Wow wee oh my - trying to hack away at my £54k debt (was even about to book a holiday)

couriervanman

Rainbowtrousers said:

Thanks both.
I have been overspending for the last 20 years and have always been in debt since i was 18. 
Do you give much time to why the problem started or just accept it?
In a weird way i think this journey will end with me appreciating the thing i do more and knowing how an enjoyable in budget holiday feels for the first time
 

"Do you give much time to why the problem started or just accept it?"

Luckily we've never had that problem but sister/brother in law have a very large (twice what i earn) salary plus other income and haven't got a pot to ---- in. Mortgaged up to the hilt, credit cards maxed out and bills mounting up but next thing you know they've booked a house in Cornwall for 2k a week for xmas with no covid cancellation. They get paid end of month and it goes through their hands like water but no surprise as they been the same for 30 years, they've had windfalls and its like watching a fat kid in the sweet shop desperate to spend it as quick as possible

enthusiasticsaver

Rainbowtrousers said:

I have been overspending for the last 20 years and have always been in debt since i was 18. 
Do you give much time to why the problem started or just accept it?
In a weird way i think this journey will end with me appreciating the thing i do more and knowing how an enjoyable in budget holiday feels for the first time
 

I think it is worth exploring why some people are quite relaxed about debt and their attitudes to spending and saving and it often goes back to childhood/early adulthood.  Luckily both my DH and I have the same attitude to debt and would rather not go there.  My parents were the same and so are our now adult children. Consequently apart from a mortgage and the odd car loan or furniture on interest free credit we have never built up debt.  As a debt counsellor though I did notice a pattern and often it is higher earners who fall into this category.  Some feel because they earn a lot that it is ok to have a lot of debt as servicing it is not that painful.  The only issues come when income drops or availability of credit dries up.  They always assume that the status quo will remain and they will always have a high salary but sometimes things change.  Usually lower earners grasp much earlier if there is a problem as they see 25% or 50% of their money going on repaying debt.  

I would recommend getting into a savings habit once the debt is gone.  I assume you have a relatively good salary so you can easily sort this out once you really start examining where your money is going.  That is where the soa will help even if you do not put it up here.  I think it is worth it though because if you have always spent a certain amount on one category it may be a bit of an eye opener when people point out how much they spend on the same category.  Everything is relative though so what is expensive for some may be really low for others.  We spend almost £70 a month on a gym/leisure club subscription and many on here would be horrified at that but we use it a lot and we can afford it and don't have any debt.  No doubt your cleaner costs a bit and many on here do have cleaners and say that is one of the last things they would give up.  Their choice. 

Rainbowtrousers

couriervanman said:

Rainbowtrousers said:

Thanks both.
I have been overspending for the last 20 years and have always been in debt since i was 18. 
Do you give much time to why the problem started or just accept it?
In a weird way i think this journey will end with me appreciating the thing i do more and knowing how an enjoyable in budget holiday feels for the first time
 

"Do you give much time to why the problem started or just accept it?"

Luckily we've never had that problem but sister/brother in law have a very large (twice what i earn) salary plus other income and haven't got a pot to ---- in. Mortgaged up to the hilt, credit cards maxed out and bills mounting up but next thing you know they've booked a house in Cornwall for 2k a week for xmas with no covid cancellation. They get paid end of month and it goes through their hands like water but no surprise as they been the same for 30 years, they've had windfalls and its like watching a fat kid in the sweet shop desperate to spend it as quick as possible

That is basically me. I went to ibiza last year and booked an apartment for i'm not going to say how much. Spent half the time wondering how in the world i was going to pay for it. Maybe its a self esteem thing who knows. Budgeting and being open with people about my travel plans (or lack of) will hopefully help me face some issues and love myself a little more. 

Rainbowtrousers

enthusiasticsaver said:

Rainbowtrousers said:

I have been overspending for the last 20 years and have always been in debt since i was 18. 
Do you give much time to why the problem started or just accept it?
In a weird way i think this journey will end with me appreciating the thing i do more and knowing how an enjoyable in budget holiday feels for the first time
 

I think it is worth exploring why some people are quite relaxed about debt and their attitudes to spending and saving and it often goes back to childhood/early adulthood.  Luckily both my DH and I have the same attitude to debt and would rather not go there.  My parents were the same and so are our now adult children. Consequently apart from a mortgage and the odd car loan or furniture on interest free credit we have never built up debt.  As a debt counsellor though I did notice a pattern and often it is higher earners who fall into this category.  Some feel because they earn a lot that it is ok to have a lot of debt as servicing it is not that painful.  The only issues come when income drops or availability of credit dries up.  They always assume that the status quo will remain and they will always have a high salary but sometimes things change.  Usually lower earners grasp much earlier if there is a problem as they see 25% or 50% of their money going on repaying debt.  

I would recommend getting into a savings habit once the debt is gone.  I assume you have a relatively good salary so you can easily sort this out once you really start examining where your money is going.  That is where the soa will help even if you do not put it up here.  I think it is worth it though because if you have always spent a certain amount on one category it may be a bit of an eye opener when people point out how much they spend on the same category.  Everything is relative though so what is expensive for some may be really low for others.  We spend almost £70 a month on a gym/leisure club subscription and many on here would be horrified at that but we use it a lot and we can afford it and don't have any debt.  No doubt your cleaner costs a bit and many on here do have cleaners and say that is one of the last things they would give up.  Their choice. 

