Living in the black

Yellow_mango · 17 June 2019 at 9:09AM

Is your overdraft completely free?

It is free up to £1,000. £1.50 a day if over £1,000, £3.00 a day if over £2,000.

The limit is £3,700.

I think that by keeping the school fees savings in there for a few months that should be enough of a buffer to keep it under the £1,000.

I have lots of spreadsheets tracking everything, and have been using YNAB to track as well for a few months. But it wasn’t enough to actually impact the spending. It just highlighted how much of a mess it was!

Yellow_mango · 17 June 2019 at 9:22AM

And I know how extremely fortunate we are to have such a high income. I grew up on a very low income and honestly it makes me feel ill to see how much money we are apparently spending on nothing every month. I don’t think I’ll ever get used to it.

But I think if I can get it under better control and be more mindful about where it is all going, I will feel a little better about it.

Yellow_mango · 17 June 2019 at 12:38PM

I've done a better SOA which should give a clearer picture. I've added comments where helpful.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 3 (plus one at university)
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 3672.87
Partners monthly income after tax....... 5030.44
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 8703.31

Monthly Expense Details
Mortgage................................ 2685
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 232
Electricity............................. 75
Gas..................................... 75 (our house is old and expensive to heat - this is an average estimate, I actually pay on a monthly variable basis).
Oil..................................... 0
Water rates............................. 41
Telephone (land line)................... 0
Mobile phone............................ 100 (this is £57 for DH - now out of contract and I'm trying to find something cheaper, £23 for DD1 (who should be paying her own phone now!) and £10 for each of the boys).
TV Licence.............................. 12.83
Satellite/Cable TV...................... 92 (Sky plus Netflix. I hate paying this much for Sky and nag about it all the time...)
Internet Services....................... 42 (Virgin)
Groceries etc. ......................... 500 (slightly aspirational!)
Clothing................................ 200 (realistic I think - school uniforms are expensive, and DH needs decent suits)
Petrol/diesel........................... 80
Road tax................................ 10.42
Car Insurance........................... 98 (includes bank fees for breakdown, and insurance for car and motorbike)
Car maintenance (including MOT)......... 100
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 1250 (school fees)
Other child related expenses............ 83 (kids pocket money)
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 40
Buildings insurance..................... 46.2 (high because we had to arrange in a hurry when we completed ahead of schedule - should be able to get down next year)
Contents insurance...................... 16
Life assurance ......................... 200 (not actually paying this yet, but do need it with such a high mortgage. Currently going through underwriting / medical etc. Family medical issues on both sides, and we're getting older, so this is going to be high).
Other insurance......................... 20 (for DD1 at university - she can pay for her own after August)
Presents (birthday, christmas etc)...... 200
Haircuts................................ 10
Entertainment........................... 350 (fairly aspirational)
Holiday................................. 450 (realistic, for 2x fairly budget holidays for 5 people)
Emergency fund.......................... 250 (includes savings for house stuff)
Other miscellaneous subscriptions....... 140.5 (mostly DH hobby stuff)
Magazine subscriptions.................. 23.67
Digital subscriptions................... 87.99 (I hate this stuff. Apple music, Office 365, various Xbox stuff, Amazon Prime etc etc. Will keep nagging...)
Charity................................. 63.33
Gym..................................... 209 (should probably cancel this tbh)
Total monthly expenses.................. 7792.94

Assets
Cash.................................... 0
House value (Gross)..................... 640000
Shares and bonds........................ 0
Car(s).................................. 10000
Other assets............................ 0
Total Assets............................ 650000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 576000...(2685).....2.49
Total secured & HP debts...... 576000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Virgin.........................1450......25........0
Barclaycard....................3225......72.56.....0
Barclaycard....................3113.98...0.........0 (paid off monthly in full, will not be spending on here any more)
Barclays (Apple)...............570.......24.99.....0 (phone for ds1 - he is repaying from his pocket money)
Total unsecured debts..........8358.98...122.55....-

Monthly Budget Summary
Total monthly income.................... 8,703.31
Expenses (including HP & secured debts). 7,792.94
Available for debt repayments........... 910.37
Monthly UNsecured debt repayments....... 122.55
Amount left after debt repayments....... 787.82

