Debt Help

Grumpelstiltskin

Boiler insurance £36.99 monthly more than £440 yearly, you could by a new boiler every 5 / 6 years.

Wouldn't it be better to save say £25 monthly in a savings account with interest?

As soon as you are out of contract with phones go Sim only.

MattMattMattUK

My thoughts below on your outgoings, there should be some easy wins, although other bits might be harder overall. 

ad2 said:

Water rates............................. 90.52 - This seems very high, for a family of four I would expect this to be in the £25-35 region with a water meter, so get one ASAP.

Mobile phone............................ 154.92 - This is incredibly high, a £10 SIM only should be more than enough per person, so £20 in total

TV Licence.............................. 13.25 - Get rid of this, just watch free catchup and free streaming from everyone but the BBC.

Internet Services....................... 37 - Not hugely expensive, but you can probably save £10 a month with a good deal.

Groceries etc. ......................... 600 - High, but not outlandishly high, could probably save £100 with some planning.

Petrol/diesel........................... 250

Road tax................................ 33.25

Car Insurance........................... 84.49

Car maintenance (including MOT)......... 30

Car parking............................. 40

Other travel............................ 335
Your travel costs seem very high, £772.74 per month, what are these actually for? The fuel alone would indicate around 1,500-2,000 miles a month and the "other travel" figure is also very high.

Medical (prescriptions, dentist etc).... 70 - This appears high, how much of it is prescriptions? You can pay £114 per year per person for a Prescription Pre Pay certificate which means that you do not need to pay per prescription. 

Pet insurance/vet bills................. 72.85 - Have you looked for cheaper alternatives, things like Topcashback to get money back on premiums etc? 

Contents insurance...................... 10.72

Life assurance ......................... 0

Other insurance......................... 39.23 - What is this for?

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

Haircuts................................ 0

Entertainment........................... 22

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

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

Household Services...................... 22[b]

Total monthly expenses.................. 4341.39[/b]

ad2 said:

1x Phone & 1 Watch in contract till October 2025. Other is February 2027.

Ok, so one signed up last year and the other early this year? Potentially sell the watch, sell the phone and get a cheaper one?

ad2 said:

The medical is a private prescription for our daughter, this will hopefully go by the end of the year.

Could this be made an NHS prescription via your GP?

ad2 said:

Boiler insurance £36.99 and gadget £2.24

The boiler insurance is almost certainly not worth it considering the costs of replacement. For gadget insurance, are you in the habit of breaking them? I ask because I know people who smash a lot of phones and personally I have never broken a single one, other people exist in the middle.

ad2 said:

Pet insurance - This is the 2nd year so went up slightly, can explore that.

It is always worth looking at options, cheaper premiums, cashback etc. Unless your animal has a lot of pre-existing issues it seems very expensive.

ad2 said:

We buy a mix but could probably buy more supermarket brands.

Drop pretty much all brands, they are not needed and you will save a significant amount.

ad2

OK thanks for everyone’s input and help.

The water is one I am going to query as it was £55 and now £90.52. I have a feeling they messed up the billing on a previous year but will check that.

The medical one is a private prescription and hopefully moving to NHS so that will help.

Travel is Train and Car for both of us.

There are a few things to potentially review reduce. In terms of phones/insurance/tv/food costs.

I think that the overall debt will need to be handled with another solution?

Grumpelstiltskin

You need to know how you got into so much debt and be sure you know how you are going to live without more credit in future.

ManyWays

The Water, the Mobiles and the Medical are the lines that looked high to me. The groceries looks pretty normal especially as it includes school meals and dog food, it will be very hard work to get £50 a month off that and it wont change your overall position

The clothes looks too low, even if you have included school uniform under child expenses. Car maintenance looks low for 2 cars? You need a line for replacing household goods and an emergency fund. And a bit in holidays even if its just for the odd day out. 

This looks like a clear debt management plan. When does your mortgage fix end and who is the mortgage lender? Is the HP debt car finance, if so when does it end and is it HP or PCP? Are 2 cars essential?

ad2

The fix ends 30 April 2025 and it is Shared Ownership with Halifax. The 1 car is PCP and unfortunately yes we need 2 at present

ad2

Grumpelstiltskin said:

You need to know how you got into so much debt and be sure you know how you are going to live without more credit in future.

I agree, I am just struggling to work out a plan out of this, to ensure we can live having enough money not to rely on using credit and then also pay off existing to be debt free

Grumpelstiltskin

You need to go through everything you spend and see what you can do to reduce everything.

If you can't find enough money to fully pay your debts then it will be  a DMP.

If you do decide to go down the DMP route then you must stop paying your unsecured debts and wait till they default.

Whilst waiting you need to save as much money as you can into an emergency fund so when something breaks down, fails MOT etc. you have the cash to pay without using credit.

Once your debts default they will stay on your credit record for 6 years whether you clear them or not. If  you jump in and state making reduced payments before they default then your credit report will be marked with 'Arrangement to Pay' The don't clear until 6 years after you have made the final payment, so if it takes you 5 years to pay off it doesn't go from your credit report for 11 years. You have to have a serious thought about how you are going to go forward, you can't carry on as you are.

ManyWays

ad2 said:

The fix ends 30 April 2025 and it is Shared Ownership with Halifax. The 1 car is PCP and unfortunately yes we need 2 at present

so what will the mortgage go up to then at current interest rates? You need to make your plan now on the basis that the mortgage is going up, no point in making a lot of small economies to scrape through paying the debts then next April be unable to as the mortgage and rent will have both gone up. When does the PCP end, because you are unlikely to be able to refinance at a good rate even if you keep paying the debts.

EssexHebridean

ad2 said:

Maybe there is work to be done on the food bill then but we never seem to be able to get lower than £120/£140 a week (dog food inc). No they are not teenagers and I have included school meals for 1 of them in that. I will see if anything can be done on your mobiles as well.

