need to get a better handle on finances - where to start?

kimwp

nomoneymoreproblems said:

there's 4 of us, 3 adults 1 child, but eldest child is only 18 so not really an adult. he works 2 shifts a week on top of college and contributes £100 a month lodge. 

husbands wage is included, they give me 50% of all bills. 

I did my SOA including presents and clothing and car tax etc because every time I see an SOA that leaves them off people say its not accurate. so no I don't put money away but after looking at 6 months of bank statements these are the averages. 

the excess money is currently used to pay extra chunks off the debt and on my stupid game

It's great that you've gone back through six months, that puts you in a good position, particularly if it covers the expensive holidays that you celebrate or take and birthdays etc. If you can do a year, it will be even more accurate.


The way you've done it with putting some of your husbands income in and mentioning 50% of bills makes it less clear as it leaves open questions like what counts as a bill on your SOA? are the car expenses for one, two or three cars? This makes it less clear where you might be paying too much. Could you go back through your SOA and write what each expense covers eg "whole household". Even knowing things like is the petrol for one car can be useful, because lots of petrol means the car maintenance budget probably needs to be higher.

Regarding your game, I've had success recently of breaking and making habits by setting goals and tracking them and also replacing bad habits with good habits. I made myself accountable by starting a diary here and each week I update it with my progress. It also gives me a point to reflect and add to or change my goals. 
I spend a lot of time on bored panda and BuzzFeed as well as on here - I'm trying to actively think of something else better I could be doing and go do it when I find myself mindlessly browsing - it's amazing how quickly it can become a habit to go either way just by repetition. 

fatbelly

I agree with Ras, that although there is a lot going on, getting a new fixed mortgage is a priority. You can lock into a new deal six months before the old one finishes, and you are in that window.

I think you are borderline for needing a debt management plan, and the new mortgage figure will be crucial.

https://www.moneysavingexpert.com/mortgages/getting-ready-remortgage

foxgloves

Hi,
It's good that you have realised your financial situation is unsustainable without change & you will find lots of help on here, especially as so many of us have also needed a light bulb moment & change of attitude in order to clear our past debts. 
You mention that meal planning is "a nightmare" but I think this is something you need to work on, as you are spending such a lot on food. We also spent a lot on takeaways before we decided we needed to start living within our means. While we were paying off our debts, we cut these to one every 3 months. They are an expensive way to eat & not compatible with debts which need paying. Now we are debt-free, we still only have about 4 takeaways a year. We still enjoy them but can cook similar ('fakeaway') meals for much cheaper.
Given that you need to be getting rid of your debt, I am thinking that £450 a month would be a more realistic amount to spend on groceries & I know many people will be feeding 4 people on much less. I find the key things when grocery shopping to a budget are:
*Meal planning. I did it weekly at first, but now do a monthly plan & just choose a week's worth of meals at a time.
*Using meal plan to write grocery shopping list & checking every item to ensure it isn't already in stock or could be replaced by something you already have.
*Cook from scratch as much as possible. Ready meals have a built in cost of paying someone to make it & are often small portions which mean hungry people go searching for more food later on.
*Cut takeaways to an absolute minimum. They are not essential & need to be a treat for a special occasion while there are debts to pay.
*Batch cook things you like & freeze them as those additional portions will provide home made 'ready meals' on days where you need something quick.
*Use freezer for bargains such as yellow stickered bread & other essentials.
*Watch out for food waste. The only food chucked out in our house is things like lemons which have grown blue fur overnight or something which has unexpectedly gone mouldy.
*Avoid that absolute gobbler of money - the top-up shop. If you are meal planning & shopping to a properly thought out list, you shouldn't need to do midweek trips apart from maybe occasional milk or loaf. We all know that we go in for 2 essential items & end up spending £30. Best avoided!
And of course, once your debts have been paid off, if you want to return to £200 a week grocery spending, that's absolutely your decision. It just isn't realistic when there's significant debt.
Well done for taking the decision to tackle it & best of luck!
F

enthusiasticsaver

Given the interest rates you are paying on those debts I would not be saving for emergencies.  I would also reduce groceries, entertainment and anything else you can until you are on top of the expensive catalogues.  Get them closed down after paying them off. 

nomoneymoreproblems

RAS said:

nomoneymoreproblems said:

this is this months SOA

[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......... 2 - actually three. 

