Aspirational SOA

Van_Girl

Hello,

So I realised in December that I was blowing through cash and despite having an OK income, I had nothing to show for it at the end of every month. The debts were certainly not getting any smaller, though not growing. So I went through everything with a fine tooth comb and got a budget sorted, which I've basically managed to stick to since then with a few tweaks. This is my refined SOA. 

My query is - am I missing anything that I could be saving on? I am planning to transfer some of the cash over to the loan to reduce the interest on that, while keeping £1k emergency fund - or should I keep more given the current situation? I estimate I could pay the debt down in about 18 months based on this, but do you think it's realistic to stick to for that long? 

Statement of Affairs and Personal Balance Sheet

Household Information

Number of adults in household........... 2

Number of children in household......... 0

Number of cars owned.................... 2

Monthly Income Details

Monthly income after tax................ 1826

Partners monthly income after tax....... 350 (his contribution to household & food only - I own the property)

Benefits................................ 0

Other income............................ 0

Total monthly income.................... 2176

Monthly Expense Details

Mortgage................................ 373

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 157

Electricity............................. 40

Gas..................................... 40

Oil..................................... 0

Water rates............................. 32.86 (meter)

Telephone (land line)................... 0

Mobile phone............................ 6

TV Licence.............................. 0

Satellite/Cable TV...................... 0

Internet Services....................... 26.99 (including landline, fixed until Nov. Had £50 cashback which went straight on loan payment)

Groceries etc. ......................... 200

Clothing................................ 5

Petrol/diesel........................... 200 (I claim an allowance for this but it's going into a separate car savings account as my car is 20 years old)

Road tax................................ 36.75

Car Insurance........................... 50

Car maintenance (including MOT)......... 33

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

Buildings insurance..................... 7.5

Contents insurance...................... 7.5

Life assurance ......................... 8.51

Other insurance......................... 0

Presents (birthday, christmas etc)...... 20

Haircuts................................ 10

Entertainment........................... 217.5 (this is basically £45 a week which I have to spend on anything I want/need - I'm thinking of reducing this to £25 a week during lockdown?)

Holiday................................. 15

Emergency fund.......................... 30

Professional Fees....................... 13.41 (not reimbursed by employer)

Total monthly expenses.................. 1530.02

Assets

Cash.................................... 3229.76

House value (Gross)..................... 175000

Shares and bonds........................ 0

Car(s).................................. 4000

Other assets............................ 0

Total Assets............................ 182,229.76

Secured & HP Debts

Description....................Debt......Monthly...APR

Mortgage...................... 114000...(373)......1.59

Total secured & HP debts...... 114000....-.........-   

Unsecured Debts

Description....................Debt......Monthly...APR

Loan...........................12075.5...286.9.....5.7
Credit Card..................3091.72...40.....0

Total unsecured debts..........15167.22...326.9.....-  

Monthly Budget Summary

Total monthly income.................... 2,176

Expenses (including HP & secured debts). 1,530.02

Available for debt repayments........... 645.98

Monthly UNsecured debt repayments....... 326.9

Amount left after debt repayments....... 319.08

Personal Balance Sheet Summary

Total assets (things you own)........... 182,229.76

Total HP & Secured debt................. -114,000

Total Unsecured debt.................... -15,167.22

Net Assets.............................. 53,062.54

EimearF

Your car insurance is high. You could save a little there.
You could shave some off groceries and £100 off entertainment but as this won’t save many months it may not be worth it if you think it will cause you to lose focus. That SOA allows for you to live a reasonable lifestyle for 18 months while you clear the debts. 

Willing2Learn

Van_Girl said:

...I am planning to transfer some of the cash over to the loan to reduce the interest on that, while keeping £1k emergency fund - or should I keep more given the current situation? ...

If it were me, I would keep your EF level as high as possible, given the current pandemic and the impact this will have on the economy.  These are uncertain times.  You may find you need to dip into your buffer...

Van_Girl

Thank you both  

The car insurance is for a car and a campervan, which makes it a bit higher than average. I do around 20,000 miles a year in the car too. I would quite like to SORN the camper but I can't fit the flipping thing up my narrow 1930's drive. 

I am thinking of reducing "entertainment" down to £25 per week, which is around £108pcm during lockdown as there's nothing to spend it on really - I might try to carry that on for as long as possible to keep the budget trimmed. £45 did seem a bit frivolous, but it was to allow for things like coffees out when I'm on the road all day (I take a flask but it doesn't always last that long), plus work things like cake days etc. Just as a catch-all really. And it pretty much always got spent - but then you spend it when it's there I guess!

I've been hanging onto the cash savings and trying to weigh up whether to pay a chunk off the loan. The loan is a high ish rate, but then, like you say, times are so uncertain right now. My employment is secure, I'm sure of that, but DH maybe not so much. 

