Debt free 2020

Roses208 · 14 January 2020 at 3:14PM

Hi Everyone,
I've been reading the treads for a while now and decided to post my own SOA. We have a significant amount of debt we are trying to pay off in a year or so. Most of the debt is from home refurbishments. (windows & doors, boiler, bathroom & garden). We bought our first house quite naively not realising the extent of the work that needed to be done, and within months of moving in the very dated bathroom ceiling came down, the house got bad damp and the boiler gave up. Factor in a wedding and a year off on maternity and this is why we are where we are. Mortgage took out 4 years ago in September over 35 years with only a 5% deposit for £125000. Had the house valued recently and is now worth up to 145000. Our mortgage in due to renewal in September so we are hoping to add the loan at 8.4% (14000) to the mortgage since it was all spent on the house. We are also hopefully going to re-mortgage over 25 years so knocking 6 years off. We realise this will mean we are reducing our equity to 10% but I am only in my late 20s so have time to build it back up. The remaining £700 (does change depending on what's happening in the month and if we have any extras to pay off) is currently being knocked off the smallest credit card. They are both interest free until April 21. Also Husband is almost finished with an engineering degree and already has a position as engineer so is looking at a significant pay rise within the next year or two. I have also been promised a 10% increase from April this year. I am also looking at a £1700 (before tax) bonus this year which will be paid off a card

Summary

Monthly Budget SummaryAmount(£)
Total monthly income: 3,215
Monthly expenses (incl. HP & secured loans) 2,142.79
Available for debt repayments 1,072.21
UNsecured debt repayments 312.6
Amount left after debt repayments759.61
Personal Balance Sheet SummaryAmount(£)
Total Assets (things you own)141,500
Total Secured & HP Debt-111,000
Total Unsecured Debt-25,157
Net Assets5,343

Household Information

Number of adults in household 2
Number of children in household 1
Number of cars owned 1

Income, Expense, Debt & Asset Details

IncomeAmount(£
)Monthly income after tax 1190
Partners monthly income 1940
Benefits 85
Other income 0
Total monthly income 3215
ExpensesAmount(£)
Mortgage 480
Secured/HP loan payments 0
Rent 0
Management charge 0
Council tax 112
Electricity 50
Gas 50
Oil 0
Water Rates 44
Telephone (land line) 0
Mobile phone 78.5
TV Licence 13.29
Satellite/Cable TV 47
Internet services 20
Groceries 400
Clothing 50
Petrol/diesel 160
Road tax 17.06
Car Insurance 42.52
Car maintenance (including MOT) 30
Car Parking 0
Other travel 0
Childcare/nursery 0
Other child related expenses 0
Medical (prescriptions, dentists, opticians etc.) 10
Pet Insurance/Vet bills 16.26 (likely to significantly increase due to a big ongoing claim)Buildings Insurance 13.29
Contents Insurance 13.29
Life Assurance 20.58
Other Insurance 0
Presents (birthday, christmas etc.) 200
Haircuts 35
Entertainment 250
Holiday 0
Emergency Fund 0
Total monthly expenses2142.79
Secured & HP Debt DescriptionDebt(£)Monthly(£)APR(%)
Mortgage: Amount £111000 Monthly £480 APR 3.4
Secured & HP Debt totals 111000 - -
Unsecured Debt DescriptionDebt(£)Monthly(£)APR(%)
Credit Card Amount £6696 Monthly Min £70 APR 0%
Credit Card Amount £4498 Monthly Min £45 APR 0%
Loan Amount £14000 Monthly £200.68.6 APR 8.6%
Unsecured Debt totals 25194
Asset DescriptionValue (£)
Cash 0
House Value (Gross) 140000
Shares and bonds 0
Car(s) 1500
Other assets (e.g. endowments, jewellery etc) 0
Total Assets141500

Willing2Learn · 14 January 2020 at 3:56PM

Just tidied for you...(My auto-calculations arrive at ever so slightly different totals)

Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 1190
Partners monthly income after tax....... 1940
Benefits................................ 85
Other income............................ 0
Total monthly income.................... 3215

Monthly Expense Details
Mortgage................................ 480
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 112
Electricity............................. 50
Gas..................................... 50
Oil..................................... 0
Water rates............................. 44
Telephone (land line)................... 0
Mobile phone............................ 78.5
TV Licence.............................. 13.29
Satellite/Cable TV...................... 47
Internet Services....................... 20
Groceries etc. ......................... 400
Clothing................................ 50
Petrol/diesel........................... 160
Road tax................................ 17.06
Car Insurance........................... 42.52
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 16.26
Buildings insurance..................... 13.29
Contents insurance...................... 13.29
Life assurance ......................... 20.58
Other insurance......................... 0
Presents (birthday, christmas etc)...... 200
Haircuts................................ 35
Entertainment........................... 250
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2152.79

Assets
Cash.................................... 0
House value (Gross)..................... 140000
Shares and bonds........................ 0
Car(s).................................. 1500
Other assets............................ 0
Total Assets............................ 141500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 111000...(480)......3.4
Total secured & HP debts...... 111000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................6696......70........0
Credit Card....................4498......45........0
Loan...........................14000.....200.6.....8.6
Total unsecured debts..........25194.....315.6.....-

