Please help me get my head around this.

Willing2Learn

karencks wrote: »

It's scary to see how much the small spends have added up - a couple of takeaway costa coffees each week, a takeaway, £10 spent in the local shop of magzines etc - it is adding up to hundreds of pounds each month.

When I first did my SOA, a few years back now, I was shocked to find out that £150/month was being spent at coffee shops and another £150/month on takeaways! It is quite enlightening to see it all in black and white, in all it's gory detail.

MallyGirl

I suggest keeping a spending diary for a month - both of you.
If you note down absolutely every penny you spend you will see just how the small things like magazines and coffee add up.
The SOA - formatted for MSE if you want to post it on here - will also force you to examine where the money goes.
Then it will be down to making sure you are on the best deals for power, phones, broadband, insurance.
Taking lunches to work rather than buying them.
If you have gym membership do you use it?
How often do you get your hair cut?
Do you have an emergency fund?
Do you save for car insurance to get the best deal paying annually or are you paying a premium for monthly instalments?

Lots of small changes can really add up

Craig1981

karencks wrote: »

Thanks everyone. I am going to work on the SOA over the weekend with DH.

I have just logged on to our internet banking and looked at last months statement. It's horrific. I have made a list of all of the things that we spent money on that were necessary - this includes a weekend away, currency for our foreign holiday, clothes, a few meals out. I am ashamed that the grand total of this unnecessary spending is £1470.

It's scary to see how much the small spends have added up - a couple of takeaway costa coffees each week, a takeaway, £10 spent in the local shop of magzines etc - it is adding up to hundreds of pounds each month.

When we do our SOA I think that we need to think realistically about how we want to live. We need to cut back DRASTICALLY, but equally I want us to be able to have come planned, affordable fun. I also want us to build up some savings. This Christmas will need to be a credit free one, however I am conscious that there are only 4 pay days to go so we need to start planning.

I agree that it's unfair of me to apportion all of the blame to DH, I am kind of past that now. I just want to sort it out. We haven't spoken much about it over the last couple of days. He is emotional and quiet at the moment, but I know it will be fine if we put a plan together

what I would suggest, is what I did... take out essential spending by cash - try using cash only for a month or two for your small stuff - will make you realise what a pound is worth nowadays when you actually see the physical money being spend - with a card it is normally out of sight, out of mind


lots and lots to start cutting back on, without drastically affecting your way of living. small changes first. once you start saving, you may get the bug and cut back more and more... what happened to me!

natlie

Hi

I've just done a brilliant budgetting coupse with CAP Money (Christians Against Poverty) I am not religious at all - the course mentioed faith now and again https://www.capmoney.org/en_GB/home

this course is brilliant I am now on budget I know exactly what I am spending and I have a pot for emergencies, I even know what date my DDs go out Ive gone from an absolute money mess to majorly organised is a few weeks and it feels good - its given me focus its even inspired me to declutter and get some stuff on ebay

Have a look at courses in your area - and stick with it, usually 3 sessions they also have free debt advice for people once they have completed the course called Cap money +

Working_Mum

Hello and welcme,
There were two books I read alongside this Forum when I had to get out of seriously eye watering levels of debt following divorce.

They are
* Dave Ramsey's Total Money Makeover
* The Millionaire Next Door by Thomas Stanley

they both enabled me to restructure my debts and HOW I approached money in my life.

I still keep a spends diary and deal in cash - I learned to budget for EVERYTHING including FUN and Christmas, special occasions etc - I just need to organise myself to do so.

Good luck and keep posting and reading, this is a phenomenal resource!

enthusiasticsaver

You need a plan to tackle this together. I think you are wrong to blame your DH. You knew how much your income and spending was but chose not to calculate if you were living within your means and if he brought it up earlier and you dismissed this I think you are just as much to blame.

On the plus side if you have lots of disposable income you can sort this out but you need to learn how to budget and save rather than use credit. No reason you cannot have holidays or weekends away but they should be saved for rather than paid on a credit card. I would say put an SOA up here but I guess you have already looked at your outgoings in detail. I would suggest save up an emergency fund and go cold turkey on the credit cards and cut them up or lock them away so you cannot be tempted to spend on them.

zippygeorgeandben

I can totally understand the OP's initial response though and there have been plenty of threads on the DFW boards before where posters have been blaming the husband's reaction to the wife coming clean regarding the debt, it's not often the other way round.
But anyway, that's in the past now and I agree with many other posters that you seem smart enough to tackle this. I'm not too sure how old your children are but perhaps this is something you can discuss as a family, i.e. how to manage finances and how mummy/daddy have been spending much more money than they should! I imagine your reaction would be 'why should they go without due to no fault of their own' and I accept that reason.

I think you can both do this, I really can. You come across as smart and level headed. I'd listen to all the great words of advice on here and as enthusiastic saver says, tackle this together.

Good luck!

karencks

Morning,

I have been up for the last hour putting this together. I have to say that I have found this excruciating. I feel as sick as a dog, but it's done now and I just want us to move on and start reducing the numbers.

