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  • FIRST POST
    • stubbyd
    • By stubbyd 16th May 17, 9:20 PM
    • 55Posts
    • 15Thanks
    stubbyd
    Am I missing anything...?
    • #1
    • 16th May 17, 9:20 PM
    Am I missing anything...? 16th May 17 at 9:20 PM
    Some back story ... I always pay off any credit I have within the time limit so as to avoid any interest charges but somewhere along the way the wife & I have managed to get to a stage where we live from month to month.

    By that I mean most large bills - food, fuel, etc have to go on our CC which we end up paying off the following month and consequently never have any spare money hanging around. A few large car repair bills forced me to some thinking .... part of which involved taking out a loan for as long as a CC would allow and other options.

    Then I sat down to work out that after all bills are paid and some incidentals (daughter's piano lessons, etc) and all income allowed for I arrived at a figure that is essentially spending / spare money each month. I then figured if I could eliminate the monthly CC payment we'd be much better off. So then I thought if we could eliminate that "debt" and budget the necessaries - food, fuel, fun we'd still have a decent amount to put away or even put it towards funding a new car.

    The Point: So, after all this came the crunch question.... "how to pay off the month on month CC bill so as to have free cash"?

    First (and admittedly so far only) thought is to get a CC with a long(ish) interest free payback term and then add the budget of paying that off into the monthly bills. If I could get an 18 to 24 month term that would add a small and extremely manageable cost to our monthly budget.

    I've checked and double checked all SO's and DD's and other regular bills (piano, martial arts classes, etc) and am quite comfortable with the sums. I get paid on the 8th, the wife on the 18th and I know both of us would have to be very disciplined not to use the CC again but it is possible.

    So am I missing anything?

    Should I consider other options to pay off (for arguments sake) this months CC bill leaving me with the cash to start budgeting?

    What are the other options... if any?
Page 1
    • WillPS
    • By WillPS 16th May 17, 9:54 PM
    • 164 Posts
    • 81 Thanks
    WillPS
    • #2
    • 16th May 17, 9:54 PM
    • #2
    • 16th May 17, 9:54 PM
    If you want to jumpstart your cash reserves, you could get a balance transfer credit card and pay off one month's bill with it.

    You need to make sure you have at least that much in cash reserve still when the card's 0% period ends.

    Edit - just seen you're thinking about doing exactly that. I can't think of a better way of achieving that, I've done the same thing successfully.
    • stubbyd
    • By stubbyd 16th May 17, 11:34 PM
    • 55 Posts
    • 15 Thanks
    stubbyd
    • #3
    • 16th May 17, 11:34 PM
    • #3
    • 16th May 17, 11:34 PM
    Edit - just seen you're thinking about doing exactly that. I can't think of a better way of achieving that, I've done the same thing successfully.
    Originally posted by WillPS
    I did ramble a bit

    Thanks for the affirmation of the idea ... just need to put it in motion now. probably too late for this month so will hunt around for something for an end of June start.
    • Ben8282
    • By Ben8282 17th May 17, 12:59 AM
    • 1,808 Posts
    • 761 Thanks
    Ben8282
    • #4
    • 17th May 17, 12:59 AM
    • #4
    • 17th May 17, 12:59 AM
    Your idea is very sensible as a short term solution.
    However, in the long term, it really does appear that you are overspending so you really must reduce expenditure or you will only have to do the same thing again in the future and get yourselves into a spiral of ever mounting debt.
    • Xbigman
    • By Xbigman 17th May 17, 4:07 AM
    • 2,847 Posts
    • 1,129 Thanks
    Xbigman
    • #5
    • 17th May 17, 4:07 AM
    • #5
    • 17th May 17, 4:07 AM
    Wait a minute. You pay off your credit card bill every month thus avoiding interest. So how will you be better off if you don't use the credit card? All that has happened is that you are using the interest free period for budgeting purposes. You might not like the fact that there is a months delay in paying for things but as long as you can pay off the card each month then the card itself in fact costs nothing.
    Personally I put everything through my card for the rewards. You might need to change cards for a better one but otherwise there is nothing wrong with what you are doing.

    I think the confusion comes from the fact you are budgeting for less than you are actually spending, so when the bill for last month arrives and its high you are blaming the card, whereas its the budget that was wrong.
    Now I can see that paying bills a month behind all the time can worry some people so my advice is to keep using the card (or rather use a card with rewards) and put a small sum away each month in a savings account, or even in a tin if you like. Even small amounts like 10 a month can build up a useful cash reserve over time. Unless like my daughter you have an emergency every month and spend it. But thats another story.


