Some advice please!

enthusiasticsaver

My mobile contract is up later on this month and I am just switching to sim only at £12 a month.  Presumably if you have a contract phone at £45 (that is expensive, my iphone 7 was only £36) it seems crazy it is on its last legs if you have only had it 2 years? Or was the contract longer?  I reckon I have a good two years more on mine although the battery runs down quicker than it used to. I just carry a battery pack with me. 

Geworgie

enthusiasticsaver said:

My mobile contract is up later on this month and I am just switching to sim only at £12 a month.  Presumably if you have a contract phone at £45 (that is expensive, my iphone 7 was only £36) it seems crazy it is on its last legs if you have only had it 2 years? Or was the contract longer?  I reckon I have a good two years more on mine although the battery runs down quicker than it used to. I just carry a battery pack with me. 

It does, doesn't it and it should have a lot more life left in it but the screen and casing are beyond repair, I'm quite clumsy! It will work out cheaper for me to just replace it. The contract I've got my eye on is £12 a month including the phone, so while I can get a SIM-only deal a bit cheaper I'd have to pay out more to either replace the screen or buy a new phone (even if that's only £100 it still works out at £4p/m over 24 months).

Geworgie

enthusiasticsaver said:

Geworgie said:

enthusiasticsaver said:

You have a lot of debt for someone who supposedly has almost £800 spare each month so I doubt that soa is accurate. You are certainly vulnerable should your DH lose his job so I think it is urgent you address this.  
I agree with saving for annual costs and emergencies as this should get you out of the habit of spending on credit.  You have no emergency savings so you should be putting something aside each month for this.  

The groceries figure is way too high even if you have a health condition.  It is perfectly possible to eat healthily for less than £600 for two adults and two pre schoolers. Can the counselling sessions be moved to fortnightly if they cannot be cut out?  

I would target the Next card and the Barclaycard first as they are both charging interest. Close them down as you pay them off to stop you being tempted into spending on them again. A lot of those cards have high balances and moving them to new 0% deals will cost a lot in BT fees even if you were able to do that. As soon as interest starts being charged on these the minimum payments will increase significantly so I would certainly prioritise paying these off over the next couple of years. Even on 0% interest it will take you almost 4 years or more to repay the debt paying around £800 a month.  You could clear that Next with one months surplus so it begs the question why you are paying almost 24% interest on a relatively small debt instead of clearing it?  Do you normally clear it in full? 

If you  receive a lump sum of £4000 that will help in bringing the debt down but you really have to stop using cards altogether and find out where all your spare money is going.  Do you keep a spending diary? 

Agreed! We ought to have plenty left over to throw at the debt but it just wasn't happening. 
I don't keep a spending diary but we've been using YNAB for a few months which has definitely helped us stop spending. We only used the credit card last month 3 times which is a massive improvement on previous months. 

Having done some forensic accounting I can see that we're overspending by about £7k a year which is horrifying and it's not on emergencies or big ticket items. It's literally just days out/take out/gifts/clothes etc. Yuk. 

We have all been there.  I did some forensic accounting (love that term) myself yesterday and was horrified too as to how much we spent on January to March.  Since lockdown we have been better and we do not have debt but still having compared our outgoings to another early retired couple I can see we have been more than a bit loose with the purse strings. Just think if you can cut that £7k by at least half if not more how much you would have to overpay the debt.  I think I would try and aim for £1k a month off the debt for the next 6 months or so and really get that debt down especially with the £4k too. Your soa shows that could be possible.  Well done on not using a credit card.  

Maybe before spending or booking a meal or day out just think how that impacts on you building up your savings and paying down your debt.  Perhaps build in a limited number of treats each month like a takeaway on payday and/or one day out a month.  You will look forward to it more when it is not so often and you are saving money to get your finances in order. 

I agree with all of that and I've tried to implement similar ideas but then we both fall back into the old 'but we work hard so we deserve this' trap. BUT NO MORE! I'm desperate to be debt-free. I worked out how much husband and I earn per hour and then for any spend we make work out how many hours I have to work to pay for it... That really helps clarify how badly we want/need it!! 
A lot of what we have now was spent on furnishing our house - sofas, fridge, beds, etc so a big chunk was possibly not wise spending but not entirely frivolous. It's just that now we keep adding to it with lifestyle spending. Ugh.

Singlespeeder

Geworgie said:

sharpe106 said:

At the moment you earn for more than your outgoings. Yes you could cut back on food, sky, internet, phone services and be debt free quicker. You could probably easily save another £200 a month without trying too hard.  

 

But I don't think that is your main issue. Your main issue is what have you been spending on to get to that level of debt and how are you going to stop it.

 

Without knowing why you have that level of debt and on your SOA, all you really need to do is priorities the credit card repayments. The next and the Barclaycard debt can go in the next month or two. The Sainsbury loan is quite low anyway so if one of the other loans are nearly finishing soon and the APR is going to be about 20% you might be best throwing money at that to get it down before you start paying interest on it. Obviously if they do not finish for a 2 or months you best addressing the Sainsbury loan.

 

There is no point keeping money aside for something that breaks to avoid having to get credit, if you already have loans at 20% plus APR. But if the interest free period is still a few months there is no harm keeping money.

