SOA - any advice on what to do next?

in Debt-Free Wannabe
13 replies 1.4K views
Hi everyone, I hope you're all well. My husband and I, after several failed attempts to remortgage or take out a debt consolidation/second charge mortgage (failed on grounds of affordability), we have finally decided to join DFW and post our SOA. 
During COVID-19, as I am working from home and my husband has been furloughed, we have managed to put by a fair amount of money into savings (approx £6000) but are trying to figure out how best to divvy it up given our current unsecured debt commitments. Any help and general advice would be much appreciated! Thank you in advance. 

[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......... 0
Number of cars owned.................... 2[b]

Monthly Income Details[/b]
Monthly income after tax................ 1620
Partners monthly income after tax....... 1670
Benefits................................ 0
Other income............................ 600[b]
Total monthly income.................... 3890[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 856
Secured/HP loan repayments.............. 456.60000000000014
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 130
Electricity............................. 90
Gas..................................... 0
Oil..................................... 0
Water rates............................. 43.6
Telephone (land line)................... 0
Mobile phone............................ 82.5
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 50
Groceries etc. ......................... 250
Clothing................................ 0
Petrol/diesel........................... 200
Road tax................................ 0
Car Insurance........................... 110
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 65
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0[b]
Total monthly expenses.................. 2363.7[/b]
[b]

Assets[/b]
Cash.................................... 6000
House value (Gross)..................... 238000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 1500[b]
Total Assets............................ 245500[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 178000...(856)......2.66
Secured Debt.................. 838......(37).......8
Hire Purchase (HP) debt ...... 9377.45..(209.7)....5.1<
Hire Purchase..................7748.3...(209.9)....16.2[b]
Total secured & HP debts...... 195963.7.-.........-   [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Halifax Loan 1.................2446......84........29.7
Halifax Loan 2.................9242......230.......14.4
Halifax Loan 3.................5987......160.......13.9
Paypal.........................2500......70........5
Barclaycard 2..................8300......210.......19.98
Barclaycard 1..................10800.....240.......19.98
Halifax Credit Card 2..........3150......75........19.58
Halifax Credit Card 1..........4540......115.......19.58
Ratesetter Loan................11000.....232.......15.3[b]
Total unsecured debts..........57965.....1416......-  [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 3,890
Expenses (including HP & secured debts). 2,363.7
Available for debt repayments........... 1,526.3
Monthly UNsecured debt repayments....... 1,416[b]
Amount left after debt repayments....... 110.3[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 245,500
Total HP & Secured debt................. -195,963.75
Total Unsecured debt.................... -57,965[b]
Net Assets.............................. -8,428.75[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]
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Replies

  • tiffalifferstiffaliffers Forumite
    3 Posts
    First Post
    I should also mention that the majority of the unsecured debt (especially the two Barclaycards) came about as a result of moving into our house in Spring 2018, which required substantial unexpected building works. Our debt, prior to this, was considerably lower consisting solely of our Halifax cards (at about 1/3 to 1/2 utilisation) and a loan for our wedding in 2017, which was paid off in full at the start of 2018. 
    Given the works we did to the house, it has also risen considerably in value and as such we were considering trying to utilise this equity to pay off what was essentially put straight into the house. 

  • edited 30 June 2020 at 4:33AM
    BabyStepperBabyStepper Forumite
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    edited 30 June 2020 at 4:33AM
    Welcome to the boards! I'm really glad you weren't able to transfer this debt to your mortgage, that would have put your house even more at risk and I think you have a chance to deal with this. Did you save £6k by using the mortgage and other payment holidays? 

    Your soa is not a bad first attempt. You need to add in presents, haircuts and entertainment. You'll probably be left with around £50 to overpay once these have been added. Your mobile phones need to go sim only once you're out of contract, and I suspect you can shave a few quid off your food budget. Car insurance, but nothing for road tax or mot? Your budget might be aspirational but you're getting the idea, wel done. 

    You have £18k secured debt and £58k unsecured debt. Are the 2 secured debts car loans? Or previous consolidation loans? If you have anything to show for them, you need to sell them and fast. If they're for cars, get yourself much cheaper ones. I know this will not be a popular suggestion so I'll move quickly on but really, you just can't afford these.

