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Help with S.O.A

Help and discussions for strategies to get out of debt
campervan65
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Help with S.O.A

#21225

Postby campervan65 » January 8th, 2017, 3:57 pm

b]Hi, hope this is the correct board to post this.
I have been forced to take early retirement from work due to ill health ( not an ill health pension)
My income has drastically been reduced. I have cut down quite a lot but I would like some fools to have a look at my Soa with a view to helping me cut back more and what to do with my £40k cash to invest for income.

My mortgage is interest only. But covers my house value £150 and my parents which they live in but which will be left to me when they pass.

Thank you in advance.
Camper.[/b]

[font=courier new]Statement of Affairs and Personal Balance Sheet

Household Information

Number of adults in household........... 1
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details

Monthly income after tax................ 13000
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 13000


Monthly Expense Details

Mortgage................................ 497
Secured/HP loan repayments.............. 134
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 87
Electricity............................. 30
Gas..................................... 30
Oil..................................... 0
Water rates............................. 22.32
Telephone (land line)................... 0
Mobile phone............................ 5
TV Licence.............................. 12.12
Satellite/Cable TV...................... 27
Internet Services....................... 44
Groceries etc. ......................... 250
Clothing................................ 0
Petrol/diesel........................... 25
Road tax................................ 0
Car Insurance........................... 23
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 13
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 15
Entertainment........................... 41
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1255.44



Assets

Cash.................................... 40000
House value (Gross)..................... 250000
Shares and bonds........................ 65000
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 355000



Secured & HP Debts

Description....................Debt......Monthly...APR
Mortgage...................... 132000...(497)......4
Hire Purchase (HP) debt ...... 6000.....(134)......6
Total secured & HP debts...... 138000....-.........-


Unsecured Debts
Description....................Debt......Monthly...APR
Credit card....................3413......40........0
Credit card....................3895......40........0
Credit card....................6965......136.......0
Total unsecured debts..........14273.....216.......-



Monthly Budget Summary

Total monthly income.................... 13,000
Expenses (including HP & secured debts). 1,255.44
Available for debt repayments........... 11,744.56
Monthly UNsecured debt repayments....... 216
Amount left after debt repayments....... 11,528.56


Personal Balance Sheet Summary
Total assets (things you own)........... 355,000
Total HP & Secured debt................. -138,000
Total Unsecured debt.................... -14,273
Net Assets.............................. 202,727


Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.
[/font]

robbelg
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Re: Help with S.O.A

#21236

Postby robbelg » January 8th, 2017, 4:21 pm

Monthly Budget Summary
Total monthly income.................... 13,000
Expenses (including HP & secured debts). 1,255.44
Available for debt repayments........... 11,744.56
Monthly UNsecured debt repayments....... 216
Amount left after debt repayments....... 11,528.56



An error here needs correcting

Monthly Budget Summary
Total monthly income.................... 1,300
Expenses (including HP & secured debts). 1,255.44
Available for debt repayments........... 44.56
Monthly UNsecured debt repayments....... 216
Amount left after debt repayments.......-172



The experts will be along shortly but the obvious first step is to pay off the credit cards

BusyBumbleBee
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Re: Help with S.O.A

#21305

Postby BusyBumbleBee » January 8th, 2017, 6:57 pm

Without wishing to be rude - surely a £13,000 income per month is enough without having to cut anything.

Did you mean to put in £13,000 per year?

campervan65
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Re: Help with S.O.A

#21425

Postby campervan65 » January 9th, 2017, 9:14 am

Sorry for the mistake. Here is the correct one. I put too many zero's in.

<pre><b>Statement of Affairs and Personal Balance Sheet</b><b>

Household Information</b>
Number of adults in household........... 1
Number of children in household......... 1
Number of cars owned.................... 1<b>

Monthly Income Details</b>
Monthly income after tax................ 1300
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0<b>
Total monthly income.................... 1300</b><b>

Monthly Expense Details</b>
Mortgage................................ 497
Secured/HP loan repayments.............. 134
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 87
Electricity............................. 30
Gas..................................... 30
Oil..................................... 0
Water rates............................. 22.32
Telephone (land line)................... 0
Mobile phone............................ 5
TV Licence.............................. 12.12
Satellite/Cable TV...................... 27
Internet Services....................... 44
Groceries etc. ......................... 250
Clothing................................ 0
Petrol/diesel........................... 25
Road tax................................ 0
Car Insurance........................... 23
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 13
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 15
Entertainment........................... 41
Holiday................................. 0
Emergency fund.......................... 0<b>
Total monthly expenses.................. 1255.44</b>
<b>

Assets</b>
Cash.................................... 40000
House value (Gross)..................... 250000
Shares and bonds........................ 65000
Car(s).................................. 0
Other assets............................ 0<b>
Total Assets............................ 355000</b>
<b>

Secured & HP Debts</b>
Description....................Debt......Monthly...APR
Mortgage...................... 132000...(497)......4
Hire Purchase (HP) debt ...... 6000.....(134)......6<b>
Total secured & HP debts...... 138000....-.........- </b>

