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  • FIRST POST
    • TheRoders
    • By TheRoders 16th Mar 17, 1:09 PM
    • 135Posts
    • 140Thanks
    TheRoders
    Disposable Income When Paying Off Debt
    • #1
    • 16th Mar 17, 1:09 PM
    Disposable Income When Paying Off Debt 16th Mar 17 at 1:09 PM
    Hi All

    I haven't posted in a long time and trying to realistically sort my financial situation out currently.

    I was just wondering if you allow yourself any kind of disposable income (if at all possible) whilst you are paying off your debts? Just for that cheeky takeaway, pint of milk if you run out unexpectedly etc? Or does every last penny get accounted for every month?

    I'm just setting up my spreadsheet to see exactly where our money goes and a big chunk seems to disappear each month which is unaccounted for!
Page 1
  • National Debtline
    • #2
    • 16th Mar 17, 2:06 PM
    • #2
    • 16th Mar 17, 2:06 PM
    Hi

    It’s generally best to budget for everything, even if that means factoring in takeaways. At least you’ll have a realistic view of where your money is going, and you can tighten your belt in those areas if necessary.

    Allowing yourself the odd luxury here and there might help to make the long haul of clearing your debts more bearable, and mean you actually stick to the plan. It’s also a good idea to budget for an emergency fund, for anything unexpected.

    If you post your SOA figures here you can ask for more specific opinions on your budgeting.

    James
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • allthe7s
    • By allthe7s 16th Mar 17, 2:29 PM
    • 71 Posts
    • 270 Thanks
    allthe7s
    • #3
    • 16th Mar 17, 2:29 PM
    • #3
    • 16th Mar 17, 2:29 PM
    I have budgetted £50 a month "fun" money so an icecream on a day out or a takeaway etc. I havent spent the full amount yet but I am being very cautious at the min
    Next £615 £495 £436.23 Santander1 £297 £279 £261.95 Santander2 £84 £79 £75.11

    Savings Goal £163.67/£3000 by Dec 17
    • EssexHebridean
    • By EssexHebridean 16th Mar 17, 2:31 PM
    • 7,776 Posts
    • 40,250 Thanks
    EssexHebridean
    • #4
    • 16th Mar 17, 2:31 PM
    • #4
    • 16th Mar 17, 2:31 PM
    Some people find they can get by throwing everything at the debt, others "need" a bit of slack there for the odd spontaneous spend. A lot depends on your own mindset and how bad your situation is though, in my view. I'm inclined to feel that the healthier, more sustainable approach is probably to account for some "fun money" though.
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£504.92 (29/08/17)
    • TheRoders
    • By TheRoders 16th Mar 17, 2:49 PM
    • 135 Posts
    • 140 Thanks
    TheRoders
    • #5
    • 16th Mar 17, 2:49 PM
    • #5
    • 16th Mar 17, 2:49 PM
    We are in a fairly fortunate position at the moment. We do have a LOT of debt but all manageable as I've just got a new job.

    Income:
    Me - £2224
    Hubby - £1900

    Debts:
    Mortgage - £147000 / £638.00 a month
    Barclaycard - £4200 / 6% / £65 a month
    MBNA - £6250 / 0% / £65 a month

    Car PCP - £378 a month
    Black Horse - £147 a month
    Personal Loan - £157 a month

    With everything we pay out, it leaves us with £1200 a month. I have been squirreling away/saving £800 a month to clear our debts on top of what we pay monthly anyway which leaves £400 disposable income but looking through what we spend that on, it really is takeaways and rubbish!!

    My only concern is, if I reduce this will I start to resent it and mess everything up!! I was looking to reduce it to £50 a week to give us some breathing space.
    • indesisiv
    • By indesisiv 16th Mar 17, 2:58 PM
    • 4,632 Posts
    • 15,544 Thanks
    indesisiv
    • #6
    • 16th Mar 17, 2:58 PM
    • #6
    • 16th Mar 17, 2:58 PM
    I built in take aways, the odd beer, weekends away. Also managed to treat myself when I paid off a card by using the next "payment" I would have made to that card on something I really wanted.
    Its a marathon not a sprint ... the plan is to get to the finish in a time that you are happy with. Not trying to hit a time that others are happy with and feeling miserable all the way through.

    I couldn't do it without being able to have treats! As such budget for them and then it doesn't set you back when you inevitably fall off the wagon.
    “Time is intended to be spent, not saved” - Alfred Wainwright
    • zippygeorgeandben
    • By zippygeorgeandben 16th Mar 17, 3:03 PM
    • 661 Posts
    • 755 Thanks
    zippygeorgeandben
    • #7
    • 16th Mar 17, 3:03 PM
    • #7
    • 16th Mar 17, 3:03 PM
    Takeaways are always cheeky!
    End Sep 2016 End August 2017
    £8236.57 £4876.49
    (Tesco 4.8%) £222.61pcm
    £6185.75 £851.34 (Zopa 4.0%) £48.99pcm

    £5344.50
    £2890.04 (Sainsburys 0% until 06/19) £140pcm
    £2000.00 £1333.35 (Sister 0%) £133.33pcm

    Total debt
    £19.766.82 £11499.70 Original DFD May 2019.
    • TheRoders
    • By TheRoders 16th Mar 17, 3:13 PM
    • 135 Posts
    • 140 Thanks
    TheRoders
    • #8
    • 16th Mar 17, 3:13 PM
    • #8
    • 16th Mar 17, 3:13 PM
    You are most certainly right!! I think I'm trying to plough too much into the debts and not think about the bigger picture..... It is a marathon not a sprint!

