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Original poster

How bad is my financial situation.

73 replies

Creation · 01/05/2020 11:29

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?

OP posts:

MrsJBaptiste · 01/05/2020 15:09

And yes, £15k on a car is a ridiculous amount but that's done now and I presume you will just have to have that debt until the loan is paid off? If so, there's no point other posters going on about it.

OnlyFoolsnMothers · 01/05/2020 15:29

Sorry OP I don’t think you are in a great financial
Position, of course there will be people who have it worse but £1100 for food and savings and extras for a family of 4 is tight. Trying to save for a house.
I’d look for anyway to claw back the debt of the car- not sure what your agreement is- but 15k
On a car when you don’t own a property is ridiculous imo.

StarchyStiff · 01/05/2020 15:30

We were in a similar situation at your age, but actually thing have improved dramatically the last few years in terms of our incomes /promotions etc, so we are now debt free, with two good incomes and about to complete on our first bought property, plus it is not a starter or first rung of the ladder house but a really nice forever home (not trying to sound braggy, just to reassure you). I am 39. We worked really hard the last few years to achieve this, and have DC.

I remember feeling so behind my friends and embarrassed having not bought or being ready to buy then, like it meant I was a failure. It was silly to compare, I see that now.

Interested in this thread?

Then you might like threads about this subject:

General money

StarchyStiff · 01/05/2020 15:31

Agree on overpaying to clear the debt, once that weight is off your shoulders you will feel so different.

TeaAndHobnob · 01/05/2020 15:40

15k on a car loan is where you've gone wrong OP.

It's all very well complaining you don't have a house, but that car loan was a choice. You could have saved up, bought a cheaper car. Cheap cars are not necessarily unreliable.

But it's done now. If you really want a house, do a budget, save every penny you can. Probably means no holidays though.

I get that it's tough, but you don't have the income to lead the lifestyle you want (nice car, holidays, mortgaged house). One or more of these things has to go. At the moment it's a mortgage. But that's a choice you've made.

Thesaltandthesea · 01/05/2020 15:41

We are a similar age to you with 2DC (all being well soon to be 3) however I'm fortunate to own a property from scrimping and saving when I was younger for a deposit. Our mortgage is a lot cheaper than rent would be but we are desperately saving to buy somewhere bigger.

After mortgage/bills/car payments (£320 and £360) /childcare we have about £2000pcm left over for food/emergencies/savings/holidays/petrol. Most of our petrol is refunded through work expenses and we both receive a car allowance which justifies the car finance.

We try to spend £1k and save £1k. It rarely works that way.

I don't think your situation is too bad if only one of you is working.

TerrorWig · 01/05/2020 15:49

It’s outing that you need a 7 seater? Because you have two kids and maybe a step child? Or like to go camping?

We had a 7 seater up till last year. I bought it for £1k old but good! I’d get rid of the car and get something different if you’re really worrying but you’re absolutely golden compared to some.

littlefawn · 01/05/2020 15:50

I think it depends on where you've come from too.
For example I'm the same age but there's people in completely different situations to me

Eg some spent 20s travelling, some had kids young, some had help from parents

MondeoFan · 01/05/2020 16:10

The car sounds massive funds.
My last car was £600 lasted me 5 years.
Just bought a car couple weeks ago for £650. I'm expecting it to last 5 years minimum.
Cars can really depreciate in value

Redlocks28 · 01/05/2020 16:20

I think that’s a huge amount to spend on a car when you want to buy a house-it sounds like your priorities are back to front. I bought a second hand 7-seater (that really isn’t outing) for 5000.

A girl at work did this-bought a car for £12k which she is paying back at high monthly payments and interest and is always complaining that she can’t move out of her parents and in with her boyfriend, yet if they’d both put their £12k into savings (they both got car loans), they’d have a good deposit.

CayrolBaaaskin · 01/05/2020 16:20

Yeah I think if I was to advise you to do it all again, it would be to get a cheap car and get a house pre kids. Too late for that now tho. 15k is a huge amount on a car. I would never pay that mich and I’m decades older with a good income (and property).

CayrolBaaaskin · 01/05/2020 16:23

Lots of young parents can’t ever get out of the renting trap too. Not much help to you op but for others I would say get the house first- so much easier to save pre kids. If you have to pay extra to rent with kids you might never be in a position to buy

Redlocks28 · 01/05/2020 16:24

15k is a huge amount on a car. I would never pay that mich and I’m decades older with a good income (and property).