Monthly Budget Summary
Total monthly income.................... 3,215
Expenses (including HP & secured debts). 2,152.79
Available for debt repayments........... 1,062.21
Monthly UNsecured debt repayments....... 315.6
Amount left after debt repayments....... 746.61

Personal Balance Sheet Summary
Total assets (things you own)........... 141,500
Total HP & Secured debt................. -111,000
Total Unsecured debt.................... -25,194
Net Assets.............................. 5,306

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

Roses208 · 14 January 2020 at 3:59PM

Thanks

Wasn't sure how to do it

Willing2Learn · 14 January 2020 at 4:04PM

And my thoughts on your SOA:

Is you council tax spread across 10 or 12 months?
Are you water rates spread across 10 or 12 months? Is it metered?
Mobile phone costs are very high. Have you explored cheaper SIM-only contracts?
Groceries are quite high too. Do you batch cook? Do you have one of the discount supermarkets near you (Lidl / Aldi)?
Do you really spend £2,400 each year on presents?
£250/month on entertainment is pretty high (£3,000/annum)
You desperately need to save something each month toward your Emergency Fund as it is an essential component of all successful monthly budgets
Do you really have £750/month budget surplus or is this an aspirational budget?

EssexHebridean · 14 January 2020 at 4:05PM

OK - first I'm going to suggest that you DON'T add the loan to the mortgage - not least as your SOA seems to suggest that your surplus will allow you to overpay heavily on the loan which means you will potentially pay it off far more cheaply by concentrating on dealing with it that way. It's generally a pretty bad idea to convert unsecured debt into secured - and by adding it to the mortgage that would effectively be what you are doing.

On the SOA then -

ExpensesAmount(£)
Mortgage 480
Secured/HP loan payments 0
Rent 0
Management charge 0
Council tax 112 If this is paid over 10 months then remember that you have two months coming up where you will not be paying this - make sure those two payments get shifted across to overpay the loan (or to save towards paying the loan off early if you can't make ongoing overpayments to it.
Electricity 50
Gas 50
Oil 0
Water Rates 44
Telephone (land line) 0
Mobile phone 78.5 This is very high - when do your contracts end? Make a note of that date and then ring up a couple of months ahead and ask about switching to SIM only
TV Licence 13.29
Satellite/Cable TV 47 It's often worth haggling on this too - Sky & Virgin are two of the best and easiest companies to haggle with - just ring and tell them they are too expensive...
Internet services 20
Groceries 400 You can easily knock £100 off this
Clothing 50
Petrol/diesel 160
Road tax 17.06 If you pay this monthly then bear in mind it's more expensive that way - your surplus allows you to save up for this and pay in a lump sum.
Car Insurance 42.52 If you pay this monthly then bear in mind it's more expensive that way - your surplus allows you to save up for this and pay in a lump sum.
Car maintenance (including MOT) 30
Car Parking 0
Other travel 0
Childcare/nursery 0
Other child related expenses 0 Definitely nothing to add in here?
Medical (prescriptions, dentists, opticians etc.) 10
Pet Insurance/Vet bills 16.26 (likely to significantly increase due to a big ongoing claim)Buildings Insurance 13.29
Contents Insurance 13.29
Life Assurance 20.58
Other Insurance 0
Presents (birthday, christmas etc.) 200 This is a LOT of money going on presents! For context, that's £2400 per year - I think you should be thinking hard about whether this is an overspend.
Haircuts 35
Entertainment 250 This is high but does it also cover money set aside for weekends away etc as I notice that you're not budgeting anything for holidays?
Holiday 0
Emergency Fund 0 Personally I'd take £50 of that entertainment fund and put it here instead. As a homeowner with a car, a cushion of £1000 in an emergency fund can make the difference between panic, and no panic, when things go wrong.
Total monthly expenses2142.79

It's good to know that you do have that £759 surplus - that is often something that people struggle with. One red flag though is the comment about that amount varying if you have "other extras to pay off" - you need to think about that, specifically how often that is the case as that would suggest that there are items currently NOT factored in to that budget. However IMO paying it off a 0% CC when you have interest accruing on another debt is crazy - you have over a year on 0% interest on those, so set both to a DD payment of £100 a month and then ignore them until a year's time, when you need to start looking at getting a balance transfer to another 0% card on each. In the meantime the current surplus plus any savings you can make on the SOA (food, entertainment, and most definitely presents!) should be either paid off the loan as overpayments, OR set aside in an interest paying savings account ready to clear the loan early.