    I shall spend some more time on my spreadsheet to make sure it suits our lifestyle....
    • loken152
    • By loken152 16th Mar 17, 3:13 PM
    • 33 Posts
    • 63 Thanks
    loken152
    • #9
    • 16th Mar 17, 3:13 PM
    • #9
    • 16th Mar 17, 3:13 PM
    I have always budgeted for £20 a week for disposable income and majority of the time i don't use it all as i a bottle wine once a week. Then at the end of the month i £60ish more to put towards the debt. But this month i have spent it each week, like on a take away and i treated the kids to the first McD's for almost 6 months, as National D said it helps with the long haul.
    • Ebe Scrooge
    • By Ebe Scrooge 16th Mar 17, 3:35 PM
    • 3,862 Posts
    • 3,244 Thanks
    Ebe Scrooge
    To my mind it depends on the severity of the debt, in relation to your income. If, for instance, you're on the point of having your house repossessed, then any luxury is out of the question. For less severe circumstances, then my view is that a takeaway and a bottle of wine once or twice a month is acceptable, and will help to keep you sane.


    Obviously, a holiday to the Bahamas would be a no-no, but occasional treats - as long as they're fairly cheap in comparison to what you're trying to achieve - are fine. Maybe even "sensible", inasmuch as you're more likely to stick to your budget if you don't feel like you're constantly living like my Dickens' namesake
    I may not know much about art, but I know what I like.
    • EssexHebridean
    • By EssexHebridean 16th Mar 17, 3:55 PM
    • 7,776 Posts
    • 40,250 Thanks
    EssexHebridean
    OK - here's another way of looking at it then. That £400 a month - whatever of it is left at the end of the month you get to pay it off against a debt. That might seem like more of an incentive not to spend, than "I've cut my "fun money" in half!" which yes, might make you feel resentful.

    Sounds a bit fluffy, but I always tried to think in terms of what I had, rather than what I was denying myself.
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£504.92 (29/08/17)
    • ReadingTim
    • By ReadingTim 16th Mar 17, 4:14 PM
    • 2,000 Posts
    • 2,917 Thanks
    ReadingTim
    In one sense, "every last penny" does need to be accounted for, because if you spend more money than you earn, you'll get into debt. If you earn more than you spend, you won't.

    But this doesn't mean having to itemise every single purchase you've ever made or will ever have to make and know what it costs down to the penny - that's silly. It's simply a case of making a budget and sticking to it. Your budget can include anything you like, so if you need (say) £5 per week 'petty cash' for the parking meter, pint of milk, cheeky Nando's, whatever, then add it in. The trick is not to spend more than the allocated £5. £4.99 is fine. £5.01 isn't. And so on....

    Sounds like the OP needs to keep a spending diary to see where this "big chunk" of his/her money is going over the month, then use that to create a realistic budget which needs to be stuck to.
    • loey93
    • By loey93 16th Mar 17, 4:22 PM
    • 38 Posts
    • 21 Thanks
    loey93
    Hi TheRoders, I think it is important to allow yourself some "fun" money each month even when paying off debts. I have tried in the past to go cold turkey for a few weeks and I always end up miserable and just having a crazy blow out (and end up in exactly the same situation) :-(

    I allow myself around £100.00 per week for "fun" money. I draw it straight out from the bank and make sure I stick to this.. whereas before I would use my card or credit card and gets slightly carried away some weeks..
    Aiming to pay debts & save!
    • Fireflyaway
    • By Fireflyaway 16th Mar 17, 4:22 PM
    • 1,171 Posts
    • 1,205 Thanks
    Fireflyaway
    Clearing debt requires motivation and if you have no money and no fun you are likely to fall off track. I keep some money for fun but write it into the budget. So in short, do have spending money but less than if there were no debts. I find keeping spending money in plastic envelopes works for us. Every Sunday we get an envelope to last the week.
    Also I find its impossible to account for every penny. This week our son came home with school photos, leavers hoodie and mothers day gift order forms. That's £36 I had not expected so I find it good to have a small miscellaneous fund too.
    • Ebe Scrooge
    • By Ebe Scrooge 16th Mar 17, 4:34 PM
    • 3,862 Posts
    • 3,244 Thanks
    Ebe Scrooge

    I allow myself around £100.00 per week for "fun" money...
    Originally posted by loey93

    Are you for real - £100 a week ??? Blimey, I'm lucky enough to be "comfortably off" by most people's standards these days, and I don't ( and would never ) spend anything like that amount ! When I was in a less fortunate situation in my youth, my weekly fun budget was about a fiver.
    I may not know much about art, but I know what I like.
    • TheRoders
    • By TheRoders 16th Mar 17, 5:38 PM
    • 135 Posts
    • 140 Thanks
    TheRoders
    Yep... £100 a week is what I have been using as "fun" money but because I know it's there then I tend to spend it on junk....... we like going out for meals etc but know full well we go out way to often. I want to clear my debt and I am a very good saver. I'm just very impatient hence the debt. Would rather have it now than save for it!

