£32k in the next two and a half years..!

Smythson

Hi all,

Long time reader but first time poster (for my own problems at least..!)

My SOA will be included in 2nd post, but a brief background. Unsecured debt is something that I’ve struggled with since I was at university. There hasn’t been a single thing which I could determine to be the ‘cause’ it’s been more generally living beyond my means for the past few years and then more recently a couple of big - unexpected - costs happened within a few weeks of each other. I very stupidly fell into the temptation of spending a bit extra when I was due to transfer my balance to a new 0% card, have previously tried consolidating my debt etc.

LBM hit me a couple of weeks ago, and then reaffirmed over the last couple of days as I read through some other folks on here diaries. I earn a decent salary, which has every chance of going up further in the next twelve months, and my salary will increase mid-2021 when my student loan is fully paid off, for now I’m not factoring in either of these things.

I’m in a good position in terms of the cards I have, all are on 0% deals for at least the next 12 months (more details on that below).

My SOA is correct re council tax / other household bills - my partner and I have separated the bills between us to be responsible for different things (e.g. I cover mortgage and groceries - she contributes toward that monthly, and then picks up the cost of Council Tax / Elec / Gas / Water. She moves into a new job in September, will be earning quite a bit more than she presently does, but we’ve agreed that she’ll start saving for the wedding instead of contributing more toward the house. At present it’s probably a 70:30 split in terms of bills.

On my SOA I’ve basically zero’d the asset value of the house, doesn’t feel like I’m in a situation whereby we’d consider action to release equity.

I’ve included nil for entertainment, but that’s because I don’t have a grip of how much I actually spend, will revisit in the next couple of months (August is going to be a weird month)

My goal - is to get rid of my unsecured debts in the next 18 months, January 1st 2021 is my goal. We’ll then shift focus to a. our wedding, and then b. getting mortgage free ASAP.

My plan - prioritise the two cards which have circa a year left on at zero APR (just over £14k in the next year), and then start to focus on the other three in equal parts.

Immediate things I’d welcome advice on:

1. My SOA - Anything looks obviously out of sync with the rest? Am I being realistic?
2. Stocks and Shares ISA - I currently have a regular payment set up for £400 per month, my ROI to date has been very positive +8% in just three months after fees. Given I’ve got 0% cards, I’m making a gain by having this money earning interest, so should I keep this up? Or empty it and pay off some debt? Ditto for savings accounts in general (e.g. I can get a regular saver with my bank at 5%, which I could use to then pay off a chunk of debt in 12 months?)
3. Any tips on how to guide myself through this journey..?

TIA

Smythson

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 3060
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 340
Total monthly income.................... 3400

Monthly Expense Details
Mortgage................................ 978
Secured/HP loan repayments.............. 158
Rent.................................... 0
Management charge (leasehold property).. 15
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 38
TV Licence.............................. 0
Satellite/Cable TV...................... 45
Internet Services....................... 25
Groceries etc. ......................... 200
Clothing................................ 0
Petrol/diesel........................... 75
Road tax................................ 0
Car Insurance........................... 50
Car maintenance (including MOT)......... 0
Car parking............................. 40
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 5
Contents insurance...................... 5
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 85
Haircuts................................ 15
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Subscriptions........................... 23
Total monthly expenses.................. 1777


Assets
Cash.................................... 2000
House value (Gross)..................... 260000
Shares and bonds........................ 1685
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 263685


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 260000...(978)......1.85<
Car Lease......................3634.....(158)......0
Total secured & HP debts...... 263634....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Virgin Money CC................6458......65........0 23 months remaining
Lloyds CC......................5725......57........0 13 months remaining
MBNA CC........................6000......100.......0 25 months remaining
HSBC CC........................5500......55........0 26 months remaining
Barclaycard CC.................8400......189.......0 12 months remaining
Total unsecured debts..........32083.....466.......-


Monthly Budget Summary
Total monthly income.................... 3,400
Expenses (including HP & secured debts). 1,777
Available for debt repayments........... 1,623
Monthly UNsecured debt repayments....... 466
Amount left after debt repayments....... 1,157

Personal Balance Sheet Summary
Total assets (things you own)........... 263,685
Total HP & Secured debt................. -263,634
Total Unsecured debt.................... -32,083
Net Assets.............................. -32,032

katsu

I would add your partner's contribution in income (not their full wage if that's easier) and the bills they pay so that you get advice reflecting your household expenditure.

£85 presents seems excessive so I would cut that. We don't all need loads of stuff in life so maybe try and adjust your running and that of your recipients to a simpler gifting style?

On the S&S ISA. What is it for? Stocks are usually a 10+ year holding so I don't understand what your strategy is?

If you have a workplace pension contributing to that often makes most sense and saving reacts cash is usually sensible after you have cleared your debts and got a handle on your finances.

DrEskimo

Agree with above, include all your household expenses.

Stop investing £400 per month to your S&S ISA. You're £32k in debt!

I would take the £1,600 out of it and use it to pay down the Barclay's card. Keep the £2k in cash as a temporary emergency fund. Once the debt is gone, look to build this up to 3-6months of expenses, then look at saving for the wedding. Then concentrate on pension contributions and finally paying down the mortgage. It's at this point you might consider building up your S&S ISA instead though, particularly if you are still on such a low rate mortgage.

You really need to get a handle on where that £1k disposable income is going. If you can direct £1,500 per month towards these debts, there is no reason you can't go a long way to trying to achieve your goal of being debt free in 18months.

Have you thought about what you are going to do when the car lease ends? Would be good to plan for a cheap car purchase instead and free up that monthly payment...

savingholmes

Good luck on your journey. I would target your debt - as stocks and shares can go up and down.