Light bulb moment

shoppingobsessed2020

Wow.  I’m in actual shock.  I have just looked at all the debt we have accumulated and I’m freaking out.  The positives we have surplus every month on paper.  The bad news is we spend most if not all that surplus.

the next step will be looking at where the excess goes and then seeing how to trim down our grocery budget.  I want to move house and on paper we have a decent income (set to increase due to a new job) but the level of debt we have accumulated via my shopping habit and his education (necessary for his job) is obscene and a level that not many can comprehend.  I know I’m certainly struggling with it!

Step 1 has been my Soa so that’s done.  Im not totally sure on interest rates but I know they are all
high.  Ulitlities I already shop around for so happy they are they best they can be.  We are tied into a contract for the phones and sky but that is tv, landline and entertainment packages as we don’t go out much unless it’s a family activity.

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

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

Number of children in household......... 1

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 980

Partners monthly income after tax....... 4000

Benefits................................ 82

Other income............................ 0[b]

Total monthly income.................... 5062[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 321

Secured/HP loan repayments.............. 692

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

Management charge (leasehold property).. 0

Council tax............................. 130

Electricity............................. 60

Gas..................................... 60

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

Water rates............................. 30

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

Mobile phone............................ 70

TV Licence.............................. 12

Satellite/Cable TV...................... 85

Internet Services....................... 0

Groceries etc. ......................... 400

Clothing................................ 50

Petrol/diesel........................... 100

Road tax................................ 20

Car Insurance........................... 80

Car maintenance (including MOT)......... 50

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

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

Childcare/nursery....................... 250

Other child related expenses............ 150

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

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

Buildings insurance..................... 10

Contents insurance...................... 10

Life assurance ......................... 50

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

Presents (birthday, christmas etc)...... 100

Haircuts................................ 15

Entertainment........................... 0

Holiday................................. 0

Emergency fund.......................... 0[b]

Total monthly expenses.................. 2745[/b]

[b]

Assets[/b]

Cash.................................... 200

House value (Gross)..................... 115000

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

Car(s).................................. 15000

Other assets............................ 0[b]

Total Assets............................ 130200[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 67715.4..(321)......2.79

Secured Debt.................. 11346....(145)......3.74

Hire Purchase (HP) debt ...... 12088....(336)......0<

Hp car.........................5367.....(211)......0[b]

Total secured & HP debts...... 96516.4...-.........-   [/b]

[b]Unsecured Debts[/b]

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

Tsb............................970.......30........30

Very...........................300.......0.........0

Next...........................2000......120.......30

Loan 2.........................15100.....362.......13

Loan 1.........................16250.....450.......17

Barclays his ..................5345......120.......0

Barclays ......................6200......150.......30

Debenhams .....................2200......150.......30

Capital one....................775.......25........35

Mbna...........................10000.....150.......25[b]

Total unsecured debts..........59140.....1557......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 5,062

Expenses (including HP & secured debts). 2,745

Available for debt repayments........... 2,317

Monthly UNsecured debt repayments....... 1,557[b]

Amount left after debt repayments....... 760[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 130,200

Total HP & Secured debt................. -96,516.4

Total Unsecured debt.................... -59,140[b]

Net Assets.............................. -25,456.4[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

[Deleted User]

I think working out where that £760 "surplus" is going each month would be a great start.  Your groceries are on the high side and could be cut down by switching to Aldi or Lidl or going down a brand.  Do you find that you are throwing a lot of food out?

The satellite tv at £85 a month  and £100 a month for birthdays and Christmas are where I would look to make savings.  Are your mobile phones still in contract because even for two £70 is high.

What is the £692 for secured debt?  Is that for the two cars?  Do you really need two cars or could you live with just one because that would be a huge saving.

What are the £150 of other child related expenses?

shoppingobsessed2020

Thanks, we don’t throw out much food at all.  The food budget can be cut!  I’m freezer inventorying today to see exactly what we have so I can hopefully avoid the supermarket shop for a couple of weeks.  We shop online and spend approx £50 a week which I don’t think is bad but then there are the popping to the shops for one thing and before you know it you’ve spent another £30 shops.  They are the ones that needs to go!

the satalite tv we are in contract for and can’t be cut.  I’m happy with that cost though as it’s our landline and internet along with sky and Netflix and we use it all.  The mobile phones are high I agree, that’s 3 contracts which we all use.  2 are sim only and one is contract so again I’m ok with that for now but will be sim only once out of contract in 18 months.

£150 of child expenses is activities and clubs.  He is an active child which I don’t want to stop as it’s not his fault we have messed up financially however I’m aware that this is an area we can look to reduce if it comes to it.

the cars are a huge bone of contention.  We don’t need 2 cars at all, we can manage with one but he won’t give up his car despite only using it for school runs when he’s home!  It has come in handy occasionally having 2 but not enough to justify it being sat on the drive for half the year.  I am working on us going back to 1 car as it is ridiculous.

the secured debt is 2 x car and 1 x mortgage.  I couldn’t see how to put the extra mortgage bit in.  It’s broken down to 330 car loan, 210 car loan and the rest mortgage.

