advice please !(be gentle )

rumblytum · 20 September 2005 at 10:21AM

Hi Katie Jane,

Thanks for posting your details.

I've reformatted it for my own benefit, so I can see clearly what's going on.

Income

Salary

1460
Tax Cr

88
Child All

113
Mat Pay

384

2045

Expenditure

Water

30
Internet

16
BT

55
House Ins

24
Mortgage

415
Elec

20
Roadside Rec

7
Car Ins

26
Council Tax

92
Tv Lic

11
Mob Ph

30
Oil Heat

25
Sky

17.50
Food/Housek

300
Kids/clothes/nappy

50
Petrol/pub tran

220

1338.50

Debts (Ex mortgage)
Min Total APR

Cahoot

134

6898.77

5.8
Woolwich

25

981.09
Virgin

70

2224
Bcard

114
O/d

850
JJB Store

40

11107.86

My comments:

Where has the debt come from? You don't have to answer this on the forum, just answer it honestly to yourself. As you can see from the above, you have a healthy surplus, before paying debts, so you have obviously been spending a lot more than the above budget intimates.

The only way you will be able to stick to a budget is to have a realistic budget. I can make some suggestions where I think you may have missed some items, but I also think you should keep a spending diary for at least a month, and go back through your bank statements in detail to find the missing expenditure. A spending diary means writing down EVERYTHING you spend, newspaper, coffees, stamps etc etc

Possible missing items:

Adult clothing/holidays/hair cuts/christmas presents/birthdays/car MOT/ car maintenance/emergency fund/days out/play school trips/days out/PIN money/entertainment/DVD hire/books/music/newspaper subs/magazine subs etc

Once you have a more realistic budget, you can work out how best to approach your debt repayments.

Possible cut backs you can make are:

Internet - look around for a better internet deal, or downgrade to a lower setting

Telephone - this is much higher than it needs to be. Look at Martin's articles on telephones. I have BT line rental of £10.50 a month, then use 1899 for 3p 'phone calls. Here is my crib list at home:

TELEPHONE

Monday – Friday 8am-6pm

Local landline – Dial 1899 prefix Costs 3p connection, no call charge
National landline – Dial 1899 prefix Costs 3p connection, no call charge
Mobile – Dial 0871 858 2473, then use
International dialling code (00 44) Costs 8p per minute
International – Use International Call Checker on https://www.moneysavingexpert.com
UK 0845 numbers – Use 1899 prefix 3p connection, 3p per minute
*First try https://www.saynoto0870.com for alternative landline number
UK 0870 number – Use 1899 prefix 3p connection, 7p per minute
*First try https://www.saynoto0870.com for alternative landline number

Monday-Friday 6pm-8am

Local - Use existing (Talk Talk) Free
National – Use existing (Talk Talk) Free
Mobile – Dial 0871 858 2473, then use
International dialling code (00 44) Costs 8p per minute
International – Use International Call Checker on https://www.moneysavingexpert.com
UK 0845 number Talk Talk 2p per minute
*First try https://www.saynoto0870.com for alternative landline number
UK 0870 number - Talk Talk 3.75p per minute
*First try https://www.saynoto0870.com for alternative landline number

Saturday/Sunday

Local – Use existing (Talk Talk) Free
National – Use existing (Talk Talk) Free
Mobile – Use 1899 prefix Costs 3p connection, then 3p per min.
International – Use International Call Checker on https://www.moneysavingexpert.com
UK 0845 numbers – Talk Talk 2p per minute
*First try https://www.saynoto0870.com for alternative landline number
UK 0870 number – Talk Talk 2p per minute
*First try https://www.saynoto0870.com for alternative landline number

For your contents and car insurance - shop around at renewal time, and follow Martin's tips on getting the best deal.

Do you not have life insurance? Much as I hate to add to your financial burden, I think you need to have this when you have children.

Elec - check on uswitch that you are with the cheapest supplier, although as prices are going up, it's not the best time to change. Maybe have a look at it in a couple of months.

Roadside Recovery - Again have a look at MArtin's article on this. We are with Autoaid which costs £25 for the whole year (for us both). It's so cheap because we pay for the repairs at the time, then claim them back, whereas with other orgs, they cover it at the time.