<b>Unsecured Debts</b>
Description....................Debt......Monthly...APR
Credit card....................3413......40........0
Credit card....................3895......40........0
Credit card....................6965......136.......0<b>
Total unsecured debts..........14273.....216.......- </b>

<b>
Monthly Budget Summary</b>
Total monthly income.................... 1,300
Expenses (including HP & secured debts). 1,255.44
Available for debt repayments........... 44.56
Monthly UNsecured debt repayments....... 216<b>
Amount short for making debt repayments. -171.44</b>

<b>Personal Balance Sheet Summary</b>
Total assets (things you own)........... 355,000
Total HP & Secured debt................. -138,000
Total Unsecured debt.................... -14,273<b>
Net Assets.............................. 202,727</b>

<i>Created using the SOA calculator at www.stoozing.com.
Reproduced on The Motley Fool DWD Board with permission, using other browser.</i></pre>

Triassic
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Re: Help with S.O.A

#21454

Postby Triassic » January 9th, 2017, 10:50 am

Cash in the bank is earning little or no net rest, on the other hand debt is costing you money. If it were me I'd use the lump sum to pay off the debt and after that I'd start looking at nvesting the cash for future income.

dspp
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Re: Help with S.O.A

#21461

Postby dspp » January 9th, 2017, 11:06 am

cv65,

For many years I lived off less than you are getting so I've pulled out a budget file from my records. As someone has rightly pointed out you would be wise to pay off those credit cards which are costing you £216/m. You are currently living in a manner that gives you £44/m to pay your credit cards which is not enough.

Going down your expenses list you might wish to consider deleting TV licence (£12/m), satTV (£27/m), moving to a cheaper internet pack (£44 >> ?? £25/m), getting cheaper haircuts (£5/m is ample for me, so £15 >> £5). That lot adds up to about £80/m of extra. Then the biggy that stands out to me is groceries etc at £250/m as I reckon on £110/m, and I note you have put entertainment at £41/m so there's no cross-subsidy between the two. Start deleting everything from your grocery basket that is not either vital or in the reduced section of Tescos (so no crisps, sweets, snacks, wine, etc,) and you ought to be able to get another £140/m of savings. So total potential current account savings are £220/m. Doing that would - as a minimum - stabilise your income vs outgoings ans stop the credit card debt mounting.

Personally if it were me I'd find a way to get well enough to do some work again but that would entail a discussion about your ill-health which is off topic here, but it will likely greatly affect your mental wellbeing. If you can't find a way to work for ££ then I'd be volunteering in the charity sector to try and keep mental balance.

Re £40k cash and where to invest it for income, you currently have £14k of credit card debt that is likely costing you 20% or so and snowballing in the wrong direction. A typical equity dividend yield (the HYP way) is only 5% so you'd be wiser to pay down those credit cards immediately, and then cut them up. That would then mean that you have £220/m - £171/m = £49/m available for discretionary expenditure or saving (save !).

I'm sure some experts will be along shortly, but those are some comments from checking my old files. I do not know the situation with interest-only mortgages - isn't it changing ?

regards, dspp

campervan65
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Re: Help with S.O.A

#21471

Postby campervan65 » January 9th, 2017, 11:35 am

Thank you for your constructive comments so far.

My credit card debt is on 0% interest. So the debt is not mounting. I thought it best to just keep paying this down and invest the 40k in shares. (HYP)
I will cut my grocery budget and start by shaving off £100 to start. My grocery budget is for all cleaning stuff and cat food etc.


dspp, what do you mean by delete my tv licence £12.12?

My tv, broadband and phone package runs out in may so will start looking one mnth before to see if I can get a better deal. I will cut out premium channels.

Yes I will find a cheaper hairdresser and also get my hair cut every 10wks instead of every 6.

The £44 for entertainment is for my membership to the golf club. Actual membership is only £300, the other two hundred is for competitions and the odd drink or cheap meal there. That is the only form of entertainment I have. Plus it gets me outside, I get excercise and socialise so well worth the money.

Re work, I will do some part time work maybe later in the year. Even if I don't get paid employment I will do some volunteering.

I have another 20yrs left on my mortgage so want to start paying that down once I have gotten rid of the cc debt.

Any savings I make from a new budget will go to paying off the cc.

Thank you so much for taking your time to look over my soa and to offer some great advice.

Cv.

dspp
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Re: Help with S.O.A

#21477

Postby dspp » January 9th, 2017, 11:52 am

I mean delete: as in switch off, unplug, sell. Pay no TV licence, pay no satTV. Stop watching the box. Save £40/m and join the local library instead. You've got an internet connection - use it.

I pay £5 per haircut for a clipper trim. That seems to be the normal price around here. Real LBYM would be to buy your own clippers.

No argument with £44/m for entertainment / golf (though its not my cup of tea). Enjoying life is part of the trick, within our means.

There are many ways of reducing grocery spend. Some are:
- make a shopping list before you go out, do not buy if not on the list.
- look in your cupboards before you go out and figure out what meals you can make, only buy the missing ingredients.
- when entering Tescos (or wherever) go to the reduced shelf first, buy only from what is there, and then only missing stuff.
- put a month's grocery cash in a purse. Buy groceries only from that cash. No cash: eat left overs from storecupboard !
- rationalise your cleaning materials !
- delete booze totally.
- and I'm sure others can tell you of their ways to do it. Trust me I've done it in the past. You can do it.