    Darren
    Xbigman's guide to a happy life.

    Eat properly
    Sleep properly
    Save some money
    • getmore4less
    • By getmore4less 17th May 17, 5:39 AM
    • 28,394 Posts
    • 16,979 Thanks
    getmore4less
    • #6
    • 17th May 17, 5:39 AM
    • #6
    • 17th May 17, 5:39 AM
    Am I missing anything...?

    the budget/plan

    well you were, as you have started to get on top of that now.

    Start with the SOA and put everything for a year on it.
    http://www.stoozing.com/calculator/soa.php

    if you need help looking for ideas post it here.
    (calculate then format for MSE)

    spending diary will check that you have not missed anything and check the numbers are right, add the missing things and adjust if over under on any category.

    You will be spending too much and not saving for the bill that are coming up.

    the trick is to workout how much you need to be holding back for the bills and where you can cut back, and to do that you need to know where the money is going.

    Living in the credit is one big bill away from that increasing, until the next big bill.

    what if you lost an income?
    The SOA exercise will give you an idea of where you could cut back if needed.

    A good first step would be to get from next month money is paying for this month to net this months money pays for this month.

    The next step is this months money pays for next month.


    If you want to use the CC to do the planning then a 0% purchase one is probably better than a balance transfer one.

    the important thing is not the balance and cash but what comes in and what goes out, you need to know where the money goes.

    if you have 1200 on the CC and want to clear that in a year you need to spend 1200 less than you earn over the year.

    Make the plan and track the spending to the plan.
    • getmore4less
    • By getmore4less 17th May 17, 5:45 AM
    • 28,394 Posts
    • 16,979 Thanks
    getmore4less
    • #7
    • 17th May 17, 5:45 AM
    • #7
    • 17th May 17, 5:45 AM
    First (and admittedly so far only) thought is to get a CC with a long(ish) interest free payback term and then add the budget of paying that off into the monthly bills. If I could get an 18 to 24 month term that would add a small and extremely manageable cost to our monthly budget.
    rather than thinking of it as a cost on the budget look at it as reduced income.

    Small but significant mind set change.

    To reduce the debt over the year you have less money to spend than you are bringing in because you already spent some of your future income yesterday.

    Everytime you get a debt you are spending future money you don't have yet.
    • stubbyd
    • By stubbyd 17th May 17, 7:01 AM
    • 55 Posts
    • 15 Thanks
    stubbyd
    • #8
    • 17th May 17, 7:01 AM
    • #8
    • 17th May 17, 7:01 AM
    Your idea is very sensible as a short term solution.
    However, in the long term, it really does appear that you are overspending so you really must reduce expenditure or you will only have to do the same thing again in the future and get yourselves into a spiral of ever mounting debt.
    Originally posted by Ben8282
    I hear you and warning duly noted.

    Not sure we are overspending anymore or for quite a while just not living on this months income and wanting to get out of that cycle...
    • stubbyd
    • By stubbyd 17th May 17, 7:11 AM
    • 55 Posts
    • 15 Thanks
    stubbyd
    • #9
    • 17th May 17, 7:11 AM
    • #9
    • 17th May 17, 7:11 AM
    Wait a minute. You pay off your credit card bill every month thus avoiding interest. So how will you be better off if you don't use the credit card? All that has happened is that you are using the interest free period for budgeting purposes. You might not like the fact that there is a months delay in paying for things but as long as you can pay off the card each month then the card itself in fact costs nothing.
    Originally posted by Xbigman
    How ... here's my thinking.

    With the month on month debt cleared by using a CC deal I now have an amount in cash (in the bank) that doesn't need to be used tp pay a card off. Instead I am paying that one debt off at 25 to 30pm depending on the deal.

    By carefully analysing what we spend the money on I can now use that money that would pay the CC towards actual bills this month as they happen and not be using the money that is left after I pay it off every month.

    Personally I put everything through my card for the rewards.
    The one we have been using (Tesco CC) is getting worse for its reward value anyway so not overly concerned by that. Unless you can point at one that has a good reward scheme?

