SoA - some extra eyes would be appreciated

RAS

It is quite possible that your sister will need a debt management arrangement of some sort in the future, with those interest rates rising.

In the short-term, that trip to Iceland is going to cost a lot more than just the cattery. It's one of the most expensive countries in the world to visit. She needs to sit down and work out a realistic budget and decide whether she can really afford to add that much debt to her existing problems?

The Crete holiday really needs knocking on the head, now. 

As others suggest, does she have stuff to sell? If so, she needs to do that. Or has she been keen on experiences? 

Her current workload is barely sustainable, but she may want to keep that going until the mortgage is renewed. The good news is that she should be able to select a deal with her existing provider and just port over. 

However, with the increased rates she's looking at a decade of hard work clearing debt, even with savings made as suggested.

Once she's got over the initial shock, your sister needs to talk to either Stepchange or National debtline, looking at a plan based on her full-time income. If they suggest debt management, come back here for advice on preparing for that.

Do make sure she understands that those adverts on TV about getting 79%, 81%, 87% of your debt written off are tosh, they are designed only to generate leads for insolvency firms and there are high referral payments and IVA fees. 

She might well be able to reduce her debt using full and final offers in a few years.

If she's been working hard to holiday, your sister may well need some support adjusting to the new reality. So thinking about ways to take breaks that don't cost a fortune. Including things like house swaps, residential volunteering etc.
.

Sea_Shell

As others have said, the holiday(s) may have to go.   Iceland might have to be on a spending shoestring.

How will this advice be received by your sister?   Is there a risk you'll just become "bad cop" and she'll ignore your (our) advice.

It's admirable that you're trying to help, but sometimes they aren't really ready to take the drastic measures needed.  I've got that t-shirt ☹️

Stateofart

You could half your contact lense subscription by going to Specsavers

nifferwilko

Grumpy_chap said:

No need for SKY TV, simply use Freeview.

The Sky package is going as soon as July comes around - Sky were as helpful as a wet blanket when called and as it's contracted, she's stuck with it. 

Grumpy_chap said:

What was the money spent on from these £38k debts?
Are there item that can be sold to realise money to paydown some of the debts?

It's consumer debt - it's money spent on nothing of long-term value. I think she could probably have a clearout, I hadn't thought of that so thank you. 

Grumpy_chap said:

Does she need a car?  Is it an essential for work, or could she work out a way to not have a car?
If she does need a car, can she start thinking about a plan to have a car in a debt-free way?

Unfortunately due to the wonderful public transport in the wilds of the north a car is essential for work - she wouldn't be able to get between the two jobs without it. I'm very thankful that the car payment is HP and not PCP (or whatever that one is called) so there's no balloon payment to factor in. She'll just have to drive this car until it dies. 

TheAble said:

Looks like around 28 years left on the mortgage? When the current fix expires in April I would factor in a new repayment of around £370/month, so this should be planned for.

Also by this time the MBNA is going to be attracting interest on the full balance i.e. £8500. So the min payment on that is going to be upwards of £190 of interest plus a portion of the balance. So expect a min MBNA repayment of £270+ from April (assuming 1% of balance repayable per month - it may be more, her statements will show).

Factoring in the Halifax card becoming interest-bearing from January (you don't mention the interest rate and terms but she should be able to find out) and also the current shortfall she'll need to find overall savings of around £500+/month from somewhere. It feels tricky given that of course she's likely accumulated all this debt over a sustained period of overspending. Any and all savings need to be made as well as increasing income where possible. I'd suggest the jolly to Crete is maybe out...!

Thank you for this - I was trying to work out roughly how all those pending interest rate changes (and the mortgage rate) were going to play out but was finding it tricky. This explains it really easily so it will be so helpful to give to her to realise how tentative this is.

nifferwilko

RAS said:

If she's been working hard to holiday, your sister may well need some support adjusting to the new reality. So thinking about ways to take breaks that don't cost a fortune. Including things like house swaps, residential volunteering etc.
.

Everything you mentioned was spot-on but thank you for this. I think I'd thought about this briefly but hadn't really thought about what a big mental change it will be. 

Sea_Shell said:

How will this advice be received by your sister?   Is there a risk you'll just become "bad cop" and she'll ignore your (our) advice.

It's admirable that you're trying to help, but sometimes they aren't really ready to take the drastic measures needed.  I've got that t-shirt ☹️

I'm giving her the tools and suggestions but I'm determined to not being the fixer for her. I think unless she takes ownership of this and fully realises how bad this is, she'll stick with a new budget for 3 months, then give up...I'm just trying to avoid the houseguest + 2 cats in a years time

Stateofart said:

You could half your contact lense subscription by going to Specsavers

Ironically she is with Specsavers - I think it's more expensive because of the strength of the prescription - but she could just wear glasses more frequently tbh...

Sea_Shell

nifferwilko said:

RAS said:

If she's been working hard to holiday, your sister may well need some support adjusting to the new reality. So thinking about ways to take breaks that don't cost a fortune. Including things like house swaps, residential volunteering etc.
.

Everything you mentioned was spot-on but thank you for this. I think I'd thought about this briefly but hadn't really thought about what a big mental change it will be. 

