Our SOA...

JamesEmma

You are echoing exactly what we've been discussing this evening and we both totally agree. I was already thinking that our original SOA was only a start. I guess the truth is neither of us, having never budgeted in our lives, have no idea what budgeting is. I never really think about where the money for something come a from and, though it's most likely an excuse, would argue every month is totally different... I work shifts and Emmas a teacher so some months we may find the three of us are all off together more often than others. When we are off we may or may not do things that cost more or less money. If we happen to decide one Sunday morning go out to a national trust for example... We'll undoubtedly have coffee and cake etc there... and then perhaps a pub lunch and a couple of pints in the afternoon. This sort of thing month to month may or may not happen...sometimes we may go twice a month an then other months not at all. The same goes with it spending whilst out at work. It does feel I'm taking my card more some months that others depending on where I'm working and what I'm doing.. I never know more than a week or so in advance. If I worked a nine to five Monday to Friday things would be so much more straight forward.

On a positive note, having been listening to Dave Ramsey in the car the past few days, I've just got off the phone and have now cancelled all my other credit and stors cards.

Oh and in relation to the £4000 we have - it was a gift when we got married in December. (We were given £5k, used 1k of it, and put £4k into an ISA to start on our buying a house deposit)

JamesEmma

*tapping my card

JamesEmma

Chandelier. wrote: »

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.

Cards all gone. Have you a link to that snowball calculator? Google found a few. Borrowing from our future selves is exactly what's been happening..

JamesEmma

So I did what I think is a more realistic SOA and I have lowered my take home pay to £2500 as this is the very least i expect to be bringing in. In reality this should rarely dip below £3k - any extra I will chuck at our lowest debt. The only anomolie In the SOA is credit union payment of £245.2 (which comes out pre being paid.)
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................ 2500
Partners monthly income after tax....... 1750
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4250

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 1100
Management charge (leasehold property).. 0
Council tax............................. 231
Electricity............................. 31
Gas..................................... 31
Oil..................................... 0
Water rates............................. 24
Telephone (land line)................... 0
Mobile phone............................ 80
TV Licence.............................. 12.5
Satellite/Cable TV...................... 7.8
Internet Services....................... 30
Groceries etc. ......................... 250
Clothing................................ 50
Petrol/diesel........................... 250
Road tax................................ 2
Car Insurance........................... 77
Car maintenance (including MOT)......... 50
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 299
Other child related expenses............ 20
Medical (prescriptions, dentist etc).... 25
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 17.5
Life assurance ......................... 11.8
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 50
Entertainment........................... 0
Holiday................................. 100
Emergency fund.......................... 0
Garden Maintenance...................... 4.81
Daughters savings account............... 25
Meals out / Takeaways................... 30
Lottery Syndicate....................... 10
Hobbies................................. 5
Days out / National Trust............... 59.5
Total monthly expenses.................. 2933.91


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
First Direct Loan E............15500.9...574.1.....0
First Direct Loan J............11076.1...217.1.....0
Work Loan......................8241.61...191.6.....0
Benson Beds....................2134.72...78........0
HSBC C/C 0%....................5925.67...200.......0
Credit Union loan..............7562.31...245.2.....0

getmore4less

Either

add the credit union payments into the income
(add a new line)

or take them off the outgoings
(set the payment to zero .

You need the totals/surplus to be right.

not sure which is best probably adding to income as you then have all the details in the debt section for a snowball calculations.

http://www.stoozing.com/calculator/

................................

Get those APR on the debt section.


...............................
This stood out from the post it was in.

I never really think about where the money for something come a from and, though it's most likely an excuse, would argue every month is totally different.

This is exactly why you need to budget every month is different so you need to have a plan that takes that into account.

The SOA is a monthly average view.

The reality is we all have variable spends on different schedules
week days, weekend days, monthly DD, annual bills, quarterly bills, Xmas........

The demand on the money are not the same every month, with a plan you can workout what is available for each type of spend

You also have term time weeks V not term time and your shift which add more variability.

IN the first instance the plan needs to be a full year.

what you do is take the estimated annual incomes and dish it out to all those demands

It does not really matter what year you choose might as well be calendar*** as we are at the start of 2019.
Some prefer financial year, you may find school year might work.

A lot of the items for the year will be regular and fixed and priority
rent/council tax, food..... you have those sorted

Then what's left can be allocated to other stuff till the budget balances for the year

so taking your example

If we happen to decide one Sunday morning go out to a national trust for example... We'll undoubtedly have coffee and cake etc there... and then perhaps a pub lunch and a couple of pints in the afternoon. This sort of thing month to month may or may not happen...sometimes we may go twice a month an then other months not at all.

Decide how much of you total income for the year you want to spend on this activity, lets go with average once a month and each day out costs £60 you have £720 for the year

Each time you go it comes off the total and then you have less to cover the rest of the year, find the fun Sunday money is running out you put more into this category and take it off a different one.

This is the key there is no more money, overspend on one thing you have to cutback somewhere else.

You need to plan where the extra for one category is coming from in advance before you spend it.

This is why the spending diary is crucial to keep track of where you are on and off plan.

Going back to the variable, you will know that during the school hols some expenses may go up but others go down

is important to know what the cash flow will be so the money is there when you need it.


Most SOA take a while to get right, it is quite common for people to have no idea where there money goes and just tracking often solves the biggest problem overspending.


Although I said above a year plan, that is the minimum to get you started, you also need to look ahead into future years where there may be big spends or reduced income.

If you are planning another kid that makes the longer term plan a bit more urgent.


I think any SOA should have no surplus(they have a habit of getting spent).
Every penny should be allocated a job either a spend or a saving.

if all the debts are listed with the min payments you can then add a snowball line inthe spends to use up the surplus.
I also think the emergency fund needs something allocated.