Yes, exactly.

Yankathebear · 01/05/2020 18:17

For the things that you’ve listed to come out of the £1100 after bills I would start separate accounts. Food, Christmas, birthdays, appliances etc. Put a set amount in each month (I put in £400 for food although never spend it, £100 for each of the others). It’s there when you need it and is for that only.

ScarfLadysBag · 01/05/2020 18:24

I think it's the extra stuff that you don't budget for that's the problem, as PP have said. You don't have £1100 a month for food, you have £1100 a month for food and every single non-monthly expense. The MSE budget planner is helpful to see how much money per month you are spending on things including one-off or infrequent expenses such as repairs, car maintenance, holidays, clothes, birthdays, haircuts, etc.

I still don't think it's dire but it's not as comfortable as some are suggesting.

RyanBergarasTeeth · 01/05/2020 18:29

I dont think your in a terrible situation op. Over 1k a month leftover even including food is a massive ammount to many. Me and dp get paid about 1.5k between us and then we have to pay rent and bills and are left with a lot less than that. Dp has a child too. Its about setting a strict budget and looking at paying off the debt and putting a reasonable ammount of savings aside.

The whole hair cuts/repairs etc argument is flawed. You only need to put a small ammount each month to once side to cover these its not like your kids need a hair cut or new clothes and shoes every single month.

Even if you can put £50_£100 a month to one side for your house deposot your savings will grow.

nowaitaminute · 01/05/2020 18:44

First, I'm going to ignore the money left over per month and just say that is a lot of debt to be honest! I wouldn't be able to sleep with that 15k to be honest. So, if I were you my aim would be to pay that off ASAP!

The money left over...what EXACTLY is that to cover OP? Just food...I mean you can feed a family of 4 on under 400 per month do that's 700 left!
I would put;
200 aside for savings
150 for fun stuff/eating out/birthdays etc
An extra 150 towards the loan
An extra 100 towards the credit card.
100 for kids expenses

Then when you have the credit card paid off...put the 100 to the loan also!!

OnlyFoolsnMothers · 01/05/2020 18:46

The thing people are forgetting is every month is not an October- that £1100 has to cover Xmas holidays, summer holidays etc. £25 a wk on activities for two kids is near impossible when not in school etc

Witchend · 01/05/2020 18:55

We need a reliable car and also need 7 seats so our car cost more than we would like
We have a 7 seater that we bought at 2yo, 7 years ago for around £6k. It's been incredibly reliable-had to call the mechanic out for the first time in 7 years other than service/MOT. If it wasn't being so rarely driven during lockdown, then I wouldn't have needed to do that-the battery had failed. He replaced it, it's now back working again.

Original poster

Creation · 01/05/2020 18:58

Thanks for the advice so far.

As and when I start working, I’ll have to pay for wraparound childcare but I’d imagine I’d be able to add around £600 per month to the £1,100. That should make an enormous difference to us.

Also, we get a lump sum of money at the end of DH’s current career which will be in around 10 years. That should be around £50,000. I’m hoping with all of these things factored in, we still stand a chance at some day owning a nice house in a nice area. I just feel like I’ve constantly had some sort of debt and I just want that weight off my shoulders. Hopefully one day not too far away.

OP posts:

Snowman123 · 01/05/2020 18:58

Yes you are not in a good situation.

Too much debt
Not enough savings

Clear your debt and get 3-6 months expenses in savings. Then it will look a lot better.

Recommend reading the total money makeover by Dave Ramsey.

EmpressJewel · 01/05/2020 19:38

Yes, I think you are in a bad situation, but only because of the car loan. It was a bad decision to spend that much money on a car given your circumstances (eg only one of you earning).

Babyroobs · 01/05/2020 19:46

It's not too bad except for the car loan. Sorry but I find that a ridiculous amount to spend on a car that but completely understand that others feel differently.

nowaitaminute · 01/05/2020 19:52

@Creation it's possible to get that paid off fast enough if you snowball it and then use whatever you have left from your earnings towards it too...you need to continue living as though you don't have that money for a while though! Just pretend it's not there!!

TheBlueBottles · 01/05/2020 20:15

Your situation is not that bad op! Don't be disheartened.

At 32 I changed career and started at the bottom, bought a flat on shared ownership at 35. Now 40 and property (my share) now worth 200k. That's just with 1 income.

I agree buying a car a few years old next time saves 000s.

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