JayRitchie

hi. I'll try to run some numbers a bit later. My quick note is that you have a pretty nasty amount of debt and that you are paying some pretty high interest rates. Really, the two things to look at are repaying as quickly as possible despite the short term pain, and trying to get 0% transfers for your credit cards.

Also, you should look to build an emergency fund of at least £1,000 with a house and two cars.

JayRitchie

Oh, sorry - and to ask - how old is your child and what are the hobbies which cost £150 a month?

shoppingobsessed2020

Thanks, any and all advice is appreciated.  Child is 8 and hobbies are Cubs, plus camps (not every month but he does as many as he can) swimming lessons and football club x 3 a week.  

The only potential positive is our income is set to increase by 1500 a month in approx 6/8 months time due to promotion (I know it’s not guaranteed but it’s a very high likelihood) and if im being honest I’ve been counting on that Money coming through for the last 5 years as that’s how long we’ve been funding the exam and course attempts. There was no chance of promotion or a salary increase without us paying for the courses so I would say a good 50% of our unsecured debt has been funding/chasing that promotion.  Dh works deep sea on a 2 month on 2 month off rotation to give a bit of background.

JayRitchie

Ah, cool - £1,500 a month increase (take home?) basically clears all your problems. Is that telecoms related or oil and gas? 
Just pondering - when might you get a better idea about the promotion? I could understand anyone not wanting to get too hardcore on saving if that extra amount is pretty likely to come in, likewise I understand the cost of clubs if one parent is away for two months at a time.

Drawingaline

If he won't lose a second car, then maybe downgrade it? With one child you can have a small cheap runaround.

Definitely try and get some cash together for an emergency fund, maybe look at things you could sell once lock down lifts. (just thinking if you have a shopping habit maybe you have excess stuff?) I would look at trying to pay off a couple of the small debts as quickly as possible, are you saving money atm, I know we are, less chance to spend money. This would give you a bit of a boost, and the more you pay off the better the chances of moving the higher interest things to 0%. So the Very, capital one and TSB, get them paid ASAP, having less cards/loans can have a huge boost and they are easy wins. I would save a lot less for Xmas, I save £100 a month, but we have four kids so a totally different family dynamic, and you could always boost that later in the year if need be. Try and cut groceries, but I know how hard this can be, and I know we are spending way more atm due to the current climate. But £400 is high for a family of three.

Once those three small debts are gone look at snowballing the highest interest first, as it is laid down you should fond more chance of 0% offers.

Good luck 

shoppingobsessed2020

Thanks everyone @JayRitchie it’s oil and gas.  Promotion I don’t want to count on but he has a small course through his company to do and then I’d say 95% chance of promotion.  They have been on his back for a couple of years now to pass this exam as he is very expensive at his rank and they can get cheaper to replace him when he’s promoted.

@Drawingaline he won’t downgrade his car either!  I’ve tried!  He only wants to upgrade so I’m fighting a loosing battle at the moment.

I’ve done a freezer inventory and we are good for the next couple of weeks.  Just need fresh stuff which I can get from local greengrocer.  We aren’t spending more on food despite circumstances but I am spending more on house stuff!  New paint and bits like that to keep occupied.  

The savings on clubs I don’t yet know about as they all go by dd so will need to look at that and then see what I can throw at the smaller debts next month.  Im still putting money into parent pay to cover childcare and lunches so will look at that as well as that’s potentially £250 next month to throw at a bill and potentially the very account closed and paid off.

the £100 a month present covers everything for birthdays and Christmas for us and immediate family and I also use it for school friends birthdays as well.

i don’t have much to sell as I’ve lost a large amount of weight and have sold everything I could to fund my new wardrobe and then I’ve still spent on next!  My vice is beauty treatments so nails and skincare but going forward I will see about trying cheaper brands and not buying more till I’ve used my current stash.  

enthusiasticsaver

Ok you need to get your husband on board with this or you are fighting a losing battle. He has fallen into the classic high earner trap of spending money like water and borrowing to cover it. You need to stop this getting worse first by ditching the cards and focusing on the most expensive like Capital one. Close the accounts as you repay them. If your husband lost his job you would be in a real mess. How secure is it? 

shoppingobsessed2020

Thanks @enthusiasticsaver his job seems to be relatively secure as he also has other sea going qualifications other than his oil and gas ones so can also work on cargo ships and chemical tankers.  His company are always asking for him to go back early or do an extended trip so I’m pretty optimistic that it is secure. 

However what job is secure in this day and age and this current situation has really given me pause for thought as if anything did happen we would be bankrupt which I want to avoid!

He is away at the moment and unsure when he is due back due to this situation so I’m hoping I can make some headway into clearing some of this mess.  Even if it’s only a couple of things cleared it’s showing him we can do it!