Debt Advice

Fellalis89

Morning kimwp,

I will make sure going forward I reflect on any potential changes on the SOA  

In response to our conversation, the petrol is an overestimate with contingency built-in due to current inflation rates. Hopefully, it isn't this high but I'd roughly guess I would need a full tank per week which is around £70-£80 per week (depending on where I go) and I have to include there are five weeks in some months so building the safety net in this pot seems needed.

With regards to the entertainment section, you are right in saying I need to spend time with others. I have spent the last two years not socialising and I have noticed the impact it has had. I know everyone is different, but I was wondering how much do other people put down?

Also in the other categories that seem low, what would the average amount be for a single person? Again I know it is a hard guess but I am looking at potentially going into a DMP as it seems the only way forward. I will complete my own tracker to also get a better understanding. What sort of monies would be sufficient for the emergency fund too?

Regarding the DMP I have been reading through the threads and websites such as nedcab for a few months, creating my own manual of information, and have got my head around the basics, it's the start-up I would like to clarify. Do you send letters stating your financial difficulty and ask them to hold the account, you cancel direct debits and put this money in the emergency fund pot? And wait for the accounts to go into default before sending across your SOA and offer letters?

And thanks for this 'You can do this'

kimwp

Fellalis89 said:

Morning kimwp,
Morning!

I will make sure going forward I reflect on any potential changes on the SOA  
My forgetful brain thanks you

In response to our conversation, the petrol is an overestimate with contingency built-in due to current inflation rates. Hopefully, it isn't this high but I'd roughly guess I would need a full tank per week which is around £70-£80 per week (depending on where I go) and I have to include there are five weeks in some months so building the safety net in this pot seems needed.
Sounds sensible. When you say "depending on where you need to go" - if this is work related travel, will you be able to claim the petrol expense? If I travel anywhere other than the commute to my designated place of work in my car, I can claim for petrol - but I know not all jobs are like that.

With regards to the entertainment section, you are right in saying I need to spend time with others. I have spent the last two years not socialising and I have noticed the impact it has had. I know everyone is different, but I was wondering how much do other people put down?
As you say, everyone is different. I've just increased mine to £80 because I've spent close to that but not more each month this year and I've been really focussing on socialising as I now work from home and I was getting a bit low. With that, I pack my weekends with seeing my family (at our houses), meeting up with friends for walks and chats and wanders round free exhibitions, going for lunch/dinner 2-3 times a month and coffee and cake a couple of times. Worth noting that I tend to pay for my own rather than split the bill unless it's close and will be returning to not having a drink, because even though I don't drink alcohol (health choice), having a soft drink each time adds £20 each month, which is a big chunk of £80 and it doesn't really add to the enjoyment of the experience, and will free money for another meal out. Sounds miserably frugal when it's described like that, but it's really about getting the most (socialising and happiness) for your money.*

Also in the other categories that seem low, what would the average amount be for a single person? Again I know it is a hard guess but I am looking at potentially going into a DMP as it seems the only way forward. I will complete my own tracker to also get a better understanding. What sort of monies would be sufficient for the emergency fund too?
I think there are standard amounts that are advised (maybe on templates?) for people applying for bankruptcy? DMP?, that might be worth a look at. But you can get your own numbers from your bank statements as a good start - some people naturally spend low amounts on some things, though obviously consider where the low amounts you have been spending is not sustainable. 

Re an emergency fund, usual advice is to build up £1000 as a first step, then aim for 3-6 months outgoings. Personally I saved a years worth and I know some people have two years

Regarding the DMP I have been reading through the threads and websites such as nedcab for a few months, creating my own manual of information, and have got my head around the basics, it's the start-up I would like to clarify. Do you send letters stating your financial difficulty and ask them to hold the account, you cancel direct debits and put this money in the emergency fund pot? And wait for the accounts to go into default before sending across your SOA and offer letters?
This isn't my area of expertise but I think if going for a DMP, you want your accounts to default as soon as possible (which will take several months) so the defaults come off your financial record as soon as possible (in six years). So I think (check this) you don't want to ask them to hold the account, you simply stop paying (the debts- keep paying utility bills etc). If they do things to help, like holding the account (if this is a thing), it will just extend the process. Best to confirm this on the DMP board. Personally, I'd get your SOA into shape then get a view on that board as to whether a DMP is the right route.

And thanks for this 'You can do this'
Sometimes we just need a reminder x

Responses above.

*My friend had a book that went through the different things in life that could be spent on and how to align spending with your values to live the life you want to lead "Your money or your life"by Vicki Robin and Joe Dominguez. It feels like a good starting point for you to start feeling in control (should be able to order it through your library).

