Christmas is over .... but there's another one next year!

Wutang_2

backinbusiness wrote: »

Cracking post.

You are preaching to the converted in my case, however if it makes the penny (pennies/pounds!) drop for at least one person, it's worth it!

ps for some reason Opinions I always assumed you were male! (not that males can't look good in a little black number!)

BiB

Agreed, everyone on here already knows all this, its then just a split between the savers and the 'others'...

Can Never In Doubt write me a letter so I get this money upfront and then claim it back?

Was it Bryan Adams?

opinions4u

backinbusiness wrote: »

ps for some reason Opinions I always assumed you were male! (not that males can't look good in a little black number!)

BiB

Oh I am most certainly male ... but have a slightly warped sense of humour!

Wutang wrote: »

Do I copy and paste your signature or do I go Bryan Adams?

That's the Joe Cocker version ...

Googlewhacker

great post!

dealer_wins

What a fantastic post OP!! By following this an average person who borrows regularly would save tens of thousands of pounds over the next few years (And have a lot less stress and worry about money, xmas, emergencies, birthdays, holidays etc etc)

tiff

Great post, people need to work out a budget, ie what your expenses are each month. Put money aside for car tax, repairs etc. I have learned the hard way and still struggle to get it right but can say we did not incur any debt this Christmas and it feels so good.

DCFC79

A very helpful and informative post, not everyone will follow it but im sure it will help others.

RichGold

27col wrote: »

I fear that your good advice will be ignored by those most in need of taking it and acting on it.

I also feel the people most in need of this will be the people who look to a website to rectify the problem after its happened rather than being proactive.

Definitely a great though post.

Dabooka

Love the sentiment but I can't help but feel it may as well be written in Klingon!!

Still, I imagine this thread will get linked to quite a bit over the next few months...

Poosmate

I've been doing similar to this for a couple of years and it really does take some of the worry out of those regular large payments like MOT, Insurance, car tax etc. and unexpected bills. I do it slightly different in that I have 2 current accounts with the same bank.

My acct is where my salary is paid. The next day an amount is paid into my other current acct which is Bills acct (every month the same amount paid by SO from My acct). All DD's and SO's are set up out of Bills acct. I know then that all of my household bills are covered and paid for from that acct. I usually round up the payments so if a bill is £43pcm I round it up to £45 that way I always have more going in than going out. When everything is paid (by 16th of the month) I'll pay the surplus off one of my debts.

What's left in My acct is mine to spend on day to day stuff like shopping and petrol. I also have a DD set up to pay the min off my CC and a SO for an amount to go into an ISA for car tax, mot, breakdown and insurance.

My gas/elec money (over estimated cost) goes into Bills acct but I transfer to my ISA and pay the bills quarterly. I will not pay by DD and losing the DD discount is a price I am prepared to pay for keeping control of my money (they once upped my monthly payments for electric from £34pcm to £232pcm and they took it, despite several telephone calls, putting me into bank charges territory - scary!). Even now several years later, my monthly cost of gas/elec is around £55 pcm!

At the end of November I had enough savings to pay for my gas/elec bill in Jan whatever that will be. It also means I don't really have to worry about heating at this time of year.

The beauty of this is that frm Dec-Mar I don't have to pay water rates (paid over 8 months) so that becomes surplus cash in Bills acct to make overpayments to CC. Also in Feb and Mar I don't pay Council tax (paid over 10 months) so that too becomes surplus cash again to make overpayments.

I may have to buy a new old banger next year so that surplus cash may go into ISA this coming Feb/Mar.

It's still a plan of forward planning though and works for me.

Poo

Andystriker

opinions4u wrote: »

Right, you've eaten the turkey. Well, other than the two thirds that's left in the fridge.

You've opened the presents. You're wearing the dodgy sweater your Gran bought you. You might even be off to a local sporting event or the sales today.

But if you needed to borrow for Christmas, it really is time to have a major rethink of your finances. Find the lightbulb moment that can turn your financial life from a real struggle in to an opportunity to generate wealth.

Typical signs that you're struggling at this time of year:

- your overdraft balance increased compared to a month ago.
- you got paid early in December, but have no idea how you're going to get through to the end of January for the next payday.
- you took out a payday loan.
- your credit card balance has inreased.
- you renegotiated a personal loan to free up a little cash for the festive season (and will now pay several years' interest on the lot).

There are other signs too. But 2012 is your chance to put things right.

I'm going to make some major predictions for the new year:

1) There will be another Christmas in it.
2) Loved ones will have birthdays.
3) Something expensive will break down and need repairing / replacing.
4) You will have a desire to go on holiday at some point.
5) You will want to buy something expensive.
5) Car insurance will need renewing and an MOT will be needed.

