Facing reality 29 January 2020 at 7:43PM in Debt free diaries 766 replies 53.5K views

Sarahwithlove

So I have been hovering round and reading diaries for last few weeks but finally decided it was time to bite the bullet and share my own story. I lost my mum in April 2018 very unexpectedly, 6 weeks after we had moved into our new jointly owned property, and it through my life and my finances upside down. We had to sell the property to allow my brothers to have their share of the inheritance and I couldn’t afford to remain living in a 3 bedroom property on my own with all the costs that came with it. Fast forward to December 2018 and I moved into a flat all of my own with a lovely mortgage to go with it. The flat needed lots of changes to it which I had budgeted for and like everything ended up costing more due to issues with the cast iron plumbing. However during that period I had been struggling to come to terms with my mums death and lived on takeaways and meal deals and costa coffees for months. Along with the additional costs of buying new furniture for my flat, putting my everyday expenses on my credit card so I could fund the extra costs for changes and having some unexpected work done in the garden. I’ve ended up with quite a few debts on my credit card and wiped out all my savings meaning I have had to put all my car costs, I.e mot, insurance and tax all on my credit card as well. So when my friend asked if she could move in with me for a year to 18 months in August I jumped at the chance thinking great more money to pay towards the bills. Unfortunately the last few months went on having to replace windows in the flat and doing other small jobs around the place and due to major parking issues and break ins down my road I borrowed some money off my dad and had my driveway done, best thing I ever did. I now feel like it’s all settled and I can start at repaying all my debts. I’ve had my credit cards all moved to balance transfer cards with 20 months at 0%. One was fee free and other at 1.5%. I have also agreed with my housemate that she will pay an extra £50 a month rent going forward.

So here is how things stand.
RBS credit card £1930.50
Tesco Credit card £3604.30
Mortgage £104,981.12 - monthly payment £370.66
DFS loan £581.91 - monthly repayment £83.13 (last payment 01/08/2020) 0% interest
Dad loan £4300 - repayment £100 per month
Brother loan £1000

I’ve set myself a budget on my basic pay and budgeted putting away £50 into emergency fund a month and £50 into car fund to pay future insurance etc to avoid using my credit cards. I’m going to transfer my mileage claim each month when I get paid into a separate account and use it purely to pay for petrol.

My current rent that I receive from my house mate is going towards repaying debt and any other sudden purchases that may crop up each month. I’m also going to start decluttering and try and sell some items, especially electronics. My phone contract is also due to end in September so I am going to move to a sim only, and my virgin media promo ends in April so researching alternatives at present. Issue we have is that it needs to be fibre broadband to make it worthwhile due to area I live in. Seriously considering now TV as an option.

It’s almost pay day and I still have some money in my bank account and my friend owes me £48 for our football tickets. Busy few weeks coming up so social budget is going to be tight so am going to put the £48 back into that fund. I don’t want to go crazy and restrict my life and stop living but also don’t want to be too crazy. Wish me luck!:j

Sarahwithlove

Some small changes I have been making to date and will continue on into the rest of the year.

Making packed lunches for work
Restricting my costa coffee visits
Menu planning meals and creating a shopping list
Saying No.
Only essential clothes shopping purchases.

I’ve also started using some apps such as receipt hog and have a spending spreadsheet ready to start using from 1st feb to make me think before I buy.

MovingForwards

Wishing you well with your debt busting!

It's great you have taken in a mate for extra money.

Have you looked at snowballing your debts? Dave Ramsey is often mentioned as he is a firm believer of it.

MidsHollie

Hi Sarah,
Have you done an SOA? If you do one for your eyes only, it is a great way of looking at your bills and spends across a whole year, and can help you set a budget (which will be key). If you post in on here, I'm sure you will get some great advice of where you can cut spends. Cutting down your spends by £50 a month I'm sure would be possible, with a few cut backs, and would have your DFS loan paid off within 12 months with not too much effort. I think an SOA and a budget will help you get the balance right between living life and debt busting. Good luck!

Sarahwithlove

I haven't looked at snowballing or heard of Dave Ramsay so will do some investigating tonight. Luckily it's all 0% interest for 20 months well apart from my mortgage so that helps. My dfs loan will be paid off by 01/08 so will have that extra available each month as well :j

Sarahwithlove

MidsHollie wrote: »

Hi Sarah,
Have you done an SOA? If you do one for your eyes only, it is a great way of looking at your bills and spends across a whole year, and can help you set a budget (which will be key). If you post in on here, I'm sure you will get some great advice of where you can cut spends. Cutting down your spends by £50 a month I'm sure would be possible, with a few cut backs, and would have your DFS loan paid off within 12 months with not too much effort. I think an SOA and a budget will help you get the balance right between living life and debt busting. Good luck!

I have tried doing a SOA but find some of it quite difficult to work out as it varies so much but I have done an informal one where possible and set myself some budgets and almost a month in and sticking to it well so far, looks like come payday I will have some money leftover from this month to throw at credit card. Which pleased about seeing as it's been a long old month and expensive with my birthday celebrations!

