Where do I start?

TheAble

I guess the first step is to try and understand how you've built up all the debt. Any major purchases or just general overspending? A few items on your SOA look a little unlikely e.g. £30/month on presents with two kids? £20/month on car maintenance for two cars? No holidays? So these type of things probably don't reflect the true expense.

On the other hand some expenses you have are very high - mobile phones and cable TV for instance. So these might be a couple of areas to pare down somewhat.

stymied

You’ve made a great start by putting your SOA together. Are all 4 mobile phones still in contract? Can you reduce your TV / internet package? Do you have anything you’ve bought recently from Studio or Next that could still be returned?

enthusiasticsaver

The bottom bit of the soa is missing but approx £930 monthly outgoings on unsecured debt is pushing you into a debt spiral. If the rest of that soa is correct though you should have some surplus income and there is scope for reduction in the cable/satellite and mobile bills. What is the £250 child related expenses? 

I would start with getting rid of that studio, next and overdrafts. You also need to stop using the credit cards as they are compounding the problems. What is the HP on? The car? If so why £10k debt on a car only worth £5k. It looks like you have both lived beyond your means for a while in spite of your husband earning a good wage. You both need to make a plan to get some of those debts off your back by really watching your expenditure. 

kimwp

Bear in mind that as your partner receives over £60,000 (technically because their adjusted net income is over £60000), your child benefit charge will be the same as the child benefit you receive so it's probably best not to count that as income given that you'll have to pay it back.

EssexHebridean

Nola1 said:

Hi again and thank you so much for your advice. I have battled out our SOA. I'm feeling even more concerned now though. Here it is....

[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......... 2

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

Monthly Income Details[/b]

Monthly income after tax................ 700

Partners monthly income after tax....... 4000

Benefits................................ 143 As said you need to remove this, and ensure that you don't consider that money "yours" if it will have to be repaid.

Other income............................ 0[b] can you add anything here at all? Even things like online surveys might add a few extra pounds each week.

Total monthly income.................... 4843[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 1130

Secured/HP loan repayments.............. 210 Is this for a car? And is it secured on your house, or something else?

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

Management charge (leasehold property).. 0

Council tax............................. 188 If you're not already paying this over 12 months rather than 10, get it swapped over - it can really help with budgeting.

Electricity............................. 111.21 why is your electricity so much higher than your gas? Also, do these cover your actual use? 

Gas..................................... 93.21 Do a proper check that this will cover your gas costs for the year going forwards as prices have more than doubled in around a year.

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

Water rates............................. 87.8 Is this metered or are you in the South West?

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

Mobile phone............................ 195.31 Phew - and ouch! definitely an area to make a big saving in here - why on earth is this so much? 

TV Licence.............................. 13.25

Satellite/Cable TV...................... 128 Too expensive allowing for the debt - have a look at where it can be cut back - find a good comparative deal with a different provider for a LOT less money, then ring your current provider and tell them you will have no choice but to leave unless they can match it as you can't afford the current costs. Consider splitting the bundle too - decent broadband connections can be had for around £20 a month now, as an example. 

Internet Services....................... 0 Assume this comes in with the TV package?

Groceries etc. ......................... 400 You can cut this down I'd say - but firstly, have you double checked that this is really what you spend, or are there top up shops, takeaways etc that mean it's actually more?

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

Petrol/diesel........................... 200

Road tax................................ 45.93 You don't actually pay this monthly do you? Allowing for the househld income this is one to budget and start paying for upfront for the year as this doesn't carry a premium on costs. (You pay 5% extra to pay monthly or 6 monthly)

Car Insurance........................... 51.26 Another one that going forwards you need to budget to save for and then switch to paying upfront for the year. 

Car maintenance (including MOT)......... 40 This doesn't add up unless one of your car deals includes maintenance, servicing and MoT? If you're paying £200 a month for fuel, that suggests reasonable mileage between the two cars, that means that they are both going to need an annual service, and the odds are that each year one or the other will need tyres. Add in other spends like MoT tests, other consumables, washing etc and there's no way the amount you're budgeting here will hack it. Allowing for how much the road fund licence you're paying is, I'm also going to suggest that at least one of those cars is probably a premium brand with a big engine - that again pushes up costs. 

Car parking............................. 0 Never? 

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

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

Other child related expenses............ 250 Is this anything that can be trimmed or done differently to cut the cost a little?

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

Pet insurance/vet bills................. 14

Buildings insurance..................... 26.35 Hopefully this includes contents cover too?

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

Life assurance ......................... 125.66

Other insurance......................... 71.7 Is this needed? If so can you get it for a better price?

Presents (birthday, christmas etc)...... 30 Breaking this down and assuming that you only buy presents for the children - that's £90 per child, per event (birthday/Christmas) and also includes costs of any birthday treats/outings/parties/wrapping stuff etc. Oh - and how do you pay for all the "other stuff" at Christmas - the higher food spend etc?

Haircuts................................ 30

Entertainment........................... 22 I'd question if this is realistic for a family of 4? It doesn't even cover a single takeaway in a month, never mind the oddments - a day out here and there, maybe a trip to McD's, that sort of thing?

Holiday................................. 0 You never go away at all? Not even a weekend trip to visit family? The kids don't do school trips etc?

Emergency fund.......................... 0[b] You HAVE to start building this - it's pretty much your number 1 priority as an emergency fund is the primary thing that will stop you reaching for the credit card when something unexpected goes wrong.  It's also not a general "dipping fund" for when the budget has gone a bit awry - think "oh no, the fridge is broken"not "Oh no, we forgot that the kids would need new shoes this month!" 

