Getting on track

LeedsOnTheUp

Hi guys. I have finally decided that not only am I useless with money, but I can't try to go it alone any more and expect things to get better. I am seeking the advice of the MSE sages and looking to try get a hold of my finances. Could someone please point me in the right direction for how to get started, I assume by me showing my incomings and outgoings and going from there?

Martico

Hi, and welcome.
Yes, you're right. Suggest you start by filling in a Statement of Affairs, format for MSE, copy and paste here.
Fill in as honestly and fully as you can. Any annual payments - divide by 12.
And fill in any credit card etc APRs where needed.

Good luck! The more info you can provide, the better, and there are well placed and experienced people (those that have been in debt, those that help people with debt, and often both) to help you

LeedsOnTheUp

So just to add a little bit of information, by April 1st I will be less one phone contract at £35 a month, and in July another at £32 so that will reduce by 67 in total. I am getting a payrise of 50p an hour on 40 hours a week as well which should equate to somewhere around £15 a week after tax and NI, and am I right in thinking minimum wage increases too? This should see my other half with a payrise as well.

LeedsOnTheUp

Sorry, please disregard the one above as it's off. This is the most accurate I can get it.

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

Monthly Income Details[/b]
Monthly income after tax................ 2080
Partners monthly income after tax....... 953
Benefits................................ 96
Other income............................ 0[b]
Total monthly income.................... 3129[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 396
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 109
Electricity............................. 114
Gas..................................... 155.26
Oil..................................... 0
Water rates............................. 53
Telephone (land line)................... 0
Mobile phone............................ 142
TV Licence.............................. 13.25
Satellite/Cable TV...................... 0
Internet Services....................... 29
Groceries etc. ......................... 520
Clothing................................ 40
Petrol/diesel........................... 180
Road tax................................ 21
Car Insurance........................... 111.44
Car maintenance (including MOT)......... 25
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 29
Contents insurance...................... 0
Life assurance ......................... 58
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 30
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 40
Gymnastics Daughter..................... 25
Other Half Travel....................... 65
Boiler Insurance........................ 12[b]
Total monthly expenses.................. 2337.95[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 170000
Shares and bonds........................ 0
Car(s).................................. 5000
Other assets............................ 0[b]
Total Assets............................ 175000[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 103000...(396)......2.9[b]
Total secured & HP debts...... 103000....-.........-   [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
MBNA Credit Card...............1183......42........26.8
Zopa Credit Card...............2698.47...62........29
Tesco Credit Card..............4355......43........0
Novuna Personal Loan...........4949.21...116.9.....9.9
Admiral Loan...................10921.....293.6.....5.9
Lloyds Credit Card.............480.......16........0
Halifax Credit Card............1400......25........72
BarclayCard....................4156.61...135.......0[b]
Total unsecured debts..........30143.29..733.5.....-  [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 3,129
Expenses (including HP & secured debts). 2,337.95
Available for debt repayments........... 791.05
Monthly UNsecured debt repayments....... 733.5[b]
Amount left after debt repayments....... 57.55[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 175,000
Total HP & Secured debt................. -103,000
Total Unsecured debt.................... -30,143.29[b]
Net Assets.............................. 41,856.71[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using Firefox browser.[/i][/font]

LeedsOnTheUp

I also want to add that at the moment I'm on an apprenticeship and on around 31k a year. In 20 months I will be qualified and this will be around 50k per year. I will obviously find it easier to service my debts at that point and actually pay over minimum payments to close some of these accounts down.

What I really want to know is what my options are. I have read a little into DMPs and IVAs but they scare me honestly. Am I best just trying to trim some fat and make it through to when I am qualified?

in_need_of_direction

There will be other points of view but my approach would be to hunker down and get through.  It was the only thing that created good habits in me having done multiple remortgages and consolidation loans.  I do have a few queries on your figures.  

Is the Halifax apr really 72%? If so, you’ve identified the first debt to target.  Do you pay Council tax over ten or twelve months? If ten, find a home for the money in the two free months or it may evaporate.
I think once you get out of mobile contracts, there are bigger savings to be made.  You have a few months to research.
I think you could also make some savings on groceries and what does entertainment cover?
also, are mortgage increases likely?

finally, well done on making it this far with the apprenticeship. It’s more a set for life win than a quick one.

