£19k debt with 2 kids and single income, need help on where to start to reduce.

[Deleted User]

Hi MSE's,

Have been in debt from roughly 10 years now, started with a £2k loan and £500 overdraft and has now grown to a whopping £19k spread between car payments, credit cards and loads. I am now struggling to pay for my monthly bills let alone the payments.

I have seen some people have given a breakdown of their in goings and outgoings to start so ill post mine below, please bare in mind I have been as honest as possible and this is what I have actually used on my bank statements over the past 3 months.

But first, a few things to mention:

- I have a problem spending money on lots of little things throughout the month and I am even considering locking my bank card away in the house and only withdrawing cash once per week at an ATM to pay for shopping/fuel and just not paying for things online unless its with a gift card bought with cash or something because I know the card is my problem, that and not having a budget to stick to.

- I have made some silly choices regarding contracts for mobile phones, internet and my car which leave me stuck for now with those. But I know there is a lot more I can do to reduce and sacrifices that will definitely have to be made but I am struggling on where to start.

- I cannot get a loan or a 0% credit card to move debt onto to avoid interest as my credit score is too low to get anything, I'm guessing because of the % of debt available to debt taken plus I have tried to apply before for credit cards and loans before and have been declined sinking my credit score lower again.

- I do not wish to discuss my partners circumstances regarding work as there are personal reasons for this, I am the only source of income for our household for the foreseeable future.

- I CANNOT have any arrears or CCJs or I will lose my job, my work perform regular background checks and I would lose my job straight away if they found anything marked on my credit file.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1868 (Hoping for pay rise and/or bonus this end of year *Fingers crossed*)
Partners monthly income after tax....... 0
Benefits................................ 0 (Not entitled)
Other income............................ 0 (Will have a look in the Boost Your Income section regarding this)
Total monthly income.................... 1868

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 300 (Hoping to see if I can get rid of the card mid contract in 12 months and it not mark my credit file, they mentioned I could do this when purchasing, then get a cheaper car for now to save £129 pm)
Rent.................................... 476
Management charge (leasehold property).. 0
Council tax............................. 116
Electricity............................. 24 (Lowest I can get, i've checked)
Gas..................................... 24 (Same)
Oil..................................... 0
Water rates............................. 53 (Will look into swapping to a meter to see if cheaper but unsure because if it isnt we will be stuck on a meter)
Telephone (land line)................... 0
Mobile phone............................ 37 (Mid contract, can reduce to sim only when complete but not for 2 years)
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 34 (Cheapest deal available at usable speeds in my area unfortunately)
Groceries etc. ......................... 220 (Hoping to reduce through budgeting)
Clothing................................ 10 (Guesstimate, only buy clothes when others are wrecked/don't fit)
Petrol/diesel........................... 120 (Work miles mostly, cant car share or cycle as too far away from work. I drive as economically as possible to save fuel and walk anywhere local)
Road tax................................ 13
Car Insurance........................... 60 (Hopefully go down a touch with this years no claims, had a crash a few years ago *Thumbs down*)
Car maintenance (including MOT)......... 12 (Service, no MOT for 2 years)
Car parking............................. 10 (Try not to pay at all if possible, look for free parking)
Other travel............................ 6 (Toll fees, only pay as it would cost more in fuel to go around)
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 26 (Eye tests, dentist fees etc)
Pet insurance/vet bills................. 21 (Pet insurance, cannot be without. Dog has been unwell.)
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, Christmas etc)...... 20 (Try to minimize, my wife and I buy little for each other, kids are great with appreciating what we can afford.)
Haircuts................................ 10 (Only 1 haircut for the kids per month, my wife cuts my hair and her friend cuts hers.)
Entertainment........................... 40 (Cancelled Netflix and audible, we record files on free-view now, borrow dvd's and listen to podcasts and radio, also stopping buying video games)
Holiday................................. 10 (Just little trips, we don't spend a lot or go anywhere often but have a day or two away once or twice a year)
Emergency fund.......................... 0
Eating Out.............................. 145 (This is ridiculous and I'm embarrassed to see this amount so high, from today forward I will not buy food out at all! Apart from a planned date night with my SO.)
Unaccounted For (Spent as Cash)......... 125 (This cannot happen going forward, every penny needs recording in my spending log!)
Total monthly expenses.................. 1925


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


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 8079.....(129)......0< (Hopefully get rid of car for a cheap one next year, if not mark on credit file)
Loan 2.........................1380.....(80).......0<
Loan 1.........................3074.....(91).......0
Total secured & HP debts...... 12533.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card 1..................4805......108.......26.9 (0% interest on half the balance from a transfer, only until Feb 2020 then back up to full interest on full balance)
Credit Card 2..................3396......85........18.9 (No 0% interest offer)
Total unsecured debts..........8201......193.......-


Monthly Budget Summary
Total monthly income.................... 1,868
Expenses (including HP & secured debts). 1,925
Available for debt repayments........... -57
Monthly UNsecured debt repayments....... 193
Amount short for making debt repayments. -250

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -12,533
Total Unsecured debt.................... -8,201
Net Assets.............................. -20,734

Created using the SOA calculator at - Link removed as cannot post with links for new users.
Reproduced on Moneysavingexpert with permission, using other browser.

Now as mentioned previously, above is what has ACTUALLY happened for the past 3 months.

I have some ideas about how I could improve but not sure how to go about it, please see my comments above.

