How would you approach this? DMP or not?

NelliePie

don78 wrote: »

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................ 3250
Partners monthly income after tax....... 1805
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 5055

Monthly Expense Details
Mortgage................................ 524
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 110
Electricity............................. 40
Gas..................................... 80 This seems quite high - do you always have your heating on and have you looked at other providers (Via the MSE cheap energy club)?
Oil..................................... 0
Water rates............................. 34 Are you on a meter? Might be worth looking in to as it could be cheaper.
Telephone (land line)................... 15
Mobile phone............................ 60 Are you on contract? If so when does this end and if you get to keep your handsets can you swap to a SIM only deal as these tend to be much cheaper
TV Licence.............................. 12.54
Satellite/Cable TV...................... 25 Do you actually use these or can you get away with freeview?
Internet Services....................... 0
Groceries etc. ......................... 250 Not bad, ensuring you only buy what you need , cooking from fresh rather than pre-prepared and batch cooking can save you money
Clothing................................ 20
Petrol/diesel........................... 160
Road tax................................ 5
Car Insurance........................... 25
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 120
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 15
Life assurance ......................... 35
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 15
Entertainment........................... 150 Can you reduce this slightly?
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1795.54


Assets
Cash.................................... 0
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 5000
Other assets............................ 0
Total Assets............................ 215000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 72000....(524)......1.8
Total secured & HP debts...... 72000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
barclaycard....................10000.....265.......17.9
tesco CC.......................4000......125.......19.9
bcard 2........................4400......101.......6.9
loan 2.........................8500......160.......7.9
halifax 2......................7000......80........4.9
halifax 1......................4800......48........0
loan...........................6000......248.6.....9.9
mbna...........................5000......198.......22.9 Target this one first as it has the highest interest
creation 2.....................4000......90........19.9
creation 1.....................5000......145.......16.9
Total unsecured debts..........58700.....1460.6....-


Monthly Budget Summary
Total monthly income.................... 5,055
Expenses (including HP & secured debts). 1,795.54
Available for debt repayments........... 3,259.46
Monthly UNsecured debt repayments....... 1,460.6
Amount left after debt repayments....... 1,798.86 Do you actually have this left in your account each month? If so, throw it at the debts; if not consider a spending diary to track where is goes and try to tidy that up

Personal Balance Sheet Summary
Total assets (things you own)........... 215,000
Total HP & Secured debt................. -72,000
Total Unsecured debt.................... -58,700
Net Assets.............................. 84,300

You're not doing too badly expenditure wise but I've highlighted a few areas that could be looked at. And as I've said above make sure what you've calculated at then end is actually in your bank account - the best SOA is a true reflection of your actual expenditure. As you have a number of credit cards you need to make sure you manage the payments most efficiently - have you looked into snowballing? Someone may be along shortly to provide a link, if not just google it.

Going from the numbers you're in a good position to do this, it will just take time. I look forward to hearing your progress - Good Luck!

NP

fatbelly

anna_1977 wrote: »

how about you throw another £1500 a month at the debts starting with the highest APR one?

Snowballing

http://www.stoozing.com/calculator/snowball-calculator.php

Dobbibill

If you really wanted to tighten your belt with your budget it is possible by making sure you are on the best energy deal, cutting back on satellite TV by getting freesat, when the contracts end on your mobile - switch to SIMO plans and when the home/contents insurance is due for renewal use cashback sites like TCB or Quidco.


As a homeowner, you need to be funding an emergency fund - if you don't when something needs repairing/replacing you will turn to the credit cards to fund it which will effectively be one step forward, 2 steps back Aim for £1000 to start with.

If you don't have the amount left over that you should have then keep a spending diary to find out where your money is going.


If you have got that left then you could be debt free within 2yrs.

Well done on addressing it - all the best with the debt-busting.

don78

It's such a relief to actually look at the figures and know that we can actually do this. Roll on September!