Personal Balance Sheet Summary
Total assets (things you own)........... 650,000
Total HP & Secured debt................. -576,000
Total Unsecured debt.................... -8,358.98
Net Assets.............................. 65,641.02

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

enthusiasticsaver · 17 June 2019 at 2:33PM

As you say the outgoings are high. There is scope for reductions but it depends on how fast you want the debt cleared. You have not put the overdraft down as of course that is a debt too. The gym is really high. How often is it used? We have a country club sub that is about £60 for 2 of us but we use it three or four times a week. Is that a family membership and is it regularly used or does it include golf or something? The charity sub of course could be removed for now until you are out of debt and if you ring Sky up and threaten to cancel they may reduce the sub. Does that include sports as that is very very high. Our sky sub is £20 a month but we just do the basic package. Think about what is used and whether you can do without it. The £140 a month on your DH hobbie magazines is quite frankly ridiculous. Does he really need all of them? That is almost £1700 a year.

Buildings and contents insurance is cheaper as a joint policy normally. Do you meal plan and use budget supermarkets and unbranded products? £500 is not completely unreasonable but is high and could probably be brought down but as you say you think you pay more than that. Does that include takeaways and meals out or is that under entertainment?

If you don't pay the barclaycard off in full is there interest to pay? I think I would be tempted to stop the credit card use altogether and make a plan to get rid of all three cards and the overdraft over the next 18 months by initially paying £500 a month until you adjust to a better more financially prudent way of living and save an emergency fund with the rest of your surplus. Do you or your DH buy lunches or coffee out when working? Taking them from home is a good way of saving money and that is often one of the areas where money is wasted. You do not show any savings whatsoever so you are extremely vulnerable there.

You have a huge mortgage and that plus the childcare costs take up about half your income. You do not say how old your children are but presumably it will be a while before those costs reduce. Are they school fees or childcare for little ones? How about reducing to one holiday a year until the debt is gone?

You have massive potential to sort your finances out, not just clearing the debt which is relatively small compared to your income but unfortunately it tends to grow so well done for tackling it now. The lack of savings is also worrying and if you do not want to be paying that mortgage into retirement you have enormous potential to overpay it once the debt is gone. Is there a reason you went for such an expensive house? You have obviously got used to a lifestyle though which has had no financial controls so this will be a culture change but as you say you have had stuff happen over the years. Is this the highest the debt has been or have you had debt previously which was cleared and is now building up again?

Yellow_mango · 17 June 2019 at 3:19PM

Thank you so much! It’s really helpful to see it all in black and white. I’ll respond fully later, but I’m answer to this:

Is this the highest the debt has been or have you had debt previously which was cleared and is now building up again?

This is the lowest it’s been for a really long time. It was well over £50k in December 2017 when we sold a property and paid down most of it. I kept the bits that were on 0% cc (about £15k at the time) and focussed on saving for a house deposit. In the 18m since then I managed to pay down about £10k and save maybe 20k to give us a 10% deposit. But we didn’t have a mortgage to pay then, so there was a lot more flex.

So it is going in the right direction, and I’m determined that it will never build up to that kind of level again. But with the mortgage to pay and so many competing goals, plus the fact I’m pretty much doing it on my own, I’m very aware that it’s going to need careful management and motivation to keep on top of it. Hence this diary :-)

Oh, and we’re not currently in the overdraft at all. That’s why I didn’t include it as a debt. If I pay off the BC in full in July that will take me into it. If I don’t pay it in full it will incur interest at 15.95% unless I transfer it somewhere.

enthusiasticsaver · 17 June 2019 at 5:33PM

It seems to me then that your biggest issue is your DH who presumably is not bothered about being financially solvent or am I being unfair to him there? Was your previous house sold specifically to clear the £50k debt or did you move areas/house for another reason? I think you need to sit him down and show him in black and white where money is being spent and reiterate there won't be enough money for holidays or extensions if you (and I mean he specifically) reins it in a bit because it all seems to be very much on your shoulders. This should be easier if you had to sell a house to get out of a financial mess previously as surely he does not want to get back in that situation?

