Genuinely how do you start?

Tommyh

Hi all,

It’s been a very long time since my last post, so apologies if it’s not done right.

I’m 46 with two teenagers from my previous and a 5 year old with my current partner (this will become relevant).
When I was with my ex wife, life and finances was slightly different in that cash was readily accepted everywhere, so I was able to use the “envelope system”. I.e. break my finances down into weekly amounts and have them in separate envelopes. In those days, I was also the sole breadwinner (that’s a story between me and my therapist….) and everything was in my name and on my credit file.
When we split and I went my own way, I started to seriously struggle keeping on top of things, partly owing to my mental health decline and drinking and smoking more than I should, and because I was spending money having to start again and trying to do things to keep the kids happy. Which resulted in me missing payments on a lot of different things, and my credit took a pounding - I mean below 10 at one point). When I started seeing my current partner, I slipped into letting her bail me out and then paying her back over a few months.
At one point, she used her inheritance to pay off MY debts as well as hers.

In the last 2 years, I’ve been diagnosed with ADHD and maths in general is a massive problem for me. One of the symptoms of ADHD is poor financial choices. Which is weird, because I can’t ever justify spending £70 on a pair of jeans that I need, but will spend £10 a day on crap and have nothing to show for it.

10 years since my divorce and 8 years into my current relationship, I’m still in debt. It seems to spiral. I’m paid well, and in a job that is pretty much secure until I retire.
We have just bought a house together, so I’m less annoyed about having no money ever, but the debts just spiral.

Overdraft, credit card (which I’ve just gone to a 0% balance transfer and a loan. All of which results in me spending about £500 a month on borrowed money.
my credit has improved recently though, so that’s a bonus.

I honestly don’t know where to start or how to start. I can write all the figures down and it’s honestly like I’m reading Japanese. The maths “work” but I honestly don’t understand it.

Where do I start? In the simplest, not numerical way that will make sense to me.

I want to afford to do things to the house and actually pay back some of my partners inheritance she lost bailing me out.

in_need_of_direction

I think that your post is you already starting. Well done. When in doubt, make a list. Assuming your partner knows about the debt, could they help with the maths side of things once you gather up the paperwork?

itsthelittlethings

Start by tracking your spending. The Google Sheets budget template works well for this for me. Also if you want some more advice fill out an SOA

https://www.lemonfool.co.uk/financecalculators/soa.php

And people here can give better advice. Transferring credit cards to 0%, cutting costs, all kinds of things work.

MillQueen

Hello, and well done for making a start by writing down what the problem is and bringing it here.

It sounds like you have gone through difficult times and managed to get yourself into a more secure place with buying a house with your partner now (what a marvellous achievement) and that getting on top of the money is the thing that needs tackling now to firm things up in your life and make everything more solid.

I think it's admirable what you are wanting to do for yourself and your relationship, getting debt free and paying back money owed. I agree that writing the numbers in a statement of accounts will be a good thing to do, as it well help you see which areas where you will be able to cut back or focus on paying.

I also love that you have found some understanding of yourself with finding out you have ADHD, as you must have felt like you were doing life on hard mode without realising what was behind it. Good luck and just keep returning. It doesn't have to be perfect and just popping in each day to talk about finance and habits is good.

Tommyh

https://forums.moneysavingexpert.com/discussion/comment/82033593#Comment_82033593

[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................ 3399.02
Partners monthly income after tax....... 1060
Benefits................................ 108.2
Other income............................ 0[b]
Total monthly income.................... 4567.22[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 2127
Secured/HP loan repayments.............. 227.0999999999999
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 277
Electricity............................. 100
Gas..................................... 100
Oil..................................... 0
Water rates............................. 98
Telephone (land line)................... 0
Mobile phone............................ 84.55
TV Licence.............................. 14.95
Satellite/Cable TV...................... 79
Internet Services....................... 38
Groceries etc. ......................... 500
Clothing................................ 0
Petrol/diesel........................... 50
Road tax................................ 23.18
Car Insurance........................... 23.18
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 531.07
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 8.57
Buildings insurance..................... 0
Contents insurance...................... 8.52
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0[b]
Total monthly expenses.................. 4290.12[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 520000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0[b]
Total Assets............................ 520000[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 365976...(2127).....0
Secured Debt.................. 7646.2...(227.1)....0[b]
Total secured & HP debts...... 373622.2..-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Credit Card ...................6425.2....130.......0[b]
Total unsecured debts..........6425.2....130.......- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,567.22
Expenses (including HP & secured debts). 4,290.12
Available for debt repayments........... 277.1
Monthly UNsecured debt repayments....... 130[b]
Amount left after debt repayments....... 147.1[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 520,000
Total HP & Secured debt................. -373,622.2
Total Unsecured debt.................... -6,425.2[b]
Net Assets.............................. 139,952.6[/b]

