Are we over committed?

maxedout79 · 14 March 2017 at 12:59PM

My New Years Resolution was to take a good look at our finance... I am just doing it and it's nearly April..

I live with DH and our 2 children, 7 & 13. I work in the financial sector as a senior manager, earning about 50K. My husband works in the plumbing industry earning about 30k. We are ok moneywise on a month to month basis, however we are both now approaching ou mid 40's and I feel that we are not really in the best place. I have posted a SOA below. It looks like we should have £1200 left over... we don't. We always seem to paying some big bill, whether its for a holiday, work on the house etc. DH also has a serious clothes shopping habit, sometimes spending over 100 per week

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 3050
Partners monthly income after tax....... 1912
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4962

Monthly Expense Details
Mortgage................................ 683
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 110
Electricity............................. 50
Gas..................................... 80
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 0
Mobile phone............................ 70
TV Licence.............................. 12
Satellite/Cable TV...................... 60
Internet Services....................... 25
Groceries etc. ......................... 400
Clothing................................ 100
Petrol/diesel........................... 150
Road tax................................ 30
Car Insurance........................... 100
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 150
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 15
Buildings insurance..................... 27
Contents insurance...................... 0
Life assurance ......................... 47
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 50
Entertainment........................... 300
Holiday................................. 250
Emergency fund.......................... 0
Total monthly expenses.................. 2869

Assets
Cash.................................... 0
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 20000
Other assets............................ 8000
Total Assets............................ 238000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 127500...(683)......0
Total secured & HP debts...... 127500....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
my car loan....................12000.....248.......5.8
caravan loan...................10000.....190.......0
husband van finance............15000.....245.......7.9
next...........................500.......25........0
argos..........................250.......20........29.9
my cc ( holiday)...............1000......50........0
husband CC.....................2500......50........0
Total unsecured debts..........41250.....828.......-

Monthly Budget Summary
Total monthly income.................... 4,962
Expenses (including HP & secured debts). 2,869
Available for debt repayments........... 2,093
Monthly UNsecured debt repayments....... 828
Amount left after debt repayments....... 1,265

Personal Balance Sheet Summary
Total assets (things you own)........... 238,000
Total HP & Secured debt................. -127,500
Total Unsecured debt.................... -41,250
Net Assets.............................. 69,250

armchairexpert · 14 March 2017 at 1:06PM

On paper you're fine, but as you say, you're really not. And if you were, you wouldn't be needing to put holidays and consumer goods on CCs and loans.

I think your first step is a spending diary, and I'm going to be predictable and recommend YNAB - it stands for You Need A Budget, and it's an online budgeting tool that will both allow you to track your spending and to think about your money differently. It encourages you to look at the money you actually have right now rather than forecasting into the future, and allocate those pounds. If your pay covers the bills, mortgage, debt repayments and food, and your husband wants to buy a 100 quid shirt, where's the money coming from? Is he willing to eat 100 less in food?

There's a bunch of things you can do to get your monthly expenditure down as well and knock those debts on the head faster, but before you do that I think you and DH need a mind shift. The question isn't, are you overcommitted. The question is, with an income that covers your expenses, why are you using debt? Once you've solved that one, the next thing can be fixed.

Good luck, and stick with us!

pmlindyloo · 14 March 2017 at 1:37PM

Just my personal opinion.........

When you earn a very good salary I think it is very easy to be very carefree with your money because 'on paper' you can afford it.

Posting on here seems to suggest that you are perhaps thinking more long term than short term.

I think you and your Oh should have a chat about how you see the future.

Some questions to ask:

What would happen if one of you fell ill (sorry, not pleasant)
Do you wish to save for your retirement?
What are you plans for the future? Travelling?
Do you wish to help out your kids in the future?
Are you happy with being extravagant? (perhaps more a question for your OH!)

Etc etc

It is good to have goals and will often dictate about how you spend your money. Some people are natural savers. Some people live for the moment and spend it while they can. Some people enjoy finding a bargain and monitor their expenditure with a fine toothcomb. Some hate 'wastage'.

Most are probably somewhere in between - set up a regular savings account or set up ISAs for their kids, enjoy their life but 'be prepared'.

Of course, it may be that you will receive an inheritance in the future or can 'downsize' if need be.

Over to you!

EssexHebridean · 14 March 2017 at 1:37PM

Well you already know yourself what the solutions are, by the sounds of it - but let's run through the SOA anyway. Comments in red as usual

maxedout79 wrote: »

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2 One car, one van?

