Trying to unpick this mess

[Rv821]

Hi Everyone,

I posted a few days ago regarding our debts and my stress due to it. I have spent the last couple of days going through statements and putting together a budget. I have created a spreadsheet that has all of the following outgoings listed -

Mortgage
All household bills
All minimum debt payments
All other direct debits that leave both of our accounts
Food/grocery bill
Diesel bill
Cost for son's before/after school clubs
Basically ever last thing that we have to pay.

After everthing is paid, on paper we should have around £1964 left each month. I now need to decide how we manage this 'disposable' income. For me it needs to go on three things in order of priority

1.Additional debt repayments
2.Building up a savings pot for emergencies
3.A small amount for leisure/discretionary spending

I feel better now that I have gone through the figures. I just need to know that we can do this and come out the other side. I have never felt as stressed and wretched as I have over the last week since I realised the full extent of our situation.

Hi, I didn't see your first post but just wanted to say well done on sitting and going through all this!

After months and months of being frustrated at having a (to me at least) decent household income, but struggling to find money for the food shop by the middle of every month, I finally got fed up and did the same as you. Slowly but surely I'm getting things in order now.

I hope that you feel a bit less stressed now, and feel positive about moving forward :)

I'm sure that you'll get good advice on this site but the real experts are on MSE.
Go to MSE Debt Free Wannabe and fill in their 'Statement of Affairs'.
There are at least 2 experts giving advice plus most posters have had first hand experience of being in debt and resolving it, many with much more debt than you have.
It may be a little harsh sometimes but all in all you will get sympathetic and very sound advice.
Anyway, best wishes on your debt free journey. Mx.

Does 'Basically ever last thing that we have to pay' include annual and irregular expenses like insurance, car servicing/MOT etc?

Also have you checked the cost of things like gas, electric, broadband and phones to see if you can reduce the cost?

Have you tried to reduce the interest cost of your debts - transfer to interest free credit card offers for example? Second the MSE recommendation. Everything you need to know, including details of balance transfer offers. And ways to reduce the cost of just about everything.

You are right about throwing as much as possible of the spare at the debts, building up a bit of an emergency fund and allowing yourself a small amount for discretionary spending, that's all good.

On the matter of an emergency fund, this doesn't have to be much at the moment, because if the emergency happens, you can probably use a credit card, that way you only have to pay the interest if the emergency happens. If you build up a big emergency fund instead, you'll be paying interest on a larger credit card balance instead.

You say 'we'. Does that mean you have a partner and are they on board with the debt reduction plan even if it means being on reduced spending until the debt is paid off?

@BarbaraofSeville

Does 'Basically ever last thing that we have to pay' include annual and irregular expenses like insurance, car servicing/MOT etc?

Also have you checked the cost of things like gas, electric, broadband and phones to see if you can reduce the cost?

Have you tried to reduce the interest cost of your debts - transfer to interest free credit card offers for example? Second the MSE recommendation. Everything you need to know, including details of balance transfer offers. And ways to reduce the cost of just about everything.

You are right about throwing as much as possible of the spare at the debts, building up a bit of an emergency fund and allowing yourself a small amount for discretionary spending, that's all good.

On the matter of an emergency fund, this doesn't have to be much at the moment, because if the emergency happens, you can probably use a credit card, that way you only have to pay the interest if the emergency happens. If you build up a big emergency fund instead, you'll be paying interest on a larger credit card balance instead.

You say 'we'. Does that mean you have a partner and are they on board with the debt reduction plan even if it means being on reduced spending until the debt is paid off?

Hi,

yes I have factored in those costs. I have put £30 a month for car maintenance etc. I have included insurances etc too.

Yes I am married. I do most of the money stuff however we both feel committed to reducing the debt. We want to do it in a way that is sustainable though as neither of us feel that life needs to be devoid of all joy during the process.

I’d put £1500 into debts and the rest leave in your account as back up, or put in any easy access if you think you’ll spunk it away on rubbish.

When we found ourselves in this situation we found piggy banking helped. I think itson the mse. Basically, you have an account for all the bills. Then we have a tiny amount each into our own acct which is used for what we want. Then you can decide how much goes elsewhere. Potentially with another account. For us, separate accounts made managing it all easier.
Well done for recognising the challenges and good luck.

Get rid of your most expensive debt first.
When that is paid off do the same with next most expensive..

Do you use all your personal tax allowance?
I only earn about £10k per year. DH earns about £32k. We have contacted HMRC and now My unused tax allowance is given to DH to use.

@MrsMoastyToasty

Do you use all your personal tax allowance? I only earn about £10k per year. DH earns about £32k. We have contacted HMRC and now My unused tax allowance is given to DH to use.

How have you managed this? I thought the married tax allowance was about £200 a year?

www.gov.uk/marriage-allowance

@MrsMoastyToasty

Do you use all your personal tax allowance? I only earn about £10k per year. DH earns about £32k. We have contacted HMRC and now My unused tax allowance is given to DH to use.

Hi

I don't think that we are eligible for this as we both use our allowances

Agree with the poster upthread who said to service the most expensive debt first. Pay the minimum payments on all bar the one with the highest interest rate - put every penny left onto that one.

I would recommend listening to Pete Matthew's Meaningful Money podcasts/videos, specifically the episodes relating to clearing debt. His site is here: meaningfulmoney.tv/ We've used it for planning for our retirement but I've also listened to episodes about debt and I find his suggestions very helpful and realistic. Good luck with it all and well done for taking these first difficult steps .