In a mess, need some perspective, SOA

JayRitchie

Could you calculate how much more money you will have when the boys are independent? My back of a fag packet calculations would guess around £300-400 a month upwards, which would make a huge difference. If your husband brings in another £200 a month - so lets say an extra £500 to throw at debt as in general your budget looks tight - you'll make some real inroads.

getmore4less

A full number crunch is needed to see what the current cashflow can do.

Two things stand out.

High 20% rates on £12k

6 year deadline on £46k with a fairly high SVR rate on £25k.

Barclays don't like reserves so there may be something that can be done with that.

getmore4less

If your debt is not going up I would use the £2k reserve and clear the card.

Instant £25 pm saving.
Throwing that £70pm at the other card will save £80 in a year.

Think about the following.

Try to get that card back into its interest free cycle without using it and keep an eye out for a deal on it.

In the mean time that is your emergency fund while you sort out the other card throwning money at that is like getting 20% on you emergency savings.

The full cash flow will decide if it worth seeing if Barclays can do something with your reserve. Your main rate is good so it may not be possible but extended term would give breathing space to divert to the higher rates and hit the other cards before the re high rates kick in.

theoretica

YORKSHIRELASS wrote: »

Thanks so much for the helpful comments. DHs business is a bit of a touchy subject and he refuses to budge on it. Better things are always just around the corner but I have been through all the numbers with him and he does understand that his earnings are low. He points out that he spends hardly anything on himself and never goes out or has any hobbies, plus his vehicle costs £1700 a year to run, and he would have to still run a vehicle if he got a job. I just have to keep working on this one.

You could point out he is 'spending' £300 a month on his choice to be self employed. Even after the vehicle, that is quite an expensive personal choice.


Can your younger son get any help with travel costs? https://www.gov.uk/subsidised-college-transport-16-19

JayRitchie

Running the numbers, as noted above the high interest rates are really hurting you. If you can find £500 a month to throw at these debts you are free of them in 18 months. This gives you a far better chance of low/ zero rate borrowings in the future for the other balances. Thats what makes the real difference.

Anyway, the lack of savings / emergency fund is a worry but if you hit the high interest balances fast and hard you'll be in a way better position in 18 months, and fully out of debt with a paid off mortgage in six years. Thats not a bad place to be!

getmore4less

YORKSHIRELASS wrote: »

Telephone bill is 4 mobiles (yes paying for son's there too), plus broadband, line rental, calls and BT TV package.

Can you break that down into the various components with a note on who it is with.
I suspect there is a little saving opportunity.

Do a TV analysis on what you watch, it may be freeview + streaming and a PAYG option like NowTV can substitute the bulk of your viewing.

With the phones use analysis to see if there is any saving it may be a few of the free "3" 200mb data on 123 tariff PAYG might work or some low cost £5pm-£10pm contracts might work.

Should the hubbys phone be off the SOA as he uses it mostly for work?

Are there any other work costs on the SOA?

getmore4less

Working with just what you have for now allocated to the debts assume the other £155 will get eaten up by stuff.

This will be a long one.

adding in red the current monthly interest

Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 21261....(349)......1.37 ( £25 )
Secured Debt.................. 25000....(250)......5.24 (£110)
Total secured & HP debts...... 46261.....-.........-

Unsecured Debts
Description....................Debt......Monthly.. .APR
Virgin.........................8421......84....... .0 (£0)
Halifax........................3173......38....... .0 (£0)
MBNA...........................9277......93....... .0 (£0)
Barclaycard 2..................2098......71........21.2 (£37)
Barclaycard 1..................10556.....238.......20.7 (£182)
Total unsecured debts..........33525.....524.......-

Starting with the mortgage

Mortgage...................... 21261....(349)......1.37
Secured Debt.................. 25000....(250)......5.24

What deal is the mortgage?
Is that one of those decent Barclays trackers?
When was the last time they reset your payment?
What is the term in years and & Months
with 6 year term and current payment

£21,261 1.37% £308pm interest £898 6 years
£21,261 1.37% £349pm interest £788 5y 4m

I think I would leave this for now but there a couple of things to think about.

If you have the full 6 years then if Barclays reset your payment you have £40pm to throw at the other debts.

Because of the reserve they may not, or it could go up.

Another thing with the reserve is I think(needs checking I have offset so they work a bit different) that if you don't put a payment on the reserve they use a bit of the normal mortgage payment to pay it.

If is the case you can in effect move some debt from 20% to 1.47% by using the £250pm on the CC. the mortgage payment then goes up at the next reset.

You have probably been getting letters about the reserve so lets have a look at that.

£25,000 5.25% £110pm interest only
£25,000 5.25% £250pm interest £7,928 11 years.
£25,000 5.25% £405pm interest £4,190 6 years.
£25,000 5.25% £475pm interest £4,782 5 years.
£25,000 5.25% £579pm interest £5,386 4 years.

what this shows is what happens if you start to throw the £250pm at the other debts first and delay paying this down for 1y or 2y
(if they won't roll the interest onto the mortgage part then you only get £140 to throw at the other debts)

Something to consider as an option as it can save a lot of interest in the short term on the CC as shown below.