I am really worried about the interest hike at the end of year, but we have agreed to not focus on that for now. I am loathe to apply for any other 0% offers just yet as I don't want to get declined and then find it even harder to apply for deals!!

NeverendingDMP

My comments are not money saving ones. Apologies if I'm being awkward but I think you may need to up your clothing and presents budget so you don't get caught out later in the year. Don't answer out loud if you don't want to but if one of you children is due to start school soon then even a budget uniform and coat and shoes may cost 100-150 to set up. If your second child is walking then you are looking at shoes every 12-16 weeks for them as well.
Even if clothes and shoes are bought second hand or in sales 240 over the year is not a lot. I've 3 under 6 and have budgeted 350 this year just for school uniforms/shoes/coats etc....although I'm hoping for change x. Reception and year one aged children also have lots of birthday parties. If you might want to hold a party you need to save for that but also on the flip side if 25 children invite everyone to their party at 5-10 pound per present/card even just going to half of them will skint you. I agree debts need paying and young children don't need loads spending on them yet but just wanted to drop a few hints so your budget can work long term. That way the credit cards can be banished and not used for those costs that just crop up without the budget. good luck on your journey. If you can be thrifty and make some bigger payments and snowball you will feel much better when the numbers start to come down. X

don78

I had a bit of a realisation earlier this evening. I started thinking about how much we would need to earn to have a decent quality of life if we had no unsecured debt and I came up with the figure of 3K take home pay per month. We are currently taking just over 5K per month ( well we will be from September).

So there is the answer... we need to pretend that we have no debt and we earn 3K per month. The other £2100 doesn't exist... this will all go on debt payments.

This should actually be quite manageable. Our total monthly expenses are £1795, leaving £1205 of 'spare' money out of our 3K per month income. This means that we should be able to save an emergency fund and have the odd treat, safe in the knowledge that the remaining £2100 of our actual salaries is taking care of the debts.

Suseka97

don78 wrote: »

I had a bit of a realisation earlier this evening. I started thinking about how much we would need to earn to have a decent quality of life if we had no unsecured debt and I came up with the figure of 3K take home pay per month. We are currently taking just over 5K per month ( well we will be from September).

So there is the answer... we need to pretend that we have no debt and we earn 3K per month. The other £2100 doesn't exist... this will all go on debt payments.

This should actually be quite manageable. Our total monthly expenses are £1795, leaving £1205 of 'spare' money out of our 3K per month income. This means that we should be able to save an emergency fund and have the odd treat, safe in the knowledge that the remaining £2100 of our actual salaries is taking care of the debts.

This is very positive and may I suggest you put this in writing to yourselves and pin it somewhere so that you stay focussed. Things come along in life and you could well be tempted to relax on your plan (human nature), but if you stick to this you will enjoy the wonderful feeling of being debt free (well, unsecured debt free ). If you stick with this and learn to live within your means (which from what you've said, is really doable) then then next thing you could focus on is overpaying your mortgage at some point.

Cut up all your cards, or at least cut each one up as you clear it -and definitely look at the 'snowballing' link provided. Set up a spreadsheet and you'll be able to see at a glance those debts reduce and disappear one by one -it really does give you the 'feel good factor'.

Lastly - well done for waking up to your situation now and putting plans in place to handle it.

Good luck :T

enthusiasticsaver

A DMP won't help you as you can meet minimums comfortably on that income. You have sufficient spare money on that soa to easily overpay on the debt which suggests the soa is not correct. Even if you take into account that your wife is not earning the extra £1000 until September you should still have almost £800 spare each month. Target the highest charging debts for the next 5 months and if you use the surplus to target MBNA you should clear it by Christmas.

NeverendingDMP

I'd say go for it. If you can live at less than your salaries and cut up or not use the credit cards to deal with those just stick it on a card moments then do it. If you can pay if off then think of the possibility for mortgage free, pensions children's car/university funds. They are endless x maternity leave and part time work in conjunction with childcare are financially a huge kick in the teeth as the saying says. You have got through the worst of it hopefully so onwards and upwards. X