    It's interesting to find out what you all put aside as fun money. I think £50 a week is reasonable and that means that I can throw £1000 a month at the debts (Black Horse and PCP aside).
    • London Town
    • By London Town 16th Mar 17, 7:22 PM
    • 295 Posts
    • 387 Thanks
    London Town
    We are in a fairly fortunate position at the moment. We do have a LOT of debt but all manageable as I've just got a new job.

    Income:
    Me - £2224
    Hubby - £1900

    Debts:
    Mortgage - £147000 / £638.00 a month
    Barclaycard - £4200 / 6% / £65 a month
    MBNA - £6250 / 0% / £65 a month

    Car PCP - £378 a month
    Black Horse - £147 a month
    Personal Loan - £157 a month

    With everything we pay out, it leaves us with £1200 a month. I have been squirreling away/saving £800 a month to clear our debts on top of what we pay monthly anyway which leaves £400 disposable income but looking through what we spend that on, it really is takeaways and rubbish!!

    My only concern is, if I reduce this will I start to resent it and mess everything up!! I was looking to reduce it to £50 a week to give us some breathing space.
    Originally posted by TheRoders
    To me, your debts seem very modest, relative to your income. £400 does seem alot to spend on takeaways and "rubbish" though. If you literally have nothing to show for that £400 at the end of the month, perhaps look at reducing the amount you do spend.

    In my mind, as justification for alot of disposable income, you need to ensure that you are paying down your mortgage - is it repayment? Also, of equal importance, are you both paying into pensions - ideally work placed?

    If you have an interest only mortgage and no pension provision, spending £400 a month on "rubbish" would be like rearranging the deck chairs on the Titanic.
    • Sharon87
    • By Sharon87 16th Mar 17, 9:11 PM
    • 3,505 Posts
    • 2,973 Thanks
    Sharon87
    Do a proper SOA with ALL your income and outgoings, inc bills, clothes, haircuts, food, insurances, phones, TV.etc Then you may realise that actually you don't have as much spare as you may think - hence running up the debt in the first place. Just divide your yearly spend by 12 to get a monthly figure.

    I am paying off debt as well as and do allocate money for 'fun'. I budget about £150 a month for my 'fun stuff' including eating out, drinking, booze at home.etc
    • jayII
    • By jayII 16th Mar 17, 9:36 PM
    • 39,900 Posts
    • 106,347 Thanks
    jayII
    We (2 of us) keep £150 each per month for 'pocket money', plus £200 into the holiday fund. So a total of £500 in unnecessary/fun money each month.

    Until last year we hadn't had a holiday for a decade and only had minimal personal money because we had other priorities, including saving for a house deposit.

    The pocket money is now often used to pay for additional holidays/weekends away or is added to savings, but that's a personal choice for each of us. Now that we have the house we want, holidays and fun times are a HUGE priority for us, lol.

    We have a huge but rapidly decreasing mortgage, 'average' incomes (total about £3500 pcm) and owe 15K on 0% credit cards from work we did on the house when we bought it (we owed 30k on 0% cards 1 year ago). We save enough each month to pay the cards off well in advance of the 0% deals running out. Once they're gone, excess income will be used to overpay the mortgage. Our cars are owned outright. We eat well, work hard and enjoy life. Not many takeaways but lots of days out and meals out with our adult children, friends and family.

    It's important to manage debt well, but it's also important to enjoy life, just in case that bus does run us over tomorrow.
    Last edited by jayII; 16-03-2017 at 9:39 PM.
    15.9.17. Balance: £10360.87/Mortg: £174,906.67

    No spend on non-essentials year. To date: £





    • moneyfacts
    • By moneyfacts 17th Mar 17, 6:24 AM
    • 67 Posts
    • 114 Thanks
    moneyfacts
    I actually think your debt payments are high each month but I suppose that's subjective.

    £400 is a lot of money to spend each month when you could be clearing debt.

    People here talk about fun money and spending money to feel better. Well that is the exact reason why people get into debt, because they think spending money is needed to enjoy life. Why not try to enjoy life outside spending (or spending a very little).

    The fact is, the longer it takes to pay your debts down, the longer they stay and you're putting off the option of saving and investing for the future.

    If however you just can't live without Nando's, treats and new cars, just be prepared to work for a lot longer
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