Need advice regarding what to do with my credit card debts

crazyhaggid

elsien said:

Is this budget aspirational rather than looking back at your actual spending? £120 a year on Christmas and birthday presents is unusually low for three children, without buying for each other/other relatives. 

I agree with you I've put this in too low, we don't tend to save for Christmas and birthdays, hence why we're now in so much debt. 

TheAble

crazyhaggid said:

elsien said:

Is this budget aspirational rather than looking back at your actual spending? £120 a year on Christmas and birthday presents is unusually low for three children, without buying for each other/other relatives. 

I agree with you I've put this in too low, we don't tend to save for Christmas and birthdays, hence why we're now in so much debt. 

£10/month car maintenance won't be realistic if doing that mileage.

Could you use your OH car if she's not using? Likely to be a lot more fuel efficient than your own. Also examine your driving style and that you're buying petrol at the cheapest price.

RAS

crazyhaggid said:

TheAble said:

Does your OH still have the business or is she doing something else now? Just wondering if she can generate a bit more income somehow.

Fuel costs still seem high even with a 60 mile daily commute. Is that £430 mostly generated by you?

OH has given up her business and is working in a shop now. I think the fuel costs are about right I do 300 miles a week, ~1200 miles a month.

Going to be brutal here, but in your situation you really can't afford to think anything is "about right", nor to end up putting stuff on credit cards because you haven't saved for predictable events like birthdays and Christmas.

Get hold of the last 6 months' bank and credit card statements and sit down with OH. Go through them with a fine toothcomb, and allocate every spend to one of the categories above, or create sub-categories if you need to. Then you'll know what is going where.

It's only then that you can start to work out how much you can afford to pay off the debt. 

One thing to note: you are going to have to stop paying anything at all to encourage your creditors to default the debts quickly and save the money you would have paid there into a savings account. Not least as with that commute, you must have a safety net in case the car claps out. 

Mean-time do talk to OH about using her car to commute if it's got better mileage. And READ the lease contract so you know if there are any termination costs. You really don't need any surprises there.

EssexHebridean

crazyhaggid said:

[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......... 3

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

Monthly Income Details[/b]

Monthly income after tax................ 3000

Partners monthly income after tax....... 546 Can this be increased at all?

Benefits................................ 140 You've checked this is all you're entitled to?

Other income............................ 0[b] Can OH maybe do something here - even things like online surveys or ebaying old childrens clothes and toys can bring in a few welcome extra pounds here and there.

Total monthly income.................... 3686[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 837

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

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

Management charge (leasehold property).. 0

Council tax............................. 231

Electricity............................. 130 You need to keep a VERY close eye on this and your gas as they are already high and if you are on a SVR then there is a good chance this will at least double - or worse - from october. Have a browse on the energy board and ask for ways there to reduce usage perhaps - lots of good advice, just go armed with your actual annual use figures for both fuels and people can evaluate whether you're high or not. (Although your payments would suggest that you are indeed well above the "typical" user".)

Gas..................................... 125 See above

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

Water rates............................. 0 OK - explained - in Scotland I assume! 

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

Mobile phone............................ 12 This is reasonable - how many phones is this for, 1 or 2? Beware of children that might be reaching an age when they will want a phone of their own - and don't be sucked into the pressure that they "must have one" for various reasons ahead of a time when YOU think they are old enough for the responsibility. 

TV Licence.............................. 0 I know you've said that you don't have this but you definitely watch NO "as live" TV, or iPlayer, no? If you do, then it may not be worth the risk of not having a license.

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

Internet Services....................... 26

Groceries etc. ......................... 250 Have you checked that this is what you're actually spending, and does it include anything like takeaways, foods grabbed as snacks on the go etc?

Clothing................................ 5 I don't think this is realistic for 5 people - even if you're getting hand me downs for all the small people there's still underwear for everyone, and kids grow out of that just as fast as they do coats and shoes!

Petrol/diesel........................... 430 This sounds crazily high for the mileage you're doing - have a think about what MPG you get from each car, and read the guide on the main site about driving economically. Also shop around for fuel and don't believe the myth about supermarket fuel being poor quality - assuming neither of your cars is a high performance model (and if so, that might explain the fuel costs!) then you'll be fine on standard supermarket stuff if that's what's cheapest. Petrolprices.com website is your friend here. 

Road tax................................ 25

Car Insurance........................... 49

Car maintenance (including MOT)......... 10 Too low regardless, but for an older car doing a lot of mileage that's really REALLY too low - at the very least you're going to need a MoT & service once a year, tyres every two years probably, and all the other odds and ends - plus the standard  maintenance that comes with an older vehicle in particular. You might just about scrape by with £35 a month if you're lucky but that won't leave you much for contingencies.

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

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

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

Other child related expenses............ 47

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

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

Buildings insurance..................... 6

Contents insurance...................... 3 This seems very low for a household of your size with the attendant "stuff" that goes with all those people - check that your amount insured would enable you to replace everything in the event of total loss. 