    I think the confusion comes from the fact you are budgeting for less than you are actually spending, so when the bill for last month arrives and its high you are blaming the card, whereas its the budget that was wrong.
    I'm not denying this situation came about because we didn't budget / spend wisely and absolutely I am not blaming the card - never have, never will But that is historical and now I want out of it.

    Thanks for the response ... keeps me thinking.
    • getmore4less
    • By getmore4less 17th May 17, 7:15 AM
    • 28,394 Posts
    • 16,979 Thanks
    getmore4less
    I hear you and warning duly noted.

    Not sure we are overspending anymore or for quite a while just not living on this months income and wanting to get out of that cycle...
    Originally posted by stubbyd
    if you think longer term you may find you are spending more now that you should be to hit any goals.

    You mentioned a car, these need replacing, whats your plan for that if you are spending everything month to month now?

    Anything else getting old that might need replacing in the next 5 years.

    Does not take much to find you need to be putting 100pm away just to replace stuff over time.

    Any holidays planed...


    Just to achieve your goal(in say a year) of not living on next months money you need to cut back 10%, and if you add in other stuff it could be quite a bit higher.
    • stubbyd
    • By stubbyd 17th May 17, 7:16 AM
    • 55 Posts
    • 15 Thanks
    stubbyd
    Am I missing anything...?

    the budget/plan

    well you were, as you have started to get on top of that now.

    Start with the SOA and put everything for a year on it.
    http://www.stoozing.com/calculator/soa.php....
    Originally posted by getmore4less
    That is essentially what I've done but via a spreadsheet. However I've printed off your response and the SOA form and will go through it against my s/s. Appreciate the time to respond
    • stubbyd
    • By stubbyd 17th May 17, 7:17 AM
    • 55 Posts
    • 15 Thanks
    stubbyd
    rather than thinking of it as a cost on the budget look at it as reduced income.

    Small but significant mind set change.

    To reduce the debt over the year you have less money to spend than you are bringing in because you already spent some of your future income yesterday.

    Everytime you get a debt you are spending future money you don't have yet.
    Originally posted by getmore4less
    Absolutely understood.

    Thanks.
    • stubbyd
    • By stubbyd 17th May 17, 3:06 PM
    • 55 Posts
    • 15 Thanks
    stubbyd
    You mentioned a car, these need replacing, whats your plan for that if you are spending everything month to month now?

    Anything else getting old that might need replacing in the next 5 years.
    Originally posted by getmore4less
    OK - in the outgoings I initially mentioned is already included regular savings. I should have said that.

    For arguments sake let's say my CC bill is 500 monthly and I have access to another 500. In my proposed scenario I now have 975pm free (500 CC pay off plus 500 spare minus 25 (estimated) for the monthly CC pay off) and the various required budgets (fuel, food, etc) taken into account from the "free" money.

    The key difference is I pay my bills as they occur rather than a month later and the important aspect here is the remaining free (the 500 in the original scenario) is now much more closely monitored & budgeted rather than just being seen as frivolous spend money. And this is the key aspect to me... "the free money is monitored and budgeted". Looking back I can see that I left this key aspect out - so my apologies

    Bottom line I guess is that it is all about regaining control of our finances.
    • sheramber
    • By sheramber 17th May 17, 3:44 PM
    • 3,155 Posts
    • 2,423 Thanks
    sheramber
    According to your first post you spend all your money paying off the credit card bill each month.

    So, if you spend the same amount and pay for these bills as they arise you are still spending the same amount each month so where does the extra come from to pay the credit card bill.

    E'g. using your figures above monthly spend on credit card 500 and nothing left over.

    Monthly spend paying direct will still be 500 so still nothing left over.

    You will only have money to pay off the new credit card bill if you reduce the monthly spending by that amount.
    • stubbyd
    • By stubbyd 17th May 17, 4:07 PM
    • 55 Posts
    • 15 Thanks
    stubbyd
    According to your first post you spend all your money paying off the credit card bill each month.

    So, if you spend the same amount and pay for these bills as they arise you are still spending the same amount each month so where does the extra come from to pay the credit card bill.

    E'g. using your figures above monthly spend on credit card 500 and nothing left over.

    Monthly spend paying direct will still be 500 so still nothing left over.

    You will only have money to pay off the new credit card bill if you reduce the monthly spending by that amount.
    Originally posted by sheramber
    Clearly I missed something in my first post.

    But I thought my subsequent for example post cleared it up.

