How To Calculate Your Living Expenses With A Trust Deed

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How To Calculate Your Living Expenses For A Trust Deed

Having a Trust Deed will bring you into contact with many new experiences. You will have to operate on a budget, as you will not be able to rely on credit.

You may have to make some lifestyle changes and create a workable budget for yourself and your family to stick to

Here is a handy guide showing what should go into your budget based on the advice and experience of Insolvency Practitioners.

NB: Before you start you will need bills, statements and receipts detailing your living expenses.

Rent or Mortgage

If you pay rent weekly, multiply by 4.33 to get the average monthly payment.

Council Tax

If you pay your council tax bills annually, you need to divide by 12 to get the average monthly payment.

Water

You may pay your water bill annually, six monthly or monthly. If you pay annually, divide your annual bill by 12. If you pay twice a year, divide your six-monthly bill by six.

Electricity And Gas

These can often be tricky to work out if you pay monthly on account, as providers often increase and decrease your monthly payment depending on your usage.  The best way to tackle this is to work out how much you have actually used over the previous year using old bills and divide by 12.

If you only have a few bills to work this out from, be careful that you are not relying on summer and autumn figures, which tend to be much lower than those in winter and which leave you short of money to pay your bills after the Trust Deed starts.

Housekeeping

This includes food, toiletries and cleaning products, and there are general maximums that many Insolvency Practitioners keep in mind when evaluating your housekeeping budget.

• Single person £100 – £200
• Couple, no children £185 – £325
• Each additional child £55 – £80

While these may be lower than what you are used to, it is important you find ways to reduce your housekeeping bills to fit into this range. You are asking creditors to accept reduced payments and they will want to see that you are doing everything possible to pay as much as you can.

Buildings And/or Contents Insurance

If you have a mortgage, you have to have buildings insurance as a condition of your contract with your lender, but have you got the right amount of contents insurance? As tempting as it may be to skimp on this, it is important to protect your belongings.

A fire or burglary could see you lose them with no way of replacing them. If you pay your insurance annually, divide by twelve to get the monthly payment.

Meals at Work/school

You will be able to include meals eaten at work and school by you and your family into your budget at the following costs:

• Single Person £36
• Couple No Children £36 each
• Each additional child £35 (Max)

Clothing And Footwear

This will always be a low expenditure category because creditors will not accept you having a large monthly clothing allowance. They consider clothing and footwear a luxury, so you may have to be economic with clothing.

• Single Person £12 – £30
• Couple No Children £22 – £47
• Each additional child £9 – £13

Hairdressing

Again, this is a low expenditure category for the reasons outlined above in clothing and footwear.

• Single Person £11
• Couple No Children £20
• Each additional child £4 – £6

Pets

Food and insurance for your pets will be allowed at a cost of £23 a month, and creditors may accept an increase if you have more than one pet.

Child Maintenance

This includes any amount you pay through a private arrangement or through the CSA.

Telephone

This includes landline, mobile and Internet connection

• Single Person £46 – £54
• Couple No Children £57 – £70
• Each additional child £6 – £7 

Sky / Cable TV And TV License

Creditors do not consider Sky/cable TV and associated costs to be a luxury.

• Sky/cable £23
  
• TV license £12.13 (annual £145.50)

Transportation

This is possibly one of the biggest expenses in your budget and also one of the most important if you are to earn an income to pay your Trust Deed.

Public transport: if paid daily, multiply by the number of days a month you travel.
Car – petrol per car:

• Single Person £130 – £167
• Couple No Children £130 – £167
• Each additional child £0

– Insurance: as per your agreement.
– Road tax:  £17 per car p/m based on a standard annual car road tax of £205
– Maintenance: £22 per car per month Including spares and servicing.
– Hire purchase: as per your agreement.

Non-car Hire Purchase

It is unusual to have hire purchase agreements on goods other than cars. They are usually financed by loans, which will be treated under a Trust Deed as a negotiable debt and should not be included in your budget.

Goods Rental (TV/Washer)

As per your agreement with the retailer.

Children

Child care: If paid weekly multiply by 4.33
School travel (bus) There are only 38 weeks per school year so to find the average monthly cost of travel for budgeting, multiply the daily cost by five (weekly cost), multiply by 38 (annual cost) and divide by 12 (average monthly cost).

Healthcare

You may find that the following costs are very low, especially if you need treatment, so you may have to make up any difference from the rest of your budget. Ideally you should find an NHS dentist if possible as private treatment may be expensive.

Dental / Optical

• Single Person £14
• Couple No Children £15
• Children are free on the NHS

Medical / Prescriptions

• Single Person £8
• Couple No Children £11
• Children free on NHS

You Can Include More Than One Prescription Per Month But Be Prepared To Justify Them.

Sports/hobbies/entertainment

Creditors accept that people have interests outside of work. However, you may have to make some sacrifices.

• Single Person £11 – £17
• Couple No Children £16 – £22
• Each additional child £6 – £11 

Home Repairs And Servicing

You must include something in your budget every month for basic home repairs, such as boiler servicing or a tradesman to fix an urgent problem.

• Single Person £15
• Couple No Children £25
• Each additional child £0

Emergencies

There will always be some events that you cannot account for so always build in a little contingency plan for those.

• Single Person £11 – £12
• Couple No Children £16 – £23
• Each additional child £6 – £11

Other Expenses

Creditors accept that there are other necessary expenses that fall outside of normal budgeting categories, and make an allowance for them. But they are very little allowances.

• Laundry and dry cleaning £10
• Newspapers and magazines £5
• Childs pocket money £11/child
• Tobacco £60, although justification must be given

You might find that not everything is a neat fit into this suggested budget and you need to juggle things around.