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SOA - Any advice gratefully received
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I actually can be quite savvy but these credit cards are weighing us down.
Jun 2020 Update: Loan £1,925.63, Credit Cards £37,541.74Overdrafts £1,540.00 Total Debt: £41,007.37 / 1% = £410.07
Jan 2021 Update: Credit Cards £34,189.49, Overdrafts £900 Total Debt: £35,089.49 / 1% = £350.89
If you stick to this SOA AND throw your £300 surplus at your debt AND your husbands bonus you could be debt free well within the next three yeass. That assumes the interest rates you quote are correct. So why not focus your energy on sticking to this budget and securing that surplus? Yes, you could make some savings on that SOA and there is a job to visit every line to either reduce costs by shopping around or asking if the spend is a genuine need or not. But you can address this in a few short years just be being disciplined.
I have a question though (and it is meant with good intentions...) If you have genuinely been living to this budget for a while, then your debt should have reduced by around £15k over the last 12 months... is this the case or are you kidding yourself that your spending is under control?
You have £2k in savings and you have £6k in investments. I would cash in the investments and take £1k from your savings. This will leave you with £1k as an emergency fund.
Use the £7k against your debts
Secured Debt.................. 2070.7...(275)......0 (ends Jan21)
Unsecured Debts
Description....................Debt......Monthly.. .APR
Credit Card....................2877.96...100.......0
(overpaying each month)
Overdraft.......................500.......0....... ..0
Store Card.....................1000......90........23.9
You should then be able to apply the remaining amount to
Overdraft......................1800......0........ .0
You have mentioned you are overpaying on lots of your debts. How much are you overpaying including your mortgage? It looks like if you can stick to your budget above, you will have at least £770 to put towards overpayment with the £465 more per month you have freed up by using your savings and investments. I would then look at repaying the overdraft off with this next.
I would pay £1 more than min balance on all your remaining credit cards and put your mortgage back to minimum and then apply all these overpayments to your £770 above and clear your debt through the avalanche/snowball method to your remaining debt of approx £36k.
You need to budget your way out of this and you need to get control of your spending. You earn good wages but you are living well beyond your means at the moment carrying all of this debt.
Ways you can squeeze more out of your budget - increase your income, reduce groceries, reduce your mobile phone costs, stop going on holiday, don't save any more into your emergency fund, spend less on birthdays/Christmas. Use your bonuses.
I had £48k of debt and a good wage and Im nearing the end of my journey with my personal debt so it can be done with a bit of sacrifice. You need to think that you could clear this within 18-24 months if you knuckle down.
I would ensure that I fully close down accounts once repaid.
I would question whether you’re that “savvy” though. Are you sure you’re not in a bit of denial about your spending? You say it’s built up over a while, but to amass £42k of unsecured debt is huge and indicates a fairly consistently high spend over your budget month on month.
I would look up Dave Ramsey, watch the videos and podcasts and then sort yourself out which you should do quite quickly.
BS 0 Bring your OD up to date £0
BS 1 Save £1000 emergency fund
BS 2 Start paying down your debts in a snowball method, take the smallest balance (for quick wins and good feeling !) so the store card of £1000 and throw everything at this, stop all other saving and investing at this point. Pay the minimum balances on the other payments.
You could knock this out reasonably fast with focus, that means not holidays or luxuries.
Once the store card is paid off then close it and throw the £90 a month at the £2877 credit card.
Get a budget sorted, also consider cashing in your bonds of £6000 and adding that to the debt snowball.
Baby Step 2
M&S Loan £11557.04
M&S Credit card 0% £3139.42
1. I have put together a spreadsheet of all debts (credit cards, store card, loan, overdrafts) - and unbelievably I found a CC that I forgot we had
2. I have put £250 per month on a Standing Order to an account in DH's name - this is to cover Emergencies, Car Maintenance, Social events and Birthdays/Christmas.
3. Holidays - we are committed to one in May - its all inclusive and 95% paid for so cancelling it would not make sense. We had a booking on a hotel for October, it was only reserved with free cancellation but we were planning (without any idea how would pay for it without reaching for the CC) on going so would have had to pay for that plus flights, plus spending - I have cancelled the reservation. On top of all that, we had been discussing a BIG holiday for 2021 which would have cost in excess of £10,000, Today, we have told our friends that we are not going and why.
4. Groceries - We are sitting down at the weekend to go through the bank statement and figure out where we are spending the most.
5. I love the idea of thinking of the big bad number as 100% and working in chunks of 1% at a time. We can pay 3 & 4% per month off, not including DH bonus (which is all going towards the debt) or my overtime (project for next 3 months).
6. How do I make one of those signatures for the bottom of my post? I want to put a visual of where we started and update it regularly.
Thanks all :A
Jun 2020 Update: Loan £1,925.63, Credit Cards £37,541.74Overdrafts £1,540.00 Total Debt: £41,007.37 / 1% = £410.07
Jan 2021 Update: Credit Cards £34,189.49, Overdrafts £900 Total Debt: £35,089.49 / 1% = £350.89
And don't be hard on yourself for missing a debt out from your SOA. It can take several attempts before your SOA reflects real life. Having a spreadsheet is an excellent way to track where all your money is going.
I love my job
Thank you!!!!!
Jun 2020 Update: Loan £1,925.63, Credit Cards £37,541.74Overdrafts £1,540.00 Total Debt: £41,007.37 / 1% = £410.07
Jan 2021 Update: Credit Cards £34,189.49, Overdrafts £900 Total Debt: £35,089.49 / 1% = £350.89
Well done on cancelling the big holiday next year and the October break. It can be difficult getting used to not doing the things you want to do but you really need to break the habit and now and have a proper budget for these things. Once you've paid down the debt that is.
You've got a good surplus and by being more careful on your spends you'll have this issue resolved in no time.
Halifax [STRIKE]£2,853[/STRIKE] £2,796.64 Barclaycard [STRIKE]£7,866.32[/STRIKE] £7,866.32 Wedding £488 EF £63
Sounds to me like your lightbulb is very firmly ON!
For others reading - "an Aspirational SOA" was referred to earlier - we use this phrase to refer to an SOA which has been prepared either by someone estimating what they "think" they spend, or what they think that they "should" be spending - rather than what is actually the most helpful, which is the SOA which reflects exactly where your finances are right at the moment of writing. So as an example - someone puts that they spend £300 on groceries - where in fact they are spending £600 - but they know from having read other threads that this figure is too high - so they resolve that they will be changing things from now - and put in the lower figure. It's done with the right intent but means it makes it tougher to work out exactly where things are going wrong and how they can be turned around.
SOA CALCULATOR (for DFW newbies): SOA Calculator