Such a comprehensive answer, thank you. Yes as a young lad i spent lots of time with a very well off friend and we gambled a whole lot. I am sure this is where the problem started as i have been in a feast or famine mindset ever since and chasing the next lot of money to spend. What is scary is that at the end of last year i was planning on remortgaging my home to buy another place and pay off my debt in the process. Had i been successful i would have had £1,050,000 in mortgages!!!! Crazy. At the time i was upset to miss out on it. I will do the soa over the weekend and post here. I appreciate the views of some (which are also very helpful by the way and thanks for raising that side of it with me) thast this is not wise but i am keen to see what everyone thinks ...

alt80

@Rainbowtrousers I was spending £3.5-4k more than earning just on lifestyle stuff. Had a lot of flack on here for the cars but still all I want to do 50% of the time is go and finance a brand new AM Vantage having just had to voluntary terminate my V8 F-Type. Before I handed the Jag back there was £175k owing on cars alone would have kept it if I could, down to 2 cars now. Point is we both need to sort the debts and mindset to an extent but don't need to drive a Kia or eat beans on toast seven days a week.

Mortgages I wouldn't worry about too much mate. Tbf I would like to be in a position I didn't have a load of personal guarantees against me. Personally can't wait to be 2 years down the line if everything goes to plan, get the res home remo and get some more leveraged investments.

Rainbowtrousers

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

Household Information[/b]

Number of adults in household........... 1

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

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 3900

Partners monthly income after tax....... 0

Benefits................................ 0

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

Total monthly income.................... 3900[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 1550

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

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

Management charge (leasehold property).. 100

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

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

Gas..................................... 50

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

Water rates............................. 35

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

Mobile phone............................ 20

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

Satellite/Cable TV...................... 0

Internet Services....................... 30

Groceries etc. ......................... 240

Clothing................................ 300

Petrol/diesel........................... 80

Road tax................................ 15

Car Insurance........................... 130

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

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

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

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

Other child related expenses............ 0

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

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

Buildings insurance..................... 0

Contents insurance...................... 70

Life assurance ......................... 0

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

Presents (birthday, christmas etc)...... 0

Haircuts................................ 85

Entertainment........................... 300

Holiday................................. 500

Emergency fund.......................... 0

(Unnamed monthly expense)............... 0

coffee takeaway......................... 30

hot yoga ............................... 45

gym..................................... 62

contact lenses ......................... 45

cleaner................................. 200[b]

Total monthly expenses.................. 4079[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 750000

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

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

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

Total Assets............................ 750000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 382000...(1550).....0[b]

Total secured & HP debts...... 382000....-.........-   [/b]

[b]Unsecured Debts[/b]

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

loan...........................25000.....668.......6.9

credit card....................5500......120.......0

credit card ...................6000......50........0

car ...........................8000......126.......6.9

parents........................5000......0.........0[b]

Total unsecured debts..........49500.....964.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,900

Expenses (including HP & secured debts). 4,079

Available for debt repayments........... -179

Monthly UNsecured debt repayments....... 964[b]

Amount short for making debt repayments. -1,143[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 750,000

Total HP & Secured debt................. -382,000

Total Unsecured debt.................... -49,500[b]

Net Assets.............................. 318,500[/b]

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

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

Rainbowtrousers

There it is ... all out there. I am suer i even missed some things off but will update if i need to

Rainbowtrousers

And thanks in advance for any tips and guidance

TheAble

You need to eliminate the following lines of expense:
coffee takeaway......................... 30

hot yoga ............................... 45

gym..................................... 62
cleaner................................. 200

The following lines need to be cut back drastically (probably by around 80%)

Entertainment........................... 300
Haircuts................................ 85
Clothing................................ 300
Holiday................................. 500

Your insurances seem very high - have you shopped around? If you have then the car one in particular is probably a function of having an expensive car - you may wish to consider trading in for a less costly model.

These steps should go a long way to reducing your problems.

caeler

Well done @Rainbowtrousers for posting your SOA. I'm sure that couldn't have been easy.  As others have said I'm sure you'll get lots of advice, you'll take some and leave some but it will get you thinking.  I remember posting my SOA over a decade ago and it changes my thinking forever!
One thing you will need to decide, is how frugal are you going to be, there are different choices to be made.  
My initial observations around your household bills - look at MSE energy saving club to see if you are on the best deal for gas and electric. Consider if a water meter would suit you, I'm a single person in a house paying £15pm on a water meter but you may prefer to stay on rates for various reasons which I won't go into here.  Clothes budget seems high - as a professional I'm sure you need to dress smartly for work but maybe review what you have and consider not buying anything new for a few months of the year.  Your contents insurance seems high (but that might be normal if you have something major to insure, again look around on renewal.  Your car insurance also seems high but I'm sure relative to your circumstances, again look around on renewal. Maybe consider if you need a monthly hair cut - even if you went every 8 weeks that would save £510 a year! Finally your holiday budget seems huge (to me), I'm sure you have earned a break but maybe consider some alternative options so you can put surplus towards your debt.  Good luck on your journey and I look forward to seeing you on the mortgage free wannabee forum soon!