Number of cars owned.................... 3[b]

Monthly Income Details[/b]

Where is junior's £100 lodging income in this?

Monthly income after tax................ 1793

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

Benefits................................ 170

Other income............................ 1090[b] Is this the 50% of bills partner "gives" you? £100 of this is from child

Total monthly income.................... 3053[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 585

Council tax............................. 175

Electricity............................. 74

Gas..................................... 100

Water rates............................. 35

Mobile phone............................ 28.38

Satellite/Cable TV...................... 10.99

Internet Services....................... 38

Groceries etc. ......................... 650 still high. You really need to cut this even if for some months.

Petrol/diesel........................... 50

Car Insurance........................... 89.17 is this for 3 cars, or just one? Where is the car tax, and maintenance costs? this is for 2 cars, those arent due this month

Other child related expenses............ 66. what is this?

Medical (prescriptions, dentist etc).... 9.9

Pet insurance/vet bills................. 182 this is very high, is this an old debt or just monthly insurance?

Buildings insurance..................... 11

Contents insurance...................... 14

Life assurance ......................... 34 what sort of cover do you get from your employments? Have you double checked that you can't get cheaper

Other insurance......................... 12

Entertainment........................... 200 you simply can't afford this at the moment

Emergency fund.......................... 200 and you need to reduce this in the short term

tax credit repayment.................... 20.99[b]

Total monthly expenses.................. 2585.43[/b]

[b]

Assets[/b]

Cash.................................... 400

House value (Gross)..................... 160000

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

Car(s).................................. 6000

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

Total Assets............................ 166400[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 103000...(585)......5.74[b]

Total secured & HP debts...... 103000....-.........-   [/b]

[b]Unsecured Debts[/b]

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

cc1............................420.......30........29

cc2............................1450......50........27

cc3............................1250......58........29

clearpay.......................284.......284.......0

catalogue2.....................1000......30........49

catalogue1.....................550.......40........40[b]

Total unsecured debts..........4954......492.......-  [/b]

These APRs are ruinous. Even your best see in the 30% range which makes paying them off very hard. 

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,053

Expenses (including HP & secured debts). 2,585.43

Available for debt repayments........... 467.57

Monthly UNsecured debt repayments....... 492[b]

Amount short for making debt repayments. -24.43[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 166,400

Total HP & Secured debt................. -103,000

Total Unsecured debt.................... -4,954[b]

Net Assets.............................. 58,446[/b]

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

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

You as a family and certainly as a couple need to have a very serious talk about your financial state as it isn't sustainable. You are going to need to remortgage with your current provider as you can do that without any further credit check. You should be able to work out now which of their current offers is best. What is the new monthly mortgage cost going to be? As you need to budget for that now so you've time to work out your strategy for tackling your situation. Although you may be lucky considering the way mortgage rates are going.

The good thing is that although the interest rates are vicious, you don't actually owe a lot. So a couple of tight years would make a huge difference and you might even get a 0% offer at some stage. Have you actually checked with the MSE tool if that's possible now?

Your current budget looks aspirational as the emergency savings have just started and you've left out several items from the first budget, some of which weren't sufficient anyway? Go back to your statements (both of you) and work out what the household has actually spent over the last 6 months on all categories.

You want to reduce your debt but you don't want to reduce your lifestyle. Where are the essential maintenance costs? They need funding before entertainment. If your partner is giving you 50% of the bills but what is happening with the rest of their income? Nearly all of the rest of yours is accounted for in the budget. Even though you've got things like clothing, car costs missing altogether and nothing for maintaining the house. Does your partner have other costs they cover? Do they have additional debt?

Who is covering the costs of the third car? Presumably this is junior's with very high insurance costs? 

