SOA - My Plan

swross · 1 January at 10:44PM

Hello all!

I have been reading the posts on this forum with interest. I thought to myself 'I should give it a try and see what the lovely community can advise!'.

A bit about myself - Im nearly 30 years old! Single bloke and in career where there is always demands for. I bought my dream house in Sept after some years of saving up for the deposit and sadly during the time at a higher than 'normal' interest rates. Take a swing at my SOA and let me know what I should do. Any advice or/and support would be welcomed and appreciated.

My aims are:

Get rid of all debts.
Reduce my mortgage by overpaying.
Life a little - basically city break holidays!

I have two jobs - hence the other income. I pay into a pension to both 8.5% for job 1 and 6.5% in job two. Both employers pay their bit in (both are LPGS).

Statement of Affairs and Personal Balance Sheet

Household Information[/b]

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

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

Number of cars owned.................... 1

Monthly Income Details[/b]

Monthly income after tax................ 3161 - Job 1

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

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

Other income............................ 1195 - Job 2

Total monthly income.................... 4356

Monthly Expense Details[/b]

Mortgage................................ 1650

Secured/HP loan repayments.............. 200

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

Management charge (leasehold property).. 34.75 - estate charge as they call it!

Council tax............................. 120

Electricity............................. 100

Gas..................................... 60

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

Water rates............................. 21

Telephone (land line)................... 0

Mobile phone............................ 70

TV Licence.............................. 0

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

Internet Services....................... 30

Groceries etc. ......................... 400

Clothing................................ 60

Petrol/diesel........................... 160

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

Car Insurance........................... 60

Car maintenance (including MOT)......... 50

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

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

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

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

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

Buildings insurance..................... 15

Contents insurance...................... 15

Life assurance ......................... 10

Other insurance......................... 10

Presents (birthday, christmas etc)...... 50

Haircuts................................ 20

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

Holiday................................. 0

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

Playstation............................. 15

Amazon.................................. 9

Sewage.................................. 16

Total monthly expenses.................. 3240.75

[b]

Assets[/b]

Cash.................................... 30543

House value (Gross)..................... 405000

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

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

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

Total Assets............................ 435543[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 363000...(1650).....4.54

Hire Purchase (HP) debt ...... 17200....(200)......6.9[b]

Total secured & HP debts...... 380200....-.........- [/b]

[b]Unsecured Debts[/b]

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

Lloyds - Kitchen...............5954......156.7.....0

Klarna - Bathrooms ............1769.85...76.95.....0

iPhone.........................1100......50........0

Monzo Flex.....................1548......500.......0[b]

Total unsecured debts..........10371.85..783.65....- [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,356

Expenses (including HP & secured debts). 3,240.75

Available for debt repayments........... 1,115.25

Monthly UNsecured debt repayments....... 783.65[b]

Amount left after debt repayments....... 331.6[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 435,543

Total HP & Secured debt................. -380,200

Total Unsecured debt.................... -10,371.85[b]

Net Assets.............................. 44,971.15[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

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

Many Thanks
Ross

MFWannabe · 1 January at 10:56PM

swross said:

Hello all!

I have been reading the posts on this forum with interest. I thought to myself 'I should give it a try and see what the lovely community can advise!'.

A bit about myself - Im nearly 30 years old! Single bloke and in career where there is always demands for. I bought my dream house in Sept after some years of saving up for the deposit and sadly during the time at a higher than 'normal' interest rates. Take a swing at my SOA and let me know what I should do. Any advice or/and support would be welcomed and appreciated.

My aims are:
Get rid of all debts.
Reduce my mortgage by overpaying.
Life a little - basically city break holidays!
I have two jobs - hence the other income. I pay into a pension to both 8.5% for job 1 and 6.5% in job two. Both employers pay their bit in (both are LPGS).

Statement of Affairs and Personal Balance Sheet

Household Information[/b]
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details[/b]
Monthly income after tax................ 3161 - Job 1
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 1195 - Job 2
Total monthly income.................... 4356

Monthly Expense Details[/b]
Mortgage................................ 1650
Secured/HP loan repayments.............. 200
Rent.................................... 0
Management charge (leasehold property).. 34.75 - estate charge as they call it!
Council tax............................. 120
Electricity............................. 100 - This is very high for one person
Gas..................................... 60 - This is high for one person
Oil..................................... 0
Water rates............................. 21
Telephone (land line)................... 0
Mobile phone............................ 70 - Are you in contract? If not then change to sim only
TV Licence.............................. 0 - Do you not watch tv?
Satellite/Cable TV...................... 0
Internet Services....................... 30
Groceries etc. ......................... 400. - This is high for one person
Clothing................................ 60
Petrol/diesel........................... 160
Road tax................................ 15
Car Insurance........................... 60
Car maintenance (including MOT)......... 50
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0 - Nothing for dentist etc?
Pet insurance/vet bills................. 0
Buildings insurance..................... 15. - This is high, did you shop around for buildings and contents combined?
Contents insurance...................... 15
Life assurance ......................... 10
Other insurance......................... 10 - What is this for?
Presents (birthday, christmas etc)...... 50
Haircuts................................ 20
Entertainment........................... 50 - Is this really enough?
Holiday................................. 0 - Never go on holiday?
Emergency fund.......................... 0. - You need to put something in here
Playstation............................. 15
Amazon.................................. 9
Sewage.................................. 16 - What is this?
Total monthly expenses.................. 3240.75
[b]

