A new bundle creating a new motivation

Kebby

Hi everyone,

Apologies in advance for the long post!

So I started a diary 2 years ago now, successfully getting our debt down from around £12k to 8k - unfortunately the husband got a new job in sales and earnings took a big hit, but our spending didn't adjust.. the cards racked back up and we're now shamefully worse than we were 2 years ago. Since then my husband has gone back to his old, better earning and more steady job, I've received a payrise and our out goings have changed drastically. We now also have a new bundle of joy who is 6 weeks new - and so I'm now determined more than ever to get us back on the straight and narrow and set a good example for our son.

I am on maternity leave until February, with very little assistance from my employers, it means that we won't be able to start making a dent in the debt until I go back to work - but my goal until that point whilst I'm still off is to ensure nothing else gets added to the debt at the very least. I'm not completely sure how much money I will be receiving every month due to tax, so that's a little up in the air - but I believe we'll only just be able to cover our bills. But my husband will also being doing overtime to earn us some extra pennies, so hopefully we can use this wisely.

A bit more background on our spending - we like cars, and therefore we have 2 very expensive PCP payments on cars. Whilst I completely appreciate we spend a silly amount on them, it now is what it is and that won't be changing anytime soon - so I'm determined for this not to stop us from getting our debt under control. We also do have an expensive holiday coming up in May next year, anticipated required spend for this is around £3.5k (probably over estimating but would rather have more and then have some left over), and a small break in Cornwall in December this year, around £350 required for this, so both of these figures need to be factored into our savings before we can touch the debt.

As you can see - we've made some silly choices, luxury holidays, luxury cars, big mortgage etc etc. But at the end of the day, we are where we are and are looking towards the positive future where we no longer have any credit card debt. A big sticking point for us has always been our 'food' budget, we have notoriously spent a ridiculous amount, so over the last few months I've switched our weekly shop over to Aldi and have been working on weekly meal plans, and we've managed to get this much more under control. Last month having our son caused a bit of a blip in this and we spent a lot again, but will be back on track this month! We already save monthly towards our annual bills, e.g. home insurance, car maintenance/insurance and Christmas, and generally I try to be quite thrifty in using quidco and buying and selling bits on Ebay and Facebook etc.

So essentially this diary is to help motivate and keep me on track with the things we need to save for and our credit card debt. All credit card debts moved onto 0%, we also have our sofa's on 0%.

Balances:
Sofas: £29.86/£239
Credit card 1 - MBNA: £85/£8261.30
Credit card 2 - Virgin: £52.25/£4334.40
Cornwall - £350/£350
May Holiday - £75/£3500

And some much longer term goals (so I have them on record!!)
- To save up some money to do up an old 1973 mini my husband purchased with some money left to him years ago - once this is done we're keen to rent it out as wedding/especial events car
- To save money towards a deposit for a second mortgage to be able to do some property development

Before I pop up our SOW for you all to be shocked at, I have a couple of questions that would be great to get some advice on:

1. I have a student loan of around the £3.5k mark (pre-2012) - my parents have offered to pay this off for me and for me to pay them back on this to avoid the interest, but what I'm not sure is if not having the interest out weighs any tax benefits I get from the payment coming out of my wages before tax? I currently pay £162 towards this every month.

2. Should I bother trying to pay our sofa finance off? It will be finished in April next year and payment is only £30 a month on 0%. But presuming that our credit rating will improve/we will be looked upon more favourably if we pay it off early? I suppose if nothing else paying it off early will give us a morale/motivation boost and an extra £30 to put towards our credit cards every month.

3. I have several credit cards that have no balances and I no longer use, one of them has quite a big limit (over £16k). I'm not sure whether it is better to keep these open and unused to keep my available credit used ratio down, or whether it's better to close them from a credit score stand point?

4. We have some money that we received from relatives when they passed, some of this has been spent and we now have around £3,700 left - we've been hanging onto it not wanting to spend it in case things went tits up whilst I was on maternity leave, and also because quite honestly I felt a little sad in using it to pay off our debts - but are we being silly, should we just suck it up and pay this off our credit cards??

Ok so onto the SOW...a few notes in line just to explain a few bits, and to confirm this is based on my income when I go back to work. Also to note I've not included any entertainment/clothing allowance because I really don't know what to allocate to this, it's kind of whatever/whenever at the moment, although I must admit we very rarely buy clothes. Keen to hear what people think would be a good amount to allocate to both of these things?

