Feels like im going under!

EssexHebridean

NiteEyez1980 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......... 4

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

Monthly Income Details[/b]

Monthly income after tax................ 3400

Partners monthly income after tax....... 600

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

Other income............................ 0 There should be a contribution here from the adult children living at home - you may not want to ask for that, but financially, you cannot afford to be supporting them in full.[b]

Total monthly income.................... 4000[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 775 Is this correct? It's the third different figure you've given for your mortgage payment now?

Secured/HP loan repayments.............. 328 Is this definitely secured? Previously you indicated that you didn't have any secured debt aside from the mortgage I think?

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

Management charge (leasehold property).. 0

Council tax............................. 146 

Electricity............................. 170 You might be able to reduce these down a little although it's getting increasingly difficult with the way costs ore rising. Don't forget to take account of the government help, though.

Gas..................................... 170

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

Water rates............................. 66 If this metered? If not it may be worth considering a meter.

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

Mobile phone............................ 25 

TV Licence.............................. 46 Is this temporarily high because you're paying "catch up" at the beginning of having a licence? Normally it's £13.xx per month?

Satellite/Cable TV...................... 60 This is high - personally I'd shift to freesat/freeview type thing but at the very least take it down to a basic package - Sky do one starting at around £25 a month.

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

Groceries etc. ......................... 800 Well there's a saving to be made there! Meal planning, cooking from scratch, ensuring that people eat the same meals, at the same times and on the same days (this will also work to reduce energy use as well as less cooking) I appreciate it's a large household, but realistically you can definitely reduce that. (and again, adult children living at home should be contributing)

Clothing................................ 50

Petrol/diesel........................... 350 

Road tax................................ 70

Car Insurance........................... 84

Car maintenance (including MOT)......... 50 Does this actually cover the servicing requirements on two presumably old vehicles judging from the values with one of them being high mileage? On the miles your commuting car is doing it's going to need a service a couple of times a year, and I'm guessing you'll be chewing through a set of tyres annually as well - that lot is likely to total £600 or thereabouts o its own before you factor in MoT test and other consumables...and then there is the second car as well? 

Car parking............................. 38.5 Can this be saved by parking and walking? 

Other travel............................ 120 Allowing for the high car costs, how come you're also paying for further travel on top of that and had quite such a high level?

Childcare/nursery....................... 100  No disrespect but your partner's monthly income suggests a part time job - can these hours for this not be worked out to cover the childcare obligations and remove the  need for the £100 here?

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

Medical (prescriptions, dentist etc).... 25

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

Buildings insurance..................... 56 This is high - I assume it includes contents cover too but still...

Contents insurance...................... 0

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

Other insurance......................... 15

Presents (birthday, christmas etc)...... 50 Are you actually setting this aside as we're only a handful of months out from Christmas now yet you're showing no saved cash?  If you haven't been setting it aside how do you propose to cover the costs of Christmas?

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

Entertainment........................... 100 I'll be honest - it doesn't feel to me as though you can afford this right now. 

Holiday................................. 100 Again - is this money genuinely being saved? And does it account for everything - food when you are there, travel, and any other spending money you'll want? How many is it for as it doesn't seem like a lot to account for a household your size? 

Emergency fund.......................... 50 Once again - are you actually saving this?[b]

Total monthly expenses.................. 4004.5[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 300000

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

Car(s).................................. 2000

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

Total Assets............................ 302000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 133000...(775)......0

Secured Debt.................. 54000....(328)......0[b]

Total secured & HP debts...... 187000....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Natwest credit card............5276......122.......0

Natwest overdraft..............1200......26........0

Natwest loan...................16000.....254.......0

Next...........................600.......50........0

Creaton (wardrobe) ............500.......16........0

Sainsburys credit car..........9449......180.......0

Virgin credit card.............6549......70........0

Tesco credit card..............4961......61........0

MBna credit card...............5915......151.......0

Hsbc credit card...............3142......130.......0

Shawbrook bank loan............13674.....247.......0[b]

Total unsecured debts..........67266.....1307......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,000

Expenses (including HP & secured debts). 4,004.5

Available for debt repayments........... -4.5

Monthly UNsecured debt repayments....... 1,307[b]

Amount short for making debt repayments. -1,311.5[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 302,000

Total HP & Secured debt................. -187,000

Total Unsecured debt.................... -67,266[b]

Net Assets.............................. 47,734[/b]

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

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

OK - some comments in bold above. 