Without the remortgage, you would have a choice of cutting back hard, tackling the most expensive debts first and closing those accounts, then slowly relaxing a bit and working your way through, or deciding a live a little more comfortably, trashing your credit record and doing a DMP. At least that would halt the interest and your credit record would be decent in 6-7 years time.

So you really need to look at your remortgage choices now. You'd be very unwise to try and increase your borrowings to pay off your family member or cover the debts. Fail to pay consumer debt and you ruin your credit rating. Fail to pay your mortgage and you lose your home.

What are the plans of your children (as in biological rather than legal status)? Are they staying in secondary education, going to university or working after college? If they work, will their income cover the costs of their personal needs and car? Once you and your partner have started to think about sorting out your difficulties, you both need to talk to junior so that they have realistic expectations about their contribution to their living costs. You don't have the slack in your budgets to massively subsidise them.

Car Insurance........................... 89.17 is this for 3 cars, or just one? Where is the car tax, and maintenance costs? this is for 2 cars, those arent due this month
Other income............................ 1090[b] Is this the 50% of bills partner "gives" you?  £100 of this is from child
Groceries etc. ......................... 650 still high. You really need to cut this even if for some months. I will try. 
Other child related expenses............ 66. what is this? £50 for a hobbie and £16 for a new uniform item they need for summer term.
Pet insurance/vet bills................. 182 this is very high, is this an old debt or just monthly insurance? its insurance x 2 groom x 2 and a bag of dog food
Life assurance ......................... 34 what sort of cover do you get from your employments? Have you double checked that you can't get cheaper can't get cheaper due to pre existing illness. its critical care and life insurance combined.  

Entertainment........................... 200 you simply can't afford this at the moment we have our family holiday (UK) this month so this is our spending money

Emergency fund.......................... 200 and you need to reduce this in the short term. long story but this has to be replaced this month. 

You are going to need to remortgage with your current provider as you can do that without any further credit check. - this is not possible they only offer one product which is expiring. so we have no choice but to move company. which leads into your next point, yes we have 0% available to us BUT we don't want to apply for any more credit while we are waiting to remortgage. 

you might think some of the categories weren't enough but my car tax is £20 a year, a new tyre is £45, I don't have have to pay for services relative owns a garage), I don't often pay for parking, we don't spend money on new clothes often, these are all the figures gathered from looking at statements. 

the remainder of my partners wage is spend on their car (HP) and child maintenance. I'm happy with the way we pay the bills. They have no other debts. 

yes the 3rd car is my childs which they pay for. they are going to University from September and can live off their loan and part time work. 

thank you for taking the time to reply, it was really helpful. I am willing to change our lifestyle but its already pretty bare bones with us constantly saying no to treats, events, days out etc as we can't afford it. I try and pay above the minimum on the debt where I can. 

nomoneymoreproblems

foxgloves said:

Hi,
It's good that you have realised your financial situation is unsustainable without change & you will find lots of help on here, especially as so many of us have also needed a light bulb moment & change of attitude in order to clear our past debts. 
You mention that meal planning is "a nightmare" but I think this is something you need to work on, as you are spending such a lot on food. We also spent a lot on takeaways before we decided we needed to start living within our means. While we were paying off our debts, we cut these to one every 3 months. They are an expensive way to eat & not compatible with debts which need paying. Now we are debt-free, we still only have about 4 takeaways a year. We still enjoy them but can cook similar ('fakeaway') meals for much cheaper.
Given that you need to be getting rid of your debt, I am thinking that £450 a month would be a more realistic amount to spend on groceries & I know many people will be feeding 4 people on much less. I find the key things when grocery shopping to a budget are:
*Meal planning. I did it weekly at first, but now do a monthly plan & just choose a week's worth of meals at a time.
*Using meal plan to write grocery shopping list & checking every item to ensure it isn't already in stock or could be replaced by something you already have.
*Cook from scratch as much as possible. Ready meals have a built in cost of paying someone to make it & are often small portions which mean hungry people go searching for more food later on.
*Cut takeaways to an absolute minimum. They are not essential & need to be a treat for a special occasion while there are debts to pay.
*Batch cook things you like & freeze them as those additional portions will provide home made 'ready meals' on days where you need something quick.
*Use freezer for bargains such as yellow stickered bread & other essentials.
*Watch out for food waste. The only food chucked out in our house is things like lemons which have grown blue fur overnight or something which has unexpectedly gone mouldy.
*Avoid that absolute gobbler of money - the top-up shop. If you are meal planning & shopping to a properly thought out list, you shouldn't need to do midweek trips apart from maybe occasional milk or loaf. We all know that we go in for 2 essential items & end up spending £30. Best avoided!
And of course, once your debts have been paid off, if you want to return to £200 a week grocery spending, that's absolutely your decision. It just isn't realistic when there's significant debt.
Well done for taking the decision to tackle it & best of luck!
F