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

MillQueen

Thanks for sharing your accounts, I think it really shows your commitment to working on things. If all of the debt is 0% interest for now, I think I'd probably focus on the debt that's secured first so you don't risk your house or other assets. The obvious place (to me) for cutting back looks to be groceries. It should be possible to eat well for less than that - you could use AI to help, as Chat GPT will plan you a nice month of food if you give it a budget of for example £300. The Too Good To Go app is also good for getting an occasional treat for less money.

I assume the child related expenses might be support for your kids from your previous relationship and may need to stay high? Also, for your mobile phone bill, might be good to switch to a SIM only deal once the handset is paid for. Do you need that many choices for satellite TV? That could probably be cut down too…

What are your own thoughts on where it might be easiest to tighten things up?

MillQueen

To add, as well, it might be good if you can, to start an emergency fund or a savings pot for maintenance, as you haven't accounted for things like the car service and MOT, which will be reoccurring and it feels less stressful when prepared for these things and prevents them from knocking you off track. Even if it's only £20, regularly setting a bit aside will make you feel more in control when there are sudden expenses 😊

Smudgeismydog

Well done for taking steps to address this.

I also felt the groceries, satellite and mobile phone bills stood out, so have a look at these. Can you make any changes to reduce costs here?

You also have a few categories where you haven’t entered anything, e.g. building insurance, haircuts, clothing, presents, car maintenance which doesn’t seem right. It usually takes a few attempts to get your SOA correct, as if you do have £147 left over each month, why do you not have anything saved in cash? If you have a look through your last few months bank statements, you should be able to work out where this is going.

Putting money away into an emergency fund is a priority, as with a house and family, life happens and you need to build a buffer to deal with it. This will also help you to move away from using credit when something unexpected happens.

As you’ve already learned, taking on loans is not the solution. Certainly secured loans where you could potentially jeopardise your house should be avoided at all cost. I’d agree with @MillQueen in that if your debt is all at 0%, then focus on the secured loan first. Review your budget with your wife, and have a serious conversation about what you can do as a household to tackle this.

Chocolatefund

Well done on taking the first steps to sorting out your finances.

I echo what the above posters have said in that you must allocate money for an emergency fund, and be realistic about filling in other categories that are missing, such as car maintenance.

Also,

Holy mortgage payment batman. That's nearing half of your combined income. I'm assuming that your partner doesn't work full time? You both are going to have to have a sit down chat about finances, because I don't think the debt alone is the issue.

Does the third adult in the house help with the costs?

Catscoffeecake

I think the budget is missing alot of expenses and this is probably how you have ended up in credit card/loan debts.

what are the other child costs?

what property do you live in? could you downsize? because neatly 50% of your combined income on mortgage is not really sustainable long term. Who is the 3rd adult? could they contribute towards costs? I think you need to sit down with your partner and put together a budget you can both agree on. Hopefully they can help with the budgeting side of things. Most places still accept cash these days, you just might have to queue slightly longer in supermarket etc. Otherwise have you considered monzo with its pots?

Tommyh

Thanks for the replies everyone.

I’ll answer a few questions I can remember.

Regarding mobiles. It’s my phone and contract. My partners contract and 2 kids on sim only. And it was the best deal we could get for everyone. We share data etc so it’s easier for them to be all under one bracket.

Haircut. I do my own hair with clippers. Occasionally I’ll get it done at the barbers when I want a beard trim as well.

Sky. We live with my mother in law. So, she has sky in her room and we have the basic package for everyone. But Sky being Sky, it’s expensive. We actually went through it the other day.

The third person in the house is my mother in law and she does contribute to her share of the water, energy, sky, broadband and council tax. One of the cars is hers also and pays for it.

I think I’ll got through the expenses tomorrow on my laptop and try and add to it.

We can’t downsize, we’ve been here for a year only and are tied into the mortgage for another 4.