Assets[/b]
Cash.................................... 30543 - If you have this much in savings can you not pay off the HP debt?
House value (Gross)..................... 405000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0[b]
Total Assets............................ 435543[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 363000...(1650).....4.54
Hire Purchase (HP) debt ...... 17200....(200)......6.9[b]
Total secured & HP debts...... 380200....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR - Are all these definitely 0%?
Lloyds - Kitchen...............5954......156.7.....0
Klarna - Bathrooms ............1769.85...76.95.....0
iPhone.........................1100......50........0
Monzo Flex.....................1548......500.......0[b]
Total unsecured debts..........10371.85..783.65....- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,356
Expenses (including HP & secured debts). 3,240.75
Available for debt repayments........... 1,115.25
Monthly UNsecured debt repayments....... 783.65[b]
Amount left after debt repayments....... 331.6[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 435,543
Total HP & Secured debt................. -380,200
Total Unsecured debt.................... -10,371.85[b]
Net Assets.............................. 44,971.15[/b]

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

Many Thanks
Ross

Hi
I’ve made some comments above in your soa

swross · 1 January at 11:22PM

Thank you @MFWannabe for your comments.

In response to your points,
- Electricity = Last night I went through my house thinking what I need to turn off. I started to do this but to be fair I had builders - drilling away and plugging their tools in (already paid them hence not on here). I also work part at home.
- Gas = I did think it was high... I will need to research into this.
- Mobile Phone = ah, I made a mistake! I included the iPhone payment of £50 per month. I pay £20 per month sim only deal.
- TV licence = No, do not want live TV nor BBC contents.
- Foods shopping = I agree, will look at cutting down.
- Dentist = ah, I forgot to include the cover on this. I pay every 6 months and have hygienist as well (£180 per year).
- Building/Content = total is around £30 per month. This is because I have two expensive items indoors that is covered for outside as well.
- Other insurance = part of my public liability insurance as a professional.
- Entertainment = Yes, I have included my playstation and Amazon.
- Sewage = waste - I have to pay for two water firms as one does water and the other sewage for my area.

- About using my cash savings towards HP/debts, yes I could but holding off as finishing the home and need to buy some items. Shall I start from big to small in terms of debts.

- Yup, all 0%. For example Lloyds - 0% for 17 months on purchase. Klarna is also 0% for two years. iPhone is also 0%. Flex - I pay 3 instalments for 0% hence the higher payment figure of £500.

Many thanks
Ross

MFWannabe · 1 January at 11:59PM

swross said:

Thank you @MFWannabe for your comments.

In response to your points,
- Electricity = Last night I went through my house thinking what I need to turn off. I started to do this but to be fair I had builders - drilling away and plugging their tools in (already paid them hence not on here). I also work part at home.
- Gas = I did think it was high... I will need to research into this.
- Mobile Phone = ah, I made a mistake! I included the iPhone payment of £50 per month. I pay £20 per month sim only deal.
- TV licence = No, do not want live TV nor BBC contents.
- Foods shopping = I agree, will look at cutting down.
- Dentist = ah, I forgot to include the cover on this. I pay every 6 months and have hygienist as well (£180 per year).
- Building/Content = total is around £30 per month. This is because I have two expensive items indoors that is covered for outside as well.
- Other insurance = part of my public liability insurance as a professional.
- Entertainment = Yes, I have included my playstation and Amazon.
- Sewage = waste - I have to pay for two water firms as one does water and the other sewage for my area.

- About using my cash savings towards HP/debts, yes I could but holding off as finishing the home and need to buy some items. Shall I start from big to small in terms of debts.

- Yup, all 0%. For example Lloyds - 0% for 17 months on purchase. Klarna is also 0% for two years. iPhone is also 0%. Flex - I pay 3 instalments for 0% hence the higher payment figure of £500.

Many thanks
Ross

Which debt to pay off first? Usually they say pay higher interest off first but if it were me:
Id pay off flex, then chuck the £500/ month at IPhone, Klarna then Kitchen
Then throw everything at the HP debt

katsu · 2 January at 3:22AM

Why do you have life cover? If no one lives with you, why do you need it? Also you'll get some lgps death benefits I'm sure.

Only a small saving but it all helps.

