Keeping on track after Covid

2020newfocus

I'm starting this diary as a way to stay focused on clearing our debts after the current situation is over. A quick introduction, I'm 35, my husband is 36 and we have two school age children. We have been trying to get out of debt for years, but it was slow going due to our expenses and relatively low wages.
We earn  just enough between us so that we don't qualify for help with childcare, or school meals etc. However we have been extremely fortunate throughout this awful Covid situation. Not only are we both able to work full time from home on our full wages, I've been able to take on some overtime. Coupled with the fact we've had no after school childcare to pay, or school lunches, and we've been able to pay off £1800 of debt in under 3 months
We had about £15000 of debt in November of last year, today we have £11437.  £822 of that is a personal loan, which is due to finish on 1st December 2020. The rest is on 2 credit cards with 0% interest.
However the kids are due to go back to school in August, and I will probably be back in the office by then (unless I'm able to persuade my boss to continue to let me work from home). So if childcare starts again, the spare money to pay down the debts stops. Before covid, we were paying £300 a month between the two 0% credit cards. I'd like to up that to at least £450 even after life returns to "normal" and I'd be grateful for any advice.
We earn about £37000 between us (gross) so I know our debt ratio isn't horrendous but we want to be out of debt, and have decent savings by the time we are 40.
Thanks for reading. 

Ponylover

Hiya.
Sounds like we are in a fairly similar boat. We are very lucky that covid (financially) has worked out well for us- kids off school (no clubs, lunches etc to pay for) and DH and ai have remained full time with the odd bit of overtime.
That coupled with enforced no spend days from the shops and attractions being closed I havnt been able to fritter money away like I normally do. 
The challenge for us will be keeping these spending habits when life goes back to normal!

Good luck   

2020newfocus

Thank you, good luck to you too! 

enthusiasticsaver

Well done on paying off the £1800 since lockdown and although £11437 sounds a lot if your loan finishes in 6 months and the credit cards are on 0% you don't sound like you are doing too bad.  When do the credit card deals finish? 

First do you budget and do you have any emergency savings?  Both of those things are important as a way of finding extra money to repay debt.  Having emergency savings sounds counterproductive when you have debt but it stops people using credit when something unforeseeable and unavoidable happens.  Normally it is boiler or car repairs, white good replacement or vet bills which tend to push people further into debt so having an emergency savings pot to deal with these things is useful.  Budgeting would help you find the extra £150 you need to up the credit card payments.  If you keep a spending diary it helps to see where your money is going.  If you have more money at the moment this may not just be because of no childcare costs or commuting costs but also as the shops are not open and restaurants, pubs, coffee shops etc are also closed perhaps you normally spend money in those?

2020newfocus

For the 0% offers, one card finishes in February 2021 and the other April 2021, so we won't get them done to zero by then, but I'd love to make a big dent in them.
I'm currently putting together a realistic budget that reflects our actual costs. Our emergency fund at the moment is £428, I need to increase this I suppose but I got excited at paying off debts and didn't think about the emergency fund.
We don't really socialise with other adults but we've noticed we spent a lot on the cinema, trampoline parks, and generally entertaining the children.
That would be a good area for temporary cutbacks, definitely. 

Honeysucklelou2

Well done on what you have achieved so far.

mrsmoneypenny90

hey, good start so far. Maybe post a SOA (of normal life with your usual outgoing) to see if there is anything to thin down and free up spare cash to throw at the debts. It’s the only way. I have followed your diary so wishing you all the best 

enthusiasticsaver

2020newfocus said:

For the 0% offers, one card finishes in February 2021 and the other April 2021, so we won't get them done to zero by then, but I'd love to make a big dent in them.

Getting them as low as possible will help as the BT fees  will be less should you need to move to other deals.  Once the loan is gone that will help too.

2020newfocus

[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......... 2

Number of cars owned.................... 0[b]

Monthly Income Details[/b]

Monthly income after tax................ 1373.4

Partners monthly income after tax....... 1305.48

Benefits................................ 140

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

Total monthly income.................... 2818.88[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 368.7

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

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

Management charge (leasehold property).. 10

Council tax............................. 141.11

Electricity............................. 78

Gas..................................... 41

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

Water rates............................. 0

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

Mobile phone............................ 67.5

TV Licence.............................. 13.12

Satellite/Cable TV...................... 67

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

Groceries etc. ......................... 412

Clothing................................ 65

Petrol/diesel........................... 0

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

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

Other travel............................ 115

Childcare/nursery....................... 341.75

Other child related expenses............ 89.87

Medical (prescriptions, dentist etc).... 25.42

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

Buildings insurance..................... 42

Contents insurance...................... 0

Life assurance ......................... 31.88

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

Presents (birthday, christmas etc)...... 80

Haircuts................................ 14

Entertainment........................... 116.5

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

Emergency fund.......................... 50[b]

Total monthly expenses.................. 2169.85[/b]

[b]

Assets[/b]

Cash.................................... 478

House value (Gross)..................... 75000

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

Car(s).................................. 0

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

Total Assets............................ 75478[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 44803....(368.7)....2.92[b]

Total secured & HP debts...... 44803.....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Loan 1.........................822.07....137.......4.6

Credit card 1..................4961......49.61.....0

Credit card 2..................5608......56.08.....0[b]

Total unsecured debts..........11391.07..242.69....-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,818.88

Expenses (including HP & secured debts). 2,169.85

Available for debt repayments........... 649.03

Monthly UNsecured debt repayments....... 242.69[b]

Amount left after debt repayments....... 406.34[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 75,478

Total HP & Secured debt................. -44,803

Total Unsecured debt.................... -11,391.07[b]

Net Assets.............................. 19,283.93[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]
Here is my SOA, I worked it out based on averaging what we spent in the couple of months leading up to lockdown. Clothing is high because it includes shoes, wellies and coats for the kids etc but kids grow, what can you do?
Also this doesn't show that we pay more than the minimum to our cards (£300pcm plus the loan = £437.01) not the £242.69 shown above.
That being said, we should have a couple hundred extra in there, but we usually finish the month with £50-£70 in the account? I will need to look at this a bit more. 

enthusiasticsaver

That is a pretty good soa and great that it is accurate rather than aspirational.  Even better you have a small emergency fund and are allowing £50 a month into that and are paying more than minimums. I think even if you end up going back to work in August you could reduce the entertainment by £50 until the loan has finished so that is £50 of the extra £150 you need for the cards.  Same with groceries with meal planning, using a budget supermarket and downbranding. As you say you already have a surplus so that is your £150.  Maybe look at charity shops or ebay for kids clothes.  Once the loan is gone divert all that to the cards. 

mrsmoneypenny90

you’re in a strong position as your loan is coming to an end soon so you have £137 extra per month to throw at the debts, also great they are on 0% APR. Maybe use the credit card snowball Calc on the same stoozing website to see how long it will take you, you will probably be surprised at how quickly you can be debt free, that’s what I did and it has certainly motivated me and kept me on the straight and narrow so far as I just have my debt free date in my head constantly. Good luck 😉