The first thing that stands out a mile is that even without the main debt payments you are already living above your means. Allowing that I suspect a lot of the things you say you are budgeting for monthly probably in fact aren't being budgeted for currently - and the problem is actually even worse than it at first looks. At the moment I'm not convinced that even a DMP is going to be suitable for you as your SOA currently suggests that you simply don't have any surplus to pay towards it? 

I reckon that you *might* be able to make savings of a couple of hundred pounds against that SOA. As said, you also HAVE to start getting contributions from adult members of the household who aren't currently contributing. *Edit - OK - you have now said that the children living at home are all 12 or under - the confusion here arose because earlier you mentioned adult children and two grandchildren at home? 

There is at least £200 you are theoretically budgeting each month that I suspect you're not actually saving - and the issue with that is that it means that in fact your household spend is actually that amount higher than you think it is. 

Stop paying the unsecured debts NOW. Are they actually all on 0%? Regardless - you don't have the money to pay them so just stop the direct debits. Letting those go out just increases your issues by over £1k every single month. 

The satellite TV is NOT essential in any way, shape or form - and asking children live without more TV channels than they could ever possibly watch in a month is unquestionably NOT cruel. We're not saying to sell all the TV's in the house - just to cut back the channels available - you'll be amazed how fast they will get used to that!  What they MIGHT find harder to live with is having parents who are constantly stressed and worried about money... do bear that in mind as that will have far less impact on their lives than having a few less options of what to watch on the TV! Evening entertainment by the way - free or cheap - board games or jigsaws you already own, books that you already own, listening to music that you already own, playing with other toys that they already own.... 

I'm going to be honest - I'm not convinced you're actually had your "Lightbulb Moment" quite yet - and if you haven't, then you're not ready to sort this out yet.  What I will say is that if you don't react and sort it now, then when you come back to it in a year that debt figure will most likely be around £80,000. And if you leave it another year after that, you'll be talking about £100,000. the sooner you deal with it, the less time you'll BE dealing with it. 

Grumpelstiltskin

So I grew up without any TV until I was 11/12 years old my parents were very cruel not to buy one earlier?

You must as I say take a step back and realise what is important and what isn't.

kimwp

NiteEyez1980 said:

Hi ya 

Yes it does. 

The life insurance is part of mort and also contents is included in overall. 

I have included the kids cost. 

Yes when the uni one comes home it is another mouth to feed.

With regards to TV, during lockdown it's all the kids had, it'd be extremely cruel to take it away and given our lack of evening activities, all we have

I'm not sure if this is you replying to my post. (It helps if you quote the one you are replying to)

Why do you not have evening activities? Board games and imaginative play would be a lot better for them than mindless TV and it's certainly not cruel to not have an expensive TV package when there's loads available on BBC, all 4 etc. 

NiteEyez1980

Hi guys. 

I think there is some misunderstandings here.

1. The adult children do not live at home, they do however visit. Of the 2, one is at uni and returns home periodically.

2. I did not allow for the car element as I have paid for that as-hoc, my and which eats into any saves money which would account for that.

3. When I did the original SOA I included the secured debt in the mortgage as this is a second charge mortgage, so again my error.

4. I included all the insurances in 1 which has equalled the higher total.

5. The parking fee is mandatory. Where in work would be impossible to park and walk in due to areas being permitted and distanced.

6. The energy bill is the cheapest we can go. People living next door to us are paying £500. Everything is switched off at night, no heating has been on etc. The total cost for both is £340. I'm surprised you think this is high??? 

7. My wife returned to work this year after 10 years. She has tried. She is just trying to get her foot in the door work wise and no the travelling is not ideal however I also work long hours so she has to work around my availability. 

8. Fair play on the entertainment, however I have factored in kids parties etc into that. 1 week they had 4 to go to. 

NiteEyez1980

With regards to stop paying the unsecured debt, what is your suggestion?

