Working towards debt0free in 7 years

Mum2Boys_2

Hello All 

I have also posted in the IVA forum as this is something I may have to consider to manage my monthly outgoings. Below is my SOA 

Household Information[/b]

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

Number of children in household......... 3

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

 

Monthly Income Details[/b]

Monthly income after tax................ 1306

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

Benefits................................ 1074.45

Other income............................ 216[b]

Total monthly income.................... 2596.45[/b][b]

 

Monthly Expense Details[/b]

Mortgage................................ 421

Secured/HP loan repayments.............. 545

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

Management charge (leasehold property).. 0

Council tax............................. 94

Electricity............................. 75

Gas..................................... 75

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

Water rates............................. 38

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

Mobile phone............................ 65

TV Licence.............................. 0

Satellite/Cable TV...................... 54.98

Internet Services....................... 0

Groceries etc. ......................... 303.33

Clothing................................ 15

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

Road tax................................ 1.67

Car Insurance........................... 50

Car maintenance (including MOT)......... 35

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

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

Childcare/nursery....................... 203.67

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

Medical (prescriptions, dentist etc).... 13

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

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

Contents insurance...................... 12

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

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

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

Haircuts................................ 15

Entertainment........................... 45

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

Emergency fund.......................... 10[b]

Total monthly expenses.................. 2216.65[/b]

[b]

 

Assets[/b]

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

House value (Gross)..................... 198000

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

Car(s).................................. 2300

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

Total Assets............................ 200300[/b]

[b]

 

Secured & HP Debts[/b]

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

Mortgage...................... 0........(421)......0

Secured Debt.................. 0........(375)......0

Hire Purchase (HP) debt ...... 0........(170)......0[b]

Total secured & HP debts...... 0.........-.........-   [/b]

 

[b]Unsecured Debts[/b]

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

halifax overdraft..............2610......0.........0

halifax credit card............4238......0.........0

barclays credit card...........2587......0.........0

studio ........................750.......0.........0

nationwide loan................2590......0.........0

halifax loan...................9189......0.........0

Littlewoods ...................2613......0.........0

vanquis credit card............979.......0.........0[b]

Total unsecured debts..........25556.....0.........-  [/b]

 

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,596.45

Expenses (including HP & secured debts). 2,216.65

Available for debt repayments........... 379.8

Monthly UNsecured debt repayments....... 0[b]

Amount left after debt repayments....... 379.8[/b]

 

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 200,300

Total HP & Secured debt................. -0

Total Unsecured debt.................... -25,556[b]

Net Assets.............................. 174,744[/b]

So I can see i'm in more unsecured debt then I had first realised and seeing it laid out like that has been pretty hard! This is the same information I have used on my stepchange Budget. 

The tv is a tv package, it covers internet, landline and basic now tv, I pay for that and share my siblings, netflix, discovery, disney, spotify and prime. 

the phones may seem expensive but that is for all 4 of our phones, I did not get an upgrade, I could ask my eldest to pay for his now he has a paper round but I feel this might be unfair as the others don't, although he does also pay for them to all have playstation plus so this is an expense I don't have. 

The clothes may seem low but that's because I have more then enough clothes, and the boys tend to get clothes for birthdays and christmas as well as my sister (works at primark) who often picks them up bits. 

Dad pays for their activities and school uniforms and he is also going to pay for their once a week school meals, Brother pays for their haircuts and my sister is going to give my younger 2 £5 per week pocket money. 

Jamesyb123

There will be some helpful people that will comment on this but looking on the face of it, it’s not a disastrous situation and definitively something you can resolve with careful planning and with the supportive family you clearly have around you. In relation to childcare are there any family that maybe able to assist at all to bring that cost down? I pay for childcare myself and it’s so expensive even for 2 days a week. That gas and electricity definitely seems a little high, should be able to get the both for 100 ish a month, depending on usage I appreciate with 3 kids usage is probably high. Anyways this is certainly a situation you can get out of. Good luck :-)

Mum2Boys_2

Hi James and thanks for your reply. 
My childcare will be coming down in July, my youngest will be in year 6 and I have agreed that he can bike to school with his friends so that will be a saving, however it is worth mentioning that it will affect my tax credits so ill be saving roughly £12 per week with that. 
I agree my Gas and Electricity is massive and I have tried to have this argument with OVO many times, they say this is my usage as calculated by my smart meter and whilst I believe it may have reached that during lockdown times, I do not think it has been right throughout the years. We are not in the house for 6 hours 5 days a week, we very rarely put the heating on and its only on for maybe 4 hours a week, so this is excessive. I am however now in debt to them so unable to change provider, this will be something I will try to do though. 

Jamesyb123

Mum2Boys_2 said:

Hi James and thanks for your reply. 
My childcare will be coming down in July, my youngest will be in year 6 and I have agreed that he can bike to school with his friends so that will be a saving, however it is worth mentioning that it will affect my tax credits so ill be saving roughly £12 per week with that. 
I agree my Gas and Electricity is massive and I have tried to have this argument with OVO many times, they say this is my usage as calculated by my smart meter and whilst I believe it may have reached that during lockdown times, I do not think it has been right throughout the years. We are not in the house for 6 hours 5 days a week, we very rarely put the heating on and its only on for maybe 4 hours a week, so this is excessive. I am however now in debt to them so unable to change provider, this will be something I will try to do though. 

