Advice on debts needed!

weimaranermerlin

Hiya there,

I would really appreciate some advice on how to sort out our financial situation. First of all the facts: My husband is working full time and takes home about £2100 after tax. I am working part-time and take home about £700 after tax. We have a two year old son who goes to a childminder 3 days a week (allowing me to work and my sanity!), as well as a large dog and 2 cats. We own our 3 bed semi with a mortgage of £120k. If we were to sell the house we'd be getting around £260k. Our set monthly outgoings are as follows:
-mortgage: £725
-council tax: £135
-Mortage & lief insurances: £80
-Phone: £50 (includes contract mobil & home phone)
-pet insurance: £30
-Gym: £40
- ISA: £ 80
- CC repayment: £ 100
- Childminding fees: £400
- gas& electricity: £ 150 (we are paying off a rather high bill!)
TOTAL: £1790

According to this we should have just over £ 1000 which has to pay for all the food, petrol, etc. My first question would be IS THIS FEASIBLE?

At the moment we have about £1100 on an Egg 0% interest CC (anniversary offer) which I was hoping to swap to another 0% interest one if this deals run out.
On the other side my husband is holding company shares & share options which if cashed in would give us anything between £23 - 27k. These are given by my husband's company as an additional income and we have been holding on to them for the last 6 years. We are now wondering if it wouldn't be wise to cash them or at least enough to pay off the £11k CC? On top of this my hubby receives a car allowance (included in his salary) under the term that he has to drive a car no older than 5 years. This means he has to get rid of his car (its already past 5 years) and start thinking about another one. Whats the best way to do that? Get a loan? Use the share money? Buy a used car? As if that isnt enough the house needs some serious roofing work done with the quotes hovering about £5k - it is possible to postpone this for another year or so so I'm not quite sure as what to do about that...

I know our situations is far from hopeless but I am getting worried since the £11k obviously were created by overspending and I wanan avoid doing any more damage than we alraedy have. Above all, we do not have any savings stashed away.

Looking forward to receiving some sensible advice since I'm feeling pretty alone. My husband leaves all the money issues to me...

Thanks a lot,
Sandra

martinpike

Hi Sandra,

Well, as you've posted on the 'debt free' thread, I'm assuming that that's what you want to be.

You'll probably get lots of fabulous advice from far cleverer people than me, but I'm a simple, but quite canny, fella.

From what you say, I'd sell enough shares to fund the replacement car (secondhand I would imagine), plus to pay off the Egg card.

Then I would concentrate on working out where the £11k overspend came from, and remedying that.

Obviously if you start getting rain through your roof, you'll either need to sell more shares, or raise funds through some other means to pay for that.

Whether you do that by a remortgage, a loan, or dipping your toes into the 0% credit card market is pretty much up to your attitude to debt, and how complex you want things to get. As and when you get to that point, re-post back on MSE and you'll get up to date advice from people.

Like I say, that's a simple way. It almost certainly won't be the cheapest, but it's not confusing.

Good luck.

Xbigman

You have fallen into a classic 'live just above your means but try to save' dilema.
This is all about interest rates. In general you will find you pay more in interest on your credit cards/mortgage than you earn in interest on the equivelent savings. The standard advice is to stop putting money into that ISA and cash in the shares to pay off your CC/mortgage. Your situation is more complex.
The shares/share options could potentially give you a high rate of return so they could be worth keeping. Only you can judge that but with a young family I'd be more interested in safety and shares are a risk in today's world.
You also get a car allowance which you should have been saving up for 5 years to fund a new car, and that ISA is ideal for that.
A third complication is that you need money now to pay off a debt, buy a new car and do essential house maintenance.

What I'd do is;
cash in the shares and ISA.
Pay off credit card debt.
Have roof repaired.
Buy new (or better a one year old) car.
Anything left over, pay lump sum off mortgage.
Open a new ISA and pay your car allowance into it.
Open a savings account(s) linked to your current account(s) and start sticking money away for a rainy day. Just whatever you can afford. This is for emergencies and replacing broken cookers, fridges, etc. Anything too big to be absorbed by one months salary.

I'd also do a proper budget. A comment like '£1000 for everything else...' is a sign you don't budget. Exactly how much do you spend on food, cloths, utilities. You really should know for your own planning and peace of mind.
Regards



X

Turning_into_scrooge

Hi
Your post doesn't include all your full breakdown. You need to include food, christmas and birthdays ect, haircuts and clothing, and prescriptions and frames for glasses or contacts if you wear them. If you can do a full budget and re post all the figures i'm sure people on here will be able to show you where you can cut back and give you a far more realistic figure of what you really have got left at the end of the month:)