Roses208 · 14 January 2020 at 5:05PM

Thanks for your replies. I will take into account everyone’s suggestions. Realise I missed a couple of direct debits. £22.50 daughters swimming lessons & £25 specsavers contact lenses. Yes we have anywhere between £450-700 pm surplus. The extras to pay as mentioned would be things like, daughters birthday party, something breaks in the house, just any sort of one off costs that life brings. Yes presents allowance is very big and will try and reduce that. The budget covers, birthdays (large family) Xmas, Mother’s Day, Father’s Day, valentines, anniversary etc but def need to look at it. We are also trying to reduce food bill and would like to get it to £70 per week instead of almost £100 so working on that. Entertainment does not include weekends away just days out etc but again we now have annual passes for local wildlife park and aquarium so hoping to reduce that too. We’ve already made massive cut backs in terms of clothing spending and beauty appointments but can see there’s work to be done. No holidays this year, had two last year and realised we need to stop spending. Do have two UK weekends booked and already paid for though. Thanks again &#55357;&#56842;

EssexHebridean · 15 January 2020 at 11:37AM

Comments in red below:

Roses208 wrote: »

Thanks for your replies. I will take into account everyone’s suggestions. Realise I missed a couple of direct debits. £22.50 daughters swimming lessons Add this under Child expenses.& £25 specsavers contact lenses. Take a look at one of the online contact lens suppliers to see how much you can reduce this - and maybe consider alternating glasses days & lenses days if you're using daily disposables to make each supply last longer. If buying online then look at savings to be made by buying in more bulk, and also go through TopCashBack or Quidco.Yes we have anywhere between £450-700 pm surplus. That's either £5400 a year or £8400 - that's a lot of difference unaccounted for! The extras to pay as mentioned would be things like, daughters birthday party Budget under child expenses and don't be pressured into keeping up with the Jones's on this one - it's easily done!, something breaks in the house This will be catered for by the Emergency Fund that you are going to start saving., just any sort of one off costs that life brings.Maybe have a think through the sort of thing you mean there and then have an honest review of how many of those things were needed, and how many just wanted. Yes presents allowance is very big and will try and reduce that. The budget covers, birthdays (large family) Xmas, Mother’s Day, Father’s Day, valentines, anniversary etc but def need to look at it. Maybe start by knocking off Valentines Day and Anniversary for any sort of significant spend - why not take it in turns to come up with a nice but budget friendly thing to do for the other? Often the best memories are those which cost the least!We are also trying to reduce food bill and would like to get it to £70 per week instead of almost £100 so working on that. Entertainment does not include weekends away just days out etc but again we now have annual passes for local wildlife park and aquarium so hoping to reduce that too. So if that is the case that suggests that you do sometime shave trips away - where are they paid for from? We’ve already made massive cut backs in terms of clothing spending and beauty appointments but can see there’s work to be done. No holidays this year, had two last year and realised we need to stop spending. Do have two UK weekends booked and already paid for though.have you factored in spending money for these? Thanks again ��

If you do have the surplus that you say you do - even at that £5400 per year level - then that means that you have knocked £5k off that smallest credit card in the last year - is that what has happened? That one is easy to check by looking at your balance at the start of last year and seeing how much it's changed.

If I were you at this stage I'd be re-working the budget, including all the stuff that is currently left out. I'd also be sitting down and making active plans as a family of where that present spend can be reduced to a more reasonable level, and where savings can be made to release £50 a month from Entertainment to go across to the Emergency Fund. For grocery shopping are you currently meal planning, shopping from a list and cooking things from scratch? That's about the best way of making savings - also look at what is better value bought from places like Lidl or Aldi. Something which can give you a great boost to start with on reducing grocery spending is to do an audit of your cupboards, fridge and freezer then plan the next week's meals as far as possible using up the things that you already have - your aim for next week's shopping is to buy just fresh fruit, veg, and milk - maybe bread too if you don't have any of that in the freezer already. it's a great challenge to see just how little you can spend!

Roses208 · 17 January 2020 at 10:17AM

Thanks for your reply. We haven't really made a dent what so ever in the debt this year. I have only been back at work from maternity leave for 11 months and just haven't had our head in gear. Sort of hand our "lightbulb moment" in December and are making it our 2020 goal to reduce / clear debt. We have on certain months paid up to £700 off the credit cards whilst keeping a £400 food shop bill and £200 on entertainment so the money is definitely there but we always seem to spend it again. (The two Holidays last year etc). We are already looking at ways to reduce food shopping bill and have made a switch from a weekly Gousto order/Asda to Aldi and Lidl and are hoping this shaves some off. Also any pay rises/bonus we receive this year are going straight to the debt. We are going to try to cut down on entertainment. Parents bought us annual passes and we are going to start taking a packed lunch on trips out as most of our money seems to go on eating out. Parents paid for one of the weekends away. We paid for the other (on credit card). No more trips happening this year though. Spending money is put to one side. We're giving ourselves a year of no holidays, no unnecessary clothes shopping (although toddler is at the age of constantly needing new clothes), no nail or beauty appointments, and generally a massive cut on spending whilst still trying to have a life. I think on top of the House, Wedding and Baby we just haven't changed our lifestyles to pay for these things and put it on credit cards. We definitely have some things to consider when it comes to our spending and hoping we can change our ways this year. Feeling very motivated and determined and hoping that doesn't go as i know how easy it is to let things slide

Debt free 2020

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Debt free 2020

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