SOA budget advice

enthusiasticsaver

I have just read your other thread re what to do with the £10.5k money you are hopefully getting soon and as others have said you talk about £4k+ of credit card debt which is not showing on the soa.  It also mentions the fact your mortgage payment is due to increase by £500 so this is now urgent.  

I would keep £2k as an emergency fund now and clear the credit cards then either lock them away or close them so you are not tempted to spend on them.  You do not mention overdrafts but if you have one or more they should be cleared as they are the most expensive means of borrowing.  

Things to do to reduce outgoings. 

Date nights, takeaways, and family days out should really be put on the back burner until you are living within your means.  Maybe  set a challenge to do some free stuff.  Your kids are young so they will not notice.  If you go out look for free local stuff and take a picnic rather than going into cafes etc. Again for date nights look for cheap or free things to do or at the very most set a nominal amount for a takeaway once a month as a treat. Can you get the gym memberships down or cancel them if you do not use them now you have young children? 

Holidays is a tricky one given you have already booked Centre  Parcs.  I well know it is expensive although if out of school holidays it is doable.  Make sure you save for that in a separate savings account.  I note you say you are saving £130 for car maintenance but no savings showing in the soa.  

Groceries is an easy win as is the £70 for supplements.  You cannot really prioritise that over your mortgage and debt repayments so I think that will have to go.  Groceries can be got cheaper by menu planning, using Aldi or Lidl and cutting back on things like alcohol.  Your children are young so cannot eat much although I note nappies and wipes are included as is dog food.  Look for cheap alternatives to the branded stuff. 

The cars definitely need to be looked at as you cannot afford them.  How have you financed them and if they are on lease or PCP how long before you can relinquish them for something cheaper?  Can you manage on one car? 

You have reasonable incomes but have obviously spent well above that for some time given the amount of debt you have.  Normally it takes a sudden event for people to realise they have over committed like sickness or redundancy.  In your case it is burn out from too much overtime trying to keep your head above water and the impending mortgage increase.  You have this windfall though to ease you into living within your means so I would say use it wisely.  

Maybe start a diary on here to keep yourself accountable and make sure you are both on the same page. 

PandaGirl6

I think OP might need some time to process the fact that she is essentially broke.

Might be hard to hear, but a wake up call is needed.

I wasn't aware of the mortgage fix ending. Wake up! Everyone's rooting for you.

kimwp

Hi Snowdrop33

I just commented on your other thread and then saw this thread. I won't comment on specifics of your SOA as I think the others have covered them. I will say though that I'm impressed with how thorough your SOA is (with the possible exception of this missing £4k credit card debt that seems to be on your other thread.) I also think you've got the right idea with looking at future big spends and dividing that between the remaining months. I think the key thing you need to consider though is that your budget needs the outgoings to be lower or equal to the income. At the moment, your SOA is showing that you are spending £800 a month more than you have coming in and if your mortgage goes up by £500, then you will be short by £1300 a month. This means that you need to prioritise your spends and cut back the least essential activities until your SOA balances i.e you need to spend £1300 less a month.

EssexHebridean

Unfortunately the OP hasn't been back for a couple of days - it may be that the LBM hasn't quite occurred yet. 

Snowdrop - if you DO return to this, I think this "two threads, with differing information" situation underlines quite how impossible it is to give informed suggestions on an SOA without having a clear view of the full picture. You HAVE to start facing up to the whole situation if you want to fix it - not "hiding" or "forgetting" certain aspects. £500 p/m extra upcoming on mortgage payments is also a huge thing to just not mention - and means that in fact the savings that a lot of folk on this thread worked so hard to help you find are now meaningless - you still need to make them, but they will simply be swallowed up by that increased payment, and leave you even further in a hole because as Kim points out - you are already in deficit on that SOA. 

The sooner you take action - the better. Whatever else you do though, for goodness sake don't a) consolidate your debts b) try to move the unsecured debt onto the mortgage or c) fritter away that lump sum on odds and ends. 

CreditCardJunkie

I just wanted to add that although some of the replies may be hard to swallow they are all coming from a good place, everyone who has taken the time to reply has done so because they want you to win. The majority of us (if not all of us) are speaking from experience and it's extremely daunting in the beginning until you get a grip of the situation. 

I always liken paying off debt like being on a diet, you need to be consistent to see results. At times it won't be fun and you will have to do without certain things. Try vinted for stuff for the kids, you'll be amazed at the quality of items for very cheap.

Good luck!

snowdrop33

Hi, sorry for the delayed reply to everyone. The last couple days have been manic. 

I just wanted to thank everyone for all the advice. Me and my husband are sitting down tomorrow to go through everything properly and make a plan of the advice on here. 

I know the information has been spread across two posts but didn’t mean to cause confusion between the two. 

So the £4k of credit card debt is now paid off as I used some of the 10.5k to pay it. I have also sorted both of our phones out onto £8 per month contracts so £16 a month instead of £80ish.