Total monthly expenses.................. 3513.68[/b]

[b]

Assets[/b]

Cash.................................... 0 If you have nothing in here, where is the money that you are budgeting monthly for car maintenance, clothing, presents etc?

House value (Gross)..................... 400000

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

Car(s).................................. 5000

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

Total Assets............................ 405000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 213697...(1130).....0

Hire Purchase (HP) debt ...... 10000....(210)......0[b]

Total secured & HP debts...... 223697....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Virgin credit card.............1600......25........0

next...........................453.......32........23.9

studio.........................253.......10.92.....49.9 First priority on debt clearance is to find enough surplus this month to simple clear that off and then close the account. That interest rate is painful!

Overdraft 3....................900.......20.04.....39.94 

Overdraft 2....................500.......13.79.....39.94

Overdraft 1....................1100......27.82.....39.94

M&S loan.......................10000.....192.......5.9

SANTANDER LOAN.................17805.....469.4.....9.9

santander CC...................3032......30.32.....0

halifax CC.....................6250......100.......20.65[b]

As someone else says, the bottom bit of the SOA is missing, but initially I'm going to focus on the spending aspect anyway, so not an issue right now!

First up - you earn £700 a year, your husband earns more than FIVE TIMES as much so some contenxt of what it is feasible for you to pay out is needed. I'm going to guess that your earnings are as low as they are because you also run the home and take the brunt of the responsibility for looking after the children? If so then that is also a huge contribution to the household, and should be viewed as such by you both. 

I'm assuming that the car finance (for the car that you consider to be yours) is for a car that is used for running the kids around, going to get shopping, other "family stuff" so this needs to be considered a family expense for definite. I'd suggest that what is needed here is a two pronged approach - firstly to re-think the way you view the household finances - a degree of "mine" and "his" is fine, but there is also the vast majority which falls under "ours" - for for example - car finance for necessary vehicles = might be consider as "us". A monthly payment for a motorbike that hubby has got as a toy? = "his" Clothes expenditure for the adults in the house might come under "us" if it's bare essentials, but if it's a nice coat that you saw, wanted and bought, but didn't need, then that would = "you". The second thing is going to be to go through the SOA to work out what you're really spending - as your income "just" covers your expenditure from what I can see - so where is the debt coming from? 

See the notes in bold against the SOA above - plus what others have already given as feedback - I'd suggest that informs your starting points on the budget. 

CONTEXT: The overdrafts you have worry me - that is £2500 that the relevant banks could come along tomorrow and demand back. OD's are often described on here as "dangerous debt" for just that reason - everything else (CCs, loans etc) comes with an agreement - you make the payments, and they will leave you alone. OD's don't, so I'd suggest you need to really concentrate on stopping using those. The good news though is that to an extent starting to work to a proper budget and making savings on the costs you have currently will actually begin to clear those back without you needing to consciously pay them. 

For now then: Go through the SOA to work out real costs.
Find sufficient surplus to clear Studio then stop using it.
Stop buying from Next - sure, they're nice clothes, but right now you don't have "nice clothes" money. You need to think more Primark, less Next. (And don't fool yourself that "Oh but the Next stuff lasts so much longer" - if it did, you wouldn't need to keep buying more would you!) If the Next purchasing is household stuff, then cut back to what is actually needed, rather than what is just wanted. Learn to step back and really consider the difference. (Example - we were in Dunelm at the weekend, looking at towels. I costed up a new set for our bathroom at around £70, then stepped back to think and realised that actually all that was needed right now was a single hand towel. £5 spent, rather than £70. )
Set all credit card payments to the minimum payment if they're not already done like that, but also make a conscious effort to not reach for CCs to buy things! 
Go back over your food spending for the past few months to check actual levels - maybe join the grocery challenge on here? That can be good for inspiration! 
Have a proper chat about how you are covering the costs for Christmas - come up with a plan between you to decide how it will be done without putting things on credit.
Start to build your Emergency Fund - maybe open a regular saver account (one that you can withdraw from if needed) and initially pop £50 a month into it - your aim is to build to £1000 initially while you're still clearing debt, then to increase that once you have more spare money. 
Let the surplus you will be creating from making savings and not spending beyond your means start to clear down the overdrafts. Until those are gone it's going to be really hard to actually see what surplus you have! 

I appreciate this is a lot to think about, but take it one step at a time. There is always help and support available here, and you are far from the first people to have found yourselves in this position. 

Nola1

Oh my goodness, thank you so much!! This has really given me the motivation I’ve needed for a long time. We are phoning sky and sorting out mobiles today. I’m going to concentrate on getting rid of the studio account and stop ordering from next to dwindle that down too. This is definitely the kick up the bum we needed. Thank you x

RAS

You also really need to look at your insurances. They are very expensive unless you have impaired health. For the mortgage, look at reducing term insurance rather than just insuring the current value, for example.

And start building the emergency fund, so you can deal with a bust car or boiler.

enthusiasticsaver

Nola1 said:

Oh my goodness, thank you so much!! This has really given me the motivation I’ve needed for a long time. We are phoning sky and sorting out mobiles today. I’m going to concentrate on getting rid of the studio account and stop ordering from next to dwindle that down too. This is definitely the kick up the bum we needed. Thank you x

That is good that you are really looking at every bill and direct debit.  It will be very motivating to clear the debts and close them down and you are lucky in that you can have a few easy wins with the next and studio cards as the balance is not too high.  Tackle the smallest overdraft first and then the other two. 

Nola1

I’ve reduced my satellite and broadband by £50 today 😊

RobM99

Nola1 said:

I’ve reduced my satellite and broadband by £50 today 😊

A small start but the first of many! Yay!