Should I remortgage to pay of debt even though I have a £9k indemnity

ryanm8655

As said, looks as though you’ve missed a few things.

Groceries are the obvious one for savings. Sure you can shave a chunk off of that by planning meals, shopping at cheaper supermarkets etc. How old are your kids?

Also no Emergency Fund? What if something goes wrong with the cars or house? Likewise £20 to maintain 2 cars isn’t enough. Especially on older cars. What does the £200 entertainment go on? I think you may need to scrap that for a while. Satellite tv needs to go. Phones could be lower if you go sim only when the contracts expire. 

On the face of it it looks like you earn enough to service the debts but you could be in trouble once the 0% deals run out as the minimum payments will sky rocket.  When do the 0% offers expire?

My strategy would be to throw all spare cash at the highest interest debt first. I’d also set the direct debit on all cards to £1 above the current minimum just to make it easier to budget and ensure the balances are coming down marginally quicker. I’d then plan ahead for beating the 0% expiries as that will be crunch time. Hopefully you have time to make a decent dent and are then able to take advantage of new 0% offers to keep the debts interest free. 

Andyjflet

OK, Im a Dave Ramsey convert and its turned my life around in over a year, and more importantly my money attitude. I have money in the bank for the first time in my whole life, I'm 52. Still a way to go, look up Dave Ramsey and follow the podcasts and baby steps.
Consolidation is not the answer, you need a written budget, it will take a while to get right but get it done and you wont regret it. Also you need an emergency fund then cut up all of your credit cards. Never borrow money again. 

rugbymadfamily

Well done on posting the SOA, but I dont think you can have captured everything? The SOA suggests oh have over £400 a month left over, but you say you consistently overspend? Its highly suggested that you sit with your last 3 months bank statements and categorise every spend to work out where your money is going. Then can figure out where to make savings.

The main area which looks high atm is £750 per month on food - that's a heck of a lot. I think with meal planning each week and cooking in batches you could easily knock at least £200 off that.

These forums are fantastic support so use them to keep yourself on track!

MsPennySaver

You have taken an important first step by recognising that you want to change your finances.  

My first piece of advice would be to get your husband on board to help with making changes.   I find that if one person is an overspender then usually the other partner is happy to benefit from the overspending but without the guilt of being the overspender.   Agree that you are going to budget together so that all the responsibility does not fall to you. 

I think if you really want to make changes then start today.  You say you have overspent on Christmas.  Is there any gifts you've bought that could be returned?  I know that will feel like a horrible thing to do but would your children notice if you returned 1 gift each?  Also if you and your husband have bought gifts for each other can you both agree that you don't need gifts this year and return them. Whatever money you raise can then be a start of an emergency fund.     

I honestly think that choosing to be proactive now will be like a line in the sand saying you refuse to keep overspending.

I also agree with the last past poster than the baby steps program can inspire you to make positive changes.  

Wishing you and your family a very Merry Christmas and a money saving New Year. 



 

enthusiasticsaver

TildaBella said:

Completed the SOA


[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......... 4

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

Monthly Income Details[/b]

Monthly income after tax................ 1500

Partners monthly income after tax....... 2100

Benefits................................ 240

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

Total monthly income.................... 3840[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 630

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

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

Management charge (leasehold property).. 0

Council tax............................. 140

Electricity............................. 55

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

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

Water rates............................. 33

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

Mobile phone............................ 40

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

Satellite/Cable TV...................... 20

Internet Services....................... 20

Groceries etc. ......................... 750

Clothing................................ 100

Petrol/diesel........................... 50

Road tax................................ 20

Car Insurance........................... 40

Car maintenance (including MOT)......... 20

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

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

Childcare/nursery....................... 400

Other child related expenses............ 100

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

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

Buildings insurance..................... 15

Contents insurance...................... 10

Life assurance ......................... 10

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

Presents (birthday, christmas etc)...... 100

Haircuts................................ 40

Entertainment........................... 200

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

Emergency fund.......................... 0[b]

Total monthly expenses.................. 2860[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 325000

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

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

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

Total Assets............................ 325000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 175000...(630)......2.9[b]