Socajam

Between these two
Eating Out.............................. 145
Unaccounted For (Spent as Cash)......... 125

you need to create an emergency fund and get insurance for your contents.
What's left put the rest on either credit card 1 or credit card 2.

I know it's hard with children and with Christmas coming, but you need to sit them down and explain that for the next year, things are going to be tough and they might not receive any presents.
As horrible as this sounds, you are not in any position to buy anyone presents (wife, children) because you have no spare money.
The choice is very clear: you have to clear this up otherwise you might find yourself without a job and in a far serious situation.
I am not sure if you do so already, but start taking your lunch to work: it could be something from the night before dinner which will be a huge saving.
Good luck because you really need it.
I know what it's like to be in debt, this was me in 1989.
Serious lesson, it was for me and never looked back.
At this time, I am mortgage free, debt free and at peace.
You can do this, but it's going to take serious discipline within the household. As long as you have that goal to be debt and keep at it you will get there, it 's not going to be easy and at times you will become extremely frustrated, but when this monkey is off your back you will feel so much lighter.
For entertaining, not sure if you can play chess, but it's a cheap game and something you could teach your children.

clairebeth

Hi, well dinner on posting your SOA and trying to get a handle on this. A quick question... are your kids under 16? If so why aren't you entitled to £137 a month child benefit? I thought anyone on under £50k a year was entitled to this.

clairebeth

I mean well done, not well dinner!

enthusiasticsaver

The unaccounted for and eating out has to stop. You need emergency savings and I would target CC1 first. It is going to be tough though with that high interest so you need some financial discipline. Changing the car for a cheaper one will help. How old are your children?

[Deleted User]

You say single income but 2 adults? also no benefits, not even family allowance? Have you applied for universal credit?

tallyhoh

LunInf wrote: »

Hi MSE's

- I have a problem spending money on lots of little things throughout the month and I am even considering locking my bank card away in the house and only withdrawing cash once per week at an ATM to pay for shopping/fuel and just not paying for things online unless its with a gift card bought with cash or something because I know the card is my problem, that and not having a budget to stick to

.

I would actually leave my card in the house, its a perfectly sensible idea. I also recommend watching Dave Ramsey on youtube for some motivation

natlie

Hi

I am in a very similar position to you, 2 adults 2 kids, my partner works part time from home as has depression and only earns around £5k a year. our debt is much higher but we earn slightly more at around £42k per year - we are entitled to Universal credits of around £300 per month, the application process is not too bad and the people at the job centre are really helpful. Its worth trying if you haven't applied.

Nat

[Deleted User]

Socajam wrote: »

Between these two
Eating Out.............................. 145
Unaccounted For (Spent as Cash)......... 125

you need to create an emergency fund and get insurance for your contents.
What's left put the rest on either credit card 1 or credit card 2.

I know it's hard with children and with Christmas coming, but you need to sit them down and explain that for the next year, things are going to be tough and they might not receive any presents.
As horrible as this sounds, you are not in any position to buy anyone presents (wife, children) because you have no spare money.
The choice is very clear: you have to clear this up otherwise you might find yourself without a job and in a far serious situation.
I am not sure if you do so already, but start taking your lunch to work: it could be something from the night before dinner which will be a huge saving.
Good luck because you really need it.
I know what it's like to be in debt, this was me in 1989.
Serious lesson, it was for me and never looked back.
At this time, I am mortgage free, debt free and at peace.
You can do this, but it's going to take serious discipline within the household. As long as you have that goal to be debt and keep at it you will get there, it 's not going to be easy and at times you will become extremely frustrated, but when this monkey is off your back you will feel so much lighter.
For entertaining, not sure if you can play chess, but it's a cheap game and something you could teach your children.

Thanks for the quick reply, I will definitely be talking the above 2 categories instantly!

- How much is advisable for an emergency fund? And when would you dip into this?

- I will have a look around at some comparison sites today for contents insurance, I didn’t even think about this but I do have things I could not replace in the event of an accident. Is there anything to look out for specifically as I have never had contents insurance before?

I do take my lunch into work but I’m looking to cut the cost of this also from about £2 per day to £1 per day or less if possible.

Thanks for the background and motivation!

[Deleted User]

clairebeth wrote: »

Hi, well dinner on posting your SOA and trying to get a handle on this. A quick question... are your kids under 16? If so why aren't you entitled to £137 a month child benefit? I thought anyone on under £50k a year was entitled to this.

Thanks!

Yes they are, this gets paid to my wife and we used this for a credit union loan, this money is getting paid to the credit union until this is cleared unfortunately.

[Deleted User]

enthusiasticsaver wrote: »

The unaccounted for and eating out has to stop. You need emergency savings and I would target CC1 first. It is going to be tough though with that high interest so you need some financial discipline. Changing the car for a cheaper one will help. How old are your children?

Yes definitely, I was shocked to see how much it was! CC1 will definitely be the priority especially getting as much off as possible before the 0% balance transfer interest promo stops next Feb.

I can change the car after 1 more year or I could keep it a further 3 years for the duration of my hire purchase scheme. The thing I’m unsure about is wether it will cost me more than £129pm to buy another cheaper car, service and MOT it and pay for any repairs and if the fuel economy won’t be as good. I need to work it all out really and see how much better off I’ll be. As my current car doesn’t need an MOT for 2 years.

My children are 9yo and 6mo. 9yo is great about money and understands we are going to have to cut right back, and obviously my 6mo has no opinion haha.

I think I also need to think about cheaper forms of entertainment and days out, also prepare lunches to take with us instead of eating out.