On the topic of socialising/integrating with society for free, have you considered volunteering? There are loads of ways of volunteering and different organisations, so it should be possible to find something that you enjoy doing (I've walked away from loads of roles that were either too much work (treasurer for a women's centre), the people there were annoying, I got bored (five years of a cub group) or I simply didn't like it (making sure homeless people only took one sandwich at a food station). I currently volunteer with two different kids' organisations and I love my time with them.

Fellalis89

kimwp said:

Fellalis89 said:

Morning kimwp,

Sounds sensible. When you say "depending on where you need to go" - if this is work related travel, will you be able to claim the petrol expense? If I travel anywhere other than the commute to my designated place of work in my car, I can claim for petrol - but I know not all jobs are like that.
I mean by which petrol station, sometimes you have no choice but to go to one that charges more if I haven't planned it well enough. I don't get expenses, its unfortunate I have had to get a job 1.5 hours away because of the debt I am in.

As you say, everyone is different. I've just increased mine to £80 because I've spent close to that but not more each month this year and I've been really focussing on socialising as I now work from home and I was getting a bit low. With that, I pack my weekends with seeing my family (at our houses), meeting up with friends for walks and chats and wanders round free exhibitions, going for lunch/dinner 2-3 times a month and coffee and cake a couple of times. Worth noting that I tend to pay for my own rather than split the bill unless it's close and will be returning to not having a drink, because even though I don't drink alcohol (health choice), having a soft drink each time adds £20 each month, which is a big chunk of £80 and it doesn't really add to the enjoyment of the experience, and will free money for another meal out. Sounds miserably frugal when it's described like that, but it's really about getting the most (socialising and happiness) for your money.*
This makes complete sense, thank you!

I think there are standard amounts that are advised (maybe on templates?) for people applying for bankruptcy? DMP?, that might be worth a look at. But you can get your own numbers from your bank statements as a good start - some people naturally spend low amounts on some things, though obviously consider where the low amounts you have been spending is not sustainable. 
Noted

Re an emergency fund, usual advice is to build up £1000 as a first step, then aim for 3-6 months outgoings. Personally I saved a years worth and I know some people have two years
Noted, I will do what I can (if I go on a DMP) to save those missed payments and use my emergency funds to continue to build on it.

This isn't my area of expertise but I think if going for a DMP, you want your accounts to default as soon as possible (which will take several months) so the defaults come off your financial record as soon as possible (in six years). So I think (check this) you don't want to ask them to hold the account, you simply stop paying (the debts- keep paying utility bills etc). If they do things to help, like holding the account (if this is a thing), it will just extend the process. Best to confirm this on the DMP board. Personally, I'd get your SOA into shape then get a view on that board as to whether a DMP is the right route.
Amazing, thank you. I have taken your advice and shared it.

Sometimes we just need a reminder x
Thank you!!! x

Responses above.

*My friend had a book that went through the different things in life that could be spent on and how to align spending with your values to live the life you want to lead "Your money or your life"by Vicki Robin and Joe Dominguez. It feels like a good starting point for you to start feeling in control (should be able to order it through your library).
Amazing, I will look for this book and definately give it a read!

On the topic of socialising/integrating with society for free, have you considered volunteering? There are loads of ways of volunteering and different organisations, so it should be possible to find something that you enjoy doing (I've walked away from loads of roles that were either too much work (treasurer for a women's centre), the people there were annoying, I got bored (five years of a cub group) or I simply didn't like it (making sure homeless people only took one sandwich at a food station). I currently volunteer with two different kids' organisations and I love my time with them.
This is something I have considered and will look into when I feel more in control of my expenses, and meet-up as you suggested earlier

Thank you x

NeverendingDMP

Good morning, it sounds like you are heading towards a dmp. If so just a few things I learnt the hard way.  If not don't worry, it's your choice!

Overestimate all your budgets to give you wiggle room. We didn't as we were panicked/wanted to rush to pay of the debts asap. It then got incredibly  tight.  Remember it can be changed if your circumstances change.

Don't rush into it, nowadays you can ask for breathing space and use this to build an emergency fund. We didn't and we really struggled.

Don't pay anyone to manage it for you. Thankfully we didn't do this but a lot of the companies that charge seem to advertise their names with similar names to the charities.

Have a read of the debt management support thread and if you really want to pickle your mind at this early stage also check out the full.and final settlement support thread. 

National debtline and stepchange used to have guides on their budget planner about realistic ranges to a budget. The dmp support thread and grocery threads will have single people on who can help you compare budgets or say what amounts they were allowed

Don't panic if you get scary sounding letters, you can paper yours walls with them you will get that many. It's just the process.

If some of them start ringing you, you can ask they do not contact you that way  and they are obliged to stop. (GDPR)


I'll have a quick look at your soa again and see if any categories need adding. We are a family of 5 so I wouldn't be that good a comparison costs wise but I'll see if anything jumps out.