Total secured & HP debts...... 175000....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Credit Card Virgin.............4000......120.......27

LOan MS........................6000......250.......8.9

Loan Hitachi ..................4000......181.......4[b]

Total unsecured debts..........14000.....551.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,840

Expenses (including HP & secured debts). 2,860

Available for debt repayments........... 980

Monthly UNsecured debt repayments....... 551[b]

Amount left after debt repayments....... 429[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 325,000

Total HP & Secured debt................. -175,000

Total Unsecured debt.................... -14,000[b]

Net Assets.............................. 136,000[/b]

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

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

It looks like you have missed a few debts off the soa which explains why you do not have a surplus so to speak.  You do not have any emergency savings so that should be addressed first to stop you turning to credit the minute you have an unexpected bill.  Presumably once your youngest turns 3 you will get some free childcare hours so that £400 will reduce or disappear?  Are you doing the tax free childcare scheme? I think that given your children are still quite young you would be best to really cut down as much as possible and try and knock some of those debts off starting with the 27% virgin credit card.  If you can move that to 0% then I would do that to start with. Do you have any stuff you can sell? The groceries is high but you have a large family and unfortunately that usually does mean high food bills.  Do  you use budget supermarkets and meal plan?  If the children are all under 10 they usually are not massive eaters so best to tackle any food wastage now before they get to the teen years when they tend to eat for England. 

It is good you have not missed payments but the situation you are in now is because you have let the debt get so high before being forced into dealing with it.  Take the cards out of your purse so you cannot be tempted to increase the debt further. 

kimwp

Is your SOA based on actual figures or guesses at what you are spending? It really needs to be based on actual figures otherwise you won't know the real picture and forumites can't give you the best advice. Try for the last three months as a minimum, ideally a year (though with four kids, I can empathise that time might be at a premium!)

steampowered

It looks like you are paying 27% interest on one of your credit cards? Pay that off ASAP! 

You could try cutting up all of your credit cards, and only spending with a debit card in future? That will help be disciplined with budgeting. You need to be paying off debt, not taking on more.

The best gift you can give your children is a healthy and responsible attitude to money. Not Xmas presents or holidays which are short term things that will be forgotten in a few years.

Naomim

I echo what everyone else has said on here so far. Please don't consolidate onto your mortgage. 

I was in a very similar position to you just over a year ago.  I owed £33.5k on credit cards and had maxed out my £4.5k overdraft.  I was thinking I would have to go down the DMP route and this may be the case for you, but somehow I managed to turn it around and a year later, all of my debt is on 0% interest. It's still going to take ages to pay off but at least I can see it's coming down.

I completed the budget planner on this site. Then I set up a separate account with Monzo so I could make use of their pot systems.  I allocated money on a monthly basis to each pot.  My car is 10 years old and I knew needed a new cambelt MrM's car is also over 10 years old so I put £80 a month into a car maintenance pot.  I also have pots for emergency fund, days out, groceries, petrol, clothing, Christmas, birthdays, haircuts & car insurance.  I used the two month council tax break to use that money to pay for car insurance in full, freeing up a monthly direct debit which I then directed into the pots.  I set a grocery budget and started to meal plan properly. I also went back to online food shopping as I seem to spend less when I'm not walking through the shop being caught out by every marketing ploy to buy stuff I don't want or need.  I took the credit cards out of my purse and set up the DD's to be just a couple of pounds over the minimum payments on each until I knew exactly what the budget was for a regular payment after we'd ben paid and the pots filled.  Basically - give every penny a job.  I started doing online surveys and selling bits on FB & ebay. Anything I made went as an overpayment every month.  After about 6 months I started receiving more 0% offers with existing cards and managed to shuffle everything onto 0%.  

It's not easy but you aren't giving up on nice things for your kids. You are just going to manage the money better so it's there for when you need it.  The only thing we have missed out on is a holiday but as 2020 and probably 2021 will be written off for holidays, it's no bad thing.

Good luck, it takes perseverance but please keep coming to the boards, read some of the diaries for inspiration and you will achieve it.

Naomim

[Deleted User]

Remortgaging won't pay off your debts.  You'll still owe the money albeit to a different creditor and this time secured against your home.