My SOA and Situation Realisation

Willing2Learn · 29 July 2018 at 9:40PM

@shteca

You may want to take a look at the MSE article The Budget Planner - How to manage your money. Learning to create and maintain an effective budget can be so enlightening!!

Good luck!!

JayRitchie · 29 July 2018 at 11:41PM

Ok - so looking at the numbers.

You need to make payments of £871.50 a month. You have a shortfall in the SOA of £210 a month but plenty of scope to cover this (although I recognise its far harder to budget with an irregular income).

If you pay at that right (which will be a pretty tight but doable budget with 2 kids) you will be debt free in four years. Very rough, but probably no worse than a lot of people saving for a deposit who have higher rental costs than you pay for a mortgage.

If you can get really tough and pay an additional £250 a month (which I think is doable for a period where you basically never spend anything) after 26 months - so a little more than two years - your debt is down to £9,500. At this point you can reduce the repayments to £624 a month, so within your current SOA, and be debt free in 42 month - so 3.5 years of which 2 and a bit are really hard.

At that point you are in a great position - good income, clearing your mortgage, chance to build up some emergency funds.

For what its worth, given that you have spent money on home improvements which do seem to have increased the value of your flat I would go very tough for 2 years. Anyone can cope for this period with a good goal in mind. This would leave you with debts of just under £12,000 which is manageable - and reconsider at this point.

Given your young age and the costs you have had of bringing up children/ fixing up a flat I'd tough it out for 2 years, get to a £12k balance then look to add this to your mortgage without increasing the mortgage term (so you are still mortgage free at 40). Thats worth a lot in a volatile area like sales. I think you would have low enough debt and mortgage LTV to get a good rate at that point. Don't remortgage now as the temptation to spend again will return.

enthusiasticsaver · 29 July 2018 at 11:42PM

shteca wrote: »

Thank you so so much! I needed to hear that. It is so easy to beat myself up about all this. I made some stupid mistakes but I feel always meant well with my money.
When I took out the Ikano and Sainsburys loans the STUPID idea was to invest it with a money lender at a higher rate. I thought at the time they were both at 3% rates.
Then I dipped into the money and so it began. All my life I have had an issue with not being able to spend within my means which is another reason why I didn't think selling my flat was going to solve anything. I need to work through this to change my attitudes and spending habits. The pain and stress of all this I hope will teach me an important lesson.
Most importantly keeping track of where I spend my money and being a bit more deliberate and thoughtful with my money.

It looks like you are starting to realise what you need to do to turn this around. There is no quick fix either to making money or paying off debt. It takes discipline and an awareness of where your money is going. Changing spending habits is the first thing.

You can try ringing MBNA if you cant get any more 0% deals and see if they will reduce your interest rate.

Sncjw · 30 July 2018 at 1:35PM

Hi do you live in the Newcastle area. You mention metro hence the questions.

I don’t understand you say you get £55 a month metro ticket but you have 276 a month on other travel. What’s the 220 spent on.

How often do you actually use the metro in a week.

shteca · 31 July 2018 at 12:47PM

enthusiasticsaver wrote: »

It looks like you are starting to realise what you need to do to turn this around. There is no quick fix either to making money or paying off debt. It takes discipline and an awareness of where your money is going. Changing spending habits is the first thing.
You can try ringing MBNA if you cant get any more 0% deals and see if they will reduce your interest rate.

I tried MBNA, they said I couldn't get a 0% balance on an existing account.
You are right, there is no quick fix and i feel most of it is a state of mind issue. Just need to focus on what is important.

shteca · 31 July 2018 at 12:48PM

Willing2Learn wrote: »

@shteca
You may want to take a look at the MSE article The Budget Planner - How to manage your money. Learning to create and maintain an effective budget can be so enlightening!!
Good luck!!

Thank you! I am going to have a read now

shteca · 31 July 2018 at 12:50PM

Sncjw wrote: »

Hi do you live in the Newcastle area. You mention metro hence the questions.
I don’t understand you say you get £55 a month metro ticket but you have 276 a month on other travel. What’s the 220 spent on.
How often do you actually use the metro in a week.

It would usually be Uber and car rentals. Now that I don't have my car (which was costing the good part of £600 a month including lease, insurance, fuel and servicing) I take public transport to town and then if I need to do say an Ikea run or a day trip I rent a car.

shteca · 31 July 2018 at 12:51PM

Quick recap on yesterday and today.
Spent £0 on going out, prepped all meals and have food in the fridge for tomorrow. My bank reconciliation is getting a hell of a lot easier. Just takes me a thought while in work the day before to but what I need to cook a couple of meals.