I have updated it again, hope that helps

[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

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 3412

Partners monthly income after tax....... 1558

Benefits................................ 170.2

Other income............................ 0[b]

Total monthly income.................... 5140.2[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 621.1

Secured/HP loan repayments.............. 380

Rent.................................... 929.3

Management charge (leasehold property).. 0

Council tax............................. 199

Electricity............................. 61.83

Gas..................................... 61.83

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

Water rates............................. 90.52

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

Mobile phone............................ 154.92

TV Licence.............................. 13.25

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

Internet Services....................... 37

Groceries etc. ......................... 600

Clothing................................ 50

Petrol/diesel........................... 250

Road tax................................ 33.25

Car Insurance........................... 84.49

Car maintenance (including MOT)......... 30

Car parking............................. 40

Other travel............................ 335

Childcare/nursery....................... 24

Other child related expenses............ 59.1

Medical (prescriptions, dentist etc).... 70

Pet insurance/vet bills................. 72.85

Buildings insurance..................... 0

Contents insurance...................... 10.72

Life assurance ......................... 0

Other insurance......................... 39.23

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

Haircuts................................ 0

Entertainment........................... 22

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

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

Household Services...................... 22[b]

Total monthly expenses.................. 4341.39[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 0

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

Car(s).................................. 1725

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

Total Assets............................ 1725[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 108821...(621.1)....2.49

Hire Purchase (HP) debt ...... 24898....(380)......7.3[b]

Total secured & HP debts...... 133719....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Credit Card....................8500......220.......20.01

Credit Card....................4700......140.......24.85

Credit Card....................5900......86........24.1

Store Card.....................164.63....30........34.9

Loan...........................6909.89...300.......0

Credit Card....................3732.84...121.......23.9

Credit Card....................2532.24...25........0

Store Card.....................589.75....37.12.....29.9

Store Card.....................110.36....30........24.9

Credit Card....................250.......0.........0

Overdraft......................250.......0.........0

Store Card.....................631.42....37........24.9[b]

Total unsecured debts..........34271.13..1026.12...-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 5,140.2

Expenses (including HP & secured debts). 4,341.39

Available for debt repayments........... 798.81

Monthly UNsecured debt repayments....... 1,026.12[b]

Amount short for making debt repayments. -227.31[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 1,725

Total HP & Secured debt................. -133,719

Total Unsecured debt.................... -34,271.13[b]

Net Assets.............................. -166,265.13[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

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

Food bills have proved challenging for a lot of folk over the years - you’re not the first to struggle with reducing this, BUT it is doable, and at this point, anything you can shave off helps! For a start do you actually “budget” a set amount for food? So set aside your chosen amount so you can see it at the start of the month and can also see the effect on the balance that each shopping trip makes? 

Secondly - HOW do you shop? Do you make a list, then once or twice a week head to the shop to get the things on that list? And what is the list based on - a meal plan? Or just things you think you probably need…? Or is there one main shop a week then lots of trips into the shops when people say “Mum! We’re out of milk!” - that is the reality for lots of people, but it’s also often a more expensive way to shop as let’s be honest, who ever goes to the supermarket for a bottle of milk and comes out having just bought the milk and nothing else?! 😂
Third - WHERE do you shop? And also - branded or own brand? Own brand or basic? The “downshift challenge” on the main MSE site is an oldie but a goodie - it can make a big difference, and often people even find that they prefer some of the swaps they’ve made too. If you currently shop at Sainsbury’s, then try Tesco. If you are currently a Tesco shopper, take a look at Aldi or Lidl. 

First challenge for you on the groceries then - ring-fence that budget so you can see how much you have, and then before you do ANYTHING else, grab a child (one with legible writing, if they are old enough for that!) and head to your fridge, freezer and cupboards, and start listing the things you have. You want a decent sized notebook for this (one you already have, this is NOT a shopping opportunity!) - set aside a full page or more for each area, and head them up so everything is clear. If you see anything as you go along you are close to running out of, and that you actually need, then add that to a new page to start a shopping list. Once you have your inventory, then the next step is to involve the rest of the family and see how many meals you can make for the next few weeks using just the things you have in stock already. This is your chance to use the things that have been lurking in the freezer for ages, and to make the most of the stuff you have. Think about batch cooking, providing a meal for the following few days, plus one in the freezer for another week. The trick is to give yourself a boost by being able to keep your spend really low for a few weeks - and also get you into the habit of shopping with a list and meal planning. Also - if having the kids/OH with you leads to temptation and overspending in the supermarket then whichever of you is the more disciplined does the shop, the other stays at home! 

My other big concern from your SOA is the Presents category - you say you budget £50 a month for this, but show nothing in cash savings. How much do you actually have saved here? We’re now just a shade off 2 months from Christmas, so what planning have you done, how much have you got budgeted to spend and do you actually have that money? Allowing that you have children, to me, this might be your most important focus right now, as it is a critical point if you DON’T currently have your budgeted spend saved. Whatever you do, please don’t be tempted to see this Christmas as one last hurrah and put spending onto plastic, ultimately it is ONE day - it is not worth giving yourselves an increased financial headache for! 

What is the situation with that water rates bill - I presume that is rates rather than a meter? If yes, then double check whether your supplier allows an option to change back from a meter after a set period if you find it more expensive, and if they do, then apply to get a meter fitted. If they don’t m then ask around among local pals with a similar family/house setup to you - you won’t take long to find people on metered supplies - then ask them what they pay - although it won’t be an exact comparison because every household is different, it will give you an idea - and I suspect you will be surprised at the difference! (We are only a household of 2, but do have a veg garden which requires water in the warmer weather, and are currently paying £18 a month.)