high income high debt!

optimizm

buythedip wrote: »

And yes, that ratio is very high, you’re basically knackered should one of you lose your job etc.

If I lost my job then we wouldn't be able to manage. If my wife lost her job then we could pay everything but there wouldn't be much surplus.

I appreciate you posting, however I am nor sure that telling someone that they will be ;'knackered' is particularly useful or supportive.

optimizm

Here is our SOA. Our minimum payments are a little less than £1400 on here as I have included the actual minimum amounts, and not the slightly higher amounts that I have been paying. This is the first SOA that I have done, so I may need to change some bits.

supportive/constructive comments please

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................ 3470
Partners monthly income after tax....... 1535
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 5005

Monthly Expense Details
Mortgage................................ 518
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 518
Council tax............................. 115
Electricity............................. 30
Gas..................................... 41
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 15
Mobile phone............................ 40
TV Licence.............................. 12.56
Satellite/Cable TV...................... 0
Internet Services....................... 25
Groceries etc. ......................... 300
Clothing................................ 50
Petrol/diesel........................... 150
Road tax................................ 10
Car Insurance........................... 75
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 200
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 10
Buildings insurance..................... 22
Contents insurance...................... 0
Life assurance ......................... 26
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 50
Total monthly expenses.................. 2377.56


Assets
Cash.................................... 0
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 216000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 59000....(518)......1.46
Total secured & HP debts...... 59000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
personal loan..................14500.....338.9.....3.7
barclaycard....................9850......208.......6.9
barclaycard 2..................4700......100.......6.9
HSBC...........................6000......180.......0
Halifax........................8500......220.......18.9
mbna...........................6000......180.......19.9
Total unsecured debts..........49550.....1226.9....-


Monthly Budget Summary
Total monthly income.................... 5,005
Expenses (including HP & secured debts). 2,377.56
Available for debt repayments........... 2,627.44
Monthly UNsecured debt repayments....... 1,226.9
Amount left after debt repayments....... 1,400.54

Personal Balance Sheet Summary
Total assets (things you own)........... 216,000
Total HP & Secured debt................. -59,000
Total Unsecured debt.................... -49,550
Net Assets.............................. 107,450

fatbelly

Looks good. I think your aim of paying your debt down by £1000 a month is achievable.

If you can lower the interest on your debts that would be more efficient. It's worth looking to balance transfer those 2 credit cards to 0%. Use a pre-eligibility checker first.

https://www.moneysavingexpert.com/credit-cards/best-0-credit-cards/

Skint_yet_Again

Is your management charge exactly the same amount as your mortgage ? Nothing spent on birthdays or Christmas ?

optimizm

Skint_yet_Again wrote: »

Is your management charge exactly the same amount as your mortgage ? Nothing spent on birthdays or Christmas ?

Well spotted! I don't pay a management charge so that's an error. Will update!

I have just found £518 that I can spend on Christmas and birthdays - only kidding, I agree that we need to factor those costs in too. For us, Christmas and birthdays have been areas of huge overspending so we need to have a discussion about that.

NeverendingDMP

Hiya. As said by others I would check for better credit cards etc. Also I would up some areas of your budget with a view to then cutting up or hiding your c cards in the freezer to not spend anymore. That way the numbers will only ever go down. It all depends on how strict you want to be. Are you going all out to pay the debt or going to still have treats along the way.
Christmas and birthday you have identified. I would also up your emergency fund and I would budget for a holiday as well maybe as four years is a long time.
50 a month for emergency would mean it would be at least 4 months before you could have a small emergency eg washing machine breaks before you could tackle it without using a card.
10 pounds for pet costs would only cover food or insurance. Depending on what kind of pet you may need more for annual jabs. Worm flea stuff etc and enough for insurance excess etc.
Ultimately it's whatever works for you but currently your SOA allows for debt repayment and other things as well. A spending diary going forwards and mini targets will help you along the way.
Good luck x

optimizm

Hi all,

I taken the error out of my SOA - I accidentally listed both my mortgage and a management charge. I don't pay a management charge so my SOA was £518 out.