If the overdraft is free up to £1000 then yes I can understand keeping the school fees in there for June, July and August so you can clear the £3113 on the monthly spending card. Then that just leaves the £4675 on the other two cards and of course you need to find enough from the three months surplus to pay the school fees in September. Are they still being used for spending? That surplus easily shows that you could afford £500 a month towards getting rid of that over the next 9 or 10 months maybe starting from September after you have enough to pay the school fees rather than go into overdraft. If you have several things you need to do in the next few years like buy a second car or fund an extension then having some leeway in your budget once the debt is gone will be crucial.

On the pet front my DD and her husband swear that B and M are the cheapest place to get pet food.

I do hope you get to grips with this as it seems as if you are very stressed with it all and it is much harder if you are dealing with it alone.

ohdearhowdidthathappen · 17 June 2019 at 7:32PM

Came over to have a nose after you commented on my diary

We're the same age and both have big families, same amount of debt too.

Our monthly finances are so similar! You earn more, but due to your higher mortgage payments and private school fees, our 'left over' money is very similar :rotfl:

I know it's a drop in the ocean, but have a look at an app called 'readly'.... you pay £7 a month and have access to every magazine known to man. We have it loaded onto several devices and read through £100-150 worth of issues a month.

I found it useful (if depressing) to keep a spending diary. I found we spent a lot on the children, over and above what I knew... 'mum, can I have £10 for lunch out', 'mum, I'm going to a party, can I have £10 for a gift' etc etc. I've found it cheaper to give the older ones a lump sum and tell them once it's gone, it's gone. Also teaches them the art of prioritising and not thinking the bank of mum and dad is endless!

We also live in an old-ish house and the spending diary showed it's another big drain

Good luck on your journey, I'll follow with interest

Yellow_mango · 17 June 2019 at 9:07PM

Thanks for dropping by ohshit!

I had a quick look at Readly, that looks really good. I’ll show it to DH later.

I know what you mean about the kids. I’m quite strict with the older ones. They get a decent amount of pocket money (£3 x their age each month) but that has to cover everything that is wants rather than needs. The oldest boy (14) is spending most of his on repaying his phone. The younger boy (13) buys the occasional sweets / lunch with friends but has managed to save over £400 just because he has zero interest in buying anything! Actually that’s a debt I should add to my list. The youngest (8yo girl spends most of hers in smiggle...).

But there’s still an endless stream of parties and non-uniform days and activities and stuff!

Yellow_mango · 17 June 2019 at 9:28PM

Thank you again enthusiasticsaver! Some responses below:

It seems to me then that your biggest issue is your DH who presumably is not bothered about being financially solvent or am I being unfair to him there?
its not that he’s not bothered. He agrees in principle that it’s better not to be in debt. He just interested in the detail or the process... He doesn’t see his spending as the problem in the context of the level of our income.
Was your previous house sold specifically to clear the £50k debt or did you move areas/house for another reason? I think you need to sit him down and show him in black and white where money is being spent and reiterate there won't be enough money for holidays or extensions if you (and I mean he specifically) reins it in a bit because it all seems to be very much on your shoulders. This should be easier if you had to sell a house to get out of a financial mess previously as surely he does not want to get back in that situation?
the house wasn’t sold specifically to pay down the debt. Though it did contribute to building it up .
If the overdraft is free up to £1000 then yes I can understand keeping the school fees in there for June, July and August so you can clear the £3113 on the monthly spending card. Then that just leaves the £4675 on the other two cards and of course you need to find enough from the three months surplus to pay the school fees in September. Are they still being used for spending? the two other cards have never been used for spending. I’ve totally stopped spending on the BC now, though there could still be some recurring / scheduled payments on there I’ve missed That surplus easily shows that you could afford £500 a month towards getting rid of that over the next 9 or 10 months maybe starting from September after you have enough to pay the school fees rather than go into overdraft. If you have several things you need to do in the next few years like buy a second car or fund an extension then having some leeway in your budget once the debt is gone will be crucial.
yes I agree. Once the debt is gone I plan to split as much excess as I can find between the mortgage and savings

On the pet front my DD and her husband swear that B and M are the cheapest place to get pet food.

