SOA - My Plan

MFWannabe

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

How essential are the items for the house? 

How much have you budgeted for them? 

If not essential I would seriously pay off the HP; I wouldn’t be paying interest if I didn’t have to
Youll be able to build the savings back up and start overpaying mortgage then once you’ve got rid of debts 

Andyjflet

MFWannabe said:

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 

Same principle applies. get rid of the debts, check your emergency fund, no overdraft, then overpay on mortgage. Basically what I said anyway. 

savergrant

It looks as if op has sufficient money in the bank to pay off the hp debt and the unsecured interest free loans as necessary. In all probability his savings aren't paying more than. 6.8 percent so it would make sense to pay the hp debt straight off then pay off the other debts if they stop being interest free. There is still money in the bank for any other necessary work on the home.

swross

katsu said:

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. 

I am not very technical with the whole cover to be honest. I was encouraged to get cover for the mortgage which is around £10 a month. I do have LGPS death cover (3x salary on both roles).

RAS said:

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?

Your comments are valid. I do go on holidays - city breaks - possibly 3-ish times a year. I would budget about £200-300 on accommodation and £100 on flights. Spending money each day is around £60-100 per day. I recently went to Sweden for 4 days / 3 nights - in all only spent £550 which was good!

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!

I agree with your comments about the mortgage being 'high' as a single person. It is partly why I wanted to reduce the term as much as I can and overpay.

EssexHebridean said:

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.

Not sure if your name relates to where you live. I also live in Essex if you do too. Thank you for your comments, really helpful. I take onboard your comments. I pay my insurances such as household, car etc as annual payment (save life cover). I have triple checked the debts - they are 0% for the period I wish to use them for. In terms on whether I have about £300 a month left over each month... it is usually more - about over £1000 left over but at the moment I am spending a bit as the house is being done up! A rather expensive process! 

enthusiasticsaver said:

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. 

in relation to my two jobs, one is my full time job 36 hours over 4 days. The other is a part time role with additional benefits as it is out of hours which is about week 18 hours. As I enjoy both of my roles and with good annual leave entitlements as well as building up my pension, I do not feel I am under a lot of stress or working long hours. 

Question about how long I will continue in my second role, there are no plans to resign from this role. 

 I will go away and look at my plans and look at this Ramsey Baby steps... I'll write back soon. I will look at my sim only deal, water rates and electrics!

 Many thanks for all of your comments and suggestions... I feel a bit energetic about this. 

 Ross -

katsu

swross said:

katsu said:

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. 

I am not very technical with the whole cover to be honest. I was encouraged to get cover for the mortgage which is around £10 a month. I do have LGPS death cover (3x salary on both roles).

in relation to my two jobs, one is my full time job 36 hours over 4 days. The other is a part time role with additional benefits as it is out of hours which is about week 18 hours. As I enjoy both of my roles and with good annual leave entitlements as well as building up my pension, I do not feel I am under a lot of stress or working long hours. 


I'll write back soon. I will look at my sim only deal, water rates and electrics!

 Many thanks for all of your comments and suggestions... I feel a bit energetic about this. 

 Ross -

Looks like this is £120 a year you can instead pay off your debts/ save for your future as you've got no one who needs the insurance to enable them to live in the house after you die, and you've got this extra LGPS death benefit anyway. 

I strongly recommend you add considering cancelling this cover to your "to do list". If you are reluctant to cancel, find the paperwork and figure out why exactly you'd want to be paying for this insurance. 

Congrats on the energy and on your hard work on these 2 roles.  MSE is a life changing mindset, and you'll get so much out of it.