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moving onto the cards

Barclaycard 2..................2098......71........21.2 (£37)

I think moving this into the reserve is best, instant saving
£2098 *( 21.2% - 5.24%)/12 = £27.90pm

This will up the reserve numbers above but the savings are worth it.

Barclaycard 1..................10556.....238.......20.7 (£182)

This is the one eating up your cash.
£10,566 20.7% £238pm interest £9,602 7y 1m

if we move the other CC and throw the £71 at it.
£10,566 20.7% £309pm interest £5,523 4y 5m

With another £140 from reserve
£10,566 20.7% £449pm interest £3,100 2y 7m

With the full £250pm
£10,566 20.7% £559pm interest £2,327 2y 0m
(Now that payment will cover the reserve requirements for the 4 years left on that)

Anything extra that can be thrown at this will really help reduce the interest costs.

There is enough to cover the mortgage the high rate cards and the reserve in the 6y window but nothing extra for other debts.

Now the other 3 debts current payment and when their 0% runs out.

V. £8,421 £84pm 12/2020 £6,500
H. £3,173 £38pm ??????? ??????
M. £9,277 £93pm 3/2020 £7,800

if we assume we can keep this all at 0% and ignore any BT fees.

£20871 0% £215pm 8 years(less because there is other money to come after the mortgage is paid off)

When is the crunch time on the Halifax card?

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Quite a lot there and looking doable with just the cash currently allocated to the debts.

probably needs a bit of time to sink in.

BUT

The SOA is quite tight already.
The 0% interest may not happen.

There is the £155 that may or may not be there month to month and any other savings or spend reductions to help with the off budget(emergency) spends.

This is where a good think about what is coming up will help decide if this will be enough or if the debt plan needs a rework.

What is going to make the big difference is this extra earnings and the £240pm reduction in travel costs in May.

---

Looking at this I think the short term(2019) is nail those two 20% CC, the rest will manage on the current payments.

With further cutbacks and extra earnings I think you can cover any extras that crop up and may be able to clear the high rates before the end of the year.
if you can then the reserve can be the next target while juggling the rest of the 0% debts

If you can do that then a 5-6 year goal is looking possible.


(almost forgot : even if hubby covers his costs from the business the car costs for the other 2 look very low.)

Edit: If really concerned about no emergency fund then you could create some room on the reserve first you won't get 5.5%/20% on any savings

YORKSHIRELASS

Thanks all, you have no idea how helpful it is having someone else look over the numbers, particularly your advice getmore4less.

At work at the moment so will digest all that later. I think I may be able to balance transfer more onto my Halifax card at 0% to put to Barclaycard 1. Will check that later. Hadn't thought of using £2K on reserve to clear Barclaycard 2, no brainer really.

I did wonder if Barclays would get suspicious if we stopped repaying Reserve. I know technically we don't have to make payments but that idea does make me a bit anxious, even though there is some sense to it.

What is clear is that we really need to increase our income and I need my husband to get on board with that.

Will look at comments properly later.

marcsshell

It's scary when you have the figures written down. I have found myself reading other diaries and trying to figure out how I can reduce our debt. I am thankful that my DH is onside with this as well.
I hope you get yourself sorted xx

EssexHebridean

Hiya YorkshireLass !

You've already had some great feedback I see, and responded to it too. I agree that the sons need to start paying their way - it IS a tough call to make but you can't continue fully supporting them when you're having a squeaky time of it yourselves too, as much as you'd no doubt like to.

You've referred to there sometimes being extra money over and above the income figures you have mentioned - overtime or DH getting extra jobs - so currently when that happens where does that money go? Obviously from now on it needs to go straight to the debt - but I'm guessing that's not been happening until now? If that's th case then a spending diary would almost certainly be helpful. Similarly the surplus - that's almost 2k a year going "somewhere" - which put in perspective is nearly the amount you have on barclaycard 2 isn't it!

Your food bill can reduce quite a bit - if you're not already doing so plan your meals in advance and make a shopping list which you then stick to. Everyone needs to acknowledge that if it's o the list, if it gets bought, then they are personally paying for it, it doesn't come out of the household grocery budget. Cooking from scratch (your sons ought to be able to help with this as well) and filling, balanced meals will help as that also reduces the need for often expensive snacks. Check out Aldi or Lidl for their super 6 and Pick of the Week offers - check in advance then work your meal plan around what is available at a good price - and there's often fruit on those which will do for puddings, adding top packed lunches, or just as cheaper alternative snacks.

You have a zero against contents insurance - I hope that's because it's a combined policy with buildings, not that you don't have any!

One other thing I note is that you're accounting for some things monthly (car maintenance, presents etc) but currently you're showing no cash under assets - you need to make sure that where you budget for things monthly you are actually saving that money, otherwise not only is that more "stray" income but you also leave yourself open to using a credit card when the car needs a new tyre, rather than just taking the money from the car maintenance "pot".