CliveOfIndia

LeedsOnTheUp said:

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1[b]

Monthly Income Details[/b]
Monthly income after tax................ 2080
Partners monthly income after tax....... 953
Benefits................................ 96
Other income............................ 0[b]
Total monthly income.................... 3129[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 396
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 109
Electricity............................. 114
Gas..................................... 155.26
Oil..................................... 0
Water rates............................. 53
Telephone (land line)................... 0
Mobile phone............................ 142 This is extremely high, you can get SIM-only deals for £10-ish a month once you're out of contract.  I do appreciate you've already made reference to mobile phones in an earlier comment, but more just for awareness.
TV Licence.............................. 13.25
Satellite/Cable TV...................... 0
Internet Services....................... 29
Groceries etc. ......................... 520 This could potentially be reduced - as is often advised, switch to Aldi/Lidl for your shopping and try and plan batch-cooking where feasible.
Clothing................................ 40 Can this be reduced at all?  Appreciate it can be difficult with a child to clothe, but there are some great bargains to be had in charity shops and the many online second-hand market places.
Petrol/diesel........................... 180 This is quite a hefty bill - can it be reduced at all?  Again, I fully appreciate it's not always possible, but try and take an objective look at whether every journey is actually necessary.
Road tax................................ 21
Car Insurance........................... 111.44 This sounds very high - £1300 a year?  Do you shop around for the best deal each year?
Car maintenance (including MOT)......... 25
Car parking............................. 0 Do you never have to pay for parking at all ?
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 29
Contents insurance...................... 0 You need something here, unless it's included in the above category as a combined buildings/contents policy?
Life assurance ......................... 58
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50 This can probably be reduced a bit?
Haircuts................................ 30 Can this be reduced at all?
Entertainment........................... 100 This seems high if you're on a tight budget.
Holiday................................. 0 Unless you genuinely never go on holiday (not even a weekend away now and then), you need to budget something for holidays.
Emergency fund.......................... 40
Gymnastics Daughter..................... 25
Other Half Travel....................... 65
Boiler Insurance........................ 12[b]
Total monthly expenses.................. 2337.95[/b]
[b]

I've added some thoughts in bold above, focussing only on your outgoings.  I do appreciate that some of the suggestions may not be possible, but hopefully it'll give you some food for thought.

Martico

Thanks for posting it up! Others have commented on a couple of cuts you could look to make (which appear sensible to consider). On things like insurance, it's always cheaper if paid annually up-front than monthly (which attracts a hefty interest rate). Something to think of and plan for long-term.

It would be my instinct as well to hunker down and see if you can start overpaying the CC with the highest interest rate first.

But that depends on a couple of things: firstly, are you able at the moment (as your budget suggests you should be) to resist using your credit card(s)? If not, that suggests you're not able to keep to that budget. And secondly, when does your current mortgage deal end? That will increase your priority debt outgoing by a fair chunk when it does. 

If you're either unable to stick to the current budget, or your current mortgage deal expires in the next 6-12 months, you may be best off considering some kind of debt plan. 

I'll leave it for others to comment as well - many here are better versed than me in this kind of tight call

fatbelly

I don't think you need a dmp and i don't think you are insolvent.

You just need to stay disciplined till your income goes up.

Any credit cards that you can shift to 0% would help

enthusiasticsaver

I don't think a DMP is needed but I do think some discipline around spending is needed.  

Your groceries bill is very high.  Can that be reduced by using discounted supermarkets or brands and meal planning?  Can you cut down on treats like alcohol etc if that is bought regularly?  The mobile phone costs are also extortionate.  Is that for 2 phones or 3?  Can you move to Sim only when you are out of contract and not update the phones. The gas bill is also high.  Are you paying off arrears? Can you cut back on entertainment?  The insurances are also high so I suggest you use comparison sites when they fall due.  The boiler insurance could be done away with and you just pay a local plumber for an annual service and you do not appear to be putting the emergency savings away as you have no cash. Is there potential for your partner to increase their hours? 

Your mortgage rate is quite low but when it next falls due for renewal the rates are now much higher so it is critical you get on top of the debt before that happens. 

Is the Halifax credit card really 72%? I think you may have reversed the minimum payment and the interest rate on the soa so should it be minimum monthly payment is £72 and interest rate 25%?  If that is the case then the very small amount left after debt repayments of £57.55 will be virtually nil.  