RAS · 2 January at 4:11AM

Now you have a house, you need to budget specifically for basic house maintenance; less so if you are good at DIY.

But gutters, boiler check, replacing one white good per year or two, decorating one room per year, minor alts like adding a power socket or changing a lighting circuit, and longer term exterior maintenance, possibly some gardening.

Re "holiday", do you never visit friends and family, get invited to weddings and other events?

Andyjflet · 2 January at 10:38AM

My first thought is that your mortgage alone is 38% of your take home pay, general advice is that should be no more than 25%
Simple to get rid of the debts, get together an emergency fund of £1000 and then snowball your debt smallest to largest, check out Dave Ramsey and his podcasts, I started the Baby Steps during Covid and now debt free!

EssexHebridean · 2 January at 11:40AM

swross said:

Statement of Affairs and Personal Balance Sheet

Household Information[/b]
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details[/b]
Monthly income after tax................ 3161 - Job 1
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 1195 - Job 2
Total monthly income.................... 4356

Monthly Expense Details[/b]
Mortgage................................ 1650
Secured/HP loan repayments.............. 200
Rent.................................... 0
Management charge (leasehold property).. 34.75 - estate charge as they call it! when budgeting, make an assumption that this will probably increase 10% each year - it may not, but it's wise to be prepared.
Council tax............................. 120 This looks like it has the single person discount applied already? Is it paid over the standard 10 months? If so, remember that you have a couple of "free" months coming up, and be ready to direct that money either to long term savings, or directly to debts.
Electricity............................. 100 Unusual to see electricity higher than gas where gas is used for heating - which I assume to be the case for you? Also - do you check bills and are you keeping your own track of meter readings at least once a quarter, ideally monthly? (Yes - even if you have a smart meter!) Your gas isn't particularly high, but the overall balance looks wrong at the moment.
Gas..................................... 60
Oil..................................... 0
Water rates............................. 21
Telephone (land line)................... 0
Mobile phone............................ 70 OK - seen further comments saying you pay £20 SIM only and this is double accounting - £20 is still high to be honest so probably worth a review of what deals are out there.
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 30
Groceries etc. ......................... 400 Massively high for a single person! You can very easily knock £100 off this I would think just with small habit changes, and there is potential to knock off far more if you wanted.
Clothing................................ 60 Probably higher than ideal for someone with debt - try to go "essentials only" for a few months, while also budgeting for things like new work suits 9if worn) as needed. If clothes shopping "for fun" occurs, though, this is one to knock on the head for now.
Petrol/diesel........................... 160
Road tax................................ 15 Hopefully not paid monthly? (monthly payments for road fund licence carry a premium - pay upfront for the year and budget monthly going forwards.)
Car Insurance........................... 60 Quite high insurance costs - I assume you use the comparison sites as per the guide on the main MSE site? Either way, this is another thing to start budgeting to pay annually amd then buget to save the relevant amount of money each month towards the next year's premium.
Car maintenance (including MOT)......... 50 Sure this is enough? A Service at least annually, plus MoT Test costs, then tyres, wiper blades, other consumables, washing/cleaning, it may well cover you, but it's one to run through and check.
Car parking............................. 0
Other travel............................ 0 Nothing at all here? You never meet pals for drinks then take a cab home, visit family by train, that sort of thing?
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 15
Contents insurance...................... 15
Life assurance ......................... 10
Other insurance......................... 10
Presents (birthday, christmas etc)...... 50
Haircuts................................ 20
Entertainment........................... 50 This is quite low for someone on your income - sure that is all you spend?
Holiday................................. 0 You never go anywhere at all? Not even weekends away visiting family and friends?
Emergency fund.......................... 0 You must start budgeting regular monthly savings - although more on this below
Playstation............................. 15
Amazon.................................. 9
Sewage.................................. 16 Adding this to your water rates figure above suggests you are paying quite a bit for a single person - although that may well be because you are still on estimated use at the moment, nd the people in your home before you were higher users (we're currently in exactly this situation!) Check your readings regularly and most importantly ensure that the one used for your next bill is an actual reading, not an estimated one.
Total monthly expenses.................. 3240.75
[b]

Assets[/b]
Cash.................................... 30543
House value (Gross)..................... 405000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0[b]
Total Assets............................ 435543[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 363000...(1650).....4.54
Hire Purchase (HP) debt ...... 17200....(200)......6.9[b]
Total secured & HP debts...... 380200....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Lloyds - Kitchen...............5954......156.7.....0 Are you sure this is zero? It looks like a loan?
Klarna - Bathrooms ............1769.85...76.95.....0 Definitely zero?
iPhone.........................1100......50........0 Definitely zero?
Monzo Flex.....................1548......500.......0 Definitely zero?[b]
Total unsecured debts..........10371.85..783.65....- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,356
Expenses (including HP & secured debts). 3,240.75
Available for debt repayments........... 1,115.25
Monthly UNsecured debt repayments....... 783.65[b]
Amount left after debt repayments....... 331.6 And do you have this? Of not, you need to track it down, as that amounts to nearly £4k per year that could be working for you. [/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 435,543
Total HP & Secured debt................. -380,200
Total Unsecured debt.................... -10,371.85[b]
Net Assets.............................. 44,971.15[/b]

