In need of some advice - SOA attached

lealivi3

Hi all,

I’m looking for some advice on how to finally tackle my mounting debt and get things under control before it gets any worse.

I feel like I spend all of my wages on paying off debt and nothing seems to change.

We are a family of 4 (1 adult child and 1 teenager) and myself and my husband work full-time.

Any advice would be greatly appreciated.

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]
Number of adults in household........... 3
Number of children in household......... 1
Number of cars owned.................... 2[b]

Monthly Income Details[/b]
Monthly income after tax................ 2290
Partners monthly income after tax....... 2968
Benefits................................ 117
Other income............................ 0[b]
Total monthly income.................... 5375[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 1220
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 13
Council tax............................. 236
Electricity............................. 86
Gas..................................... 67
Oil..................................... 0
Water rates............................. 0 (live in Scotland)
Telephone (land line)................... 0
Mobile phone............................ 36 (3 phones)
TV Licence.............................. 15
Satellite/Cable TV...................... 0
Internet Services....................... 24
Groceries etc. ......................... 800
Clothing................................ 100
Petrol/diesel........................... 100
Road tax................................ 34 (2 cars)
Car Insurance........................... 58
Car maintenance (including MOT)......... 45
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 100
Medical (prescriptions, dentist etc).... 25
Pet insurance/vet bills................. 160 (inc dog walker)
Buildings insurance..................... 10
Contents insurance...................... 10
Life assurance ......................... 40
Other insurance......................... 0
Presents (birthday, christmas etc)...... 260
Haircuts................................ 80
Entertainment........................... 0
Holiday................................. 250
Emergency fund.......................... 0
Lotto................................... 12.5
Union membership........................ 18[b]
Total monthly expenses.................. 3799.5[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 327500
Shares and bonds........................ 0
Car(s).................................. 20000
Other assets............................ 0[b]
Total Assets............................ 347500[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 203500...(1220).....4.39[b]
Total secured & HP debts...... 203500....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Loan...........................17800.....388.......7.3
PCP Car........................22300.....332.5.....0
PCP Car........................17000.....256.......0
Store card.....................550.......0.........0
Store card.....................1390......0.........0
Credit Card....................8357......84........0
Credit Card....................3140......33........0
Credit Card....................10000.....120.......0[b]
Total unsecured debts..........80537.....1213.5....- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 5,375
Expenses (including HP & secured debts). 3,799.5
Available for debt repayments........... 1,575.5
Monthly UNsecured debt repayments....... 1,213.5[b]
Amount left after debt repayments....... 362[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 347,500
Total HP & Secured debt................. -203,500
Total Unsecured debt.................... -80,537[b]
Net Assets.............................. 63,463[/b]

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

Ms_Chocaholic

Is there an option to go down to one vehicle?

Can mobiles be reduced to a SIM only deal say with GiffGaff for £6 pcm

Does your adult child work - does he pay board?

lealivi3

Hi, thanks for your response.

I have 2 mobiles on SIM only deals at £6 each and one is still in contract unfortunately.

My adult son is a full-time Uni student and only works a part-time job to give him some spending money so not enough to ask for board I’m afraid. 😟

lealivi3

I have thought about going down to one car but where we live has a very limited bus service so it’s trying to work out getting our youngest to school and back (whilst still getting to our place of work). I might need to have a good look at this though as it is so costly running two vehicles (albeit my car is a small electric).

Vitor

First, with over £80,000 of unsecured debt, I think OP needs proper free debt advice rather than trying to tinker around the edges. As you are in Scotland, look at StepChange Scotland, National Debtline Scotland, Citizens Advice Scotland or MoneyHelper. In Scotland, the Debt Arrangement Scheme may be relevant because it lets you repay debts at an affordable rate through a Debt Payment Programme, with protection from creditor action. It is not the same as bankruptcy or a trust deed, and it may suit people who can repay in full over time. That said, a debt solution will only work if the household stops creating new debt.

On the numbers shown, OP is not insolvent on paper because there is house equity, but are clearly overcommitted on cashflow. The cars and the lifestyle categories (Presents, Holidays, …) need urgent attention before this gets worse.

fatbelly

This isn't a disaster. You are meeting the contractual payments on the debt, living a generous lifestyle and still (on paper) having 362 a month left over. Your soa looks honest but I wonder if something is going on as you have accumulated 80k of debt, with half of that being pcp on cars

I think you are saying that you want to get debt free. This is going to take a bit of time (no quick fixes like shoving it on to the house please) and will involve overpaying the debts in order of expensiveness. To that end you do need to know, and record, the aprs of the debts.

I'll leave others to comment on the expenditure items that seem high

Smudgeismydog

SOA observations;

• the car finance is costing £588pm, that is a huge commitment. By the looks of it, you still owe more than they are worth, so perhaps cannot hand back or get out of the agreements, and replace with cheaper vehicles.
• Groceries at £800pm could be reduced, do you batch cook and meal plan?
• I do understand that with 4 kids the cost of gifts and presents can be high, but you just cannot afford £3,120 per year. Perhaps have a family discussion about what this needs to look like going forward
• Similarly, holidays at £250pm is on the high side. UK breaks, self catering, camping/glamping?
• Clothes at £100pm, can you e.g. sell things on Vinted and then use money raised on there to buy the things you need?
• Dog walking, can the kids help with walking before and after school?
• Lotto is only £12.50pm, so doesn’t feel like it would make much difference, but seriously, your chances of winning are so low

Having an emergency fund could really help avoid using credit cards in the future, as I’m sure with such a busy households there will be unexpected costs that crop up.