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................ 3470
Partners monthly income after tax....... 1535
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 5005

Monthly Expense Details
Mortgage................................ 518
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 115
Electricity............................. 30
Gas..................................... 41
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 15
Mobile phone............................ 40
TV Licence.............................. 12.56
Satellite/Cable TV...................... 0
Internet Services....................... 25
Groceries etc. ......................... 300
Clothing................................ 50
Petrol/diesel........................... 150
Road tax................................ 10
Car Insurance........................... 75
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 200
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 10
Buildings insurance..................... 22
Contents insurance...................... 0
Life assurance ......................... 26
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 50
Total monthly expenses.................. 1859.56


Assets
Cash.................................... 0
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 216000


Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 59000....(518)......1.46
Total secured & HP debts...... 59000.....-.........-
54
Unsecured Debts
Description....................Debt......Monthly.. .APR
personal loan..................14500.....338.9.....3.7
barclaycard....................9850......208...... .6.9
barclaycard 2..................4700......100.......6.9
HSBC...........................6000......180...... .0
Halifax........................8500......220...... .18.9
mbna...........................6000......180...... .19.9
Total unsecured debts..........49550.....1226.9....-


Monthly Budget Summary
Total monthly income.................... 5,005
Expenses (including HP & secured debts). 1859.56
Available for debt repayments........... 2,627.44
Monthly UNsecured debt repayments....... 1,226.9
Amount left after debt repayments....... 1,918.54

Personal Balance Sheet Summary
Total assets (things you own)........... 216,000
Total HP & Secured debt................. -59,000
Total Unsecured debt.................... -49,550
Net Assets.............................. 107,450

-taff

This is probably not going to be something i would normally say but you have a mortgage and are the one earning the most. You only have life cover. I would start considering whether you would be better having life and critical illness, or income protection. This is because you have the spare income to afford that and to ensure that if you did lose your job or were too ill to work, your plans would not be thown in the bin.

Dobbibill

Hi optimizm - welcome to the forum.

Well done on completing the SOA. A SOA is rarely accurate the first time and often needs a few tweaks to get it spot on. It also requires reviewing on a regular basis but you've certainly done well to get 2 done already.

A few things from me to give you food for thought.
You have 2x cars but only £30 pcm in the maintenance budget for them, I would consider upping that - a puncture would wipe that out instantly without wipers, oil etc.

You need to add something into the Christmas/birthday presents - take what you spent previously and divide by 12. This will give you a realistic figure and unless you are planning on cutting back will be right amount going forward.

You have nothing in the 'cash' entry which I understand as you are just starting your emergency fund but I would consider using the spare funds in the first month to get that set up - £1k as an EF for a homeowner is standard. Then add the £50pcm to maintain it.

Budget for a holiday too - you won't want to go for 4yrs without one, it will make you resentful and annoyed.

It is do-able but you will need to focus and self disciplined.
If it helps, set up different account for each purpose.

All the best.

DrEskimo

As above, I think it's worth doing the SOA based on your actual spend, as this first draft looks more like what you hope the future budget to be.

By doing one based on your actual previous months expenditure you can see where you have been over spending, and whats a realistic budget to maintain.

On a cursory glance, there are some aspects of the SOA that I just think are not realistic. The main one being the £100 per month entertainment fund. Are you really only going to spend £25 between you, your partner and your child a week? Look back at what you are spent in the last few months and compare to decide whether that is feasible. Same with the food budget and car maintenance.

It goes without saying that if you could easily stick to the above budget, then you would have had >£3k surplus income each month before you took on these debts. So clearly you were spending a lot more than the SOA to be in a position of having £49k worth of unsecured debt...

What was these debts on? Was it just bad spending habits that accumulated over many years, or was it large items that you had to take on credit due to not having any emergency savings? Debt is the symptom, and you need to identify why you got into this position to ensure you don't continue or end back up in the position again in the future.

If you can reduce your spending to the above SOA amount and actually stick to it, you could clear all your debt in just 2yrs....