Need to pay off debt

RhiBi

Hi, I am a long standing, but sporadic poster, and need some help! My circumstances have changed considerably in that my 21 year marriage ended in October 2019 and for the first time, I am trying to sort all finances. Through the split, I made a few silly financial decisions which mean I have some high credit card bills. However, my ex-husband has agreed to pay the mortgage until he finds a place of his own (he's currently living with his mother) I need to use this time to pay off as much debt as possible, as when he does find a place of his own, I will also be paying a mortgage of £292 a month...

I have applied for a council tax reduction, but am not hopeful as I have a 22 year old daughter living with me and she is a wage earner - greater wage than me, and trying to get rent out of her is hard work

I've posted an SOA which is as accurate as I can make it, obviously Christmas means that I did not see any of the surplus money as it went on presents - that had not been budgeted for, the lead up to the split was extremely difficult and Christmas had not been a focus at all so it was a case of using the last few day days to finance it, I'm just glad the paydays did and that I didn't have to further resort to credit cards. . However, from this point, I have to try and get these card debts down. MY SOA is below...

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 4
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 981
Partners monthly income after tax....... 0
Benefits (UC and child benefit)................... 637.4
Other income (maintenance)............................ 500
Total monthly income.................... 2118.4

Monthly Expense Details
Mortgage................................ 0 - will be £292 in future months, not calculated into current SOA
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 99 - 12 months
Electricity............................. 43
Gas..................................... 43
Oil..................................... 0
Water rates............................. 39
Telephone (land line)................... 30
Mobile phone............................ 10
TV Licence.............................. 12.87
Satellite/Cable TV...................... 30
Internet Services....................... 0
Groceries etc. ......................... 320
Clothing................................ 0
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 50
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 25
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 37
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 838.87


Assets
Cash.................................... 0
House value (Gross)..................... 120000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 120000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Halifax........................5371.96...126.......19.9
Asda...........................6543......143.......19.9
Capital One....................593.......20........30
Littlewoods....................600.......27........0
Next...........................800.......56........29.4
Total unsecured debts..........13907.96..372.......-


Monthly Budget Summary
Total monthly income.................... 2,118.4
Expenses (including HP & secured debts). 838.87
Available for debt repayments........... 1,279.53
Monthly UNsecured debt repayments....... 372
Amount left after debt repayments....... 907.53

Personal Balance Sheet Summary
Total assets (things you own)........... 120,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -13,907.96
Net Assets.............................. 106,092.04

Created using the SOA calculator at https://www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using other browser.

Looking at this, I should be able to pay off the debts very quickly, but what I'm finding difficult is that I get money at different times of the month. Universal credit is paid on the 8th into my current account, my wage gets paid on 15th into the same account. The maintenance gets paid on 22nd into a different current account that my bills come out of - I've arranged all bill dates from 22nd - 28th of the month. I'm just finding it all very confusing having (embarrassingly) never dealt with this before. Please help me as I really can't see how I will have £900 surplus to pay off debt - if I do then thats fantastic. I'm hoping this month, will help me see where things are more clearly now that the madness of Christmas has gone.

How do I make sense of this in my head, I am afraid to pay off a huge chunk on a credit card in case I've forgotten something, but at the same time, I need to get the debts down. Please can someone talk me through this in very simple baby steps, as I am just panicking and not sleeping trying to make sense of it all.

monetxchange

Welcome and well done on taking the first debt clearing step! Really sorry to hear you've had a rough time of it this last year.

First off, your SOA should be 2 adults and 3 children. Your 22 year old, whilst your child, is now a wage earning adult. You need to have a serious sit down with her and let her know she HAS to pay her way in terms of rent and bills (proportionately, of course) or finds her own place to live. She's more than mature enough to understand and to be honest, when she sees how much she'd have to pay out to live on her own, she'll realise how good she has it in the family home. Being frank, you shouldn't be eligible for a council tax reduction as it needs to be split with your daughter - she can afford it. Time for the both of you to start viewing her as an adult and not 'one of the kids'.