thank you so much for your reply I am going to try and stick to £120 a week for food shopping, everything is so expensive! considering we barely eat meat and don't drink alcohol I don't know how we spend so much! My plan is to do £100 weekly shop following meal plan and then have £20 for a top up if required, hopefully it wont be and at the end of the week I can pay £20 off a debt. 

nomoneymoreproblems

original SOA with comments. New SOA at bottom with new amounts going forward)

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 2

Number of cars owned.................... 3[b]

Monthly Income Details[/b]

Monthly income after tax................ 1793

Benefits................................ 102.4

Other income............................ 1090[b]

Total monthly income.................... 2985.4[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 585

Council tax............................. 175

Electricity............................. 79.84

Gas..................................... 100

Water rates............................. 35

Mobile phone............................ 28.38 ( for 2)

TV Licence.............................. 13.66

Satellite/Cable TV...................... 10.99

Internet Services....................... 38

Groceries etc. ......................... 803 (reducing to £480 from June)

Clothing................................ 36

Petrol/diesel........................... 50 (just my car)

Road tax................................ 1.66 (just my car)

Car Insurance........................... 89.17 (2 cars)

Car maintenance (including MOT)......... 7.5 (just my car)

Car parking............................. 1.95

Other child related expenses............ 50 (hobbie)

Medical (prescriptions, dentist etc).... 4.45 (prescription once every 2 months)

Pet insurance/vet bills................. 119 (grooming, insurance & food average)

Buildings insurance..................... 11

Contents insurance...................... 14

Life assurance ......................... 34 (life & critical illness cover)

Other insurance......................... 12

Presents (birthday, christmas etc)...... 116

Haircuts................................ 5

Entertainment........................... 37.4 (average for past 6 months)

Holiday................................. 75 (average for past 6 months, nothing else planned to to be paid for)

Emergency fund.......................... 100 (just begun)

Takeaways............................... 141[b] (being cut out!)

Total monthly expenses.................. 2774[/b]

[b]

Assets[/b]

Cash.................................... 400

House value (Gross)..................... 160000

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

Car(s).................................. 6000

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

Total Assets............................ 166400[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 103000...(585)......5.74[b]

Total secured & HP debts...... 103000....-.........-   [/b]

[b]Unsecured Debts[/b]

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

cc1............................420.......30........38

cc2............................1450......50........27

cc3............................1250......58........29

catalogue2.....................1000......30........49

catalogue1.....................550.......40........40[b]

Total unsecured debts..........4670......208.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,985.4

Expenses (including HP & secured debts). 2,774

Available for debt repayments........... 211.4

Monthly UNsecured debt repayments....... 208[b]

Amount left after debt repayments....... 3.4[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 166,400

Total HP & Secured debt................. -103,000

Total Unsecured debt.................... -4,670[b]

Net Assets.............................. 58,730[/b]

NEW GOING FORWARD

Household Information

Number of adults in household........... 2

Number of children in household......... 2

Number of cars owned.................... 2

Monthly Income Details

Monthly income after tax................ 1793

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

Benefits................................ 102.4

Other income............................ 1090

Total monthly income.................... 2985.4

Monthly Expense Details

Mortgage................................ 585

Secured/HP loan repayments.............. 0

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

Management charge (leasehold property).. 0

Council tax............................. 175

Electricity............................. 79.84

Gas..................................... 100

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

Water rates............................. 35

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

Mobile phone............................ 28.38

TV Licence.............................. 13.66

Satellite/Cable TV...................... 10.99

Internet Services....................... 38

Groceries etc. ......................... 480

Clothing................................ 36

Petrol/diesel........................... 50 (just my car)