I have added some comments next to some of the numbers

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

Monthly Income Details
Monthly income after tax................ 1600
Partners monthly income after tax....... 3450
Benefits................................ 0 we are no longer eligible for child beneift
Other income............................ 0
Total monthly income.................... 5050

Monthly Expense Details
Mortgage................................ 518 - we have recently fixed this until 2021
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 130
Electricity............................. 50
Gas..................................... 67
Oil..................................... 0
Water rates............................. 60 paid over 6 months
Telephone (land line)................... 15
Mobile phone............................ 40 2 phones
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 25
Groceries etc. ......................... 250 This is what I think we should be spending. We definitely waste money on buying extra food when we pop to shops on way home etc. We need to stop throwing food away!!
Clothing................................ 0
Petrol/diesel........................... 175
Road tax................................ 12
Car Insurance........................... 100 2 cars plus AA breakdown
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 120 before and after school provision.
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 10
Life assurance ......................... 37
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 20
Entertainment........................... 100 - not sure what I should have put here
Holiday................................. 0
Emergency fund.......................... 50 - should this be more?
Total monthly expenses.................. 1861


Assets
Cash.................................... 14800 - will explain this lower down.
House value (Gross)..................... 205000 - estimate
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 225800


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 72580....(518)......1.75
Total secured & HP debts...... 72580.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
credit card 1..................11100.....226.......0
credit card 2..................4500......99........6.9
Loan ( Paragon)................5700......248.......9.9 aaargh
MBNA 2.........................2390......70........19.9 aargh
small barclaycard..............800.......20........0
BNPL...........................1500......0.........0
HSBC...........................2500......75........0
tesco..........................4100......125.......16.9 aargh
M&S............................4100......41........0
Asda...........................3800......38........0
halifax 2......................3000......30........0
halifax 1......................4400......44........0
My worst credit card...........6900......191.......19.9 aargh
MBNA...........................6000......180.......20 aargh
Total unsecured debts..........60790.....1387......-



Total monthly income.................... 5,050
Expenses (including HP & secured debts). 1,861
Available for debt repayments........... 3,189
Monthly UNsecured debt repayments....... 1,387
Amount left after debt repayments....... 1,802 - this shows just how much we have been wasting. This figure makes me feel both sick and embarrassed.

Personal Balance Sheet Summary
Total assets (things you own)........... 225,800
Total HP & Secured debt................. -72,580
Total Unsecured debt.................... -60,790
Net Assets.............................. 92,430[

With regards to the £14800 savings. My DH received this from his parents recently. They cashed in some investments and shared it amongst their kids. The company my husband works for is going through a big restructure over the next 12 months and whilst he doesn't think he will be affected, we kind of feel that we need to keep this money, just in case. As soon as he finds out that his job is safe then we will use the money to pay off some of the higher interest debts. He hasn't worked at his company for may years so his redundancy would be quite low. The £14800 would need to tide us over until he found a new job, should this happen. I would like to forget that this money exists for the next 12 months,

I would welcome any comments,but please be gentle - I am struggling with it all today. I can see how awful it must have been for DH dealing with this. He has taken a total back seat in this and I think he needs a bif of space from the finances.

I am going to put this info through the snowball calculator in a minute, so I will let you all know how long this is going to take!

karencks

So I have put the numbers through the snowballing calculator. I have based this on us topping up our total debt payments to £2100 per month. I haven't included the loan in the snowball calculation as this has a fixed APR and monthly payments and ticks along nicely. I have deducted the monthly loan payments of £248 from the £2100 available for debt payments and this leaves us with £1852 to throw at the cards. This is what is says -

t will take you 35 months to pay off these debts if you snowball correctly. During that time, you'll pay £4,459.00 in interest.

If you paid the same amount per month, but changed the order in which you paid your debts so you weren't paying the highest interest rates first, it would cost you an additional £6,590.00 in interest.

35 months seems good to me. I expected it to be a lot longer. I can live with that. The loan ends in 2 and a half years so there will be an additional 248 to throw at the cards for the final year too.

I know that there are now guarantees that we will get new 0% deals when our current dealx expire so I ran the figures again with everything being at 20%apr. and it would take us 44 months and would cost over 20K in interest, so this is our absolute worst case scenario.

fatbelly

Available for debt repayments........... 3,189

I'd be surprised/impressed if this were ever true.

You need to budget for things that are essential expenditure but don't necessarily come up every month. For example car maintenance/MOT on 2 cars is going to be significant -I'd suggest 40 as a starting point

For clothing I usually work on a minimum of 3-5 per person per week, so 51 there.

Prescriptions/dentists/eye care could easily be £10 per person per month.

You own your own house. Will it need anything doing in the next 3 years? Because I think that is the sort of timescale you are looking at to demolish 60k of debt, and I think it's do-able

Personally I would try to get as many credit cards to long term 0% deals as I could, then use the savings to clear the high-interest ones. your mortgage looks good, and the 6.9%/9.9% apr debts are good enough to stay as they are

edit - cross posted with that 8.23 post but I agree with your thinking there