    CC Bill = 500
    Cash in Bank after pay, etc taken into account = 1000

    Pay off CC and still have 500 which goes on sundry non-regulated stuff.

    Proposal:
    Payoff CC at 25pm (example guess figure) leaving 975
    Pay regular bills in cash leaving 475
    475 to be carefully monitored and budgeted so as to not just let it drift through ones wallets.

    Does that make it clearer?
    • molerat
    • By molerat 17th May 17, 4:38 PM
    • 16,216 Posts
    • 10,352 Thanks
    molerat
    The light bulb moment comes when you realise you are in debt. Yes you are in debt if you are paying off last month's spending with this month's pay. The debt may not be large but it is still debt. Transferring to a 0% BT card will help you to pay down this debt but you need to realise how you got there in the first place and how to prevent it happening in the future - what is stopping you from transferring it out into easily manageable monthly payments and starting again with the old card ?

    Set up a budgeting spreadsheet, I have one with many columns for 5 credit cards, 1 spending account, 1 budget account and 2 savings accounts - the last 4 columns in reality being one interest paying current account. At the bottom of the current column is the box that shows how much I have to spend for the remainder of the month taking into account what is actually in the account, what bills have to come out and what is owed on the cards. Quite simple to do.
    Last edited by molerat; 17-05-2017 at 4:40 PM.
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    • Shakin Steve
    • By Shakin Steve 17th May 17, 4:54 PM
    • 744 Posts
    • 534 Thanks
    Shakin Steve
    Clearly I missed something in my first post.

    But I thought my subsequent for example post cleared it up.

    CC Bill = 500
    Cash in Bank after pay, etc taken into account = 1000

    Pay off CC and still have 500 which goes on sundry non-regulated stuff.

    Proposal:
    Payoff CC at 25pm (example guess figure) leaving 975
    Pay regular bills in cash leaving 475
    475 to be carefully monitored and budgeted so as to not just let it drift through ones wallets.

    Does that make it clearer?
    Originally posted by stubbyd
    Another, but basically the same, method would be to watch the spending on your card and reduce it by 25 each month. The end result would be the same.
    I came into this world with nothing and I've got most of it left.
    • getmore4less
    • By getmore4less 17th May 17, 5:01 PM
    • 28,394 Posts
    • 16,979 Thanks
    getmore4less
    OK - in the outgoings I initially mentioned is already included regular savings. I should have said that.

    For arguments sake let's say my CC bill is 500 monthly and I have access to another 500. In my proposed scenario I now have 975pm free (500 CC pay off plus 500 spare minus 25 (estimated) for the monthly CC pay off) and the various required budgets (fuel, food, etc) taken into account from the "free" money.

    The key difference is I pay my bills as they occur rather than a month later and the important aspect here is the remaining free (the 500 in the original scenario) is now much more closely monitored & budgeted rather than just being seen as frivolous spend money. And this is the key aspect to me... "the free money is monitored and budgeted". Looking back I can see that I left this key aspect out - so my apologies

    Bottom line I guess is that it is all about regaining control of our finances.
    Originally posted by stubbyd
    Why borrow more money? just use your savings.

    Currently any savings you have are through borrowing.
    • Shakin Steve
    • By Shakin Steve 17th May 17, 5:09 PM
    • 744 Posts
    • 534 Thanks
    Shakin Steve
    Why borrow more money? just use your savings.

    Currently any savings you have are through borrowing.
    Originally posted by getmore4less
    I must admit, I am absolutely awful at that. If I have, say, 4000 in the bank and a CC debt of 2000 on a low APR deal, I pay it off monthly and hang on to the money in the bank 'in case I need it'. Stupid, I know.
    I came into this world with nothing and I've got most of it left.
    • getmore4less
    • By getmore4less 17th May 17, 5:35 PM
    • 28,394 Posts
    • 16,979 Thanks
    getmore4less
    I must admit, I am absolutely awful at that. If I have, say, 4000 in the bank and a CC debt of 2000 on a low APR deal, I pay it off monthly and hang on to the money in the bank 'in case I need it'. Stupid, I know.
    Originally posted by Shakin Steve
    Not to big a deal if it is zero or very low as you can get savings at least at that level to break even.

    It's OK if your cash flow says you will need that money again soon and you could not get the borrowing at the same rate again but if you are on top of things a 0% purchase card should not be too big an issue to get.
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