How bad is my financial situation.

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I’m 31. I have 2 DC, youngest almost school age.

We have £1,500 on a 0% credit card.
We have a £15,000 loan which was used to buy a car. We pay £320 for this each month and it’s due to be cleared in early spring 2024.
We have £400 in an instant access savings account
We have £900 in a help to buy ISA.
Due to DH’s recent promotion, we now have about £1,100 left per month after bills.
I was hoping to start working soon after completing my studies but my plans are up in the air now due to Covid as DH is a key worker and so I am taking care of DC (one of whom is high risk).

We don’t own our own home (as you probably guessed since I mentioned our help to buy ISA).

Is this a bad situation to be in at our age?

Over a grand a month left after everything??? Seriously?

Save as much of your excess as you can.

Can you overpay your debts?

Well, our outgoings have decreased a little thanks to a change in circumstances and DH has also had his promotion so both of those things have improved things for us significantly.

Just to be clear, the £1,100 is to cover food, I haven’t included that in bills.

I have a plan to firstly clear the credit card (before the 0% runs out in September). I am able to increase the loan repayments so once the credit card is cleared, I was going to up the monthly payments by £50 and also continue to build up the money in the instant access savings so we don’t need to use a credit card in future if we are ever hit with unexpected costs. Once the instant access account is at around £1,500, I was considering then upping the loan repayments again to get that gone quicker.

I’m just feeling a little disheartened as I was really hoping to be earning money by now but I know our issues are very trivial by comparison to many others at the moment.

I just feel a bit of a failure for not having a house deposit saved by this point in our lives.

If you have already factored in the car payments you could choose to stay on plan and start a regular saving for a house deposit. Get used to the saving habit before committing to earlier repayment.

But it is never too late to start saving. You just have to decide how and when.

It's no failure. Do a budget for food, make sure you have some available for sundries and then chuck the rest at your loans if poss. I have standing orders set up for money going into saving accounts as soon as I'm paid so it can't be spent on other things. Most money websites advise paying off debt before trying to save but I get why you might want to try and save a little at the same time.

I’m not being funny but that’s about what we have after bills, we’re a family of five all kids at school.

If you manage then it’s fine. If you don’t - then reassess your outgoings. £1.1k should be plenty for month to month expenses.

Are you serious? A grand on food is more than enough.

What's the interest rate on the car loan? If the loan allows, it's probably worth putting some of your spare money into overpaying the car loan, to save interest, which is likely to be higher than any savings, except perhaps the bonus elements of the Help to Buy ISA so keep up with that first.

When the loan is paid off, are you planning to keep the car long term after that? If you can manage to do that, your plan should be to save for your next car, and going forwards, only pay for cars out of savings, not with borrowed money. It makes a huge difference.

Whether or not the £1100 a month 'spare money' is a lot depends on exactly what it's supposed to cover. You've already mentioned food.

What about annual and irregular expenses like insurance, Christmas, car repairs, new washing machines? Are you putting money away out of the 'bills' money, or does that also come out of the £1100? If not, it then shrinks further.

What about your DHs fuel for work? Any essential travel for you and DC - medical appointments etc, and what about things like eye tests, dental, hair cuts?

Sounds like a time to have a really good look at your budget - even if you don't earn money directly, you not working might mean that you have time to keep a really close eye on the family budget and make your money go as far as possible, shopping around etc, which can have the same effect as earning money by working, but is then lost because you're time poor so spend more because you have to do thinks quickly, which is usually more expensive. You mention a high risk DC - if they have additional needs, you may be entitled to carer's allowance.

Anyway, have a look at the moneysavingexpert money makeover and sign up to the weekly email for ongoing tips on how to make your money go as far as possible.

www.moneysavingexpert.com/family/money-help/

my god i have £1000 for my bills/mortgage etc! with children.

im sure you can make that work! i do, not easy but its budgeting!

my god i have £1000 for my bills/mortgage etc! with children.

im sure you can make that work! i do, not easy but its budgeting!