Life assurance ......................... 16

Other insurance......................... 16

Presents (birthday, christmas etc)...... 10 Yep - already said I believe but way WAY too low - as an example assuking you ONLY buy for the children this means you are spending £20 each on them each for Christmas, and the same again for Christmas. Realistic? I suspect not. Also remember to budget for additional food, drink and socialising (for you AND the children) around Christmas too, as well as any "days out" you might do to celebrate birthdays. 

Haircuts................................ 0

Entertainment........................... 15 

Holiday................................. 50 Right - I suspect this is because the SOA is an aspirational one but if you are going to budget this you MUST make sure you put it away - the same goes for anything else you budget monthly and only pay for annually or quarterly. You're currently showing no cash assets, and we're coming into Autumn, which makes me concerned that you are running headlong towards christmas in particular without anything saved to pay for it. 

Emergency fund.......................... 0[b] You need to start stashing something here - but it aso needs to be used ONLY in an emergency - so the fridge/washing machine/oven stops working, or you need to get a lock changed, or you have a water leak and need to call a plumber, NOT "it's Christmas", "the kids need new shoes" or "we want to go out for the day but the entertainment pot is empty" - those things all need budgeting for - if they arise then either you have saved the cost into the relevant areas savings pot already, or you go without, or you find the money from elsewhere in the budget - by having an "eat from the cupboards" month - or reducing non essential mileage a bit, for example. 

Total monthly expenses.................. 2293[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 250000

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

Car(s).................................. 500

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

Total Assets............................ 250500[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 156000...(837)......2.5[b]

Total secured & HP debts...... 156000....-.........-   [/b]

[b]Unsecured Debts[/b]

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

card 1.........................10774.....288.......19

card 2.........................11080.....325.......19

card 3.........................15000.....380.......19

Lease car......................3300......300.......0[b]

Total unsecured debts..........40154.....1293......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,686

Expenses (including HP & secured debts). 2,293

Available for debt repayments........... 1,393

Monthly UNsecured debt repayments....... 1,293[b]

Amount left after debt repayments....... 100[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 250,500

Total HP & Secured debt................. -156,000

Total Unsecured debt.................... -40,154[b]

Net Assets.............................. 54,346[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

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

OK - some of this stuff may already have been mentioned by others but I'll stick it in the SOA above regardless as it keeps it all in one place. See in bold above. 

So that currently says £100 left - you can probably win back some money from the petrol costs which either you are currently massively underestimating, or you can reduce a good bit by learning to drive bet...more economically... Possibly with very careful management something could be gained from groceries too, although with prices increasing as they are that might prove to be more of a challenge than previously it might have been. You also need to account for the underestimations in some areas too - the most important being car maintenance, then christmas & birthdays probably. 

Do you actually need two cars? Can the lease car be driven by you, meaning you could let your  older one go perhaps? Or is the lease at a stage when the car can be handed back without any form of financial penalty? If so but 2 cars re still required then personally I'd be inclined to scrape together every penny you can for the next few months and buy something old but solid for OH so the lease car can go back - that instantly frees up £200 or so in your budget even once you have to take account of the expenses that are currently included within the lease (I'm assuming all servicing maintenance consumables barring petrol and tax/insurance are included?) 

Keep a close eye on the MSE credit club for any possible 0% deals you might be able to get to transfer ANY of the balances from the existing cards to - and once you are 100% confident that those cards are not going to be used, change the monthly payments from the minimum payment to an amount just ABOVE that current minimum - this means that over time you chip away slightly more at each one, with each payment. It also potentially improves your credit history a little as you won't be noted as paying minimums only - meaning the possibility of an improved chance of 0% deals. Only ever do this for unused cards though otherwise it is too risky. 

Personally, and unless you can either massively cut costs (so losing the lease car and hugely reducing that petrol spend for example) OR increase income, I'd say it might be worth you looking at a DMP. That's currently a lot of debt with a relatively low monthly amount to throw at it. Someone who's got more expertise in that area will be able to advise better, though. 

EssexHebridean

crazyhaggid said:

elsien said:

Is this budget aspirational rather than looking back at your actual spending? £120 a year on Christmas and birthday presents is unusually low for three children, without buying for each other/other relatives. 

I agree with you I've put this in too low, we don't tend to save for Christmas and birthdays, hence why we're now in so much debt. 

This is where a proper budget will help - first learn how to budget, then learn how to stick to that budget. Sometimes that will mean saying "No, not this time" - and that will be hard, but something else to also learn is that experiences are where memories are made, not through "Stuff". Investigate free options for entertaining the kids in your area - do what we all did during lockdown and get out there on foot and explore - look out for things like unused "i-Spy" books in charity shops or on eBay and challenge the kids to find all manner of fascinating things - from my childhood I can still remember having to search out various things from the car on longer journeys, and also things like looking for old postboxes can be interesting particularly for younger children. (Did you know for example that we tend to use post box, letter box and pillar box interchangeably now, but they are actually different things? See - that's iSpy knowledge right there stashed away for the past 40-mumble years!)