Our SOA...

JamesEmma

Evening all,

Finally got round to filling in our SOA having been a lurker for a few months. So we are married 37 and 32 years old with a 1 year old daughter, both public sector full-time, living in private rented accomodation. Over the past 7 years our debt has slowly but surely increased and we are now determined to tackle it once and for all. Our credit files are above average.. we never miss payments. We earn relatively well but our accounts have to date been all over the place with money coming out all over the place so it's been difficult to truely know how much money we've got left before the next payday. We have this week however gone through all our commitments and have organised all our outgoings to come out of two separate accounts. 1 services our debts and the 2nd everything else. We've set up standing orders to feed these accounts on our respective payday and theoretically whats left in our individual accounts is spare and will be used to cover unexpected expenses / things we haven't thought of and ideally will be thrown at our debts.

Our goal is to become debt free in 2 to 3 years and ultimately buy a house.

Please see our SOA below. I'm sure there's things I've forgotten so any suggestions and thoughts appreciated...

Thanks
James

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................ 3000
Partners monthly income after tax....... 1750
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4750

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 1100
Management charge (leasehold property).. 0
Council tax............................. 230
Electricity............................. 31
Gas..................................... 31
Oil..................................... 0
Water rates............................. 24
Telephone (land line)................... 0
Mobile phone............................ 70
TV Licence.............................. 12.5
Satellite/Cable TV...................... 0
Internet Services....................... 30
Groceries etc. ......................... 250
Clothing................................ 40
Petrol/diesel........................... 250
Road tax................................ 20
Car Insurance........................... 70
Car maintenance (including MOT)......... 40
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 299
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 17.5
Life assurance ......................... 11.8
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 50
Entertainment........................... 8
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2634.8


Assets
Cash.................................... 4000
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 9000
Other assets............................ 0
Total Assets............................ 13000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
E First Direct Loan............16649.1...574.1.....0
J First Direct Loan............11510.5...217.2.....0
Credit Union loan..............8082.75...245.2.....0
Benson for beds................2134.72...78........0
HSBC CC........................5850......200.......0
Loan through work..............8624.95...191.6.....0
Total unsecured debts..........52852.02..1506.1....-


Monthly Budget Summary
Total monthly income.................... 4,750
Expenses (including HP & secured debts). 2,634.8
Available for debt repayments........... 2,115.2
Monthly UNsecured debt repayments....... 1,506.1
Amount left after debt repayments....... 609.1

Personal Balance Sheet Summary
Total assets (things you own)........... 13,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -52,852.02
Net Assets.............................. -39,852.02

JamesEmma

A couple of points I should add..

The APR's on our unsecured loans are shown at 0%. The truth is the the first direct loans are 3.3%, the HSBC credit card is 0% for another 32 months, the other two loans - both through work - were mainly for vehicle purchases at 5.9%,.and Benson for beds loan is 0%. All the totals include the original loan amount plus the interest that will be paid over the payment period so they won't go up as we have no intention of stopping payments.

Our child care costs are actually in the region of £800 A month - £299 is what we pay on top of what we already pay with childcare vouchers. Our take home pay figure reflects the total after the vouchers have been paid for.

On a similar note the credit union loan payment is also taken directly out of my pay so we don't have to pay that again..

Hope this doesnt confuse things too much?

enthusiasticsaver

I am guessing you have consolidated debt a number of times as the only asset you have to show for the debt is the car. Good you have some emergency savings though. Surely if the credit union and work loan are paid prior to the take home pay you have quoted you have a further spare £435 approx giving you over £1000 disposable income? To have got to that level of debt with your income there are some serious gaps in your soa as to where your money has been going. You have explained two of the loans were for cars but the first direct loans and credit cards amount to more than £34k so how did you overspend to that sort of level without a house to show for it? Was it maternity leave or holidays, gambling?