I think the car loan is a lot in the whole scheme of things. Better to focus on saving for a home whilst getting around in an old banger.

You could eat like a king on £1k after bills and still have nough for frivolous spends and probably overpay some of those loans or cards. You're in debt but you're fine, there are millions who can't even get food on the table right now

It depends on what the £1100 has to cover, if it’s just food then it’s OK.

If it’s food, petrol, holidays clothes, hair, school clubs, birthdays and Christmas then I would struggle on that personally. I know it’s doable but I wouldn’t saying that you’re doing badly for your age, at all either.

Once you get in work you’ll be in a much better position and can save more.

Thank you for your really helpful post @BarbaraofSeville. The £1,100 includes things like replacing washing machine, car repairs, birthdays, Xmas and haircuts, all of those sorts of things. I never really looked at it that way before. Also, if we manage to afford a family holiday, that would come from there also. I will definitely have a look on moneysavingexpert. Hopefully that will help with budgeting.

One thing I am quite good with is shopping around for the cheapest deal with things like utilities & insurance etc.

I got a pretty good deal on our loan. 2.95% annual annual rate of interest.

Buying our own home just feels so out of reach just now. Hopefully that will change.

£320 monthly repayments on a car? Sorry in my mind this is where you are going wrong, much better to buy a good second hand car outright for several thousands.

£320 monthly repayments on a car? Sorry in my mind this is where you are going wrong, much better to buy a good second hand car outright for several thousands

This x 100.

I might get a £15000 car loan if my mortgage was paid off, not if I was saving to get a mortgage.

We need a reliable car and also need 7 seats so our car cost more than we would like but should do us for many years.

The reliable car thing is a bit of a fallacy, in my opinion.

My first three cars cost 600, 1350 and 3000 pounds respectively. I've had the latter for a year, but the second lasted me five years with good annual maintenance and occasional repair jobs that cost as much as a one off as your MONTHLY outgoings. Even with the cheapest, though it needed repairs, never stranded me. If it had, taxis for a few days would have cost less than a loan also.

I'm not trying to be a dick, I just see that line trotted out so often when the maths just doesn't stack up.

With no savings and credit card debt I’d not have bought a £15k car on finance. You don’t need to spend a fortune on a car for it to be reliable whatsoever. Why would you need 7 seats with two DC.

The situation re the 7 seats is pretty outing so I’d rather not elaborate on that one. But it is essential for us.

Also, the car itself was less than £15,000. That is the amount we will pay back, including interest.

You really don't need a 7 seater car if you have two children, or are you planning ahead for having a third (when the extra space can be very useful).

I think you sound as though you have things going in the right direction, other than that.

I know it’s not what you are wanting to hear but I’m in agreement about your car. You’ve basically bought one that is way out of your realistic price range. Loads of people do it which is why you probably don’t see it as a bad thing, but it’s just not financially savvy.

The best financial advice I ever got was to not buy what you can’t afford outright. Except for a mortgage we have always saved up for things. This meant buying very unflashy cars. Once we paid off the mortgage (which we did far quicker than most because we didn’t buy expensive stuff) we bought a better car. But with our savings, not with a loan.

My priority would be build up a bit of a cash reserve (6 months outgoings) then try and overpay the loan if there's no penalties.

I agree that the reliable car thing is a fallacy. My cheap runaround has gone strong for three years and cost me next to nothing, whereas the 6 month old car I bought needed a new engine after 27000 miles (Ford Focus Ecooboost, I'm looking at you). If you can sell the car and get a cheaper one you'll be a heck of a lot better off.

With your disposable income you can turn the situation around quite quickly, so I don't think your situation is bad.

I'm surprised by some of these responses. If we (family of 4) had £1,100 left to cover food, petrol, going out, birthdays, clothes, etc. we'd really struggle.