(edit: I'd personally pay off the CC debt even though it is not objectively the right thing to do. The reason I would do it is because afterwards you can cut up the credit cards and eliminate that temptation from your life, and stay focussed.)

regards, good luck, dspp

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Re: Help with S.O.A

#21517

Postby PinkDalek » January 9th, 2017, 1:21 pm

Some brief comments:

Monthly Income Details

Is there no income from the Shares and Bonds, valued at £65,000, and do you receive Child Benefit?

Secured & HP Debts

You are paying off the liability of £6,000 at £134 per calendar month (and the interest rate is 6%). Rather than thinking of HYP, why not pay this off in full (if allowed)?

My credit card debt is on 0% interest

When does the 0% interest rate expire?

campervan65
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Re: Help with S.O.A

#21523

Postby campervan65 » January 9th, 2017, 1:35 pm

PinkDalek wrote:Some brief comments:

Monthly Income Details

Is there no income from the Shares and Bonds, valued at £65,000, and do you receive Child Benefit?



Secured & HP Debts

You are paying off the liability of £6,000 at £134 per calendar month (and the interest rate is 6%). Rather than thinking of HYP, why not pay this off in full (if allowed)?

My credit card debt is on 0% interest

When does the 0% interest rate expire?


Thank you for your comments.

1) I re invest all income. I get about 3k per year in dividends which I then re invest. My child is 22 and is away at university.

2) The £134 per month is for my car which I lease. It was bought before I even considered retirement. I am stuck with it for another 3yrs. All servicing and roadside assistance comes with the £134. There is no tax on the vehicle. I estimated the interest rate as I'm actually not sure what it is. So am tied in for at least 3yrs.

3) cc debt - I have got about 2yrs of 0% interest.

Lazyferret
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Re: Help with S.O.A

#21808

Postby Lazyferret » January 10th, 2017, 10:26 am

Hi Campervan,

I've just got a few things that you may have missed off the SOA:

1. you have no buildings or contents insurance listed - if this is the case it's v. risky. If it's in with your mortgage provider then you should be able to get cheaper by shopping around. If you've missed it off then it's going to bring that small surplus at the end of the SOA before the debt payments down to almost nothing.

2. you've a cat but have nothing in the line for pet insurance or vet's bills - is this correct?

3. You've nothing in the line for clothing - you may not buy very much but the basics need replacing occasionally, so £10 a month may be a minimum here.

4. You've no landline - is that in with the Internet services? If not then you'll need to add something in there. Shopping around for the internet bundle may be able to reduce that line.

5. You've nothing in the emergency fund, now with £40k of savings you probably don't need it, but if you do use some of your savings to pay off the debt you do need to make sure that you (albeit mentally) set some aside for a broken boiler or dead car.

6. Your child's at uni - do you honestly not sub them from time to time? Or buy them birthday or Christmas presents? Do you buy your parents birthday and Xmas pressies? You need to consider putting something in the child related expenses and present lines.

7. You've nothing in the car maintenance line - is that included in the HP costs? Once the car is 3 years' old you'll have to factor in MOT costs. If you have a leasing plan, what are you going to do when it ends? Give the car back or carry on paying for it? At that point you'll need to start paying maintenance alongside any loan or may need to consider purchasing a car outright, so you'll need a plan for that.

An SOA is generally a work in progress, especially if it's a first go at one, so it might be an idea to keep a written or spreadsheet tally of everything you actually spend for the next few months - I keep mine in the back of my old fashioned filofax and trasfer it to a spreadsheet at the end of each month.

We've recently changed to freesat from Sky, so after the one-off purchase of a box (which paid for itself in less than 6 months, has far more recording capacity than our old Sky box and does everything our Sky plus box did) we're saving £27 a month.

As far as the groceries budget is concerned, Mr F and I spend an average of £250 a month (includes food, cleaning and laundry products, wine/beer for Frid and Sat nights in as we don't go out much, and basic toiletries) so for one person you should be able to get it down to less than £150, even with the cat - or is your groceries figure hiding money in kind that you're giving to your child?

I'd advise caution when factoring an inheritance into any financial planning as you don't know what care costs may eat into your parents' property or savings.

You may want to consider income generating things like having a de-clutter and seeing if there's anything you can sell on Amazon/Ebay or take to a carboot sale. Have you an extra room you can rent out? Or a car-parking/driveway space/garage for storage, etc.?

Have you though of cross-posting this to the Dealing With Debt page, it's a bit quiet over there but they're the experts and may have other ideas/comments on your SOA.

Good luck and I hope your health improves. I think that keeping up the golf sounds like a great idea for the exercise and the social contact, as it's easy to become isolated when you're not working and it's a great reason to get out of the house.

'Ferret

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Re: Help with S.O.A

#21844

Postby Wondergirly » January 10th, 2017, 1:03 pm

I have moved this to 'Dealing with Debt' in order to get more input from the SOA experts.

W


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