    Keep £1,000 of your savings and tuck it away in a savings account. This is your emergency fund and is there to help when the freezer packs in, the washing machine breaks or your car has an expensive mot. Do not touch it otherwise and when you do use it, top it up again as soon as you can. This will help you to stop getting into more debt. You need to stop using the cards and stop taking out loans. None of this has helped you so far. 

    You're paying a LOT of interest every month. If you set the direct debits to a few pounds over the minimum payments, and stop using the cards, you will receive or become eligible for (hopefully) some balance transfer offers. This will take a few months so you'll need to be patient but you need this moved to 0% interest as soon as possible.  

    Regarding the £5k, you can pay it off debt but I think you could better use it to sort out the car situation (if that's what the loans are). You could sell both cars, freeing up £400 per month to overpay the debt. Could you manage with one car? No cars? (probably not). Using the £5k to buy yourselves affordable cars might set you up well for the long haul of debt repayment. 

    Good luck. Let us know how you get on and keep posting. 
    Emergency fund £8,500/£8,500
    Mortgage overpayment £260
    Debtfree!
    £21,228.07 paid off in 22 months
  • edited 30 June 2020 at 5:27AM
    fatbellyfatbelly Forumite
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    edited 30 June 2020 at 5:27AM
    So you have 1,526.30 available for debt repayments and are using 1416 on those repayments, giving 110.30 available. Except it isn't.

    There are too many zeroes in your expenditure and I can't believe they genuinely are:

    Telephone (land line)................... 0
    TV Licence.............................. 0
    Satellite/Cable TV...................... 0
    Clothing................................ 0
    Road tax................................ 0
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Buildings insurance..................... 0
    Contents insurance...................... 0
    Presents (birthday, christmas etc)...... 0
    Haircuts................................ 0
    Entertainment........................... 0
    Holiday................................. 0
    Emergency fund.......................... 0

    You are heavily involved with using interest-bearing lending to purchase depreciating assets (the cars)  - you should look at voluntary termination options. I agree that the lump sum might be best used to sort the cars out, at least in part.

    There is something odd secured on your house for £838 and I'd get rid of that and avoid any other secured lending

    None  of the cards are at 0% and so you need to look at that. I'd be tempted to clear  the Halifax card first (highest apr, smallest card debt) and then ask what BT offers they have available.

    This is potentially serious as you are running with a lot of debt, and you're technically insolvent despite having 6k cash and 60k equity!
  • edited 30 June 2020 at 6:40AM
    RASRAS Forumite
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    edited 30 June 2020 at 6:40AM
    Totally agree with fattbelly; this SOA looks aspirational as there's a lot missing. And I'm uncertain how you manage to spend that much on petrol with one furloughed and the other working from home. 

    And what id the £600 other income?

    Since your husband is furloughed, I suggest that he gets out or downloads the last year's card and bank statements and actually analyses the expenditure by category.. Does one of you have a latte habit costing  £1000 a year? Or does popping in for milk result in a  £20 shop on treats? Very easy to do.in both cases. Then have a detailed conversation about a realistic budget for the future as you're both going to need to be very disciplined to get out of this. And put him in charge of menu planning so that you shave a bit of the grocery bill.

    You are technically insolvent even if you perceive yourselves as asset rich. I'd check the cars to find out when you can return them (around the half way mark) and consider using the £6k to dispose of one of those. Meantime, hold on to it in case OH is made redundant as it would enable you to make the secured payments for a few months while he looks for work.
    The person who has not made a mistake, has made nothing
  • BizzywizardBizzywizard Forumite
    161 Posts
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    Hi,
    Welcome to the forum😀
    we have all had debt, so well done for posting your SOA. A couple of things that jumped out at me. Your mobile bill is super expensive, needs to be on a sim only. Council tax- have you spread this over 12 months and not the normal 10? If not call the council today and change this.

    I agree with Fatbelly, I would pay the £838 secured debt first. Then the next largest APR debt which is Halifax £2446 29.8%. That’s £3284 paid off straight away. Plus 2 debts gone for good. It will make you feel better and another this gone off the list!
    You are then left with £2716. I would use the whole amount to pay  The Halifax CC 2 £3150. You only have £434 to pay off on this card.

    Your savings are making no money at the moment and as Martin Lewis has stated on the main sight. Use you Emergency fund to pay off debt at the moment. Please read HIS post on the main page about EF verses debt. 