Fireflyaway

I'd put a bit more away in savings just in case. Put the entertainment money into the emergency fund and knock £50 off groceries and put that in savings too, at least whilst we can't go out. Do you really only spend £5 a month on clothes? I very very rarely buy clothes but £5 a month would only get you a couple of tops or a pair of shoes each year. 

Van_Girl

Fireflyaway said:

I'd put a bit more away in savings just in case. Put the entertainment money into the emergency fund and knock £50 off groceries and put that in savings too, at least whilst we can't go out. Do you really only spend £5 a month on clothes? I very very rarely buy clothes but £5 a month would only get you a couple of tops or a pair of shoes each year. 

I don't think we can reduce the groceries - I'd like to, but DH is not really on board with the savings. It's the only area our finances cross over in that way really, so I'm happy to compromise with him.

£5 for clothes is really just to have a bit in a pot in case I absolutely need something, but really I have far more clothes and shoes than one person needs. I'm hoping for a year of buying no clothes unless something I really need wears out completely. 

I think you're right though, I could be far more brutal with the entertainment money right now. Especially if we're not cutting down on grocery spend. 

EssexHebridean

OK - comments will be below in bold italics to hopefully make them stand out:
Van_Girl said:

Hello,

So I realised in December that I was blowing through cash and despite having an OK income, I had nothing to show for it at the end of every month. The debts were certainly not getting any smaller, though not growing. So I went through everything with a fine tooth comb and got a budget sorted, which I've basically managed to stick to since then with a few tweaks. This is my refined SOA.  So to clarify - this is an update on what you have been doing which has worked, but accounting for further savings that you now think that you can make - yes? 

My query is - am I missing anything that I could be saving on? I am planning to transfer some of the cash over to the loan to reduce the interest on that, while keeping £1k emergency fund - or should I keep more given the current situation? I estimate I could pay the debt down in about 18 months based on this, but do you think it's realistic to stick to for that long? 

Statement of Affairs and Personal Balance Sheet

Household Information

Number of adults in household........... 2

Number of children in household......... 0

Number of cars owned.................... 2

Monthly Income Details

Monthly income after tax................ 1826

Partners monthly income after tax....... 350 (his contribution to household & food only - I own the property) While you might own the property, this seems a relatively low contribution - does it really cover 50% of the costs of your partner being there, allowing for things like the extra amount you pay for the council tax, what he is actually eating, increased use of power etc? If not, then allowing that you are currently paying down debt, you may need to have a sensitively worded chat.

Benefits................................ 0

Other income............................ 0

Total monthly income.................... 2176

Monthly Expense Details

Mortgage................................ 373

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 157

Electricity............................. 40 Assume you have checked to ensure that you are on the best tariff for this and the gas? If you've not joined the MSE cheap energy club then it is worth doing so as this will keep an eye on potential savings for you.

Gas..................................... 40

Oil..................................... 0

Water rates............................. 32.86 (meter) I bet there are things you can do to bring this down a bit!

Telephone (land line)................... 0

Mobile phone............................ 6 Oh nice work - well done! 

TV Licence.............................. 0 You never watch live or "as live" TV at all?

Satellite/Cable TV...................... 0

Internet Services....................... 26.99 (including landline, fixed until Nov. Had £50 cashback which went straight on loan payment) Make a diary note for a month ahead of this expiring to shop around - alternatively ring the current provider dead on expiry date and ask them for a good financial reason why you shouldn't move elsewhere...

Groceries etc. ......................... 200 This is pretty good, but can still be tweaked - you could save yourself £25 a month there without too much effort I'm guessing, and probably another £25 - £50 if you were prepared to be hardcore about it.
Clothing................................ 5

Petrol/diesel........................... 200 (I claim an allowance for this but it's going into a separate car savings account as my car is 20 years old) Excellent forward planning.

Road tax................................ 36.75 This is high - why so much? 

Car Insurance........................... 50 Again - I assume you've shopped around for this and read the guide on the maid site to getting the best deal possible?

Car maintenance (including MOT)......... 33 Make sure you do genuinely put this aside each month.

Car parking............................. 0

Other travel............................ 0 Definitely nothing? You never hop on the bus when your car is in for a service, or get a taxi home from a night out, a train to visit family? 

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

Buildings insurance..................... 7.5

Contents insurance...................... 7.5

Life assurance ......................... 8.51

Other insurance......................... 0

Presents (birthday, christmas etc)...... 20

Haircuts................................ 10

Entertainment........................... 217.5 (this is basically £45 a week which I have to spend on anything I want/need - I'm thinking of reducing this to £25 a week during lockdown?) If my experience is anything to go by then your best bet while the lockdown is in place is to leave the existing amount in place then at the end of the month transfer any surplus from it to debt. There's not a lot to spend on, is there! 

Holiday................................. 15 Assume this is your half of a two-person holiday - are you sure it's enough though?

Emergency fund.......................... 30 Well done - keep on with this.