Also think about priorities for the discretionary spends so if your spends don't match the plan you are in agreement where the cutbacks will be.

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

I think a 5 year plan would be a good idea.

You will have over £280,000 to allocate(unless you have another baby).


If you like tools you could do a spreadsheet or use something like MSMoney to have the 5 year plan mapped out.

You can also do "what if" scenario like what would the plan look like if we had a goal of debt free with £50k saved in 5 years.

Goals are very good motivators.

---

*** although you start with a year what actually needs to happens is you have a continuous rolling year or longer term plan that gets regular reviews.

if you start with Jan-dec 2019 by April you should have Jan-March 2020 mapped out in detail.

clairebeth

Well done. Looks like you are really getting on board this together.

I agree about the mobile phones, get on GiffGaff or similar for £10 a month asap and don't get a new phone until your current one dies completely (and then have a budget for your new one).

I find the easiest way to stick to the grocery budget is to have a separate account that I have a standing order of £250 a month sent to it on pay day. I use a Monzo account and it updates immediately and I can keep track of just how much money I have left for groceries and makes sure I stretch it all out until pay day. You have the same budget that we have for a family of four and this can be done very comfortably, including nappies (although we use cloth ones during the day), don't buy Pampers thigh, money for old rope, just get the cheapest own brand ones. Lidl is our supermarket of choice and is also our nearest. Every couple of months I get an online Asda delivery (it still comes out of that £250 budget) of heavy things like tinned tomatoes, pasta and chickpeas so I don't have to lug them home in the bottom of the buggy and then just supplement with small shops for fresh food. It also means I always have store cupboard ingredients to make something quick and easy and make the budget last. I don't get another Asda delivery until the cupboard is bare!

Another thing Monzo accounts, or Starling, which is similar, are good for is that you can create little 'pots' and name them. So you can literally have a pot for haircuts and put £25 a month into it and know you will have the £50 set aside in two months time for your haircut. Or a pot for Christmas or a special date night or whatever.

I'm not sure whereabouts you are living, but does your council tax suggest you are living in a biggish house? (I have no idea what council tax rates are in England, but we pay £124 for a two bed flat in Edinburgh, although I appreciate we are very fortunate). Would you consider downsizing while you are still renting? We had a two bedroom when we had our daughter and we never used that second room until she was nearly three! We could have had a one bedroom for a lot longer than we thought! And if you did move, would it be possible for you to live somewhere where it meant you only needed one car? That would also save you a bit of cash?

We are similar to you in that I work shifts and hubby is a teacher. Would it be worth going back and comparing cost of nursery fees vs daily earnings and seeing if it would be worthwhile cutting a day of nursery and picking up a night shift or a weekend instead? (Yay penalty rates!)

For instance, I never work a Wednesday because of a commitment hubby has in the evening, so that's one day we never need childcare. It doesn't mean I work less, I just never work on that particular day and thus reduce paying for childcare 'just in case' I get rostered on. Likewise, Friday is a half school day here, and because my shifts are 12 hours it's more worthwhile me picking up the occasional overtime on a Friday than hubby working that half day, but again, because we know he's definitely off, we don't pay childcare on a Friday and it actually works out better financially AND we have a better work/life balance. When you take into account tax, NI and pension it can sometimes seem absurd slugging it out at work while paying for nursery!

Anyway, sorry for my ramble, I hope you find it useful!

getmore4less

looking ahead

ultimately buy a house.

In your area what do houses cost.
Something like you are renting or something you would like to buy
brief descriptions might help.

JamesEmma

getmore4less wrote: »

looking ahead



In your area what do houses cost.
Something like you are renting or something you would like to buy
brief descriptions might help.

We live in Surrey. Our jobs are in Surrey and central London. We currently rent a nice two bedroom bungalow at £1100 A month which is actually quite cheap. The county is ridiculously expensive. As is everywhere in the south east that's within an.acceptable.commute of London. A 3 bed semi new build likely in the region of £360k to £420k..:(

clairebeth

Oooh, I forgot about school holidays. If you consider that your wife works 38 weeks a year, but you're paying 52 weeks of nursery, makes even more sense for you to reevaluate. If you could make it that you picked up most of your overtime during the holidays, you could swing it so you could reduce your nursery costs by £300 - £400 a month without a big change in income plus have less rushing around during term time.

getmore4less

JamesEmma wrote: »

We live in Surrey. Our jobs are in Surrey and central London. We currently rent a nice two bedroom bungalow at £1100 A month which is actually quite cheap. The county is ridiculously expensive. As is everywhere in the south east that's within an.acceptable.commute of London. A 3 bed semi new build likely in the region of £360k to £420k..:(

Where I was going with this

£1,100 is quite a lot even if you have a decent deal on your place.

£1100pm will cover a £300k repayment mortgage @ 2% over 30 years(upto 70).

Of that £1,100 the split is £500 interest and £600 capital
Renting the money is a lot cheaper than renting the place you have.

If you looked at 5% deposit and 20% help to buy that gives around £400k to play with a £300k 75% LTV HTB deal

£20k savings would be a decent target for a savings pot.

I think that once you have the spending sorted, probably going to take 6 months to settle down, and you have a good idea of what is available to hit the debt and save I would be reviewing that goal of buying a place.


With £80k joint income £300k is under 4 times and I think with a good budget in place and the debt down you will hit affordability.

IT may be worth a chat with a broker in a few months to see what is feasible

when you crunch some numbers it may be worth delaying debt repayment to get a deposit together and buy.

With mortgage costs very close to renting the extra interest on delaying debt will be more than covered by the effective reduction in interest renting