Mobile 'phone - only use it for emergencies - when contract expires, change to PAYG

Sky - is a luxury £210 per year - can you afford it - what about freesat?
https://www.freesatfromsky.co.uk As you've already got the equipement, you may be able to downgrade for free

Food/Housekeep - look at the Moneysaving Old Style Board for tips on reducing household exp - cook from scratch, shop at lidl/aldi, grow veg/herbs, use bicarb & vinegar for cleaning

When you've got a realistic budget which includes your cutbacks and your missing expenses, you can see how much your surplus is.

At the mo it looks like a surplus of about 700.

Pay minimums on everything, and use that 700 to clear the JJB store card and the b/card, and the balance towards the OD., Next month, you will clear your overdraft. It's VERY liberating to have a bank account in credit just before pay day.

Depending on the APRs, you can decide whether to tackle the Virgin or Woolwich next with your surplus. Tackle the one with the highest APR, not the one with the lowest balance. I only suggested clearing down the lowest balance before, because it's psychologically good to clear some numbers down!

I am also slowly paying off debt, so these comments only come from my own experience.

I hope you find some things of use there. Sorry it's so long!

Kind regards

rumbly

Bestthingsinlifearefree · 20 September 2005 at 1:37PM

HI Katiejane,

Well done for taking steps to take control of the situation.

I think the two sets of posts by Yorkshire boy (ie if possible transfer debt to lower or 0% interest deals / cut up old credit cards) and rumblytums (advice on budgetting and throwing the surplus at your debts). Are 2 excellent pieces of advice / strategies. Combine the two and you will over a period of months / year or two you WILL become debt free.

Definitely do a spending diary to see where the cash goes.

You have a surplus of cash each month if you are disciplined and live with in your means. Use this surplus to reduce the most expensive debts first.

At the moment / next 6-12 months do not commit to any new financial commitments e.g be very sensible with christmas presents, don't upgrade the car,new furniture, book a expensive holiday next year etc aim to reduce debt NOT take more on.

Sit down with your other half make a joint plan,team effort, stick to it and together you will gradually month on month get in a stronger financial position.

And smile be positive you are in a good position to soon turn things around. I have a good feeling if you and your other half seriously put your mind to it over a sustained period of time you will be fine and debt free. Lots of small steps equal big changes / progress.

GOOD LUCK !!!

Bestthingsinlifearefree !!!

katie_jane_2 · 20 September 2005 at 2:38PM

hi thanks so much for the latest responses!
thanks rumbly we do have life cover (id forgotten to stick that on the list!)started my spending diary this morning and allowed 55 quid instead of 70 for my asda shop and by looking what i actually needed before i went and being slightly more inventive than usual i did it for 35 quid!
my names kate and im a money saving addict!this is soooo the way forward WHAT A BUZZ!
Christmas is sorted as im pregnant i qualify for a 500 quid maternity grant supposedly to get equipped for the baby.i have most things so that 500 will cover the whole of christmas.I have just set up a savings account and endeavour to squirrell 50 a month into that by standing order so im not tempted to spend it.
thanks again folks
kate

YorkshireBoy · 20 September 2005 at 2:55PM

katie_jane wrote:

I have just set up a savings account and endeavour to squirrell 50 a month into that by standing order so im not tempted to spend it.
thanks again folks
kate

Hi Katie, me again!

It's great that you're looking to chivvy off £15 from your shopping, and try and save another fiver somewhere else.

It's also commendable that you've set up a savings account so that you can "endeavour" to save £50 a month (and presumably get 4.75% gross on it now you're a non-tax payer).

But, the fact remains that you're paying 15.9% on your Virgin debt, (possibly) 18.9% on your overdraft, and 5.8% on your Cahoot loan.

You may feel like this shopping thing is "giving you a buzz", but the fact remains that you could do a heck of a lot more by shifting the debt to 0%.

If you're happy to bake your own cakes, and buy Tesco "value" beans then that's your decision, and I promise I won't mention shifting your debt to 0% again - unless you and hubby have a change of mind and ask me to!

Very best of luck to you.