Professional Fees....................... 13.41 (not reimbursed by employer) Is there tax you can reclaim on this? 

Total monthly expenses.................. 1530.02

Assets

Cash.................................... 3229.76 Assume this is the car, holiday, EF and other monthly budget/annual spend items?  I'll make a suggestion about this below...

House value (Gross)..................... 175000

Shares and bonds........................ 0

Car(s).................................. 4000 Allowing for the age you said your car is are you sure about this? It sounds a high value for a vehicle that old?

Other assets............................ 0

Total Assets............................ 182,229.76

Secured & HP Debts

Description....................Debt......Monthly...APR

Mortgage...................... 114000...(373)......1.59

Total secured & HP debts...... 114000....-.........-   

Unsecured Debts

Description....................Debt......Monthly...APR

Loan...........................12075.5...286.9.....5.7
Credit Card..................3091.72...40.....0 When does the 0% run out on this? make sure you know so it can either be paid off by them or you can find a new deal to transfer to.

Total unsecured debts..........15167.22...326.9.....-  

Monthly Budget Summary

Total monthly income.................... 2,176

Expenses (including HP & secured debts). 1,530.02

Available for debt repayments........... 645.98

Monthly UNsecured debt repayments....... 326.9

Amount left after debt repayments....... 319.08 Is this going to be hammered off the loan if the loan allows overpayment? 

Personal Balance Sheet Summary

Total assets (things you own)........... 182,229.76

Total HP & Secured debt................. -114,000

Total Unsecured debt.................... -15,167.22

Net Assets.............................. 53,062.54

I'd say that probably is workable to live to - you're being realistic about spending, not trying to cut things to the bone (which is often why budgets fail) yet you still have the incentive of knowing that any money you save in a month can go off against debt or to bolster that EF even more.

On the money you have saved for various things - if this is currently all in one account then you need to be quite cautious about making sure you account for what belongs in each "pot" - the first suggestion from me on this is that if you aren't planning to replace your car in the next 12 months, then you could open a regular savings account - the MSE email currently recommends one from the Coventry Building Society - and then feed that £200 a month into that. In fact, in the first instance you could also feed in an additional £300 a month from your car savings that have already accrued -that will mean that your savings are earning you a better rate of interest than you'll get elsewhere. Not ideal for emergency fund money as you want that somewhere you can get at it immediately if needed,  but works well for smaller amounts of longer term savings. 
Second - your cat tax & insurance - you are currently paying a premium to pay these monthly - so rather than carrying on like that, why not when the renewal comes up, pay up front using some of the money saved, and then you can add the amount you would have been paying in monthly instalments back to the savings again - does that make sense? You get a cheaper overall price that way. 

Other things I noted - that clothing spend looks a little low - I assume that's a "socks & pants" budget but do be sure that is realistic - it will certainly need an end date on it after which you increase a bit as your existing clothes start to need replacement.  Similarly be sure that the amount for holiday is accurate - remember to factor in spending money, any travel involved etc as well as straight accommodation costs.

Van_Girl

Hi EssexHebridean, thank you for an incredibly detailed review Much Appreciated.

I have two vehicles, a campervan and a car which explains the higher costs and asset value. I have paid both insurance in full and save the equivalent monthly amount (plus buffer) into separate pots. I have individual savings pots for everything, which are all earning interest - I am obsessive.

The cash amount is purely what I've saved since Dec by following the budget and also a couple of tax and other refunds which have come in. This is essentially the budget I've been sticking to since Dec, but with some improvements/reductions as I've seen how things can be better organised and budgeted for. I was going to allocate £1k to top up the EF and pay the rest off the loan, but then the world went mad and I suddenly got nervous about not having much in the way of cash savings. I have 23 months left on the 0% credit card, which is ample time to pay everything off I reckon. I haven't actually included any of the savings pots in the cash amount as these are budgeted amounts for other things so to me its not cash assets, if that makes sense?

DH pays half of the household bills and food. He doesn't contribute to the repayment part of the mortgage, or the vehicles as they are owned by me - he doesn't drive. He chips in for fuel though. 

The water bill is a bit of a bugbear - I don't know how we use so much to be honest. I might have to get a timer for our showers! I'm with you on groceries too. I definitely think we can trim, just need to get DH on board with that - to be honest it's the alcohol spend within that that needs the trim!

I am on the MSE energy club and this was one of the best deals at the time, I've got the renewal date logged though. We certainly could be more careful with the usage though. 

No TV licence as we don't watch live. Nothing on anyway DH has a Netflix account which keeps us going.

I think I do probably need to reconsider holiday savings - it probably is a bit low. We have the van which helps, but it's still got to cover diesel, food etc even if we wild camp. Clothes wise, I have an awful lot already so really want to be brutal with it - but is it realistic to stick to... not sure. Maybe I should adjust the budget up and then transfer any surplus at certain points through the year, as you suggest with the entertainment budget. 

Lots of food for thought, thank you