Monthly Income Details
Monthly income after tax................ 3050
Partners monthly income after tax....... 1912
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4962

Monthly Expense Details
Mortgage................................ 683
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 110 Do you pay this over 10 months or 12? If 10, then bear in mind for the last 2 months you should have had this spare even if every penny else is accounted for...
Electricity............................. 50 This is very high - send the kids round the house with instructions to turn off everything they find left switched on, on standby etc. (NOT the freezer!) That has the advantage of warming them up too - so you can turn the heating down!
Gas..................................... 80 Turn the thermostat down and acquaint everyone with putting on jumpers.
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 0
Mobile phone............................ 70 Ouch. How many phones?
TV Licence.............................. 12 Sorry - I'm going to be picky - 12.12
Satellite/Cable TV...................... 60 You could reduce this but franjkly, bearing in mind your income, you shouldn;t need to if you don't want to.
Internet Services....................... 25
Groceries etc. ......................... 400 You can hammer £100 off this almost without trying. More if you wanted. Aldi/Lidl, shop with a list, cook from scratch
Clothing................................ 100 How does this marry up with what you said about your OH's spends?
Petrol/diesel........................... 150
Road tax................................ 30 Do you actually pay this monthly? If so, stop, it's costing you extra to do that. If not then you need to set aside this money and also the other budgeted spends for the vehicles into a separate account so it's there when needed
Car Insurance........................... 100 Ouchy again - take it this includes OH's van which I'm guessing is high-ish on the insurance cost? Check you're getting th best deals via comparison sites
Car maintenance (including MOT)......... 0 You need to budget something here - servicing, MoT test, tyres, wiper blades, bulbs and even screenwash - budgeting for them means you don't end up hitting the cards when the bills roll in.
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 150
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20 Can this be reduced by using pre paid certificates if it's prescriptions?
Pet insurance/vet bills................. 15
Buildings insurance..................... 27 Assume this covers contents also?
Contents insurance...................... 0
Life assurance ......................... 47
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100 Wow that's a lot! :eek: Is this every month? If you're averaging out then you need to think about stashing this amount away each month so it's there when needed
Haircuts................................ 50
Entertainment........................... 300
Holiday................................. 250 OK - £250 a month for this, but you're showing no cash assets? Where's this money really going?
Emergency fund.......................... 0 You need to build this - as home owners and vehicle owners, having an emergency fund is key to avoiding card/loan use.
Total monthly expenses.................. 2869

Assets
Cash.................................... 0
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 20000
Other assets............................ 8000
Total Assets............................ 238000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 127500...(683)......0
Total secured & HP debts...... 127500....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
my car loan....................12000.....248.......5.8
caravan loan...................10000.....190.......0
husband van finance............15000.....245.......7.9
next...........................500.......25........0
argos..........................250.......20........29.9 :eek::eek: Just get this paid for goodness sake! That interest is painful!
my cc ( holiday)...............1000......50........0
husband CC.....................2500......50........0
Total unsecured debts..........41250.....828.......-

Monthly Budget Summary
Total monthly income.................... 4,962
Expenses (including HP & secured debts). 2,869
Available for debt repayments........... 2,093
Monthly UNsecured debt repayments....... 828
Amount left after debt repayments....... 1,265 OK you've already said you don't have this. If that's the case then that is in excess of £15,000 a year that is just disappearing.

Personal Balance Sheet Summary
Total assets (things you own)........... 238,000
Total HP & Secured debt................. -127,500
Total Unsecured debt.................... -41,250
Net Assets.............................. 69,250

Your priority is a spending diary, and also probably an agreed budget each for you & OH for personal spending. This means he can blow his entirely on clothes if he wants, but that then becomes his call and he's not impacting on the family finances.

I'm guessing if you opened your online banking and found that someone had raided £15k from it,. you'd be a bit upset - but at the moment you're effectively doing that to yourselves. You need to get to grips with where you're money is going, and come up with a working budget and then stick to it. Your debts are high ish - and let's be honest - if your income was lost tomorrow, you'd find yourself in a hole really fast - but as things stand, you can service your payments.

One question - if you have a caravan, why are you paying the large sums you seem to be for holidays?

Food for thought - you're currently paying over £800 a month just servicing debts. With that, and the £1200 that you show as surplus, not even thinking about any extra surplus you can make by making savings, that's £2k a month you *could* have by paying everything off and making yourself debt free. Or, to put it another way, that's a new car when yours needs replacement next, bought and paid for in well under a year and without ANY more finance being needed. An appealing thought, that, no?

enthusiasticsaver · 14 March 2017 at 1:58PM

First you need to find out where the missing £1265 goes every month assuming the soa is correct. That means as armchair expert says keeping a spending diary. I personally use a spreadsheet with separate categories and a limit for each category. You can use ynab but it takes some getting used to and I think you have to pay for it.