Road tax................................ 1.66 (just my car)

Car Insurance........................... 89.17 (2 cars) 

Car maintenance (including MOT)......... 7.5 (just my car)

Car parking............................. 1.95

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

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

Other child related expenses............ 50 (a hobbie)

Medical (prescriptions, dentist etc).... 4.45 (prescription once every 2 months)

Pet insurance/vet bills................. 119 (insurance, grooming,food)

Buildings insurance..................... 11

Contents insurance...................... 14

Life assurance ......................... 34 (life insurance & critical illness)

Other insurance......................... 12

Presents (birthday, christmas etc)...... 115

Haircuts................................ 5

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

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

Emergency fund.......................... 100

tax credit repayment.................... 19.99

Total monthly expenses.................. 2436.59

Assets

Cash.................................... 400

House value (Gross)..................... 160000

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

Car(s).................................. 6000

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

Total Assets............................ 166400[/b]

Secured & HP Debts

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

Mortgage...................... 103000...(585)......5.74

Total secured & HP debts...... 103000....-.........-   

Unsecured Debts

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

cc1............................420.......30........38

cc2............................1450......50........27

cc3............................1250......58........29

catalogue2.....................480.......40........40

catalogue1.....................1000......30........49

Total unsecured debts..........4600......208.......

Monthly Budget Summary

Total monthly income.................... 2,985.4

Expenses (including HP & secured debts). 2,436.59

Available for debt repayments........... 718.81

Monthly UNsecured debt repayments....... 208

Amount left after debt repayments....... 510.81

Personal Balance Sheet Summary

Total assets (things you own)........... 166,400

Total HP & Secured debt................. -103,000

Total Unsecured debt.................... -4,600

Net Assets.............................. 58,800

stymied

That looks so much better and it’s not forever. As mentioned you can look to secure a new mortgage deal now  https://www.moneysavingexpert.com/mortgages/getting-ready-remortgage/

Besides cutting costs (the challenges sub forum is good for that, or one of the store cupboard challenges on the old style board), can you increase your income with eBay / Vinted / surveys? Every £2 earned is worth £3 with the interest rates you’re currently stuck with.

kimwp

Thank you for updating your SOA with those notes. A few things to consider -

It's absolutely the right thing to be focussing on cutting down your food bill. Bear in mind that it's a significant reduction, so don't be hard on yourself if it takes a little while to get to that new number. It's worth scrutinising what you throw away to make sure you aren't buying too much and not eating it. And reviewing your cupboards and freezer to see how much food you have there. Eat well for less is one of my favourite BBC programmes, I'm not sure if it's on at the moment, but they point out areas to help reduce food cost.

Having an emergency fund while in debt tends to split the crowd, but financially it's better to have no emergency fund and instead pay that money towards debts which are incurring higher interest than your savings interest rate. If you have an emergency, you have the credit cards to fall back on. Once you are out of debt, you would then start building up an emergency fund again, so that you wouldn't need to rely on credit at that point.

Although you have a higher interest debt, I think you should throw your emergency fund and takeaway fund at the catalogue 2 debt and get it closed asap. Then anything spare goes to your catalogue 1 debt until that is paid off and close it (if you can keep to your budget, that will only take two months). At the same time, you can look at trying to get a 0% balance transfer, maybe after your mortgage application? (I'm not sure what your timescales are on that). Then keep throwing money at whichever debt has the highest interest until it's all gone.

You're in a good position to get these debts gone and start building significant savings fairly quickly, it's just going to take a bit of work.

kimwp

Oh...and if not already, have you thought about putting your eldest in charge of a couple of meals a week, with a budget to do so? Good skills for him to have.