Sea_Shell said:

How will this advice be received by your sister?   Is there a risk you'll just become "bad cop" and she'll ignore your (our) advice.

It's admirable that you're trying to help, but sometimes they aren't really ready to take the drastic measures needed.  I've got that t-shirt ☹️

I'm giving her the tools and suggestions but I'm determined to not being the fixer for her. I think unless she takes ownership of this and fully realises how bad this is, she'll stick with a new budget for 3 months, then give up...I'm just trying to avoid the houseguest + 2 cats in a years time

Stateofart said:

You could half your contact lense subscription by going to Specsavers

Ironically she is with Specsavers - I think it's more expensive because of the strength of the prescription - but she could just wear glasses more frequently tbh...

I know that worry.   Currently Bank of Mum & Dad are keeping the wolves from my Sibling's (+family) door.  I've tried to help steer a budget for them, but to no avail.   There is always the risk that the wheels will fall off, but they'd have a bare faced cheek to come round here with a hat!!!     Would be hard not to intervene though...although my DH would take a pretty dim view of any assistance.   (Loooong story!!)


Family eh....[shrug]

enthusiasticsaver

nifferwilko said:

Hi everyone,

My sister called me earlier this week quite frantic following her lightbulb moment so we've sat down and created her SoA. I've got some ideas on savings (I've told her the brows, nails and disney+ are going to have to go) but I would appreciate any input anyone more experienced can give on this. It's not great but I think it's do-able (just), although I'm a little concerned about the upcoming 0% expiries, and that her fixed-rate term on the mortgage ends in April 2024. 

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

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

Number of children in household......... 0

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

Monthly Income Details[/b]

Monthly income after tax................ 1853.12

Partners monthly income after tax....... 616.08 

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

Other income............................ 0[b]

Total monthly income.................... 2469.2[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 228 (currently 2.08% until April 2024)

Secured/HP loan repayments.............. 209.82 

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

Management charge (leasehold property).. 0

Council tax............................. 128

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

Gas..................................... 0

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

Water rates............................. 23

Telephone (land line)................... 69 (this is a Sky package - phone, internet, TV - in contract until July 2024)

Mobile phone............................ 60 (contract until Dec 2023)

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

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

Internet Services....................... 0

Groceries etc. ......................... 160 (this is a guess)

Clothing................................ 30

Petrol/diesel........................... 120

Road tax................................ 15

Car Insurance........................... 45

Car maintenance (including MOT)......... 18

Car parking............................. 25 (for parking when in office - no free parking available)

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

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

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 35 (contact lens subscription)

Pet insurance/vet bills................. 16.19

Buildings insurance..................... 25.89

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

Life assurance ......................... 32.12

Other insurance......................... 12 (this is for white goods and boiler I think)

Presents (birthday, christmas etc)...... 20

Haircuts................................ 7.5 (one £90 a year)

Entertainment........................... 50

Holiday................................. 65 (£65 to pay off holiday until November)

Emergency fund.......................... 0

Nails & Brows........................... 40

Disney Plus............................. 7.99

Amazon Prime............................ 7.99

Amazon Subscriptions.................... 30 (this is for cat litter - apparently cheapest place?)

Cat Food................................ 50 (one cat has a special diet. We've already reduced this by £20)

Breakdown Cover......................... 7.5

Travel Insurance........................ 5 (annual)

Window Cleaner.......................... 12 (once a month)

Park Saving (x2 more payments).......... 22.22[b] (two more payments to make in September and October)

Total monthly expenses.................. 1665.47[/b]

[b]

Assets[/b]

Cash.................................... 602.54 

House value (Gross)..................... 108000

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

Car(s).................................. 8000

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

Total Assets............................ 116602.54[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 59455....(228)......2.03

Secured Debt.................. 21600....(30.82)....0 (this is a guestimate of the amount on the Help to Buy loan)

Hire Purchase (HP) debt ...... 9600.....(179)......11.9[b] (for car)

Total secured & HP debts...... 90655.....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Nationwide Loan................17679.....458.......7.4

Halifax C (Jan 24).............2783......70........0

Sainsburys CC..................8828......252.......22.46

Parents........................345.......50........0

MBNA (Apr 24...................5695......0.........0

MBNA (Nov 23)..................1530......0.........0

MBNA (Standard)................1418......120.......27.21[b]

Total unsecured debts..........38278.....950.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,469.2

Expenses (including HP & secured debts). 1,665.47

Available for debt repayments........... 803.73

Monthly UNsecured debt repayments....... 950[b]

Amount short for making debt repayments. -146.27[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 116,602.54

Total HP & Secured debt................. -90,655

Total Unsecured debt.................... -37,933[b]

Net Assets.............................. -11,985.46[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

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


A couple of points that seemed to wordy to write alongside.

Jobwise - she works full-time 9-5 M-F and then part-time 6-10 M-Th. There is a possibility she can increase the evening work to Friday, which would be another £140ish. 

