]

Well done on getting your OH on board! Having that mutual support is so important!
Selling the rental property will be such a big step towards being debt-free for you, I wish I had an asset like that!
Yes, if you live rurally then I understand you need 2 cars. I live in a big city with buses literally every 2 minutes and millions of shops everywhere, so we've binned off the car altogether - but being from a tiny village myself, I totally sympathise that cars are needed in those situations!

Treadingonplaymobil

I'm so pleased that your DH is having his LBM too, it makes it so much easier when you're on the same page. Keep on keeping on.