Time to get my head out of the sand (with SOA)

zedonk

Hi all,

It's my first post here and I'm looking for solidarity, encouragement, and if anyone has any suggestions that I haven't thought of.

I've been struggling to make ends meet since my PIP was stopped last autumn. I don't think it should have been, as my condition hadn't changed, but at the time I was in a bad place mental health-wise and couldn't face appealing it. In addition, my freelance income has dropped as the main market I work in is falling apart, and all my outgoings have gone up due to inflation and mortgage interest rises, so I'm being squeezed from both sides. I do get some UC, but as I'm a homeowner it doesn't help with housing costs, and I can't sell up and rent because I'm in negative equity and would also need to pay around £15K I don't have to extend the lease (leasehold property). I'm a single parent to two kids, who live with me 50% of the time, and one of them is also disabled.

Until now I've been burying my head in the sand and using 0% credit cards to supplement my income, hoping the situation would improve on its own. It hasn't and I know I need to face up to the problem. My debt is not huge (yet) and the minimum payments are small but the issue is how to live within my means and not run up more debt.

Here is my SOA:

Household Information

Number of adults in household........... 1

Number of children in household......... 2

Number of cars owned.................... 0

Monthly Income Details

Monthly income after tax................ 1567

Partners monthly income after tax....... 0

Benefits................................ 365

Other income............................ 0

Total monthly income.................... 1932

Monthly Expense Details

Mortgage................................ 629

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

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

Management charge (leasehold property).. 178

Council tax............................. 9

Electricity............................. 75

Gas..................................... 75

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

Water rates............................. 20

Telephone (land line)................... 15

Mobile phone............................ 14

TV Licence.............................. 13

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

Internet Services....................... 15

Groceries etc. ......................... 300 (try to reduce)

Clothing................................ 35 (reduce?)

Petrol/diesel........................... 0

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

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

Other travel............................ 70 (public transport as don't drive)

Childcare/nursery....................... 16

Other child related expenses............ 50

Medical (prescriptions, dentist etc).... 70 (includes private counselling which I will need to stop)

Pet insurance/vet bills................. 180 (uninsured cat with long-term health condition)

Buildings insurance..................... 0 (included in service charge)

Contents insurance...................... 8

Life assurance ......................... 8

Other insurance......................... 30 (boiler insurance, worth it as boiler breaks down often)

Presents (birthday, christmas etc)...... 30 (reduce?)

Haircuts................................ 45 (I've used this category for toiletries etc., rarely haircuts - try to reduce)

Entertainment........................... 100 (will reduce)

Holiday................................. 67 (committed to cheap camping holiday this summer but won't plan any more)

Emergency fund.......................... 50

Monzo Plus.............................. 5 (could cancel)

Gardening............................... 40 (will reduce but want to keep growing fruit/veg)

Pets (food etc.)........................ 40

Total monthly expenses.................. 2187

Assets

Cash.................................... 300 (Help to Save account, this is my emergency fund)

House value (Gross)..................... 60000

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

Car(s).................................. 0

Other assets............................ 0

Total Assets............................ 60300

Secured & HP Debts

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

Mortgage...................... 65000....(629)......8.78

Total secured & HP debts...... 65000.....-.........-   

Unsecured Debts

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

Tesco credit card..............2399......25........0 (22.9% from May 2024)

Santander credit card..........2200......22........0 (22.9% from July 2025)

Total unsecured debts..........4599......47........-  

Monthly Budget Summary

Total monthly income.................... 1,932

Expenses (including HP & secured debts). 2,187

Available for debt repayments........... -255

Monthly UNsecured debt repayments....... 47

Amount short for making debt repayments. -302

Personal Balance Sheet Summary

Total assets (things you own)........... 60,300

Total HP & Secured debt................. -65,000

Total Unsecured debt.................... -4,599

Net Assets.............................. -9,299

Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.

I'm trying to do what I can to increase my income. I've sought business advice and have a marketing plan to try and find new clients in a better market. I've started the process to reclaim PIP for me and also to claim DLA for my disabled child - it's not guaranteed whether we will get either of these. I'm also planning to declutter my house and sell what I can, but as a disabled single parent running a business I know it may be hard to find extra time and energy for this.

Budget-wise, I've marked the categories where I'm hoping to reduce spending above. I'd welcome opinions on what is a realistic budget for these.