NeverendingDMP

Sorry I can't figure out how to make notes inside the soa. I would consider increasing food, gas, electricity,  clothing, car maintenance. You need to add something  to cover prescription, dentist etc even if not regular expense. Presents e fund, entertainment you are allowed an allowance for those to so include them. Gym will help keep you going mentally and physically so keep that if you want. You can also add on a category for pet food/medicines in a dmp. A repairs fund is also allowed in a dmp as is the ability to save a small amount.  Life insurance might be something you need as a homeowner, not sure if a single person?
I've gone on a lot, sorry to bombard you! Enjoy your day.

RosaBernicia

I think it would be worth working out your car costs, especially as if you drive a lot for work it's essential to you.  £10/ month is unlikely to be enough.  For example, I have a little old runaround that doesn't get used much (now I WFH) and I budget £70/ month to cover my annual totals divided by 12 - that includes road tax at about £150, MOT around £55, insurance £200 (old car and low annual mileage - definitely worth going through the MSE pages on how to get the cheapest quotes), £125 for service, £200 to allow for replacing tyres or brakes or whatever, and £50 for breakdown recovery. 

There is some MSE info on breakdown options but do read carefully about options - I used to have AutoA1d as the cheapest option and they were great, but they required you to pay the breakdown company on the spot and claim it back, so you need to have a card on you with either money in the account (potentially hundreds for parts and towing) or a credit card.  If those aren't suitable for you right now then there are ways of cutting cost on the other options. 

I second the suggestion of looking for points or other benefits you might be able to get from your petrol spending.  The other thing I wondered about is do you do regular car maintenance checks?  If you do all the things you can do yourself - keeping tyres the right pressure, checking lights, wipers, etc - hopefully you can keep it running well and spot any issues early so that you are less likely to suffer the drama and expense of breakdowns.  It doesn't have to take long or be complex, I can do the rounds of mine in about 15 minutes including the tyres.  It's also a good reminder point for taking weight out of the boot when things migrate in there!

Entertainment I agree is very much a case of what things are worth to you.  Mine has changed a lot since I moved house as the things I do are different, and I suppose I don't really put it in one category.  I allow money for books, audiobooks, subscriptions and pay to view movies, eating out (mostly coffees with friends but also meals), tickets to exhibitions etc, but I suppose my general petrol costs are also partly social and the fitness classes I'm planning to start would be both, but in that instance I'd call it fitness costs and consider the social aspect a side benefit!

Life insurance I feel is another thing that depends on your individual circumstances.  Some websites etc will try and insist that you need it in order to have a mortgage.  I explored this with a financial adviser and found that it isn't true (the mortgage companies will simply get their money back from the house sale, so they don't care).  However, if you have dependents, anyone else living in the house, or anyone who would struggle in your absence, you may want to consider it so that they have the house paid off or an income.  (If you're looking into this, you can also check if your job or pension arrangements would provide a payout so that you can take that into account in planning.)

in_need_of_direction

sorry for having little to add but I noticed you get your petrol from Tesco.  I recently used my club card points to get breakdown cover as they were multiplied by three for this.  If I were you, I’d try to free up available cash by challenging myself to income generate to clear the dwp debt and then maybe a month’s gym membership, sofa payment etc. I know surveys are a pain but I generally hit £15 to £20 a month between prolific and swag bucks. I also get roughly £200 a year from cash back sites that I use to buy what I actually need.

I’m aware of just how draining facing debt is.  Try and stay focused on the fact that outgoings are due to reduce in the next six months which I’m guessing is a really short time frame compared to how long you’ve had debt.

best of luck and take care,

Fellalis89

NeverendingDMP said:

Good morning, it sounds like you are heading towards a dmp. If so just a few things I learnt the hard way.  If not don't worry, it's your choice!
Good morning! I think so too. Completing an SOA has made me realise I have never budgeting for hardly anything.

Overestimate all your budgets to give you wiggle room. We didn't as we were panicked/wanted to rush to pay of the debts asap. It then got incredibly  tight.  Remember it can be changed if your circumstances change.
I have been doing on some and I keep going back to my SOA sheet. At first I thought companies would wuestion it, however the more I think about it the more I realise we are always planning for the unknown and cost price increases.

Don't rush into it, nowadays you can ask for breathing space and use this to build an emergency fund. We didn't and we really struggled.
What is breathing space, the one the government advise of? Don't you need to be in talks with a debt charity and have a plan in place? I was thinking of going self-managed as it seems better in the long run.

Don't pay anyone to manage it for you. Thankfully we didn't do this but a lot of the companies that charge seem to advertise their names with similar names to the charities.
Definately not when there are free companies out there! After reading through threads I can't believe these comapnies are still running.

Have a read of the debt management support thread and if you really want to pickle your mind at this early stage also check out the full.and final settlement support thread. 
Thank you, that is a good shout I hadn't noticed that thread.