I moved from an energy provider before with a balance but I think it was only £100 so maybe see if  there are any options. You are definitely overpaying but that £150 maybe going towards some arrears. Once you’ve decided how you are moving forward your gas and electric could be a little project for you. There are companies that don’t charge fees that will help u to swap maybe look into that.

MrFrugalFever

I echo what Jamesyb123 has said above. From experience, don’t rule out options based on assumptions, call these companies and ask those difficult questions, they’ll either say yes or no. We seem to be living in a better age whereby there is ever increasing consumer protection and support.

i currently use Igloo as my energy provider, it works great for my use and I like the app, 3% interest on credit balances up to £1,000 and £50 referral scheme. 

With reference to your post regarding your car, I would stick with it as long as you can, I absolutely would not allow anyone to enter in to a finance agreement on your behalf for another car, for many reasons but the main two being a) it’s then classed as an accommodation deal which is in effect against FCA regulations and b) if you had to enter in to a formal debt plan you would not be able to keep those payments up as it won’t be your debt and could be rejected by your creditors as an unreasonable expense. If your brother is intending to pay the finance on your behalf and effectively gift you the car, perhaps it would be better he use the money he would have paid to support with your highest interest bearing debt instead?

i don’t recall you mentioning who is aware of your circumstances?

Your debt is quite large but by no means impossible to deal with! I will look over your SOA in a bit more detail and hopefully can assist

Mum2Boys_2

My siblings know my situation and are all very supportive but no i have absolutely no intention of letting my brother gift me a car and I most certainly do not want to be adding to the debt I owe, this includes paying for a car longer then I have to. 
I have already attempted to transfer debts but I am now literally running out of options, this is really what has prompted me to contact stepchange.
Some of the debt, particularly credit cards was used to pay for childcare, this was a personal expense of £700 per month myself which I clearly could not afford but I didn't realise until myself and Stepchange did the budget. This is also what prompted my decision to go back in to working in a school, as this and my older two getting older, prompted the cuts in childcare. 
I hadn't considered an IVA originally or a DMP until it was spoken about with Stepchange. 
I think once I have a long term plan in place, I will then seek to cut my energy bill, i am in arreas of around £600 although I could possibly make a lump sum payment. 

Jamesyb123

Mum2Boys_2 said:

My siblings know my situation and are all very supportive but no i have absolutely no intention of letting my brother gift me a car and I most certainly do not want to be adding to the debt I owe, this includes paying for a car longer then I have to. 
I have already attempted to transfer debts but I am now literally running out of options, this is really what has prompted me to contact stepchange.
Some of the debt, particularly credit cards was used to pay for childcare, this was a personal expense of £700 per month myself which I clearly could not afford but I didn't realise until myself and Stepchange did the budget. This is also what prompted my decision to go back in to working in a school, as this and my older two getting older, prompted the cuts in childcare. 
I hadn't considered an IVA originally or a DMP until it was spoken about with Stepchange. 
I think once I have a long term plan in place, I will then seek to cut my energy bill, i am in arreas of around £600 although I could possibly make a lump sum payment. 

I know you have a lot on your plate but when you get chance google some companies that do energy switching because I wouldn’t be surprised if there are ways to carry a balance over to another provider also you may then pay the arrears off quicker as youll be on a better tariff and paying a lot less in usage .

Mum2Boys_2

do you know of any good websites James? 

Jamesyb123

Mum2Boys_2 said:

do you know of any good websites James? 

Just did a bit of googling and citizens advice came up saying if you’ve been in arrears for more than 28 days you can’t switch :-( but did you say you may be able to clear it? Based on what you said earlier there are 3 of us in my house and we are not careful with the energy, lights heating washing machine it’s a free for all and we pay £75 a month for both and that’s with British Gas who I think are well known rip off merchants. So in the short term paying the arrears may be painful but then you may then save that much within 6 months of switching? 

MrFrugalFever

@Mum2Boys_2 I notice on your SOA you have not put in APR’s? 

I think to really grab the bull by it’s horns as they say, deep dive in to your debts and what interest rates they charge. You could then adopt a strategy like attacking the highest interest bearing or snowball effect.

do you have anything around the house you could sell?

Your food bill seems reasonable for the household size but I reckon you could still trim in that area, take a little extra time making a shopping list, maybe with the kids present or everything you want then review it with them and work out what you want and need, crossing out the wants!

are there days you could avoid taking the car and save fuel? Could you car share?

you don’t appear to allocate a cost for TV license, do you pay it in full?

do you pay your council tax over 10 or 12 months?

Mum2Boys_2

I am looking through my ovo app and in all honesty I really don't understand it, it is talking about debit and credit etc.  It is quite frustrating, as my bills are showing differently to the dd but it is not showing when i'm in credit.