My SOA

EssexHebridean wrote: »

Comments in red as usual



Well - the good news is that there is an awful lot you can do there to make savings. The bad news is that - if you'll pardon me saying it - I'm not sure how much you want to. Sorry if that seems harsh - but being reckless with money is not something to come across as proud about. For a single person with no dependents that would be true - for someone with a child, that is doubly true.

If you actually want to tackle this, then the first thing is to get brutally honest with yourself. It's not that you are "reckless with money" - it's that you're irresponsible. I know that's not quite such a glamorous sounding label - but I'm afraid it's a more accurate one. Start to take responsibility starting now and you can easily turn this around on that sort of income. Ignore it a bit longer and it will become that much harder to tackle. Have a think what happens should anything go horribly wrong with your job - where are you left then? You have nothing in the bank to cover emergencies, and certainly no way of covering expenditure if you were without work for a few months. I should have added, my business has enough to pay me for the next 3 months, but didn't include it as I haven't drawn it yet

There are easy savings to be made on that SOA which would top your monthly surplus up to over £1k a month. That means that if you instigate those savings, in just one month you can knock more than 10% off the amount owing on the cards - which thanks to the interest rate there is the first thing to tackle. If you wanted to you could make further savings and pay off an even higher percentage. That food spend could, with work, be halved (And you'd likely be eating better as a result too). The clothing - switch to budgeting for essentials only for the foreseeable future and even if you need to ensure you have savings set aside for replacement of a decent suit, for example - you can still easily cut that by £100 a month. The entertainment spend - well, you already know, I suspect, that spending over £7,000 a year on entertainment when you are £46k in debt is ludicrous. Slash it. Start seeing all the things to do in the world which are free - and you have the added advantage of introducing your child to those things too - thus meaning you are not giving them unrealistic expectations of normality.

The beauty of an SOA with great big savings to be made and a big income to boot is that even a high amount of debt like yours is an easy fix - but it won't fix itself. Put the work in and within a few years you could be in the position of hammering down your mortgage with overpayments.

Thank you - and yes on most point you are quite right. I rarely have any money left at the end of the month

I'll try to clarify your points below but my formatting might be a bit out

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 1
Number of cars owned.................... 3 Explanation/background needed for this number, allowing that you can only use one at a time, and that you are in debt...I run two cars (one as a spare) and have a classic car. Family heirloom and not saleable, niether does it cost anything to run

Monthly Income Details
Monthly income after tax................ 4600
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4600

Monthly Expense Details
Mortgage................................ 454
Secured/HP loan repayments.............. 199 What's this relating to? Motorbike HP
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 100
Electricity............................. 90 All heating by electric I assume? Storage heaters? If so it is still probably possible to reduce this a little. APologies, gas and electric combined as I only have one bill. I work from home so the cost is a little higher
Gas..................................... 0
Oil..................................... 0
Water rates............................. 30 Metered? If so you can probably reduce a bit, yes, metered
Telephone (land line)................... 75 Why so much? This is very high. - this is my mobile, I have no landline
Mobile phone............................ 0 No mobile at all?
TV Licence.............................. 0 Do you only watch streamed content and never from iPlayer? Yes, mainly youtube
Satellite/Cable TV...................... 20 - netflix and spotify
Internet Services....................... 0 Is this included elsewhere? My business pays for this
Groceries etc. ......................... 350 This is super-high for a family of two, particularly with one of the two being a child. GEnerous estimate - and that includes all household items
Clothing................................ 150 Oh for goodness sake - why so high? Oh god I thought this was low!
Petrol/diesel........................... 400 That suggests you are massively high mileage. 20kpa minimum
Road tax................................ 40
Car Insurance........................... 35 And this seems extremely low for three vehicles? two are insured through the business
Car maintenance (including MOT)......... 200 Allowing for the very high mileage be sure this is enough to cover everything. I do all the work myself, I also break cars to pay for the running of them.
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 30 This seems very low when taken into account with your income and mileage - the mileage indicated by the fuel spend suggests a job that requires a fair bit of traveling about? I have my daughter 50/50 and tend to time my time away for when I don't have her
Other child related expenses............ 0 Nothing? No clubs or activities? I lumped this in with entertainment
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 37
Buildings insurance..................... 35 This is high - includes contents and not something I am willing to budget on
Contents insurance...................... 0 I hope this is zero because it is lumped in with the buildings cover?
Life assurance ......................... 0 This needs sorting - bluntly. You have a mortgage and a child, and it appears you are a single parent. Add those things together and THAT is why you need something here, I'd suggest.
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0Unrealistic - I find it highly implausible that someone doesn't buy presents for their child, at least. Yes, sorry, missed this one.
Haircuts................................ 15
Entertainment........................... 600 And this is extortionate. I'm debt and mortgage free and spend nowhere near that amount in several months, never mind one! I realise this is a major problem, I go out a lot. I also have a binge drinking problem
Holiday................................. 0 You never go away at all? Not overnight visits to family or a cheeky weekend away, that sort of thing? I tend to just pay for them when I need to, as I say, I can find a lot of money sloshing around in my account from time to time, which is why my spending is hard to control, my brain just tells me i'll earn more
Emergency fund.......................... 0 You MUST start budgeting something here. I do, then it gets spent.
Total monthly expenses.................. 2870


Assets
Cash.................................... 0
House value (Gross)..................... 220000
Shares and bonds........................ 0
Car(s).................................. 3000 You're showing 3 vehicles above - how is this figure so low? 2 are worth about £1500 each, the other isn't for sale, so not included. It would be about £30k
Other assets............................ 0
Total Assets............................ 223000


Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 100000...(454)......3
Hire Purchase (HP) debt ...... 12000....(199)......8
Total secured & HP debts...... 112000....-.........-

Unsecured Debts
Description....................Debt......Monthly.. .APR
cards..........................9100......200...... .20 That interest rate is horrible. Tell me about it.
cloths.........................950.......100...... .0 Is this more clothing spends, in addition to the £1800 a month you have budgeted? A Catalogue by any chance? No, Combination of a new motorcycle helmet and a matress
loan...........................31000.....656...... .14 What on earth is THIS for? It's horribly high and at a truly hideous rate for a loan. Consolidation of debt when I wasn't earning for 18months (setting up my business)
Parents........................5500......250...... .0
Total unsecured debts..........46550.....1206......-


Monthly Budget Summary
Total monthly income.................... 4,600
Expenses (including HP & secured debts). 2,870
Available for debt repayments........... 1,730
Monthly UNsecured debt repayments....... 1,206
Amount left after debt repayments....... 524 I'm going to lay odds that no, you don't have this amount left each month... You are absolutely correct.

Personal Balance Sheet Summary
Total assets (things you own)........... 223,000
Total HP & Secured debt................. -112,000
Total Unsecured debt.................... -46,550
Net Assets.............................. 64,450



So in summary the bulk of the debt was accrued when I went from full-time employment to self employed, and didn't earn much at all for 2 years. Now I am earning I'm finding the mental side of paying debt down, and not still living beyond my means extremely difficult. It gives me incredible anxiety which then in turn affect my work, which affects my earnings etc etc. Spending money is one of the few things that makes me feel better, and banishes my insecurities until the horrible guilt descends.

I am certainly not proud of it, mostly disgusted.

I have the lightbulb moment so many times, and then as soon as a chink of light appears, off I go spending again.