National debtline and stepchange used to have guides on their budget planner about realistic ranges to a budget. The dmp support thread and grocery threads will have single people on who can help you compare budgets or say what amounts they were allowed
Amazing, thank you!

Don't panic if you get scary sounding letters, you can paper yours walls with them you will get that many. It's just the process.
Haha I need to redecorate

If some of them start ringing you, you can ask they do not contact you that way  and they are obliged to stop. (GDPR)
I have noticed that reading through the thread.

I'll have a quick look at your soa again and see if any categories need adding. We are a family of 5 so I wouldn't be that good a comparison costs wise but I'll see if anything jumps out.

Thank you so much for all of your useful tips above!

Fellalis89

NeverendingDMP said:

Sorry I can't figure out how to make notes inside the soa. I would consider increasing food, gas, electricity,  clothing, car maintenance. You need to add something  to cover prescription, dentist etc even if not regular expense. Presents e fund, entertainment you are allowed an allowance for those to so include them. Gym will help keep you going mentally and physically so keep that if you want. You can also add on a category for pet food/medicines in a dmp. A repairs fund is also allowed in a dmp as is the ability to save a small amount.  Life insurance might be something you need as a homeowner, not sure if a single person?
I've gone on a lot, sorry to bombard you! Enjoy your day.

Don't worry, it took me ages to copy, paste and change the format!! Amazing, I have been using your information to change my SOA to reflect these increases. Can I ask, the repairs fund....is this just a general repairs fund for any issues within the home? Yes I'm a single person and could possibly get this through my new job but I will add some in and will look to take it out. Not at all, I hugely appreciate all of the advice being shared! Have a lovely day!

Fellalis89

RosaBernicia said:

I think it would be worth working out your car costs, especially as if you drive a lot for work it's essential to you.  £10/ month is unlikely to be enough.  For example, I have a little old runaround that doesn't get used much (now I WFH) and I budget £70/ month to cover my annual totals divided by 12 - that includes road tax at about £150, MOT around £55, insurance £200 (old car and low annual mileage - definitely worth going through the MSE pages on how to get the cheapest quotes), £125 for service, £200 to allow for replacing tyres or brakes or whatever, and £50 for breakdown recovery. 
Thank you for sharing this, I had never thought about it like that. I have increased my monthly total because I also need to have some work done on the car. 

There is some MSE info on breakdown options but do read carefully about options - I used to have AutoA1d as the cheapest option and they were great, but they required you to pay the breakdown company on the spot and claim it back, so you need to have a card on you with either money in the account (potentially hundreds for parts and towing) or a credit card.  If those aren't suitable for you right now then there are ways of cutting cost on the other options. 

I second the suggestion of looking for points or other benefits you might be able to get from your petrol spending.  The other thing I wondered about is do you do regular car maintenance checks?  If you do all the things you can do yourself - keeping tyres the right pressure, checking lights, wipers, etc - hopefully you can keep it running well and spot any issues early so that you are less likely to suffer the drama and expense of breakdowns.  It doesn't have to take long or be complex, I can do the rounds of mine in about 15 minutes including the tyres.  It's also a good reminder point for taking weight out of the boot when things migrate in there!
I completely forgot that they did that! I will shop around and see if there are any companies that don't charge you on the spot. Yes I do the checks myself. My last job required us to do it on the company car so I know what to look for. Very ture, I will sort my car out today and take anything that doesn't need to be in there out.

Entertainment I agree is very much a case of what things are worth to you.  Mine has changed a lot since I moved house as the things I do are different, and I suppose I don't really put it in one category.  I allow money for books, audiobooks, subscriptions and pay to view movies, eating out (mostly coffees with friends but also meals), tickets to exhibitions etc, but I suppose my general petrol costs are also partly social and the fitness classes I'm planning to start would be both, but in that instance I'd call it fitness costs and consider the social aspect a side benefit!
Thank you for this, again I hadn't thought about books and they are something I buy regularly. This is all so completely new to me and such an eye opener as to how I got here and how to get better at managing my money. 

Life insurance I feel is another thing that depends on your individual circumstances.  Some websites etc will try and insist that you need it in order to have a mortgage.  I explored this with a financial adviser and found that it isn't true (the mortgage companies will simply get their money back from the house sale, so they don't care).  However, if you have dependents, anyone else living in the house, or anyone who would struggle in your absence, you may want to consider it so that they have the house paid off or an income.  (If you're looking into this, you can also check if your job or pension arrangements would provide a payout so that you can take that into account in planning.)

I will definately see if my new job offers this before taking it out. I am a single person that doesn't necessarily need it, however we don't know what life throws at us and with having no savings and still a long way to go with my mortgage it is something I will benefit from going forward.

Thank you so much for your help!