I'm going to ask the UC people about Support for Mortgage Interest but I'm aware that this is a loan and would need to be paid back with interest eventually, so I'm not sure it's a great idea.

Finally, my vet bills are high as one of my cats needs medication and regular blood tests for the rest of his life, *unless* he has more expensive treatment to cure him. My parents have generously offered to pay for this treatment and I've been quoted a 75-80% success rate. I've paid the non-refundable deposit on the treatment but I'm dithering on whether to go ahead with it as it might not work... if I decide not to go for it then my parents would be happy for me to use the rest of the money to reduce my debts instead. Opinions on this are also welcome!

Thanks in advance,

Zedonk 

TheAble

Your expenses really aren't that outlandish, it's lack of income that's the problem. Could you take an extra job or does time not permit?

On your question about money from parents, I'd try and avoid going down this avenue. After all if you haven't solved the cause of the debts you're liable to run them up again so it won't really do you any good.

zedonk

Thanks. I could consider a part-time job, if I can find something that fits around my freelance work and parenting commitments. I've also looked at full-time employment and giving up my freelance career, although that would be a wrench. It's hard to know what to focus on - do I put my time and energy into turning my business around or into job hunting?

I agree the money from my parents isn't going to solve anything long term, but I think it's better to have it than not to have it, so my question was really about how to use it wisely. 

[Deleted User]

I think its wonderful that your parents are willing to pay for the veterinary treatment which seems to have a high success rate. If it works it will give you nearly £200 a month to help clear your debts. I agree with some posters that advise against borrowing from relatives but of it is a gift I can see no problem.
If any of my relatives were in financial difficulty I would help them out to a point where they can see a way forward to overcome their debt issues. This is different from sorting things out for them completely. It would also be a gift not a loan. In the past I gave been grateful to family for seeing me through difficult times.

TheAble

zedonk said:

Thanks. I could consider a part-time job, if I can find something that fits around my freelance work and parenting commitments. I've also looked at full-time employment and giving up my freelance career, although that would be a wrench. It's hard to know what to focus on - do I put my time and energy into turning my business around or into job hunting?

I agree the money from my parents isn't going to solve anything long term, but I think it's better to have it than not to have it, so my question was really about how to use it wisely. 

Spending it on the cat then probably best. You've already paid the non-refundable deposit, it's got a 75% success rate and if it works then that's one monthly expense vastly reduced.

fatbelly

What's the story with the mortgage? Is that the lender's standard variable rate? 

Have you tried talking to your lender or a broker to see if that £629 can be reduced?

[Deleted User]

I can see a scope for some savings on groceries and maybe a little on entertainment.(say £70 a month) After your holiday there should be another £67 a month to go towards the debt too.(70 plus 67 plus 180 eventually gives you another 317 a month which would deal with your current shortfall) The management charge on your home seems very high each month.
Even if you could earn another £200 to £300 a month it would make an incredible difference.

zedonk

Thank you all. I'm feeling a bit better about things now! 

To clarify, yes, the money from my parents is a one-off gift and not a loan. I will spend it on the cat then and cross my fingers that the treatment works. 

Mortgage was one of those dodgy Northern Rock ones, originally 50% interest-only. I did manage to change it to fully repayment after a few years, but my flat lost 1/3 of its value in the 2008 crash and never recovered, hence the negative equity. It's now with Whistletree, on their SVR, and all they can offer me is a fixed rate that would be more than I'm paying now - without equity, I'm not eligible for the good deals. And I doubt I'd be able to remortgage with someone else, given my low income and bring self-employed, although I suppose it doesn't hurt to try.

Management charge is what it is and can't be changed (although it's only ten months of the year, so I'll have an extra £178 in Dec and Jan).

So, plan going forwards: spend less on groceries and entertainment, don't book/save for a holiday after this one, get the cat treated, and try to earn an extra £200-300 (should be possible if either I get some more clients, or I get my PIP back or my daughter is awarded DLA). 

fatbelly

It's definitely worth a chat with a mortgage broker

https://www.moneysavingexpert.com/mortgages/best-mortgages-cashback/

zedonk

I fact, I just checked the Whistletree website and they are now offering fixed rates lower than the one I'm on. 

EssexHebridean

Speak with a broker before doing anything about the fixed rate with Whistletree. There might well be a far better way out - and it's certainly worth ruling that out before you commit to anything else.