Sarahwithlove

Statement of Affairs and Personal Balance Sheet

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

Monthly Income Details
Monthly income after tax................ 1487.09
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 300
Total monthly income.................... 1787.09

Monthly Expense Details
Mortgage................................ 370.6
Secured/HP loan repayments.............. 83.13
Rent.................................... 0
Management charge (leasehold property).. 102.28
Council tax............................. 125
Electricity............................. 37
Gas..................................... 12.24
Oil..................................... 0
Water rates............................. 22.07
Telephone (land line)................... 0
Mobile phone............................ 40.9
TV Licence.............................. 12.56
Satellite/Cable TV...................... 71.25
Internet Services....................... 0
Groceries etc. ......................... 180
Clothing................................ 30
Petrol/diesel........................... 0
Road tax................................ 14
Car Insurance........................... 38.33
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 22
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10.4
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 6.66
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 16.25
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 50
Cleaner................................. 70
Total monthly expenses.................. 1474.67


Assets
Cash.................................... 0
House value (Gross)..................... 160000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 166000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 104981...(370.6)....2.05
Hire Purchase (HP) debt ...... 518......(83.13)....0
Total secured & HP debts...... 105499....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
RBS............................1930.5....19.5......0
Tesco .........................3604.3....84.4......0
Dad loan.......................4300......100.......0
Brother loan...................1000......0.........0
Total unsecured debts..........10834.8...203.9.....-


Monthly Budget Summary
Total monthly income.................... 1,787.09
Expenses (including HP & secured debts). 1,474.67
Available for debt repayments........... 312.42
Monthly UNsecured debt repayments....... 203.9
Amount left after debt repayments....... 108.52

Personal Balance Sheet Summary
Total assets (things you own)........... 166,000
Total HP & Secured debt................. -105,499
Total Unsecured debt.................... -10,834.8
Net Assets.............................. 49,666.2

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

Sarahwithlove

A couple of things you will notice about my SOA. I haven't included petrol because I use my mileage money from work for this and haven't included it in my income as a result. I don't do many miles that are outside of work and the rate I get vs what spend on petrol is alot more so balances itself out. You will notice that my car expenses are slightly more and that's because I usually have to change a type or two throughout the year which technically my moelage should cover but I find it easier to budget it this way.

Also you will notice we have a cleaner. My housemate has agreed to put her rent up by £50 a month to cover most of this rather than us get rid. I felt like it was a good compromise. So once she has made the first increase on 1st Feb I will update SOA to reflect it. I'm also getting stricter with my housemate about food shopping and her paying her share so that should come down as well.

girlatplay

Hi Sarah

Just found your diary so I have subscribed.

I'm so sorry to hear about your Mum.

It sounds like you've got a good plan in place now. Keep posting regularly, it certainly keeps me on the straight and narrow.

Another app to look at, if you haven't already, is Shoppix. I've only just started using it so I don't really know how good it is but it's for uploading your shopping receipts. I have the receipts anyway (and I guess you do too if you're using them for receipt hog) so it doesn't cost extra to use it. I'm hoping to be able to cash out for cash eventually.

There will be others along to help with your SOA but I would say cut out the cable tv and use Freeview. I use Freeview and Netflix and I really don't feel like I'm missing out. Saves a fortune.

Sarahwithlove

girlatplay wrote: »

Hi Sarah

Just found your diary so I have subscribed.

I'm so sorry to hear about your Mum.

It sounds like you've got a good plan in place now. Keep posting regularly, it certainly keeps me on the straight and narrow.

Another app to look at, if you haven't already, is Shoppix. I've only just started using it so I don't really know how good it is but it's for uploading your shopping receipts. I have the receipts anyway (and I guess you do too if you're using them for receipt hog) so it doesn't cost extra to use it. I'm hoping to be able to cash out for cash eventually.

There will be others along to help with your SOA but I would say cut out the cable tv and use Freeview. I use Freeview and Netflix and I really don't feel like I'm missing out. Saves a fortune.

Thanks it’s been a rather tough 18 months since she passed away but starting to feel like I’m coming out the other side and feel more positive about life in general.

I downloaded shopping tonight thanks, it seems to be pretty much the same as receipt hog.i wish I had kept this weeks receipts but at least I will be able to do both in future.

TV is one of places I am looking to cut down but in contract until end of April. It does include broadband as well which I need for work as I work from home a few hours every day. I’m in process of looking at alternatives at present ready for when the contract is up.

Sarahwithlove

Popped to shop today to get myself some crisps with my lunch and ended up buying some fizz and chocolate, £5.50 later. Doh. Also realised that my breakdown renewed on my old credit card I cleared in December so had to pay that off £28.22 for the year. Then Thursday is cleaner day so £16.50 paid to her today. It’s payday tomorrow so have set up for my mileage expenses from my wages to be paid into a separate account that I’m going to use for petrol/car expenses only. I have also ordered a new card for what used to be my social account and going to use it for that again and for food shops. My main account will be purely for bills to come out of (I get cash back on bills) and credit card DD to come out. According to my budget I would have about £100 leftover spare in that account at the end of the month. I have decided I want to leave a £100 in there spare at end of each month for any unexpected expenses and then remainder will be used to overpay my credit card. Luckily the next two months mean no council tax so that should be an extra £125 a month that can be paid off the cards. I’m finishing this month with £67.30 in my bank account, £10 in my purse, £50 in my big expense saver and £100 in emergency fund. I’m not too fussed about building that up quickly, will stick to my £50 a month because if something major happens I know my dad would always lend me the money. Not ideal but I’d rather do that and pay the credit cards off first as they will eventually have interest. My dads motto is if he dies before I pay him off then it gets written off, personally I don’t want to be in debt to him but I’m happy and he is happy with the £100 per month repayment plan we currently have.