What debt to pay first? - Currently stuck with my decision

RAS

HSBC and Nationwide rates are 39.9% if they are arranged, though they charge only for the days and amounts you are overdrawn.

Halifax is 39.9-49.9%

Are you actively using any or all of these accounts? Where does you salary get paid?

I'd suggest that you clear the Halifax OD before anything else. One month of hard budgeting could do it. 

You've boxed yourself into a corner with very high inflexible debt. You need to address the reasons you've got into this situation. No need to share with us but you need to recognise whether this is as a result of a nasty divorce or a business failure, living the high life or a gambling or substance use. 

You've got some leeway in your budget but probably not as much as in your SOA. You need to add things like insurance, just divide by 12. You need to reduce costs further if possible, avoid additional spends and get those overdrafts and the Virgin account cleared, Halifax, Virgin, others.

Once you've done that, it's time to start saving some money each month into an emergency fund, and keep knocking down the debts in interest order.

EssexHebridean

MrBowler said:

Never been able to do one of those SOA's correctly but this one seems to be a bit easier than the last one i did.

Please see below i think i covered everything

[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.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 4000

Partners monthly income after tax....... 300 Any way of your partner increasing this at all? It would make a big difference even if only a small amount. 

Benefits................................ 75

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

Total monthly income.................... 4375[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 324 If this is a fix on a low interest rate when does that rate end?

Secured/HP loan repayments.............. 827 This is painful - what does it relate to? 

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

Management charge (leasehold property).. 0

Council tax............................. 165

Electricity............................. 100 This and the gas are on the high side - have you checked you are being billed on accurate readings, if you are then probably a good plan to have a think about where you might be able to reduce use. 

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

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

Water rates............................. 45

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

Mobile phone............................ 84 On the high side - note when contracts finish and look for cheap sim-only deals, retaining phones while they still function well. 

TV Licence.............................. 15

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

Internet Services....................... 31

Groceries etc. ......................... 300 This would be extremely good for a family of 4 - are you absolutely certain that this is all you spend, you're not just adding up the cost of your main weekly shops and forgetting about top-up shops ? 

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

Petrol/diesel........................... 320 Ouch - that suggests massively high mileage.

Road tax................................ 3

Car Insurance........................... 45

Car maintenance (including MOT)......... 20 On the basis that you presumably do high mileage you need to rethink this - you are going to need service and MoT more often than most, as a starting point. 

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

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

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

Other child related expenses............ 50

Medical (prescriptions, dentist etc).... 30

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

Buildings insurance..................... 0 These need to be budgeted monthly

Contents insurance...................... 0

Life assurance ......................... 45

Other insurance......................... 0

Presents (birthday, christmas etc)...... 60

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

Entertainment........................... 0 Not realistic - particularly with children,  and you have already said that you want to be able to take days out with them too! 

Holiday................................. 0 So where is that week in a caravan being funded from if you aren't budgeting for a holiday?

Emergency fund.......................... 0 This is a priority to start building and then continue paying into each month[b]

Total monthly expenses.................. 2634[/b]

[b]

Assets[/b]

Cash.................................... 1500

House value (Gross)..................... 180000

Shares and bonds........................ 500

Car(s).................................. 4000

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

Total Assets............................ 186000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 78000....(324)......1.49

Secured Debt.................. 47470....(565.3)....9.9

Hire Purchase (HP) debt ...... 4369.....(229.9)....9.9<

Hire Purchase..................224......(11.8).....9.9<

Hire Purchase..................560......(20).......0[b]

Total secured & HP debts...... 130623....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Virgin.........................1973......150.......44.9

Virgin 2.......................4221......150.......25.9

Dad............................10000.....0.........0

Simply Be......................1000......50........0 Are these accounts definitely not incurring interest?

Studio.........................150.......50........0

Drafty.........................775.......96.1......12.9

Halifax Overdraft..............915.......50........0

Nationwide Overdraft...........1023......50........0

HSBC Overdraft.................2391......50........0

Santander......................3508......130.5.....12.9[b]

Total unsecured debts..........25956.....776.6.....-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,375

Expenses (including HP & secured debts). 2,634

Available for debt repayments........... 1,741

Monthly UNsecured debt repayments....... 776.6[b]

Amount left after debt repayments....... 964.4 Well this is excellent  - more on that below! [/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 186,000

Total HP & Secured debt................. -130,623

Total Unsecured debt.................... -25,956[b]

Net Assets.............................. 29,421[/b]

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

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

OK - most of my comments are in bold, but let's talk about that surplus separately. What are you currently doing with that £964 a month? That's a really excellent surplus, and if it is a real one, it leaves you in a great position to start attacking things, BUT, is it real? You need to track that down as a priority - because if you are currently not seeing any benefit from it, that is very nearly £12k a year just effectively getting lost! 

I think you need to go back over the SOA with bank and card statements to hand - and make sure that the costs you have filled in are accurate. Groceries and entertainment stand out as a starting point, plus a likely under-budget for car maintenance which could be responsible for a big hole in your finances currently. 

Where you are budgeting things monthly you MUST make sure you set that money aside so it's ready when needed - otherwise the bill comes in and then you end up reaching for the credit card because you have no other way of paying it. 

MrBowler

So valid point about the surplus, its come due to me getting a pay increase at my job, i have worked 2 jobs for a number of years now but one went from 600 a week to around 100 per week so i stopped it and started another job which is now between 3-500 per week depending on how many hours i do.

I have also had a promotion at my main job that has increased my wage by around 8k per year. So the surplus has only just happened over the last few months, christmas out the way, new year new start and a few other things that i have paid off as well has shadowed the money we had to spare.
Now i know what i have to spare i have been looking at what to pay off first, the snowball or avalanche option has just thrown me completley.

