Getting on track

LeedsOnTheUp

Martico said:

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

When I say I have been bad with money it's an understatement. I have never sat down, got all the information in front of me and decided what money should go where before filling out this SOA. I tried to be honest in the budget and look at whether I can stick to it and upped certain amounts if I decided I couldn't. I am pretty confident that I can stick to this and stop the spend and therefore the rot.

LeedsOnTheUp

CliveOfIndia said:

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. I do pay for parking occasionally but I wouldn't be sure how many times a year so I would just have to guess I think, but I will do so.

So I think I responded to some in the massive post I did but there are others. For hair cuts I probably can try bring this down. The diesel is unfortunately not able to be reduced as I work fairly far from where I live and also cart the missus to work, go to see parents on the weekend etc. It unfortunately is pricey. Clothing should be possible to reduce as well it is just an estimate but I wanted to try and make sure I would be able to stick to it.

Buildings and contents are combined. Again the entertainment is for days out and stuff but I should be able to bring this down.

As for a holiday I haven't been anywhere in 2 years as I just haven't had the money. It's quite obvious the reason I haven't had the money is because I've been frittering it away and digging a deeper hole for myself but I don't want to go anywhere until I can get a bit of breathing space and so would rather invest spare cash into getting that first.

in_need_of_direction

My only other suggestion is that you decide what debt goes first and start to tackle it so you can see progress. It’s a long but doable process.  When I got serious, I used to count any vouchers used and reduce debt by that amount.  Even if you only save a penny or two each month in interest, it all mounts up.

Martico

Good plans, and I'm glad to see that you're getting on top of things. It can be quite an eye-opener writing down and addressing your budget for the first time. When I did similar, I found that creating an excel spreadsheet with all balances, incomings and outgoings, very helpful. If excel isn't your bag, then at least see if you can keep a spending diary to track how your budget is progressing.

Along with tweaking your spending as suits you, I'd recommend overpaying as much as you can on the card with the highest interest rate, while paying just above minimum on the others. Things will start to head in the right direction 

MFWannabe

LeedsOnTheUp said:

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.

Do have any available credit on any of your 0% cards that would offer you a 0% balance transfer ? At least if you can only shift some of the balance it would be better while you pay them off 

kimwp

Your SOA indicates that you can pay your debts with some to spare, so the job now is to cut back on what you can and track your spending to make sure your SOA is accurate. Use any spare to build up a small emergency fund (£1000-2000) and then throw any spare at the debts. When your wage goes up to £50k, you'll be in good habits to throw the extra income at the debts and get rid of them quickly. NB, when your wage goes to that level, you'll have to start paying some of the child benefit back.

LeedsOnTheUp

Guys I think this is exactly what I need. My money situation will only improve if I stick to this and it should be entirely possible. Is it uncommon for people to update the thread a few months in to say how they're getting on? Would like to report back.

sourcrates

LeedsOnTheUp said:

Guys I think this is exactly what I need. My money situation will only improve if I stick to this and it should be entirely possible. Is it uncommon for people to update the thread a few months in to say how they're getting on? Would like to report back.

Uncommon? no, not at all, many posters return in time to update the forum.

So please do so, it helps motivate those who are still struggling with their own debt.

MFWannabe

LeedsOnTheUp said:

Guys I think this is exactly what I need. My money situation will only improve if I stick to this and it should be entirely possible. Is it uncommon for people to update the thread a few months in to say how they're getting on? Would like to report back.

There’s also the debt free diaries board if you want to keep a diary of your journey 

Martico

LeedsOnTheUp said:

Guys I think this is exactly what I need. My money situation will only improve if I stick to this and it should be entirely possible. Is it uncommon for people to update the thread a few months in to say how they're getting on? Would like to report back.

It can be of help to you, and certainly for others, so if you feel the need to check in on this thread (or on a new one in the diaries section) that'd be fab. Any more questions you have, any bumps in the road, any need for encouragement, you'll have a receptive audience here