Help with budget and want to pay mortgage off.....

A question about : Help with budget and want to pay mortgage off.....

Hi all

I am new to this forum but I am after some advice. (I have posted in another section but it was suggested I post here instead!)

We are at the final stages of remortgaging to clear the large debts we have built up over the years. We are taking out more than enough to clear them all which is a relief. I know some people don't suggest remortging to clear debts but they were starting to get unmanageable to seemed the only option.

We have fixed for 2 years to give us some peace of mind what the payments will be for that time. I don't expect the rates to go up but it is fixed at 2.99% so didn't seem excessive compared to my credit cards which some were at 25.9%. Last month alone our interest was nearly Ј700 on our credit cards.

Anyway, this will be the first time DH and I will not have unsecured lending and have one monthly mortgage payment only so I am trying to set a budget to keep on top of our money and try to save to pay our mortgage off. Previously it was just buy what we wanted /needed with a credit card so I don't know what is reasonable.

We are a family of 2 adults and 2 boys (7&4) so what should be reasonable for food? Should we have separate accounts for food and petrol and then another for other bills? We do have a santander 123 account paying our dd's each month at the moment.

Any advice appreciated! . Should I do a soa?

Xxxxxxx

Best answers:

• Yes, if you can, do an SOA, not only will it assist people here in giving you advice, it will also make you aware of what you are spending.
• Hope this
  Statement of Affairs and Personal Balance Sheet
  \
  Household Information[/b]\
  Number of adults in household........... 2
  Number of children in household......... 2\
  Number of cars owned.................... 1
  \
  Monthly Income Details[/b]\
  Monthly income after tax................ 2324.79
  Partners monthly income after tax....... 500\
  Benefits................................ 136.2\
  Other income............................ 0\
  Total monthly income.................... 2960.99
  \
  Monthly Expense Details\
  Mortgage................................ 776\
  Secured/HP loan repayments.............. 0\
  Rent.................................... 0\
  Management charge (leasehold property).. 0\
  Council tax............................. 109\
  Electricity............................. 175\
  Gas..................................... 60\
  Oil..................................... 0\
  Water rates............................. 42\
  Telephone (land line)................... 26.5\
  Mobile phone............................ 80\
  TV Licence.............................. 12.12\
  Satellite/Cable TV...................... 52.5\
  Internet Services....................... 7.31\
  Groceries etc. ......................... 400\
  Clothing................................ 100\
  Petrol/diesel........................... 100\
  Road tax................................ 20\
  Car Insurance........................... 20\
  Car maintenance (including MOT)......... 30\
  Car parking............................. 0\
  Other travel............................ 0\
  Childcare/nursery....................... 0\
  Other child related expenses............ 0\
  Medical (prescriptions, dentist etc).... 30.94\
  Pet insurance/vet bills................. 0\
  Buildings insurance..................... 10\
  Contents insurance...................... 10\
  Life assurance ......................... 20.45\
  Other insurance......................... 0\
  Presents (birthday, christmas etc)...... 25\
  Haircuts................................ 10\
  Entertainment........................... 100\
  Holiday................................. 20\
  Emergency fund.......................... 100\
  Total monthly expenses.................. 2336.82
  \
  Assets\
  Cash.................................... 0\
  House value (Gross)..................... 225000\
  Shares and bonds........................ 0\
  Car(s).................................. 5000\
  Other assets............................ 0\
  Total Assets............................ 230000\
  \
  \
  Secured & HP Debts\
  Description....................Debt......Monthly.. .APR\
  Mortgage...................... 163995...(776)......2.99\
  Total secured & HP debts...... 163995....-.........- \
  \
  Unsecured Debts\
  Description....................Debt......Monthly.. .APR\
  Total unsecured debts..........0.........0.........- \
  \
  \
  Monthly Budget Summary\
  Total monthly income.................... 2,960.99\
  Expenses (including HP & secured debts). 2,336.82\
  Available for debt repayments........... 624.17\
  Monthly UNsecured debt repayments....... 0\
  Amount left after debt repayments....... 624.17\
  \
  Personal Balance Sheet Summary\
  Total assets (things you own)........... 230,000\
  Total HP & Secured debt................. -163,995\
  Total Unsecured debt.................... -0\
  Net Assets.............................. 66,005\
• That was quick, well done.
  I'm afraid I'm no expert on assessing SOAs but there will be some friendly people along later who will be able to give you great advice.
  One thing they may ask is how you got into the position of having to remortgage to consolidate your debts because there may be habits they you need to break to move forward.
• Electricity............................. 175
  Is this a typo?
• There you go, Iris has already spotted something!
• Ј80 for mobiles seems high. Satallite tv is costing you Ј630 a year which is almost another mortgage payment.
• Clothing, tv and mobiles are all high, switch to sim only when your contracts run out. I did this and saved Ј23.75 a month.
  Try cutting down on clothing for adults, kids grow and need stuff, eBay their clothes they have grown out of to go towards new stuff.
  Can you cut down the satellite package?
  Holiday seems low for 4 people, unless you go camping like us
  Does your mortgage allow overpayments?
  Save as much as you can, if you can't overpay, and pay a chunk off next time you remortgage, then if the rates have gone up it will less of a shock and your LTV will be better.
  Please don't spend on cards again, it's tempting to think' it's only xxx much' but it will end in disaster, been there and done that.