I can't just not pay as I'll have bailiffs around etc. Do I write to my creditors, and ask them to freeze interest and offer to pay say 50%

By the way I couldn't access the interest % which is why I didn't include it. 

madaboutspots

What’s the secured loan/HP for? £54,000 - second mortgage? Car loan? 

I ask because so often that sort of item listed and the amount is often a car. If that is the case for yourselves then could there be options to sell this car and buy cheaper to alleviate some pressure on the budget?

You do seem to be in denial about what is essential and what is a luxury. A roof over your heads and food in tummies is the most basic start. A TV is a luxury - even without the additional channels. Like Grumple above - my parents brought us up without a tv for many years. I didn’t feel I missed out. 

I genuinely worry for you. There is a real disconnect between what you can do and what you seem willing to do. At this level of expenditure you can’t afford to ignore this. This is going to bite hard at some point whether you like it or not.

The advice you’re getting is genuine and sensible. I’m sure it’s very hard to accept but really, we’re not trying to be mean, we’re trying to help you work through this. 

Do you understand how all these debts have racked up? I worry you don’t really because your 3 figures for your mortgage have been wildly different which indicates your focus isn’t as engaged as it needs to be for you to get on top of things and be able unravel this and not return to it. 

Times are tougher than they were a year ago - for everyone. You will need to get your head round the fact you need to act - not just try and justify luxuries because you don’t want to deal with the repercussions in the family. Get the kids on board, make it an entertaining challenge for everyone to join in and talk about money and how to cut back. Your children won’t learn how to balance the books themselves if you pretend all is well when it clearly isn’t. 

Grumpelstiltskin

NiteEyez1980 said:

With regards to stop paying the unsecured debt, what is your suggestion?

I can't just not pay as I'll have bailiffs around etc. Do I write to my creditors, and ask them to freeze interest and offer to pay say 50%

By the way I couldn't access the interest % which is why I didn't include it. 

No you won't have bailiffs around, for unsecured debt they are so far down the possible line take them out of the equation.

Don't pay anything and let the debts default don't offer anything to any unsecured creditor.

What ever you do don't speak to them on the phone, nothing terrible is going to happen so you have time to change your lifestyle, you must tell the older children that things are tight moneywise and things are going to change.

You aren't the only one in this position and the sooner you face up to it the sooner you will have chance to sort it out

Grumpelstiltskin

I will add. You bank with Nat.West?
You have debts with them?
You need a basic current account ( no overdraught ) with a bank not connected to Nat West and transfer all income and DDs for council tax utilities etc over to that account. this is because Nat West could pounce on any money you have to put to their debts.

kimwp

The reason why the advice is to not speak to the unsecured creditors is that they may try to help with a breathing space on payments or reduced payments, but you will end up with an arrangement to pay marker on your credit file which will only come off six months after the debt is paid. If you stop paying and wait til the account is defaulted, the default will come off your file size years after it first went on.

NiteEyez1980

Hi guys 

I appreciate all your advice.

Tbh, when I first posted I hadn't done a thorough stocktake which caused the inaccuracy for which I apologise. 

With regards to the TV I appreciate that however they have already had TV in their lives, to remove it would be a shock, so would need to be approached with care. Lockdown has already affected the kids MH already so stability is what they need, though I agree with your point(s) virtually entirely. 

The 54k was an original consolidation as I had an unbelivablea amount of bad luck with vehicles, storm damage, failed side business (set up as a PT just before covid which killed it) 

Straight up, denial and a wife whom hasn't wanted to compromise her lifestyle has seen us live beyond our means. 

I held off doing that proper SOA as I am/was in complete denial. When I clicked 'calculate' and saw it I genuinely nearly vomited!!! 

Not passing the blame however my wife didn't want to wait to do work on our house and compromise lifestyle during this. I 'foolishly' gave in (let's be pregamatic about spousal influence when reading that please) and it has snowballed for years.  I was getting promotions and it was 'on paper' balancing itself out however it snowballed with covid and I foolishly over stretched and its spiralled ever since. 

The cost of living increase, fuel increase, energy increase, ni increase, old job messing up and storm damage that needed essential work turned in the space of a few months what was a great new job and surplus cash into a hole that has consumed me! 

Just being honest!