Separating your essential bills and debt repayments out sounds sensible and the only thing that looks high on your soa are the mobile phone costs. Presumably though you have been overspending in areas not shown on the soa so a spending diary would be sensible. I know the credit card is 0% for 32 months but I think I would tackle that first by using spare income to pay more than the £200. You seem to have accumulated £4000 in savings so I assume you have either been getting to grips with your spending recently or is this money left over from one of the loans after consolidating? There are quite a fe gaps on the soa in terms of holidays, never? And very low entertainment.

You have some positives in that the interest you are paying is low and you have enough income to sort this but £52k debt is a lot for very little in the way of assets and £1500 out of your pay every month is affecting your future and ability to save for a house etc. Getting this sorted is a good move before it gets higher or one of you loses your job and leaves you unable to make payments. If you are able to save out of the spare £600 a month I suggest you do that until you have enough to pay off one of the three loans providing you will be disciplined enough not to spend. . I would leave the bed payments as they are.

MallyGirl

is this aspiration or based on looking at past spending?
2 young people with a baby spending less on clothes than on haircuts and only 8 per month on entertainment seems unlikely. You never get a coffee when out - or is that the £8 per month? You never go to softplay/swimming/some other activity to get you out of the house with a small person?
I would suggest keeping a fully itemised diary for a month - it will be an eye opener.
Do you not claim child benefit?

getmore4less

Over the past 7 years our debt has slowly but surely increased and we are now determined to tackle it once and for all.

I would look at how much they went up/down in 2018(Jan-Dec) and where all the money went in 2018(income + change in debt).

That is a realistic starting point for 2019 as you can see where your cutbacks will need to be to get to the SOA you have that has a surplus of £600pm

I think it is better to put the real current debt, payment and interest rate it gives a better picture than what you have done.


Spending diary is going to be essential to get the SOA accurate going forward.

Exodi

MallyGirl wrote: »

Do you not claim child benefit?

JamesEmma wrote: »

Monthly income after tax................ 3000

It's vague here as we're unaware as to whether the OP is ineligible for Child Benefit or unaware.

Individuals earning between £50,000-£60,000 gross a year are entitled to less Child Benefit, with those earning £60,000 a year entitled to nothing (this applies to whomever is the highest earner between partners - research "High Income Child Benefit Tax Charge" for details).

Whilst £3,000 take home a month would suggest a gross salary of £49,000 (:rotfl:), the take home doesn't indicate benefits like a company car or salary sacrifice pension contributions, etc. The point is they could easily be earning more than £60,000 with a take home of £3,000 and thus be ineligible for Child Benefit. Always good to check though!!

JamesEmma

Thank for your reply...


Where to start..


Firstly yes theres been lots of debt consolidation over the years. I left uni in 2004 and have been in credit card and loan debt ever since 15 years on and I am where I am. I have never budgeted and have never said no to buying anything I've ever wanted. Holidays...cars...motorcycles... going out socialising.. Ive essentially consolidated over and over and the total debts just climbed and climed.

Emma and I have been together 7/8 years and together have continued this living beyond our means...holidays.. nice things... pub lunches etc etc. 'd say the debt splits is £35k in my name £15k in here. That's said the debt is both of ours - I've just put most of it in recent years in my name because a) I've had better access to credit and b) I'd rather it in my name where I can keep an eye on it and not have it add to her stress.

The credit union loan £245.20 a month comes off before I get paid.. the work loan comes out from my bank after I've been paid (to clear that up)

I should probably point out also that a lot of this debt has been accumulated in the last 2 years. We had a baby so Emma was on maternity leave and only last month we got back from New York where we blew 7-8k getting married (inclusive of flights/hotels/clothes/enjoying ourselves) One way or another thats rolled Into all that debt.

Hope this helps clarify some of the concerns you raise and thanks for your time..