  The car will need replacing eventually, save for this as well.
  I hope it works out for you xx
• HI Thanks for the advice.
  Iris yes Ј175. We are paying off the charges that arose when I forgot to read the meter and they had massively underestimated our reading. My fault so trying to clear. I am also tied to my tumble dryer - I know they are not efficient but I hate ironing!
  Yeah mobile was a moment of madness as I wanted an Iphone 5 (and hubby) so that is a 24 month contract which runs out in 2015 so may go onto a pay only sim.
  Sky is high and I Keep nagging hubby about it but he really wants it for Sky Sports! Footie fan! am thinking of changing to BT so not sure.
  Is Ј400 reasonable / excessive for groceries?
  Yeah we need to change our way of thinking but we have also spent a lot of money on extending our house which we did by using our cards and money as we have earned it. That is 90% finished now so this shouldn't happen again.
  I have set myself a challenge to spend as little as possible and looking forward to the challenge!
  Any other advice welcome!
• If your want to avoid getting into debt again you need to understand why you got into debt in the first place.
  Is your SOA the amount you want to spend, or is it what you really spend?
  I would take a close look at my outgoings and make a spending diary to identify where the problem is. Try one of the apps goodbudget or YNAB ( your need a budget)
  Some comments below:
  Groceries etc. ......................... 400\ - This is ok, could be improved if you wanted to - look at theold style board for ideas
  Clothing................................ 100\ - this is ok - but monitor carefully, so you dont spend more
  Presents (birthday, christmas etc)...... 25\ very low for a family - is this really what you spend?
  Haircuts................................ 10\
  Entertainment........................... 100\ - could be improved if you wanted to
  Holiday................................. 20\ - very low, not many families can make a holiday for 4 with this amount. It makes your entertainment budget stand out as large.
  Take a look a t these and try to get better deals, no need for both a landline and mobiles. I would drop the cable tv.
  Telephone (land line)................... 26.5\
  Mobile phone............................ 80\
  Satellite/Cable TV...................... 52.5\
  Internet Services....................... 7.31\
• Thanks Tommelise
  We go on holiday once a year and the cost Ј250 for the accommodation and it is self catering so included the day trips in the entertainment costs.
  I know the reasons we go into debt, I spend too much and buy whatever I want whenever I see it rather than save but then I have always thought - already in debt so what is another Ј100. Also the household extension cost c Ј50k over the last 4 years so that counts for a lot.
  Just hoping a clean slate will help me start a fresh.
• Said without judgement -consolidating your debts into your mortgage isn't recommended as the debts now become a secured debt and unless you address the root cause of the problem, it could put your home at risk. I understand why you did it - I did similar but I consolidated to an unsecured loan AND changed my spend/save habits radically.
  Now you have the breathing room, you MUST work on a budget for every penny you earn, spend and save - it is the only way. No more using credit cards (unless you have the money saved already in your account to pay it off in full)
  The scariest bit of your post is this:
  Quote:
• Start a spending diary of what you spend and keep the SOA upto date.
  Amount left after debt repayments....... 624.17
  If this is not left every month the SOA is wrong so fix it.
  (no one gets the SOA right first time and thye are continualy changing as life moves on)
  Make a 5 year plan, you need to start saving for stuff so you have the cash to buy replace/items when needed.
  Make a list of everything that you might need or change or break down in the next 5 years and start a saving pot for those.
  Some will be a risk analysis based on age, but most whites goods last between 5 and 15 years, if stuff is older save more pm for the replacement I work on an average of 10 years and you probably have Ј1k+ worth of washer fridge irons,vacuums etc, thats Ј10pm min and if stuff is older you will need more.
  you can lump this into the emergency fund but if you have an idea of where some of it will go you can assess how big it needs to be.
  (the emergency fund is for things you can't predict this should get smaller over time as the planning gets better, emergency spending only happens once for each type, it goes in the plan for next time so if something happens a bit sooner than planned the emergency part is reduced)
  Cars(these are the big drain), make sure the maintenance budget is good(when are the big items due like tyres), replacement even if you make a Ј5k car last 10 years thats Ј40pm, needs to be on the SOA
  house 90% done where is the rest of the money coming from?
  I don't see this itemiszed on the SOA.
  We are taking out more than enough to clear them all which is a relief
  Where is this cash on the SOA for the excess money you got on the new mortgage?
  The Idea of a budget is a plan of how you want to allocate your resources, the SOA is a snapshot trying to reflect the averages, I find it better to look at a full year and normalize all the items as annual cost, you get a much better idea of relative value that way.
  The longer the plan the better, I think 5 years is the minimum for forward looking items, gives time to save, 10 years ahead comes next but that tends to be thing like house moves kids going to uni/leaving home
  The Key to staying on plan is to track the spending but you can go over one month as long as you are under another.
  One way to manage this is to have a rolling years worth
  eg clothes. You have Ј1200py to spend every month this goes up Ј100, every time you spend it goes down, as you are starting out at zero it may go negative to start with but over time the Ј100s add up.
  Another good idea on clothes is have an audit use stuff up and plan what you need for the year or so ahead, then you can preemp by buying when cheap, we all need socks and pants, so no harm in buying them if you see a bargain.
  Once you get the hang of tracking is does not matter where the money is.