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

Many Thanks
Ross

Well, the good news is that there is already a surplus, and a LOT of areas where overspending is seemingly occurring and savings can be made. the bad news is that some of that - albeit I suspect far from all - is offset by stuff that isn't already being budgeted for, or budgeted for correctly. As always - starting with comments above in bold...

One side note - you need to shift the mindset of interest rates at the time you bought being "higher than normal" - right now, they are still low from a historical perspective, although some economists are working on the basis if the old "normal" now probably being a little higher than we can expect to see returning as standard once higher property prices and different lending rules are taken into account. Don't pin ANY hopes on a return to 2% rates being the usual - and indeed, we really wouldn't want that to be the case as it would probably indicate the economy and possible even the country as a whole being in a pretty dire position.

You are in a generally good position, but allowing for the savings you already have, it also looks like you may use credit as a habit rather than evaluating the advantages of buying needed items outright then repaying the money to your savings, or saving for "wanted" items and not buying until the money is there. While it's not always the wrong thing to use credit - particularly when on a good and fairly "safe" income, it is still a good idea to form the habit of thinking through each decision individually. use of credit, and indeed being in debt generally, is very normalised these days - but it's always worth thinking about things from a "what if the worst happened" scenario and then trying to see how debt would change or worsen your position.

If your debts are all on 0% interest then I'd be inclined to continue as you are for now, while ensuring that you make savings on the "easy win" areas like groceries, make better use of your money where it comes to the things that cost you most to pay monthly, and being ready to clear anything that has an end date to the 0% before that. If however anything has interest charged on it, then just get it cleared off - there is really no sense in paying interest to people when you have the money sitting there.

In terms of savings, I would look at opening up a Regular Saver account to pay into monthly - possibly even more than one. Nationwide offer an 8% Regular saver where you can place up to £200 per month (I think this is still available) and if you are a customer of First Direct then they offer 7% on up to £300 per month. Set the standing orders for the savings to go out at the beginning of each month, then you know that money IS saved - and make sure that you still have your basic emergency fund money somewhere accessible too in case there IS an emergency.

Once the debt is cleared, I'd start to look at overpaying that mortgage too - the more you can knock off it by the time you need to get a new deal, the cheaper the interest rate on that ne deal will be. Assuming your lender allows it, I'd make a starting point of rounding the monthly payments up to £1700 - the extra £50 a month will not be missed and you can start making an impact on the outstanding balance from the beginning.

enthusiasticsaver · 2 January at 11:52AM

I would agree with @EssexHebridean that in general you are in a good position as you are not paying interest and have a surplus.

However how realistic is it for you to be able to continue doing two jobs? That is something which would concern me as you would be vulnerable should you be unable to do even job 2.

I would also urge you to double check the loans for the kitchen and bathroom and make sure they are 0%.

The positive is that the majority of the debt you have appears to be linked to your property rather than lifestyle debt. Is it really critical you do all these jobs immediately or can they wait until the debt is lower or gone? You have a high cash buffer which is good but if you are paying interest on any of the debt I would urge you to consider paying it off rather than going hell for leather and doing a full refurbishment on your home as if the debt is gone and you reduce your groceries spend which is very high for one person you would not be so vulnerable should you have to give up job 2. Are these both full time jobs? You say your job is always in demand but if you work really long hours this could be detrimental to your mental health and lead to burnout.

Once the debt is gone I would overpay the mortgage as this is relatively high for one person to service.

savergrant · 2 January at 12:46PM

Double check your interest rates on the home improvement loans, is it a 0% window or option and do rate charges apply at a later date? If so try to put money into savings now and pay off/down the debt just before interest charges start to apply. If it is really 0% for the duration of the debt look towards paying off other debts and check out overpaying on your mortgage. Unless you really enjoy your second job set a target as to how long you plan on doing two jobs for, eg until the kitchen is paid off.

MFWannabe · 2 January at 1:50PM

Andyjflet said:

My first thought is that your mortgage alone is 38% of your take home pay, general advice is that should be no more than 25%
Simple to get rid of the debts, get together an emergency fund of £1000 and then snowball your debt smallest to largest, check out Dave Ramsey and his podcasts, I started the Baby Steps during Covid and now debt free!

OP has 30k in savings? Currently looking to spend some on house before paying off debts, which if it were me I’d pay off the debts first and be debt free and then start overpaying mortgage and getting savings back up

SOA - My Plan

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