JamesEmma

MallyGirl wrote: »

is this aspiration or based on looking at past spending?
2 young people with a baby spending less on clothes than on haircuts and only 8 per month on entertainment seems unlikely. You never get a coffee when out - or is that the £8 per month? You never go to softplay/swimming/some other activity to get you out of the house with a small person?
I would suggest keeping a fully itemised diary for a month - it will be an eye opener.
Do you not claim child benefit?

It's an aspiration and is the first time we've written down what we spend...everything in that list will be covered by what we send to the two respective accounts I've mentioned. It'll probably leave a disposable income of around £1000 A month for everything else day to day / to throw at the debt..

Re child benefit... We do claim and put it directly into a savings account for her. Last year I earned £55k pre tax and this year will likely hit 60k. I'm still not sure it was ever worth claiming as am pretty sure we will have to pay some/all of it back. My salary is actually £45k a year but I earn garuanteed over time. My monthly take home varies month to month... from anything between £2500 on a bad month to £4000 on a very very good month...(after pensions deductions, credit union repayment and maxing out the available child care vouchers (£246ish I think it is))...

Chandelier.

With such a variable income on your part, I'd work out the budget on your minimal wage and see how that works out. You could then treat the additional money as extra to throw at debt repayments.

It's so easy to fall into the debt traps but it seems you have enough disposable income to cover your debt repayments at this time and that a many are on low interest rates.

Pop your figures into the snowball calculator and see what that advises in regards to paying off which debt first etc. The snowballing method works a lot for people and gives you an idea of a debt free date. Whilst making minimum payments, it shows you where the throw the extra repayments too.

Some prefer to pay off the higher interest debts first whilst others prefer to get rid of the smaller balances. It all depends on what works for you psychologically.

I think you need to tweak your budget and make it more realistic. There are a few areas you could cut back on such as the mobile phone contracts, haircuts (try to leave longer between cuts) and possibly save a little on your groceries spend. You also need to factor in costs for entertainment, emergency funds, savings etc. Your budget looks like its stripped back to basics in certain areas but not in others and will possibly not be sustainable long term.

It's good you are looking to tackle your debts but you need to enjoy the little things in life as well or else you could find yourselves being miserable.

Cut up the CCs, stop borrowing from your future selves and start to save up for future expenses and bills. Shop around and use price comparison websites for all expenses such as car insurance, gas and electricity, content insurance to ensure you are getting the best prices possible. It may also be useful to check cashback websites such as topcashback or quidco to see if they offer any cashback when it comes to renewing expenses.

Good luck.

theoretica

JamesEmma wrote: »

It's an aspiration and is the first time we've written down what we spend...everything in that list will be covered by what we send to the two respective accounts I've mentioned. It'll probably leave a disposable income of around £1000 A month for everything else day to day / to throw at the debt..

I strongly urge you to look more closely at that £1000. If it is left as 'disposable income' it will find itself spent without thought. Decide how much you are happy to get spent without thought - on coffee and clothes and entry to the zoo and give the rest a place. I suggest putting some to debt repayment, some into a savings account for emergencies/things you will need to change your SOA to include (is your car maintenance high enough?) and a bit into a savings account for bigger purchases to be made after thought and discussion (like holidays or a new computer).

katsu

JamesEmma wrote: »

It's an aspiration and is the first time we've written down what we spend...everything in that list will be covered by what we send to the two respective accounts I've mentioned. It'll probably leave a disposable income of around £1000 A month for everything else day to day / to throw at the debt..

That means your budget isn't your budget. You aren't making decisions on where 21% of your income is going.

It might take you some time to get to a realistic budget after years of overspending, but you will clear the debt a lot faster and happier if you make decisions about things like saving for a holiday. You need to switch to saving up for things not putting them on cards, and having £1000 a month that just gets spent randomly isn't going to help you as much as looking at your spending together and deciding what it really costs to for example go out once a week with friends, and what you want to do as a family. You can't decide to save money for the summer, for example, if you aren't looking at your money up-front and over time. You will still be living month to month.

I think getting specific and thoughtful up front about your spending will be far more beneficial for you.

Sorry.