Debt Journey starting out - SOA included

positiviT91

Hello, 
I am just starting out on our 'debt free' journey with my husband. We have only recently realised how bad our debt situation is, previously thinking we owed around £10k (which I understand is fairly bad) and then on working it out properly, realising we owe £25, 834.27. 

After lots of sleepless nights and worrying, we have decided it is only going to get better if we deal with it head on and start making some head way to clear this debt. Neither of us has a particularly high paying job but if it weren't for the debt payments we make each month I think we would be able to live fairly comfortably. As it is, it seems each month we have pennies left in our account for the last couple of weeks before payday and it has felt as though things are starting to get out of hand. The size of the loans we have is due to us consolidating previous debts, only to build them. We seem to have got into a bit of a cycle of trying to solve the debt problem only to end up adding more on each time we do it. 

I want to be able to take our little boy on holiday etc with actual savings rather than giving us more debt, so my goal is to be debt free (apart from our mortgage) as soon as possible so we can start making actual savings pots. 

Any advice would be hugely appreciated as we do not really know where to start. 

SOA below....

Thanks for reading,
PositiviT91

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................ 1100

Partners monthly income after tax....... 1400

Benefits................................ 84

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

Total monthly income.................... 2584[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 237.8

Secured/HP loan repayments.............. 232.2

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

Management charge (leasehold property).. 0

Council tax............................. 164

Electricity............................. 50

Gas..................................... 55

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

Water rates............................. 41

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

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

TV Licence.............................. 13.2

Satellite/Cable TV...................... 39

Internet Services....................... 27

Groceries etc. ......................... 250

Clothing................................ 30

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

Road tax................................ 22.66

Car Insurance........................... 50.44

Car maintenance (including MOT)......... 25

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

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

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

Other child related expenses............ 50

Medical (prescriptions, dentist etc).... 10

Pet insurance/vet bills................. 90

Buildings insurance..................... 23.01

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

Life assurance ......................... 49.01

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

Presents (birthday, christmas etc)...... 50

Haircuts................................ 25

Entertainment........................... 40

Holiday................................. 20

Emergency fund.......................... 20[b]

Total monthly expenses.................. 1784.32[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 200000

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

Car(s).................................. 2000

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

Total Assets............................ 202000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 72110.9..(237.8)....1.94<

Mortgage.......................68780.6..(232.2)....2.09[b]

Total secured & HP debts...... 140891.5..-.........-   [/b]

[b]Unsecured Debts[/b]

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

Loan...........................8855.21...134.5.....4.49

Loan...........................15251.....211.8.....3.1

Credit Card....................1050.3....35........0

Store Card.....................177.7.....9.........23.9

Overdraft......................500.......5.........2.008[b]

Total unsecured debts..........25834.21..395.3.....-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,584

Expenses (including HP & secured debts). 1,784.32

Available for debt repayments........... 799.68

Monthly UNsecured debt repayments....... 395.3[b]

Amount left after debt repayments....... 404.38[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 202,000

Total HP & Secured debt................. -140,891.5

Total Unsecured debt.................... -25,834.21[b]

Net Assets.............................. 35,274.29[/b]

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

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

sharpe106

Hi and welcome, at least you are starting to address it now so good luck.

A quick look and you can save a bit on mobile phones, sky,  presents

Your car insurance seems high have you tried shopping around? vet bills are they normally that high each month?

You still have a fair bit each month to throw at the debts. Pay back the store card ASAP and your other debts should be manageable. 

positiviT91

Vets bills are high as my dog requires a monthly injection not covered by our insurance. Unfortunately this is likely to be life long. 
Car insurance has just been renewed, that is for both myself and my husband to be insured to drive our on and each other's cars. I did think perhaps we could lower this by only being insured on our own cars though as we rarely drive each other's it was more for convenience...

Will definitely look to cut our mobile phone bills and sky thanks. 

The presents one is one we need to work on as well i think, we have a lot of children in our extended family and tend to spend around £10 each on them for christmas and birthdays, which adds up to a considerable amount. But i am going to look at some better ways of gifting that fit with our current budget. We also probably spend too much on our own child who has plenty - force of habit i guess, but thats what we need to change isnt it!

Thank you so much for your input it is appreciated!

enthusiasticsaver

According to that soa you should have a £400 surplus each month and you obviously don't so checking back on statements to see where that is going is a start.  A spending diary is another good way to find out where your money is going. 
You don't have any savings including an emergency fund so that is something to focus on immediately as that stops you adding to the debt. Saving monthly for car maintenance, presents and clothing etc is essential to help you budget.  You are paying too much for mobiles definitely so see if any are out of contract which you can move to sim only. 

sharpe106

Good budgeting and you should be able to address the debts in a few years, quicker if either of you can do any overtime. 

PurpleFairy26

Well done on looking to get this sorted. Make sure you start putting away all of the monthly amounts listed on your SOA now so that when your insurance is up in 12 months time you have the money to pay for it. 

As enthusiasticsaver says, you need to start an EF, even if £50 a month to start with. Also look back through your last 12 months statements to see where your money has actually been going as you have obviously been spending more than your income. Keeping a spending diary may be useful for you both. 

Best of luck. 

ryanm8655

Welcome to the forum and well done on posting.

Firstly, I’d prioritise getting rid of the store card and clearing the overdraft. Though you’ve got 2% APR, I’m not sure where that has come from? But most will be around the 40% mark once the coronavirus £500 grace periods end.

When does the 0% end on the credit card? I’d recommend setting a DD for slightly more than the current minimum to keep that going down at a decent is rate and to help with budgeting. Ideally you’d set the DD so that it’s cleared by the expiry date (or at least set aside that cash in savings). Can you overpay the loans without penalty? If so I’d tackle those with any remaining cash or you could get rid of the credit card if you think that’d help motivation, since you could clear it swiftly.