As @fatbelly said, it feels like it’s time to really understand how you have accumulated this debt. If you are ready to tackle it now, then it can be achieved, but you will need to do this together as a family

Grumpelstiltskin

You need to add the interest rates on to your SOA, I'm sure they are not all 0%.

Your children are old enough to understand that you have been living above your income for some time and it can't carry on. They will have to be told they must pull their weight and from now on it's not going to be 'I want' but only what 'I need' unless they can come up with a way of paying for it themselves.

The sooner they learn about money the better it will be for them later in life.

Emmia

https://forums.moneysavingexpert.com/discussion/comment/81989667#Comment_81989667

There's 4 people, not 4 kids. There's the parents, one adult "child" at university and a younger child.

I absolutely agree though that over £3k a year on gifts is far too high.

The reality is that holidays away from home in the UK are often as expensive as going abroad, and camping/glamping also isn't necessarily super cheap either. I'd probably just stop going away at all - home based staycations only.

Edit: I also think the adult child should make a contribution, I paid my parents board when I was at home from uni holiday, and I had to have a job or in my case jobs to do this. It doesn't need to be full whack, but offsetting the cost of their food would help.

foxgloves

There is capacity for some decent cut-backs here. Holidays aren't really compatible with the amount of debt you have, so it'd be worth a couple of years of using that £250 pm holiday money for debt repayments. £800 pm for groceries is high for 4 people. Do you meal plan? Batch cook? Reducing this to £500 pm would be another £300 freed up, making £550 a month towards debts. That would be a decent wodge over a couple of years & that is without even starting on reductions to expenditure on presents & other categories. Most of us on these forums have been in a similar position with many years (decades in my case) of living outside our means. Payback time eventually arrives for all of us, along with the realisation that our financial situation won't change unless our lifestyle habits do.

Good luck with turning things around. The security of being debt-free is very much worth it.

F

Brie

Jumping on the cheerleading bandwagon!!

Great to see so much thought has gone in to your SOA. But me being me I'm still going to poke some holes in it.

First off there's a number of things listed which are such nice round numbers I don't know if you are being realistic about what you are actually spending.

Groceries etc. ......................... 800 - have a look at 3 months worth of bank statements/credit cards and find out exactly what you spent at Tescos/Aldi/corner shop. This will include all the household stuff too like dish soap and shampoo.

Clothing................................ 100 - check back over the last year. Presumably the one at uni buys their own kit. Is the teen really being fitted out in school uniform/shoes/fashion gear for a part of £1200 a year? No spends for the working adults? Or are you raiding the local charity shops? (great way to save on quality items if you have the right shops near by)

Petrol/diesel........................... 100 - again - too round. Check your statements.

Car maintenance (including MOT)......... 45 - ditto

Other child related expenses............ 100 - what are you putting here? Teen's ballet classes or their school uniform & football subs?

Pet insurance/vet bills................. 160 (inc dog walker) - someone's already mentioned the kids helping. Unless it's a case of someone having to walk the dog mid day while everyone's at work/school.

Buildings insurance..................... 10 - and again…check

Contents insurance...................... 10 - and again…check

Life assurance ......................... 40 - and again…check. And also double check if you are covered (properly) via work. It may not be the right idea to cancel this even if you are covered by work but only you'll know how secure you feel in your employment and how good your policies are. Think about why you have this. To cover the mortgage should either of you lose your job? To provide security for the kids should one or both of you die? Consider if there is a time when this is no longer necessary. I was surprised when my parents told me they had cancelled their life assurance but it made sense as they did it when myself and my siblings had finished education and were earning ourselves. What they did at that point was buy us each an income protection policy.

Presents (birthday, christmas etc)...... 260 - as others have said this should be trimmed. Conversations about finances with kids (whatever their ages) will help them manage their expectations. Presents for others outside the immediate family need to be cut as well - having a light hearted chat with siblings/parents about how silly it is for you to buy them things they don't need/want and they buy things you don't need/want. It lets them off the hook as well - make sure they know you (& the kids?) won't be expecting anything. Some would say limit it to £5 each person but frankly I think that makes things worse - the "presents" are likely to be cheap tat and it will cost more to wrap/post them than to buy the actual items. Believe me I know this far too well.

Haircuts................................ 80 - check please!

Holiday................................. 250 - Can you afford holidays away? Granted that even to go out to a place like Eden project/Legoland can easily cost a huge amount but maybe the excursions can be limited in some way. That said we all need something to look forward to….maybe compromise between presents and holidays, have one but not the other?

Lotto................................... 12.5 - no. And don't check whether your numbers would have won after you stop.

And now that I've been an absolute pain I'll leave you with a simple thing to consider….your TV licence. Do you need it? If you're not using BBC iPlayer or watching any live programmes you don't. If everyone watches on demand things like Netflix then just cancel the licence.

Best of luck and remember we've all been there ourselves and lived to tell the tale!