The reason you keep getting caught out by big bills is you have no emergency savings, and you should be budgeting for holidays, home improvements and car maintenance. Your husbands unchecked habit of £400 on clothes is also ridiculous. That is 25% of his take home pay just on his back. Is that the reason for his £2500 credit card bill? At your level of income these should be paid off every month although thankfully they are at 0% unlike the Argos one. I would pay that off and close it. Same goes for next.

Your loans do appear to be for assets though which is good. Do you use the caravan and are you getting £10000 worth of holidays from it?

I would also say why are you borrowing and why aren't you saving? At some point your kids will probably go to uni, you are presumably going to retire at some point so how will that be funded? Hopefully you have pensions but that is something else to look at.

ReadingTim · 14 March 2017 at 2:39PM

Firstly, your husband needs to grow up - a £100 per week "clothes shopping habit" might be ok for a young guy out on the town in the pubs and clubs on the pull, but frankly, it's a bit sad for a 40-something bloke who's married with 2 kids. Plus, he doesn't earn enough to sustain it, and also provide for his family: he's sponging off you, so you need to tell him to knock it on the head.

Otherwise, it's just a case of being organised: knowing where it's going (spending diary) and knowing what's coming up. Bills are rarely unexpected: they're due around about the same time every month, quarter, year, whatever. Things rarely just blow up/stop working - there are usually some warning signs they're on the way out. Birthdays and Christmas happens on the same date, year in year out: they don't creep up and surprise you out of the blue.

Others have made comments on specific line items in your SOA - consider them, and with some organsiation and maturity you ought to be able to get back into the clear. However, you're not going to be in much of a position to help your kids in terms of university or property ownership, plus may want to consider your own future post-retirement.

MallyGirl · 14 March 2017 at 3:19PM

my thoughts:
in your mid 40s you ought to be planning for the future. In your job I presume you are getting a company pension. Is it salary sacrifice? If so are you contributing enough to get the max contribution from your employer. Any AVCs?
Is your husband self employed? Does he have a pension?
Are you putting any money away for the kids - uni fund, driving lessons/car.
I am just about to turn 50 and have just ramped up the pension planning with S&S ISA and AVCs to company pension (on top of the standard 5% from me and 10% from company). It still won't realise quite enough to enjoy the retirement I dream of but I was focussed on paying off the mortgage (which I have done). Starting earlier means you can put less in and still get a good result at retirement. On your salary this should be easily doable.
It sounds like DH needs to be given a clothes allowance and be required to stick within it.
Your food bill is high - more cooking from scratch could really bring that down.
You show no savings so where is the holiday fund and present fund?
How are you going to pay for car maintenance?

angelpye · 14 March 2017 at 7:46PM

I guess my question is: Has your husband had his lightbulb moment? Does he recognise how unnecessary it is on a pre tax income of £80,000 a year to have debt? Only £34,428 is going on monthly expenditure. I realise you may not quite have had your LBM as your asking the question you are asking but you are at least questioning whether this is ok.

£41,250 worth of debt when you 'should' have £24K a year spare is a big hole to plug - I would want to account for that so I second the ideas above: YNAB (apps mean you can both update when you spend if you want that system), spending diary and separate account for spending budgets so the total available isn't seen as free to spend. OH's £5,200 a year clothing allowance definitely needs some discussion. Perhaps watch 'spend well for less'? they have shown people with high incomes and how they can save and although I am on a much lower income I have found it interesting.

moneyfacts · 15 March 2017 at 7:33AM

It's never too late to sort your finances out so good luck.

You need to stop spending money. When my partner and I were in our mid 30s our joint income was £4,400. Our mortgage was £600 and we overpaid by £2800 on top each month.

I'm not bragging (I was also in debt once) I'm just trying to show how much wealth your income can generate.

Of course we didn't have nice cars or loads of holidays, suppose it's what you want out of life.

MrsLWW · 15 March 2017 at 10:21AM

My DH and I were in roughly the same situation as yourselves. I was infuriated at the fact that we earned reasonably well but seemed to have nothing at the end of the month to show for it.

To combat this i decided to do some jam jar accounts:

We each have our own account that our wages are paid into (the card is in the safe and generally we don't touch them as we consider these as our source accounts and want to make sure there is always money in the.)
From this account we each pay our own loan and own mobile phone. We have standing orders into the following:

-Joint bills account (currently Santander 123) -we pay the same amount each as our wages aren't too dissimilar but you could always do a percentage each based on your wages;

Mortgage (with Santander so get cash back)
Council tax
Gas & Electric (with spark, best deal on price comparison - check every year)
House insurance
Car insurance (admiral multi-car - been the cheapest for 6 years running)
Car tax
Car MOT
TV, phone, broadband
Netflix

-Joint Shopping/Fuel Account
As the name suggests we use this for any household shopping and groceries, fuel for the cars etc. We bulk buy where we can, shop in farmfoods (sign up to their news letter and get £2.50 off £25 spend, £5 off £50, £7.50 off £75 and £10 of £100), BM bargains, Home bargains and tesco (usually their value range only and things we can't get in the other stores such as certain spices etc). I avoid a lot of brands (was paying £2.63 for harpic to flush it down a toilet :O I now pay 27p for tesco value, switched from parazone bleach £2 to easy bleach 35p and discovered they were made by the same company!).