You appear to have two mortgages listed? But then one of them is described as a secured loan in the expenses? What is this?

There are a few cutbacks you could make. I’d get rid of sky for a start and replace with Netflix. Plenty of good tv on iplayer etc. Your electric and gas looks high to me, is this based on estimated readings? I remember EDF owed me £1600 once, tried saying it was for winter but it was more than my annual usage Have you looked at how much Gould save by switching? Phones could be cut down, though I pay similar but plan to switch to sim only when my contract expires. When could you switch to sim only as that would probably save you about £50/month? Groceries look high to me. Presents are quite high for your income level and situation. Entertainment looks quite low but in a good way. You don’t eat out often/go for pricey days out? Takeaway coffees etc. Assume your buildings insurance covers contents too? I’d add at least £50 per month to an EF, especially given you own your home. Otherwise your budget means you’ll be forced into borrowing if something goes wrong with your come.

Your SOA looks aspirational, are you sure it’s realistic? How did the debt build up in the first place? You need to address that if you’re going to succeed.

Time2Go_25

The first thing you need to do is go through all your statements and maybe keep a diary to show where all your money is going. You say you only have pennies for the last couple of weeks before payday, but your SOA has you with over £400 spare at the end of each month, so is clearly not reflecting your actual expenditure.

sourcrates

Hi,

Actually your debt is quite average, i say average as it appears to have become the norm to carry large amounts of debt around with us, i see you have a secured loan, as well as a mortgage, was that a previous attempt at consolodation ?

My guess would be yes on that one.

Your SOA doesen`t look that bad, there`s not a lot you can cut back on, and as you are homeowners, debt solutions are limited to just IVA or debt management.

I think your SOA is aspirational, that £400 is been eaten away somewhere, so basically you have 3 main choices here.

(1) Cut back as much as possible on your outgoings, try to increase your income (if possible) then throw as much as you can at the debts, starting with the OD, as that will revert back to 40% interest very soon.

(2) Debt mangement plan, with stepchange debt charity, basically you repay what you owe, at a reduced monthly rate, with the agreement of your creditors, over a longer period of time, hopefully all interest will be stopped, but its not a gimme, and will negatively affect your credit file.

(3) Least popular option, IVA (Individual Voluntery Arrangement) full blown insolvency, well not really, would last 5/6 years, legal protection from your creditors, the expectation of a re-mortgage would emerge in year 5, tight budgeting required, usefull if you have a lot of unsecured debt, don`t think this would be of much benefit to you though.

In a nutshell, those are your choices OP.

Naomim

positiviT91 said:

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................ 1100

Partners monthly income after tax....... 1400

Benefits................................ 84

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

Total monthly income.................... 2584[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 237.8

Secured/HP loan repayments.............. 232.2

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

Management charge (leasehold property).. 0

Council tax............................. 164

Electricity............................. 50

Gas..................................... 55

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

Water rates............................. 41

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

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

TV Licence.............................. 13.2

Satellite/Cable TV...................... 39

Internet Services....................... 27

Groceries etc. ......................... 250

Clothing................................ 30

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

Road tax................................ 22.66

Car Insurance........................... 50.44

Car maintenance (including MOT)......... 25

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

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

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

Other child related expenses............ 50

Medical (prescriptions, dentist etc).... 10

Pet insurance/vet bills................. 90

Buildings insurance..................... 23.01

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

Life assurance ......................... 49.01

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

Presents (birthday, christmas etc)...... 50

Haircuts................................ 25

Entertainment........................... 40

Holiday................................. 20

Emergency fund.......................... 20[b]

Total monthly expenses.................. 1784.32[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 200000

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

Car(s).................................. 2000

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

Total Assets............................ 202000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 72110.9..(237.8)....1.94<

Mortgage.......................68780.6..(232.2)....2.09[b]

Total secured & HP debts...... 140891.5..-.........-   [/b]

[b]Unsecured Debts[/b]

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

Loan...........................8855.21...134.5.....4.49

Loan...........................15251.....211.8.....3.1

Credit Card....................1050.3....35........0

Store Card.....................177.7.....9.........23.9

Overdraft......................500.......5.........2.008[b]

Total unsecured debts..........25834.21..395.3.....-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,584

Expenses (including HP & secured debts). 1,784.32

Available for debt repayments........... 799.68

Monthly UNsecured debt repayments....... 395.3[b]

Amount left after debt repayments....... 404.38[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 202,000

Total HP & Secured debt................. -140,891.5

Total Unsecured debt.................... -25,834.21[b]

Net Assets.............................. 35,274.29[/b]

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

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

What stands out for me on here are:

Petrol - You have two cars, I don't actually think £100 is very much or would get you very far. I know at the moment we are all travelling less but think this probably needs looking at.

Car Parking - People always leave this out.  How often would you pop into town and pay for parking? Go out for a day and pay for parking? There's very few places that offer free parking these days so there probably needs to be something in here.  Some months will be more or less than others.

Personal spending - there doesn't seem to be anything for personal spends.  MrM and I have £120 a month each to spend on what we want.  Coffee's, lunches (if we haven't made a packed lunch), meals out with friends, cinema trips. All of these things add up and are not accounted for in your SOA.

These are likely to be some areas where that missing £400 on your SOA is going. I agree that you really need to scrutinise your bank statements and also keep a spending diary. I found keeping one on a free app on my phone really helped me to see where my cash was being spent.

Naomim

Sncjw

Why do you have teo morgatws running at the same time?