    Have you checked your credit report on this site? If not, you maybe able to see if you or Your partner can get a balance transfer 0% card. This may take a few months (it took my DH months time finally get a 0% card after paying off some of his interest incurring debt).

    Chin up!
    Bizzy


  • TheAbleTheAble Forumite
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    Appreciate you've had some unexpected building works which is of course unfortunate. A consequence of that is your situation is now highly precarious - if say your husband lost his job when furlough comes to an end you'll barely be able to make your payments. A quick top of the head calculation - I make your interest payments excluding your mortgage, in the region of 12k a year. So you're working 3 months of the year just to pay interest.
    So here are a few ideas for you:
    1. Go through every line of your expenses and optimise the. Eliminate where possible.
    2. Consider selling your cars. Could you buy one cheap but reliable second hand car to share instead?
    3. Your husband should be looking for a side job. This can be used to supplement furlough income and gives him a backup in case his main job goes kaput later this year
    4. Use the Dave Ramsey snowball method on your credit cards.
    And good luck to you!
    Sealed pot challenge 074
  • tiffalifferstiffaliffers Forumite
    3 Posts
    First Post
    Thanks to everyone for your responses so far! I really appreciate all the advice and thought I'd clarify a few more things that came up in some of your replies.
    1. The petrol figure I put in was for a normal month commuting, as I know lockdown won't last forever! My husband's car is fully electric, so he doesn't use petrol. His petrol costs were around £250/month prior to purchasing his second hand electric car, so there's already a savings of about £40/month. 

    2. The cars aren't on HP, so there's no lump sum to pay at the end, we've gone for the option where we own the car outright at the end. We both need a car as we live in a rural village and commute to different locations. I am also an archaeologist and need the car to access sites, most of which are remote. 

    3. The other £600 income comes from my husband's part-time self-employment, which he has continued during furlough. He has a contract with a marketing agency and does monthly copywriting for them. 

    4. The £838 is a Creation Finance loan which I suppose is secured on some of the furniture? When we moved in, all the savings we had for furniture (in addition to the credit we had to take out for building works) was eaten up by the building works, so we had to opt for part finance. 

    5. Looking at all of your advice, it looks like our best bet would be to try and pay off what's left on the mobile phone device plan (about £200 each) and switch to a sim only deal; pay off the £2500 Halifax loan; and throw the rest onto one of the credit cards with the highest interest rate. Is it even worth paying off the £838 Creation Finance loan, since the monthly payment is so low? 

    Thanks again, everyone!
  • bamgbostbamgbost Forumite
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    Hi Guys. Welcome to the forum!

    You’re story sounds very similar to the one I am in. See https://forums.moneysavingexpert.com/discussion/6119637/soa-help#latest.  The key difference being that I have no secured debt, all unsecured.

     One big positive that everyone has said is you have a small lumpsum. Keep 1-2k as an emergency fund, and use the rest to clear 1 of the debts. I would be tempted to say the Secured debt of 800+ and the smallest halfax card.

    Next you can use the money not spent on those 2 debts to top up the payment of another card.

     The phone bill needs to come down too! Even the foodbill could be reduced as it’s only the 2 of you!

     I will be keeping a close eye on this thread. As its very close to my situation, and any help suggest will likely relate.


    Good luck!






    Light Bulb Moment-  MAR 2020: Non- Mortgage Debt £67800; As at June 2021: Non Mortgage Debt:£48319. (28% cleared in a year!)
    Emergency Fund: £700 / £1000 (70% of babystep 1)
    Debt Free: Jan 2025 (if continue snowball method)


  • DrawingalineDrawingaline Forumite
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    The creation finance is low, I would maybe look at throwing the odd £10 at it here and there, that's what I did to pay off our new sofa, overpayments were easy. Maybe look at selling some bits to plug away at that one and it will soon be gone. An easy win. Then roll the payment onto the higher interest cards. 
    Debt free Feb 2021 🎉
  • RASRAS Forumite
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    Thanks

    If the HP debt is not secured on cars, what does it fund and is there any chance you can return at any point and stop paying? I suppose the real issue is, are those items going worth the amount you paid for them when the debt ends?
    The person who has not made a mistake, has made nothing
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