I have put £2k into a savings account for emergency. And will build on this as with our household this is probably a bit low. 

In the above SOA the contents insurance is 0 as I have joint buildings and contents. 

The electricity bill is right for us we are in a new build and have air source heating and we are actually paying slightly more than we use but are fixed agreement will finish next year. 

I plan to work on the food shop and reducing this, this does include all household supplies too not just food. 

I have also looked at my work and I have decided I need to continue extra hours for the next year and maybe have breaks now and again. Then the nursery fees will stop as they will get government funding so I can then look at slightly reducing hours.

we have until august until our mortgage deal changes we will get a confirmed amount this will be in feb when our broker sorts it but from me estimating online I think I will be worst case scenario £450-£500 more. So my hope is for the next 6 months to continue increased hours to cover budget whilst I work on reducing what I’m spending by at least £500 hopefully more. So that the new mortgage will be covered. Then look to decreasing hours in Jan 2024. 

And by Jan 2024 I should have max 3.5yrs hopefully less of the l two larger loans. 

I am also from Jan going to start a diary on the forum to monitor all the above.

I have also opened a monzo account to start pots so I can see what I am spending and monitor it better. 

kimwp

snowdrop33 said:

Hi, sorry for the delayed reply to everyone. The last couple days have been manic. 

I just wanted to thank everyone for all the advice. Me and my husband are sitting down tomorrow to go through everything properly and make a plan of the advice on here. 

I know the information has been spread across two posts but didn’t mean to cause confusion between the two. 

So the £4k of credit card debt is now paid off as I used some of the 10.5k to pay it. I have also sorted both of our phones out onto £8 per month contracts so £16 a month instead of £80ish.

I have put £2k into a savings account for emergency. And will build on this as with our household this is probably a bit low. 

In the above SOA the contents insurance is 0 as I have joint buildings and contents. 

The electricity bill is right for us we are in a new build and have air source heating and we are actually paying slightly more than we use but are fixed agreement will finish next year. 

I plan to work on the food shop and reducing this, this does include all household supplies too not just food. 

I have also looked at my work and I have decided I need to continue extra hours for the next year and maybe have breaks now and again. Then the nursery fees will stop as they will get government funding so I can then look at slightly reducing hours.

we have until august until our mortgage deal changes we will get a confirmed amount this will be in feb when our broker sorts it but from me estimating online I think I will be worst case scenario £450-£500 more. So my hope is for the next 6 months to continue increased hours to cover budget whilst I work on reducing what I’m spending by at least £500 hopefully more. So that the new mortgage will be covered. Then look to decreasing hours in Jan 2024. 

And by Jan 2024 I should have max 3.5yrs hopefully less of the l two larger loans. 

I am also from Jan going to start a diary on the forum to monitor all the above.

I have also opened a monzo account to start pots so I can see what I am spending and monitor it better. 

Sounds like you've made some fab steps - the phone one is a brilliant saving! 

It's worth for your plan talking to your nursery about what it will cost when you get the free hours - the 15/30 hours is just for term time, not all year and they may charge for things like food, nappies etc - it's literally just the sheltering of your child that has to be free.

Singlespeeder

Great to see you back ! Some superb progress there! Phones especially!.
If both your jobs are are fairly secure, personally I wouldn't have too high an Emergency Fund if there's debts that are costing interest. Aspirational EF's are great if you're in a position to afford them (and when you are, you usually find you don't need them so much as you're generally good at handling your finances ) £2000 is a great EF as most emergencies (that wouldn't be covered by an insurance) are sorted.

I see them really as a buffer between you and the Credit Cards, with £2k in reserve, you really shouldn't need to reach for the CC's. Ever. Cut Them Up. (Maybe keep one if you think you MUST).

The Pots work so well for us (we have a Starling account but Monzo are the same) ... and the most importants one that works in combination with your EF is the Annuals pot. Everything that only get paid for once a year, TV License, car tax, car insurance, breakdown, christmas, birthdays, house insurance, etc. total what these cost, add 10%, divide by 12 and make sure you put this amount away each and every month in to the Annuals pot. This way you KNOW you've got most plannable stuff covered AND usually by paying in a single payment, not instalments, you'll save money too, a proper win/win. This once again works as a buffer between you and these damn credit cards.

Do start a diary, it's really good to see people sorting themselves out.  

PandaGirl6

Good to hear you got rid of the CC's.
It will feel even better when the loans are paid off.

If I may suggest something - with young children and overtime have you found an activity to keep you sane? An hour of yoga a week? A walk? A bath?Take care of yourself, cause it might get a little be daunting.

Although, once you start and treat paying off debt as a game, it feels great. I like the advice of cutting up credit cards ✂️.

Looking forward to reading the rest of the plan. You can do this! 

enthusiasticsaver

Some great actions taken already.  Would you like me to ask this thread to be moved to the diaries section?  Then it will all be in one place rather than you having to go through it all over again.