MrsPorridge · 31 July 2018 at 4:26PM

Do you have a freezer? You could always cook four meals, one to eat that night, one to take to work next day and two to freeze.

saajan_12 · 31 July 2018 at 5:23PM

Sounds like you're on the right track and know what you're doing with the spending. It definitely looks possible based on your SOA to make some more room to get those debts down. I understand its much harder without an irregular income but perhaps try to save on the essential costs and then create a (tight) budget for the non essentials such as clothes, entertainment, holidays. Just my two cents on your SOA, to make sure you're saving in every area possible.

shteca wrote: »

Below is an update of my situation
Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 2
Number of cars owned....................

Monthly Income Details
Monthly income after tax................ 3000
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3000

Monthly Expense Details
Mortgage................................ 477.2
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 100
Council tax............................. 76- are you getting single person's discount?
Electricity............................. 59
Gas..................................... 0
Oil..................................... 0
Water rates............................. 22.43
Telephone (land line)................... 0
Mobile phone............................ 42.68 - this is high.. are you within a minimum term? If not can you drop to a sim only? You get plenty of calls & data for £10pm these days, and can cheapen with cashback
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 22.95
Groceries etc. ......................... 264 - quite high for 1 adult plus 2kids part time.. are you throwing away food? can you drop a brand level? can you cook in bigger batches and store food?
Clothing................................ 111 - £1332 seems a lot each year.. how much does each item tend to cost? Are you shopping in stores or online? May be worth having a budget for non essential purchases such as this and keep track of your spend on a ssheet or pay it out of a specific 'fun' account.
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 276- Have you calculated how many journeys you use the metro card for - is it cheaper to pay for each journey rather than the metrocard? Can the 26-30 railcard help? While travelling with big loads e.g from IKEA can be hard via public transport, can you make an effort to use buses / walk / use metro instead of Ubers?
Childcare/nursery....................... 300
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 45
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 7
Other insurance......................... 14
Presents (birthday, christmas etc)...... 20
Haircuts................................ 30 - is this just for you or kids too? How frequently is this? Can you find a cheaper place,
and go less frequently?
Entertainment........................... 174 - What does this include? I'd have a budget for all 'fun' spends such as this e.g. £150 per month, and don't go over it. Entertainment can be cheaper eg meeting friends at home, museums, parks, funfairs, skip a round of drinks..
Holiday................................. 25- Is this what you've actually spent or what you're putting away for a holiday fund? Might need to focus on an emergency fund or pay down debts before you start putting money away for this.
Emergency fund.......................... 0
Eating out.............................. 270- is this lunches or dinners/weekends? If lunches, try packing lunches and you'll save a lot wihtout compromising the 'fun'. If its because you don't want to cook,
I'd start cooking bigger meals and freeze half, so next time you don't have time / energy to cook, you can just heat something up. If its eating out with friends etc, can you meet them for a coffee / lunch instead? Don't order a drink? Find other ways to socialise such as doing an activity.
Total monthly expenses.................. 2336.26

Assets
Cash.................................... 0
House value (Gross)..................... 125000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 125000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 66474.7..(477.2)....0
Total secured & HP debts...... 66474.7...-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
NatWest Overdraft..............7500......107.4.....0
MBNA Credit Card...............5780.5....148.2.....0-
how long left on these 0%s?
Ikano Bank Loan................10601.4...308.5.....3
Sainsburys Bank Loan...........13220.5...307.4.....9 - this is the one to focus on, you're spending £1.2k on just interest each year. Can you refinance to a 0% card? That wouldn't solve the problem, you still need to focus on sorting out your budget, but it could reduce monthly repayments by £100. IF not, throw any savings from your budget to pay this off asap.
Total unsecured debts..........37102.4...871.5.....-

Monthly Budget Summary
Total monthly income.................... 3,000
Expenses (including HP & secured debts). 2,336.26
Available for debt repayments........... 663.74
Monthly UNsecured debt repayments....... 871.5
Amount short for making debt repayments. -207.76

Personal Balance Sheet Summary
Total assets (things you own)........... 125,000
Total HP & Secured debt................. -66,474.7
Total Unsecured debt.................... -37,102.4
Net Assets.............................. 21,422.9

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

My SOA and Situation Realisation

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