There are some existing commitments coming up that already have spend attached
- a trip to Liverpool for a concert in September(ticket & hotel paid, just petrol) 
- a trip to Iceland in November (the holiday that the £65 is for to finish paying for travel & accommodation) - this will also mean paying to put the cats in the cattery for a week (£11 a day)
- a trip to Crete that was booked just before LBM - this hasn't been fully paid for but a deposit paid. This is next May/June. No idea on the cost or payment deadline, but she's getting this information.

I know my parents are financially stable enough that the payments to them could be suspended indefinitely (or knowing them, they would write it off entirely) but that would be dependant on her telling them about her debt. I don't know if she wants to do that. 

I am going to encourage her to come along and join the boards but it seemed a step to far last night. 

I'd appreciate any ideas - I'm very lucky that I haven't had to navigate the debt world for a long time so I'm a little rusty. 

I am assuming she has been living beyond her means for a while. Is  the part time job a recent thing when she realised the amount of debt she was in? She obviously works hard given she works full time then an evening job and if she is able to I think if I were her I would take on the Friday evening as well to get the extra £140. She really needs to stop booking these trips until she is in a better place financially though. 

The insurances look quite high and I personally don’t think white good insurance is worth it. If she has no dependants she could get rid of the life assurance. The buildings insurance looks quite high too so she should make sure that is competitive by comparing on renewal. Same with car insurance.  As always paying annually is much cheaper. I would ditch the window cleaner too and any of those subs like Disney plus and Sky TV. She probably doesn’t need new clothes so that could be reduced for a year to just new underwear. Nails and brows is a luxury which she could do herself. Tell her not to sign up for Park savings next year. Sticking £20 in a savings account is a better idea. Ditch mobile deal in December for Sim only. £60 is very expensive. 

She needs to tackle that MBNA first. I assume she has too much debt to get 0% deals. If the rates on them all go up to 27% she may need to consider a DMP. I personally would go for lifestyle changes first. 

MattMattMattUK

nifferwilko said:

RAS said:

If she's been working hard to holiday, your sister may well need some support adjusting to the new reality. So thinking about ways to take breaks that don't cost a fortune. Including things like house swaps, residential volunteering etc.

Everything you mentioned was spot-on but thank you for this. I think I'd thought about this briefly but hadn't really thought about what a big mental change it will be. 

The mental adjustment is one of the hardest things for people to adjust to. In one of my businesses there is a man who earns good money, but over the last four years he has run up just over £50k of debt. He is now having to face up to the very hard adjustment of not only losing the £1k a month he has to make in repayments, but also losing the £1k a month loss of spending he was previously accumulating as debt every month, so a £2k a month loss of income from the last four years. It has been a huge mental adjustment for him that holidays are out, going out for a meal or ordering a takeaway for the family without a thought has gone, they can go out once a month and get two takeaways, that is is. That is amplified across all aspects of his wife, as well as having to break the news to his wife that he ran up that debt. Adjusting from the mentality of running up debts, to paying it off, and the lifestyle impact that has is very difficult for many people and some ultimately fail.

Sea_Shell said:

nifferwilko said:

RAS said:

If she's been working hard to holiday, your sister may well need some support adjusting to the new reality. So thinking about ways to take breaks that don't cost a fortune. Including things like house swaps, residential volunteering etc.
.

Everything you mentioned was spot-on but thank you for this. I think I'd thought about this briefly but hadn't really thought about what a big mental change it will be. 

Sea_Shell said:

How will this advice be received by your sister?   Is there a risk you'll just become "bad cop" and she'll ignore your (our) advice.

It's admirable that you're trying to help, but sometimes they aren't really ready to take the drastic measures needed.  I've got that t-shirt ☹️

I'm giving her the tools and suggestions but I'm determined to not being the fixer for her. I think unless she takes ownership of this and fully realises how bad this is, she'll stick with a new budget for 3 months, then give up...I'm just trying to avoid the houseguest + 2 cats in a years time

Stateofart said:

You could half your contact lense subscription by going to Specsavers

Ironically she is with Specsavers - I think it's more expensive because of the strength of the prescription - but she could just wear glasses more frequently tbh...

I know that worry.   Currently Bank of Mum & Dad are keeping the wolves from my Sibling's (+family) door.  I've tried to help steer a budget for them, but to no avail.   There is always the risk that the wheels will fall off, but they'd have a bare faced cheek to come round here with a hat!!!     Would be hard not to intervene though...although my DH would take a pretty dim view of any assistance.   (Loooong story!!)

Family eh....[shrug]

I know people who have relied on the BoM&D, the person mentioned above is one of those, but the thing is that it did not actually help, all it did was enable, the same with two others I know, they have never learned to be responsible with money because they never had to be, someone always bailed them out, until they no longer did, and they they hit the wall hard. I know people who have been given £100-200k by their parents and they little to no net worth (or in one case £20k negative net worth) as a result of that money enabling them to never grow up. I would not bail a family member out for being an idiot, but I would be prepared to help my sister out if she fell on hard times.

theoretica

Would her property allow her to take in a lodger?  More income without more working would help her a lot.

It will depend on her whether she would find it useful to mentally divide the debt into lumps and think of each particular holiday as she pays a card off or something.