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.................... 3] This includes the mini mentioned above

Monthly Income Details[/b]
Monthly income after tax................ 2349
Partners monthly income after tax....... 1924
Benefits................................ 80.2 - When I go back to work I want all of this to go into a savings account for little one
Other income............................ 0
Total monthly income.................... 4353.2

Monthly Expense Details
Mortgage................................ 983 Fixed rate ends in March, and believe it will go up due to interest rate rise
Secured/HP loan repayments.............. 986
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 199
Electricity............................. 49
Gas..................................... 40
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 0
Mobile phone............................ 104 Husbands contract up for renewal in October - will be going to SIMO so this will reduce
TV Licence.............................. 24
Satellite/Cable TV...................... 55
Internet Services....................... 35 Again this and TV is up for renewal in October, so looking at what we can do here to reduce, sadly limited in being only able to have Virgin or BT internet
Groceries etc. ......................... 400 Including nappies, formula, dog/cat food and toiletries.
Clothing................................ 0
Petrol/diesel........................... 200 Estimated at this stage, not sure how much Diesel the new car will use when I return to work
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 150 This includes tax, insurance and servicing, does not include tyres - we will pay for these as they come up
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15.5 Contact lenses
Pet insurance/vet bills................. 23.11 Includes pet insurance and flea treatment, vaccinations paid as they come up
Buildings insurance..................... 12 Includes contents
Contents insurance...................... 0
Life assurance ......................... 10.8 With buba arrived we need to reconsider this as we are massively undercovered.
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Lottery................................. 18
Total monthly expenses.................. 3349.41


Assets
Cash.................................... 3700
House value (Gross)..................... 410000
Shares and bonds........................ 0
Car(s).................................. 1200
Other assets............................ 0
Total Assets............................ 414900


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 275822...(983)......1.34<
Sofas..........................239......(30).......0<
PCP car 2......................0........(608)......0< Not sure on the interest rate or balance
PCP car 1......................23953....(348)......0 Not sure on the interest rate
Total secured & HP debts...... 300014....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
MBNA...........................8261.3....85........0
Virgin Money...................4334.4....50........0
Total unsecured debts..........12595.7...135.......-


Monthly Budget Summary
Total monthly income.................... 4,353.2
Expenses (including HP & secured debts). 3,349.41
Available for debt repayments........... 1,003.79
Monthly UNsecured debt repayments....... 135
Amount left after debt repayments....... 868.79

Personal Balance Sheet Summary
Total assets (things you own)........... 414,900
Total HP & Secured debt................. -300,014
Total Unsecured debt.................... -12,595.7
Net Assets.............................. 102,290.3

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

Honeysucklelou2

Congratulations on your new arrival. Savour this precious time...

On a totally different tangent, depending on when you are visiting Cornwall in December, Mousehole is well worth a visit with the Christmas lights around the harbour ( and the story of The Mousehole Cat is a great read for children!)

[Deleted User]

First things first....Congratulations!! :j Being a new mum is scary and tiring but it's the best thing in the world :smileyhea:smileyhea:smileyhea

As far you're queries are concerned I'm afraid I'm not much help - 1.never had a student loan so know nothing about them; 2.personally, I would ditch the interest free sofa payments and pay the cash (if you have it) but if you have an overdraft or anything that is interest charging, I'd pay it to that. 3.I'd get rid of the credit cards you don't use so that you can reduce the temptation (16k is a scary amount!!) and 4.I would keep the cash you have been given as an emergency fund

You said that you have done your financial statement on your income when you return to work but there is no budget for childcare costs on there? Not sure if this is the case or if you have omitted it in error so thought I would point it out

I'm sure you'll do well - babies are expensive and it's so tempting to buy a mountain of stuff for them that you will get very little use from so there are generally bargains to be had on facebook, freecycle etc - unfortunately, as a first time grandparent I have not heeded my own advice on this and spent an absolute fortune on my grandbaby - he really is my one area of total weakness! :rotfl:

With cooking - try to batch cook where possible it will save time and money in the end - plus you can escape to the kitchen and let the oh look after the baby while you do it!

Good luck on your journey, I'll be cheering you on!!

Willing2Learn

And another post congratulating you on your new bundle of joy!!

On your SOA, you need to include the money you are spending on your holiday and also for entertainment. You've hinted that you like your luxury spending and this needs to be included. You also need to include the cost of tyres as these are probably a lot if you have luxury cars...

Sorry if I seem nit-picky It's just if you are looking to address your debt level, then things need to be accurate.

enthusiasticsaver

Firstly to address your questions. I would not pay off the student loan early. As interest rates go they are at a fairly low rate and you only pay it off if you are earning a certain amount. Depending on what scheme you are on this may be never depending on whether you are going back to work full time or part time. Presumably you have looked into childcare costs as this will make a massive dent in your income when you return to work unless you have some family help?

If the sofa is on 0% I would let this run its course. You are fairly heavily committed to costs on cars and your mortgage is not small so if you have childcare costs to pay once you go back to work you may want to consider cancelling the holiday if you don't want that debt to increase any further as in many cases it can be almost as much if not more than a mortgage. You get no help until the term after your sons third birthday although there are a few schemes where you can get vouchers from your employer or the tax free childcare costs where you at least get some tax reimbursement (20%). You will not get tax credits on that income.


What interest rate are you paying on those credit cards? Are they really at 0% and if so when do the deals expire?

Kebby

Thanks Honeysuckle - we're heading to Padstow, so I'm not sure where this is in relation but I'll definitely have a look!