Joint birthday/Christmas/holiday/days and nights out
As it suggests we worked out how much we would spend on each person and everything else, added it up and divided it by 12.

individual spend/fritter accounts

Set a reasonable amount but dont be excessive. It's amazing how you change your spending habits when you KNOW you only have £100 for personal spends (for us this includes clothing, and it has really made us look at items we already have).

The only card we have on us on a day to day basis is our spend accounts, everything else is in the safe to stop impulse spending. We pack lunch, batch cook, fuel up at the begining of the month, shop and stock up and it has made a difference. We see where the money goes now and now overpay all our debts. We always make sure the is a little more in each of the accounts than we need and this also means wee have some savings here and there.

If i were you I'd get rid of all the small debts first; Argos then next, the get RID of those credit cards. Your husband looks like he is already using his to bridge a funding gap - stop it now before it's out of control!

Then use the money you were paying towards those debts on your finance loans for cars, vans etc (debt snowballing).

HTH

Money_saving_maniac · 19 March 2017 at 2:37AM

maxedout79 wrote: »

My New Years Resolution was to take a good look at our finance... I am just doing it and it's nearly April..

I live with DH and our 2 children, 7 & 13. I work in the financial sector as a senior manager, earning about 50K. My husband works in the plumbing industry earning about 30k. We are ok moneywise on a month to month basis, however we are both now approaching ou mid 40's and I feel that we are not really in the best place. I have posted a SOA below. It looks like we should have £1200 left over... we don't. We always seem to paying some big bill, whether its for a holiday, work on the house etc. DH also has a serious clothes shopping habit, sometimes spending over 100 per week

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 3050
Partners monthly income after tax....... 1912
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 4962

Monthly Expense Details
Mortgage................................ 683
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 110
Electricity............................. 50
Gas..................................... 80
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 0
Mobile phone............................ 70
TV Licence.............................. 12
Satellite/Cable TV...................... 60
Internet Services....................... 25
Groceries etc. ......................... 400
Clothing................................ 100
Petrol/diesel........................... 150
Road tax................................ 30
Car Insurance........................... 100
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 150
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 15
Buildings insurance..................... 27
Contents insurance...................... 0
Life assurance ......................... 47
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 50
Entertainment........................... 300
Holiday................................. 250
Emergency fund.......................... 0
Total monthly expenses.................. 2869

Assets
Cash.................................... 0
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 20000
Other assets............................ 8000
Total Assets............................ 238000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 127500...(683)......0
Total secured & HP debts...... 127500....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
my car loan....................12000.....248.......5.8
caravan loan...................10000.....190.......0
husband van finance............15000.....245.......7.9
next...........................500.......25........0
argos..........................250.......20........29.9
my cc ( holiday)...............1000......50........0
husband CC.....................2500......50........0
Total unsecured debts..........41250.....828.......-

Monthly Budget Summary
Total monthly income.................... 4,962
Expenses (including HP & secured debts). 2,869
Available for debt repayments........... 2,093
Monthly UNsecured debt repayments....... 828
Amount left after debt repayments....... 1,265

Personal Balance Sheet Summary
Total assets (things you own)........... 238,000
Total HP & Secured debt................. -127,500
Total Unsecured debt.................... -41,250
Net Assets.............................. 69,250

I'm going to be an old curmudgeon and say just stop pi$$ing your money up the wall. You could be paying off your mortgage with the cash you two are just frivolling away and then if one of you lost your job or became sick you would have a guaranteed roof over your head. And obviously this SOA is actually truly inaccurate as you have put £100 a month for clothes and OH is actually spending £100 a week on clothes.

I suspect the only answer is to approach it from the other end ie you each have a monthly amount of spending money and the rest goes towards bills and savings. If you did this you could double your mortgage payments without feeling any pain and it would stop the insane amount of discretionary spending which is I suspect where your cash is going. Also bet most of it on the cc is discretionary spending ie what should be coming out of pocket money.

This bit is in capital letters cos you need to get it:

WITH 80K INCOME YOU ARE WELL OFF BUT YOU ARE NOT RICH, PAY YOUR MORTGAGE OFF ASAP, YOUR SPENDING HABITS WILL BREAK YOU IF YOU HAVE ANY BAD LUCK!!

Writing as someone who lost her job thru redundancy in her mid 50s and was extremely grateful she had been overpaying her mortgage when she was earning...

Are we over committed?

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