Stopping using credit cards is the first thing you need to do and start to live within a budget and save for emergencies. 
If you are able to move any of the interest bearing cards to interest only that will save on interest for you. 
Tackle repaying the cards starting with the most expensive which is Zopa assuming that Halifax interest rate is wrong. 

LeedsOnTheUp

enthusiasticsaver said:

I don't think a DMP is needed but I do think some discipline around spending is needed.  

Your groceries bill is very high.  Can that be reduced by using discounted supermarkets or brands and meal planning?  Can you cut down on treats like alcohol etc if that is bought regularly?  The mobile phone costs are also extortionate.  Is that for 2 phones or 3?  Can you move to Sim only when you are out of contract and not update the phones. The gas bill is also high.  Are you paying off arrears? Can you cut back on entertainment?  The insurances are also high so I suggest you use comparison sites when they fall due.  The boiler insurance could be done away with and you just pay a local plumber for an annual service and you do not appear to be putting the emergency savings away as you have no cash. Is there potential for your partner to increase their hours? 

Your mortgage rate is quite low but when it next falls due for renewal the rates are now much higher so it is critical you get on top of the debt before that happens. 

Is the Halifax credit card really 72%? I think you may have reversed the minimum payment and the interest rate on the soa so should it be minimum monthly payment is £72 and interest rate 25%?  If that is the case then the very small amount left after debt repayments of £57.55 will be virtually nil.  

Stopping using credit cards is the first thing you need to do and start to live within a budget and save for emergencies. 
If you are able to move any of the interest bearing cards to interest only that will save on interest for you. 
Tackle repaying the cards starting with the most expensive which is Zopa assuming that Halifax interest rate is wrong. 

Thank you to yourself and everybody else that has responded. I think you have asked the majority of what others have so I will reply to your points and try to clean up on the others.

So groceries I fully agree that those are two high and me and the missus have been speaking today, and we want to bring those right down so that's what we will begin working on as soon as we do our next shop. We include all household cleaning items in there too but I think we can knock a chunk off.

Mobile phone costs are a mess I have created but by the end of next year this should be £38.94 so will be much more manageable but unfortunately I am contracted for now and these are do to run to their end by then (some bits earlier, some bits later).

Gas bill I have just switched to Eon who were the cheapest provider but I have a home with concrete walls and no insulation and very little loft insulation. Eon have agreed to fit loft insulation for free under the scheme that's running so will have this in by February next year. It's obviously still too high so I will look into trying to cut back my usage and see how I get on.

Entertainment is inclusive of basically anything I do with my daughter so if I take her to soft play for example, or to watch a movie. I am not currently budgeting at all which is why I decided to come here to try get a handle on it. Does this seem like too much? I wanted to put what i thought would be reasonable but if others have the experience and they think it's too much I'm willing to listen as my own judgement has not helped me much thus far.

The car insurance has just come up and it was the cheapest i could find, even with 7 years no claims and no previous on my events on record (I did have a car stolen but that was 7 years ago and is wiped after 5). I also have no points). House insurance was me being an idiot and letting it auto renew, even when I know there is cheaper to be had. Life insurance is expensive but I'm an anxious person and wanted to make sure I covered me, my missus and my daughter. We have previous health issues that drove the cost up and it's such a time consuming process having to deal with doctors to get records sent to the providers that I'm not sure I want to do it again in order to save a few quid a month. I am aware how stupid that seems but the questions they asked my other half when I took it out last time were very personal and bringing up a lot of stuff that's very hard for her to talk about so this one is tricky. As for boiler insurance I wanted a backup in case sh*t hit the fan and the boiler blew up and they include a service annually. Is this not a common thing? Again if the consensus is to not pay it then I'm willing to look into changing it.

Unfortunately the position we are in at the moment we cannot change her permanent hours, but she is going to start picking up extra shifts where possible in the new year and I am sometimes able to do a 12 hour shift on overtime which is quite a decent chunk of money in the bank.

My mortgage is fortunately fixed for 3 years and 3 months, by which time I would hope with the advice I receive, the things I put into place and my qualification I will be on the road to it being less of a blow.

The Halifax card is actually 0% and I have no idea how I typed 72! I believe you are right and it's the Zopa and MBNA cards that are priorities to deal with. I am unable to get any 0% deals at the moment although my credit rating is slowly creeping up so hopefully they are not too far away. I will look into changing interest bearing cards to interest only, I didn't know that was a thing.

Thanks for the help so far and any further input would be appreciated.