Thank you all for your kind replies. Just to address the childcare a few of you have mentioned, apologies I should have mentioned this in my original post, we are extremely lucky because my husband's mum is a child minder and my parents are required, so childcare will be split between them. I'll be going back to work in February - I have a few weeks annual leave to use so I'll be using this to make myself part time for a couple of months, so essentially getting a full wage still, and then after that will be full time, so in regards to student loan payments these will continue.

Credit cards are on 0%, can't remember the exact terms for each but we only just switched to them before our son came along so we've got a couple of years at least on them both (I'll dig out the exact dates).

I think you're right Willing2learn - I actually think a lot of our problems have come from additional costs such as tyres (you're right they will be bloody expensive!), additional vet costs etc etc so I think I need to have a rethink on our budget and allocate for these.

And in terms of entertainment and holiday expenditure etc, I haven't included these as I was keen to see what we had left to allocate towards all of these - so now I know I'll take a look at where we can put the excess money

jackieblack

If you don't have any emergency expenditure before your maternity leave finishes, I would use the inheritance money to pay for the £3.5k holiday, then the money you would have spent on the holiday can be used towards paying off the debt.

I could then enjoy the holiday (without feeling guilty about spending that amount on a holiday when there is debt to be repaid).

brizzlegirl

Hi :wave: well done on posting..seem to remember I would have been incapable of doing anything 6 weeks after birth of my first...let alone start to tackle my debts :rotfl:

I echo the comment on using the inheritance to spend on the holiday. It means that their contribution feels used for something other than debt, but you’re not adding to your debt then whilst you’re on ML.

Our weakness is groceries too. Check out local greengrocers, butchers and stuff. Go seasonal. Ethnic supermarkets are great for cheap staples. Shifting to Aldi seems a good idea.

Best of luck x

enthusiasticsaver

I think I would use savings or inheritance money for the holiday as already having £312k of debt I would feel uncomfortable adding to that. I think you have to ask yourself where most of your money is going as on that soa you have over £800 monthly spare income although I appreciate your husband was on a different income until recently. You need savings pots for those cars and you should add up what you have spent on them this year and divide the amount by 12 to get a monthly spending amount. The holidays also need saving for and whilst you have put the minimum monthlys down for the credit cards they wont be cleared within the deal period so I would definitely be increasing that. Presents, haircuts, personal money etc is variable according to disposable income. Once you have allocated money to clothing (your son will need some at least) and holidays, entertainment, xmas and gifts, car maintenance, emergency savings then personal money depends on what is left over.

I would forget your credit score and close the cards you have down. If you have a few years until the balances on the cards need moving then concentrate on clearing them in that period and stops you being tempted to spend on them given you are already heavily in debt with the cars. I would also ditch the lottery. The chances of winning are so remote and you are spending £216 a year on that.

Kebby

squirrelgirl wrote: »

First things first....Congratulations!! :j Being a new mum is scary and tiring but it's the best thing in the world :smileyhea:smileyhea:smileyhea

As far you're queries are concerned I'm afraid I'm not much help - 1.never had a student loan so know nothing about them; 2.personally, I would ditch the interest free sofa payments and pay the cash (if you have it) but if you have an overdraft or anything that is interest charging, I'd pay it to that. 3.I'd get rid of the credit cards you don't use so that you can reduce the temptation (16k is a scary amount!!) and 4.I would keep the cash you have been given as an emergency fund

You said that you have done your financial statement on your income when you return to work but there is no budget for childcare costs on there? Not sure if this is the case or if you have omitted it in error so thought I would point it out

I'm sure you'll do well - babies are expensive and it's so tempting to buy a mountain of stuff for them that you will get very little use from so there are generally bargains to be had on facebook, freecycle etc - unfortunately, as a first time grandparent I have not heeded my own advice on this and spent an absolute fortune on my grandbaby - he really is my one area of total weakness! :rotfl:

With cooking - try to batch cook where possible it will save time and money in the end - plus you can escape to the kitchen and let the oh look after the baby while you do it!

Good luck on your journey, I'll be cheering you on!!

Ah thank you - very sweet of you!

I've found Facebay to be a godsend in terms of cheap baby items like you said - didn't realise quite how cheaply you could get things, definitely always my first port of call!

In terms of batch cooking - normally when I do some sort of pasta dish I make a little more to give us a couple of portions for lunch, but definitely interested in looking at creating some big batches of yummy food, if not just for ease! I'll swing by some of the other boards and see if I can find some recipes.

Kebby

A few positive things to report from today.

Realised I get a 'baby bonus' from my private medical insurance (through work), this is £100 - so I've applied for that so should hopefully receive it soon. I'll pop this towards our trip to Cornwall alongside the £125 I already have which has built up in our Natwest Rewards account.

Went over to the in-laws this evening and they gave us a multi-pack of 4 baby wipes and a jar of Korma, ha. Small wins...every little helps I guess!

Also successfully managed to persuade other half out of buying the new bloody iPhone (for now!!). He's a nightmare, has the newest iPhone as it is and only got this in January. Things like this are definitely what have caused our problems..