In terms of money coming in at different times of the month, what has helped me is zero based budgetting. So that's knowing where every single pound is going. A great way I've found to help is to get something like a Monzo account that has savings 'pots' to stash money in so it's safe for when needed and then isn't at risk at being frittered away. So for example put the electricity bill money in there at the beginning of the month, or at least half of it and then add the rest when your next income comes in. Make sure you have a set budget for groceries and other every day spending that's put into a dedicated spending account. Any surplus should be put towards the debt at the beginning of the month/after each income comes in - that way the £900 you should have is in no danger of being frittered away as it's already off where it needs to be!

If you're worried about getting it wrong and missing something, an app like You Need A Budget might help. That way you can list every single expense, bill and budget pot you have coming so nothing gets missed.

You also need to set up savings pots for 'one offs' that come up regularly - eg. Christmas, so it doesn't overwhelm you and leave you turning to credit when it comes up. You know it's coming; put aside monthly for it! Good luck

Agentmomo

Hi,

You have nothing budgeted at all for Clothing or entertainment with 4 dependants seems unrealistic. I know this after completing my 1st SOA. (Now on version 4!) Which is a truer version when you have 3 - 4 months of receipts saved. You can easily forget little things like a necessary new pair of shoes, Underwear etc... Also the best piece of advice I've picked up from here is to create an emergency fund which should be 3 - 6 months of your monthly commitments. Set up a separate bank account for this with a monthly DD to get this started, it will soon build up. Then redo your SOA and snowball towards your creditors.

Karonher

How realistic is the SOA you have posted? Is there really no travel paid for, clothes bought for the younger children, days out? Is the contents insurance covered by something else as that is needed? So is an emergency fund.

Go through a few months of credit card/bank statements and see where the money has been going then keep a diary and record every penny that you spend.

Finally - a rant - your daughter needs to be told in no uncertain terms that she is going to contribute. Council tax benefit is for people who need it, not to subsidise people who don't want to pay their way. I know the board is for help but I am so annoyed reading about her.

How old are the other children and can they help at all?

RhiBi

monetxchange wrote: »

Welcome and well done on taking the first debt clearing step! Really sorry to hear you've had a rough time of it this last year.

First off, your SOA should be 2 adults and 3 children. Your 22 year old, whilst your child, is now a wage earning adult. You need to have a serious sit down with her and let her know she HAS to pay her way in terms of rent and bills (proportionately, of course) or finds her own place to live. She's more than mature enough to understand and to be honest, when she sees how much she'd have to pay out to live on her own, she'll realise how good she has it in the family home. Being frank, you shouldn't be eligible for a council tax reduction as it needs to be split with your daughter - she can afford it. Time for the both of you to start viewing her as an adult and not 'one of the kids'.

In terms of money coming in at different times of the month, what has helped me is zero based budgetting. So that's knowing where every single pound is going. A great way I've found to help is to get something like a Monzo account that has savings 'pots' to stash money in so it's safe for when needed and then isn't at risk at being frittered away. So for example put the electricity bill money in there at the beginning of the month, or at least half of it and then add the rest when your next income comes in. Make sure you have a set budget for groceries and other every day spending that's put into a dedicated spending account. Any surplus should be put towards the debt at the beginning of the month/after each income comes in - that way the £900 you should have is in no danger of being frittered away as it's already off where it needs to be!

If you're worried about getting it wrong and missing something, an app like You Need A Budget might help. That way you can list every single expense, bill and budget pot you have coming so nothing gets missed.

You also need to set up savings pots for 'one offs' that come up regularly - eg. Christmas, so it doesn't overwhelm you and leave you turning to credit when it comes up. You know it's coming; put aside monthly for it! Good luck

Thank you for your reply, you are right with regard to my eldest daughter, and I agree, but since the split things are rather fragile here, and I am not sure now is the best time to bring this up. I know really, I need to 'grow a backbone' and stand up to her, but its difficult. In the early days I was the focus of blame for the split - in actual fact it was a mutual thing that should have happened years ago. But because I've stayed in the family home I seem to have become the target for blame.

How does the monzo account work? Will I need to change all my direct debits to that 'pot' so to speak. Currently my bills all come out of a halifax current account, which the maintenance also goes into. My wages and universal credit goes into a nationwide current account.