 

If you get your lump sum, I would be throwing it at the credit card debt.

Agreed. So I spent 2 days this week getting ALL my transactions for the last 12 months (current account and credit card) onto a spreadsheet and organising them into various headings. 
Results were awful, obviously but it definitely made it easier to see where we were/are overspending and also helped to prioritise our spending going forward. 

I think this is probably the case for a lot of people, certainly was for me. I was certain I was not spending much on food a month, then when I did what you've done I was gobsmacked to find I was spending easily double what I thought I was, it was the 'quick nip to Sains8urys' that did it !
I still write down EVERY purchase and keep a daily eye on my accounts. It's taken a year to eradicate all the unexplained / unexpected payments from my account !.

Geworgie

Singlespeeder said:

Geworgie said:

sharpe106 said:

At the moment you earn for more than your outgoings. Yes you could cut back on food, sky, internet, phone services and be debt free quicker. You could probably easily save another £200 a month without trying too hard.  

 

But I don't think that is your main issue. Your main issue is what have you been spending on to get to that level of debt and how are you going to stop it.

 

Without knowing why you have that level of debt and on your SOA, all you really need to do is priorities the credit card repayments. The next and the Barclaycard debt can go in the next month or two. The Sainsbury loan is quite low anyway so if one of the other loans are nearly finishing soon and the APR is going to be about 20% you might be best throwing money at that to get it down before you start paying interest on it. Obviously if they do not finish for a 2 or months you best addressing the Sainsbury loan.

 

There is no point keeping money aside for something that breaks to avoid having to get credit, if you already have loans at 20% plus APR. But if the interest free period is still a few months there is no harm keeping money.

 

If you get your lump sum, I would be throwing it at the credit card debt.

Agreed. So I spent 2 days this week getting ALL my transactions for the last 12 months (current account and credit card) onto a spreadsheet and organising them into various headings. 
Results were awful, obviously but it definitely made it easier to see where we were/are overspending and also helped to prioritise our spending going forward. 

I think this is probably the case for a lot of people, certainly was for me. I was certain I was not spending much on food a month, then when I did what you've done I was gobsmacked to find I was spending easily double what I thought I was, it was the 'quick nip to Sains8urys' that did it !
I still write down EVERY purchase and keep a daily eye on my accounts. It's taken a year to eradicate all the unexplained / unexpected payments from my account !.

I started using the YNAB app a few months ago and it's great for forcing you to acknowledge every single time you spend money!
We've spent a mind boggling amount on food and takeout. 😳😳

monetxchange

enthusiasticsaver said:

My mobile contract is up later on this month and I am just switching to sim only at £12 a month.  Presumably if you have a contract phone at £45 (that is expensive, my iphone 7 was only £36) it seems crazy it is on its last legs if you have only had it 2 years? Or was the contract longer?  I reckon I have a good two years more on mine although the battery runs down quicker than it used to. I just carry a battery pack with me. 

To be honest, I recently sold my year old iPhone 6 and paid off the contract - because it was deemed an 'old' model, the updates Apple were releasing were slowing it down to near the point of unuseability (I suspect deliberately to encourage upgrades). Battery only lasted about three hours. Just awful, that was the last straw for me and Apple! 

OP, can you get a new screen and casing off eBay and replace them yourselves? It's actually much easier than you'd think. Usually cost around £12 each and all the how-to videos are on YouTube. Or next time make sure you get a heavy duty case!

enthusiasticsaver

If you are clumsy and drop the phone a lot then get a heavy duty case as monetexchange suggests.  
£12 is a decent price for a contract including a  phone. 

Geworgie

enthusiasticsaver said:

You could start a diary on here too to keep motivated?  I can move this to the diaries section for you if you wish? 

Having slept on it - yes please! I really could do with the motivation! 

enthusiasticsaver

I have moved it to the diaries section

Graham1982

I am not debt free yet but am living within my means and am paying off ONE consolidation loan that has truly consolidated my debts, i.e. I haven't used my paid off credit accounts to make other purchases, lesson learned. Somebody said something on one of my threads prior to me sorting myself out that once you know where your money is going you can plug the gaps and have more money in your pocket, thus reducing reliance on credit (not verbatim). This is the wisest thing anybody had ever told me - I once had a Graduate Additions account with Barclays and an £800 overdraft that I reduced from £1800 in 2006 (when I graduated) to finally getting rid of it in 2017. When I conservatively estimated how much I was paying to service that overdraft, plus on average how many times I was getting returned payment notifications and associated charges, I reckon I literally threw away £5k (probably more). Now, no bank fees as I don't bounce payments (although I think they aren't allowed to charge now) and no overdraft and associated charges. 

Sorry if this is rambling but I had a similar issue with my mobile phone contracts - my wife had a Samsung S8 and me an S7 (edge) if no additional calls were made out of plan (which they often were), I would pay £90 on those phones alone.
I switched to SIM only on both handsets over a year ago and got my daughter a sim too and I pay £55 a month for all three. This is not the cheapest deal however, I have a large amount of mobile data that I distribute between my daughter and my wife so that they have it when they are out. Once again £35-40 saved per month there. 

I am by no means a paragon of virtue and I could still make some cuts, however it is possible and you can do it.