I do want to pay my dad off at the earliest opportunity as hes getting old and i dont want to be the one who owes money to family members, i just want it gone, now as much as i can wait i also dont want to be getting further into debt just to be the one who doesnt owe money to family.

As for the comments above, my partner as much as i would like her to have her wage increased wont be able to at the moment as this then would mean we would need to pay for childcare which then doesnt help and we would end up paying more over time, now its not the best wage but its something that when both kids are at school full time she could then benefit from going on her own and benefitting massively from.

Mortgage runs out in March 2027, i got it on a 7 year deal when Covid started in the UK
Secured loans are from a secondary mortgage and my current car payment and 2 old car payments.

Gas and Electric are high as the meter readings havent been read properly from British Gas for over 12 months and then when they were they put me in a defecit of over £1000, they said the meter readings were wrong, so i am actually spending around £130 in the winter and around £40 outside of winter as i have solar panels. 

Mobiles, one runs out tomorrow and that will be the first thing i do tomorrow morning looking for a sim only, the second one runs out in September which yet again i will be looking at Sim Only options

Fuel - yes my secondary job is working as a delivery driver using my own vehicle.

Maintenance of the car, i pay £100 every 6 months for a service and an MOT every year at £30, yes there is new tyres as well which i didnt think about so thats around 320 per year so around £40 per month instead of £20

Building insurance, mentioned earlier i forgot to add that in.

Entertainment, we currently dont do much not even with children, we entertain by going to friends or the local park or farm, a local pub has a play area and as we both dont drink we usually have a refillable drink for £3.20 each and let them go in the play area, but yes its around £20 per month max. But this i want to change.

Emergency fund - 100% want to get available, how much i dont know, i think around £2000 would be a good number.

Simply be yes its buy now pay later and we are still in the time limit.

But i do think the credit cards is the main one, i did look at getting a money transfer card but it was only allowing me £200 to transfer even though the ClearScore app was saying £5k was approved, so instead of actually trasferring £200, i snapped the card up and put it in the bin.

ManyWays

Simply Be......................1000......50........0 is that a BNPL? If so just clear it now, it will go up to something nasty if you dont

Studio.........................150.......50........0 same as Simply be, usually even nastier...

Drafty.........................775.......96.1......12.9 I think you have the wrong numbers in as Drafty is a payday loan with a representative APR of 96.2%... 

So I suggest clearing Drafty first, then the two catalogues and then on to that Virgin card. I dont think I have ever seen a Virgin card charge that much before.

Mortgage...................... 78000....(324)......1.49
Nice - when does your fix end? Because its likely that your rate will go up a lot and so you will need to pay a hundred or two more a month. Think of this as the date you want most of your debts cleared by. 

RAS

If Drafty is a payday loan at 96%, clear that immediately, regardless of sorting out the SOA. 

Then take a better look your actual spends and re-post.

Meantime, maybe Mrs Bowler can look at the Boost Income subforum along side this one? It might only yield £20pm and a few freebies but...

EssexHebridean

OK - so go back over the SOA with the right numbers in various places, and see where that leaves the surplus.

Have you already stopped using any form of credit? If not, you need to do so. That includes buying from catalogues as well. 

Set a diary reminder to read your meters once a month and pass those readings to your supplier to avoid going into any more debt there - it's your responsibility to ensure that they have regular readings, so this is a good habit to get in to. Personally I'd also get on the list to get smart meters if you're not the best at remembering to do readings as that ought to solve the issue. 

You've got two years to make a proper impact before your mortgage rate goes up - so make that time count. 

Personally I would make every effort to get Drafty gone ASAP, then the catalogue stuff, and then treat the overdrafts as the next priority as those are a bit dangerous - the banks can come along and call those in at any time which would leave you in a right hole. once that is under control, the Virgin CC is going to be the next option. 

It will be the payday loan having a significant effect on your credit file at the moment which won't be helping in terms of moving things around. Give it three months after clearing that and use an eligibility calculator to establish whether you may be able to shift any of the CC debt to 0%. This time, if you get approved, even for a small amount, get that transferred as it's debt you aren't paying interest on. Then give it another 3 months before checking again. 

MrBowler

If drafty is that percent then i have my numbers wrong on a report i keep a record of, so i will look into that, just seems the app is down at the moment.

If that is the case then yes i will attack that first.

I am also on smart meters, thats the reason ive had a full arguement with them stating that the readings by them cant be wrong but they say its a technical error.

I am also in the middle of PCP claim (dont via this site) so far i have 3 claims that say i fall in the category of "missold" (or whatever it is), hopefully this will give me a bit of a lump sum that i will also throw straight on to debts.

I am hoping to have all my debts paid by the time i come to redoing my mortgage and then everything will be a lot easier, but the way my calculations are at the moment i will have a fair chunk of the secondary mortgage left to pay off.

RAS

If you renew with your existing provider, you could just be able to choose the best of there deals with no credit check.

ManyWays

I am also in the middle of PCP claim (dont via this site) so far i have 3 claims that say i fall in the category of "missold" (or whatever it is), hopefully this will give me a bit of a lump sum that i will also throw straight on to debts.
I have seen some wild amounts suggested by claims firms and solicitors. And solicitors fees can be extremely high. I suggest you assume you may possibly get a few hundred back sometime in 2026.

EDIT - was (dont via this site) a typo for (done via this site) or (didn't use this site)

MrBowler

should have been done by this site, sorry.

yes i am not expecting much, at the max £1000 across 3 cars (3 cars over the years have been around £40k purchase so i dont think its that bad what i am expecting.