It is feeling overwhelming at the moment, but hopefully, in time, I'll get the hang of it and feel in control. At the moment, I feel scared that I'm missing things and constantly fearful of things coming crashing down

monetxchange

No, I still have a main account with Barclays where I do all my direct debits for bills etc, but have a Monzo account (Starling etc are the same concept) where I transfer over my set budget for groceries/travel/shopping etc, and then also transfer over my money for savings pots (so car insurance, christmas etc). Have a look at the app for these online banks to see which one works for you - all very user friendly! Transfers are quick from bank to bank if you need to pay bills.

I understand how rough it is coming out of a split. Maybe you could ask your daughter for a sit down to talk it all through. Make sure it's a night where you can sit down in peace the two of you, maybe tea/wine and a bowl of crisps to make it a bit more relaxed. You can be honest and say that you're putting all the feelings on the split aside etc, but here's the reality with the money situation and that she's either in or out, so to speak. I can't see that she'll get annoyed over the financial talk - if she lets her feelings about the split get in the way of it all, then frankly she needs some time to cool off and maybe live somewhere else for a while. I'm sure she'll come round.

The worst step of facing up to it all is over. It's all uphill from here. Most of us have been there and are always here to help.

RhiBi

Karonher wrote: »

How realistic is the SOA you have posted? Is there really no travel paid for, clothes bought for the younger children, days out? Is the contents insurance covered by something else as that is needed? So is an emergency fund.

Go through a few months of credit card/bank statements and see where the money has been going then keep a diary and record every penny that you spend.

Finally - a rant - your daughter needs to be told in no uncertain terms that she is going to contribute. Council tax benefit is for people who need it, not to subsidise people who don't want to pay their way. I know the board is for help but I am so annoyed reading about her.

How old are the other children and can they help at all?

The other children are 19 - she is 2nd year in uni, 15 and 13.

I've no idea how realistic it is tbh. My ex-husbands monthly take home pay was over £3000 and he left in october, and since then I've had Christmas, so I've no idea what is 'normal' for me with my current incomings and outgoings!

monetxchange

Now might be a good time to also have a chat with your uni going daughter about what her plans are when she graduates. You need to lay down rules that if she continues living with you, when she's out of study, she needs to contribute by either getting a job or signing on while job hunting. Can she get a weekend/evening job so she can at least throw in £50 a month or something to cover her food etc? You've got 3 adults and 2 children living in your home, not 4 kids as you put. Keep remembering that. You can be a loving and kind mum while still teaching them how to be grown ups.

Now is the perfect time to get a grasp on what income and outgoings you have. Look at your own bank statements to see. The SOA is a good place to look at to see which categories you have that you may have forgotten about. You can do this, the first time trying to get your head round it is the worst, then it'll become like second nature!

zippygeorgeandben

I would sit down with all four children and explain about the financial situation. Solidarity and all that. I know the younger two cannot financially contribute but they can in other ways; making sure that lights are turned off around the house: it would also teach them a life lesson, one grateful for when older.
Is the 19 year old working? When I was at Uni I worked each year. I was grateful that my family could send me to university. I stayed in Halls and came back each weekend to work in the local bars/bingo hall(yes!) etc.
Making a rash judgement here but it seems that your older children have it good. Remember. Who is in charge here? YOU!

Karonher

RhiBi wrote: »

The other children are 19 - she is 2nd year in uni, 15 and 13.

I've no idea how realistic it is tbh. My ex-husbands monthly take home pay was over £3000 and he left in october, and since then I've had Christmas, so I've no idea what is 'normal' for me with my current incomings and outgoings!

In that case you could keep the diary and re evaluate in about 3 months. Would ex OH have a word with the older ones about helping out?

clairebeth

Your eldest children could actually be a big help here. As well as contributing financially, they could sit down with you and help to work out which £ go where and when to make sure everything is paid on time and the debt is paid also. They can help to research the app based accounts like Monzo. They might really like that responsibility!

Another vote for Monzo here, by the way, it's a fantastic app and way of banking. I follow them on social media and apparently people have transformed their financial lives by using it!