I do hope you get to grips with this as it seems as if you are very stressed with it all and it is much harder if you are dealing with it alonethank you! I do find it all extremely stressful, and going through this is bringing up all kinds of emotional stuff I wasn’t expecting. I can only imagine what a relief it will be to finally feel in control of finances at least. .

Yellow_mango · 17 June 2019 at 9:51PM

And some more!

As you say the outgoings are high. There is scope for reductions but it depends on how fast you want the debt cleared. You have not put the overdraft down as of course that is a debt too. The gym is really high. How often is it used? We have a country club sub that is about £60 for 2 of us but we use it three or four times a week. Is that a family membership and is it regularly used or does it include golf or something?
the gym is a family membership. It’s not used nearly as often as it should be. It’s value is during the school holidays really. DH is home with the kids and it gives him somewhere to take them. It’s probably worth keeping it until after the summer holidays at least, then cancelling.
The charity sub of course could be removed for now until you are out of debt £25 of it is mine, and yes I could absolutely cancel this. and if you ring Sky up and threaten to cancel they may reduce the sub. Does that include sports as that is very very high. Our sky sub is £20 a month but we just do the basic package. Think about what is used and whether you can do without it.
i think we are in contract with Sky until October. It includes all the sport and all the cinema, and 2 boxes. It does get used, but I’m not at all sure it’s worth the money. When the contract runs out I’ll see what I can do.
The £140 a month on your DH hobbie magazines is quite frankly ridiculous. Does he really need all of them? That is almost £1700 a year.
subscriptions wasn’t quite the right word. More like memberships. It’s a social thing for him and it’s really good for him to have something to do that’s not work related. It does seem to be adding up though. And it is accompanied by fairly regular evenings out and dinners, which add to the cost.

Buildings and contents insurance is cheaper as a joint policy normally. I’ll definitely be able to save on this at renewal next March

Do you meal plan and use budget supermarkets and unbranded products? £500 is not completely unreasonable but is high and could probably be brought down but as you say you think you pay more than that. Does that include takeaways and meals out or is that under entertainment?
this is a real weakness. I’ve tried so many times to meal plan, but I just can’t seem to get the hang of it. I don’t buy much branded stuff, but can definitely do more shopping in Lidl etc. This includes toiletries / cleaning stuff / pet food, but not eating out or takeaways.

If you don't pay the barclaycard off in full is there interest to pay? I think I would be tempted to stop the credit card use altogether and make a plan to get rid of all three cards and the overdraft over the next 18 months by initially paying £500 a month until you adjust to a better more financially prudent way of living and save an emergency fund with the rest of your surplus. Do you or your DH buy lunches or coffee out when working?
luckily not any more. Since we moved I can now come home for lunch, and DH gets lunch at work
Taking them from home is a good way of saving money and that is often one of the areas where money is wasted. You do not show any savings whatsoever so you are extremely vulnerable there.

You have a huge mortgage and that plus the childcare costs take up about half your income. You do not say how old your children are but presumably it will be a while before those costs reduce. Are they school fees or childcare for little ones?
the eldest is 15, so we have another 3 years until these costs start to reduce. Although if he goes to university they won’t necessarily stop. I’ve added up all the cash I’ve subbed dd1 at uni over the last 3 years and it comes to £5.5k. And she’s been really good at getting jobs and paying her way as much as she can. I’m not sure my boys will be as self-sufficient...
How about reducing to one holiday a year until the debt is gone? yes we can do that.

You have massive potential to sort your finances out, not just clearing the debt which is relatively small compared to your income but unfortunately it tends to grow so well done for tackling it now. The lack of savings is also worrying and if you do not want to be paying that mortgage into retirement you have enormous potential to overpay it once the debt is gone. Is there a reason you went for such an expensive house? we’re in the SE. The house is nice, but it’s a fairly standard 4 bed semi in a decent area close to my work. It’s certainly not a mansion, and it needs a fair bit of work. To spend less we would have had to compromise significantly on either location or space, so we ended up going for something at the top of our budget to get both location and space.

You have obviously got used to a lifestyle though which has had no financial controls so this will be a culture change but as you say you have had stuff happen over the years. Is this the highest the debt has been or have you had debt previously which was cleared and is now building up again?

Living in the black

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