For those of you attending the sales today, the idea of picking up a bargain will be the first challenge to your spending between now and next Christmas. Set yourself a clear rule while you're out and about - before making any purchase, however many per cent discount the retailer claims, ask yourself "Do I really need this?". If the answer is anything other than an absolute certain yes, don't buy it. We all know the reality of the sales, so don't kid yourself. The item that's an extraordinary amount lower is going to be something you don't need, didn't know you wanted when you woke up, is in the sale because nobody else would touch it with a bargepole, has actually been exactly the same price as the sale tag for the last 9 months, except for a period last October when the Shetland Islands branch was offering it for double the price etc. etc. It is rare that these bargains are genuine.

But beyond the sales, please take the time to think about how you plan your finances.

My radical suggestion for those in the habit of borrowing for the predictable list of events above is pure genius. A savings account.

In a perfect world, I'd list off the best buys etc or say "make sure you're getting at least 2.75% on an easy access account". But this thread is more about getting in to the habit of saving ahead of known events. Let's worry about the value when you've cracked that.

So, my challenge for the year for those who accept borrowing for Christmas and the like is silly, is to open a savings account. Even if it's only with £1. Do it online now.

Then, stop all pointless day to day spending. It's not a bargain. You could make your lunch at home and take it to work. You don't need to pay £3 for morning coffee when you could have filled a hot flask for less than 10p. You could walk to work / car share / park for free and walk the last 500 yards etc.

Review the big spending. Could you register with a site like TopCashback and then change your energy provider to save money? Do you really need Sky Movies when you've got 400 DVDs sat in a box somewhere? Do you really need Sky at all? As your mobile phone already has the ability to do anyting and everything, get it on a SIM only deal and keep the handset for another couple of years. Or stop using a phone and just have a cheap PAYG for incoming calls and emergencies!

Next, when you get your next pay packet, hammer your debts. Get rid of PDLs, reduce / repay overdraft and / or credit card. Do not do anything this year that rolls over or increases debt. All actions related to debt repay it.

Then, move some money over to that savings account you opened. How much depends on a little bit of budgeting, but it may look a bit like this, using the list above.

1) Christmas 2012: How much extra will you spend on food and drink? What's the cost of the party frock going to be? How much do you have to contribute to the Christmas party? Is the frock essential, or would that lovely black number from 2006 be worth bringing out again cos you looked good in it (well I looked hot in mine, anyway ...)? Do the sums. £200 for food. £120 for frock if needed. £30 for the party. £350. Bet you could do December for less as well.

2) Birthdays: How much do you spend on birthdays through the year? How many people for? Let's say £20 x 5. Plus £100 for a slighty specialler loved one. So £200.

3) Breakdown / repair: Living / renting your own place: £500. Living with parents £200. If your boiler's over 10 years old add £750 to this amount for a few years!

4) Holiday: How much you spend on yourself depends on what you expect. Caravan in Devon or all inclusive on the Costa Packet. But a quick sum for me says £1,000 for holiday including spending money per person.

5) Something expensive: I'm not letting you do this in 2012. It's time to take control of the debts and pay them off. If, a year down the line, you have no card debts, no overdraft, no PDL and no other debts, then add this one in. But cut out the luxuries for the next 12 months.

6) Car insurance: £600 plus £400 for repairs, service, MOT.

Add the numbers above together: £350 + £200 + £500 + £1000 +£1000 = £3,050. Your numbers may be different to mine. Whatever answer you've got add on 10%.

I now have £3,355. Now divide it by 10.

I make it £335.50. If you're paid weekly, divide by 4 (£83.88).

So each and every month, pay £335.50, or the amount you came up with, in to your savings account. You can withdraw for birthdays. You can pay for holiday out of it. You can replace the breakdown (but if nothing breaks down, leave the money there because sure as night follows day 2 things will break down next year). And you can withdraw for Christmas and pay your car expenses.

If you reach month end and still have money in your current account, pay off any outstanding debts with it. If the debts are all gone, sweep it in to your savings account anyway. Even if it's only £3.28.

But the strict rules are that you can withdraw for nothing else than the list above. And you are not, for any reason, allowed a month off.

See how it goes for a year. I promise you that if you stick to the rules your year will be financially happier.

The following year you might make change the rules a little bit. Have a second savings account to put money for a new car, house deposit etc in. Your amounts might change. Your priorities may be different. We might be talking about cash ISAs and other places to keep your money.

But getting the savings habit first. And remember, just becasue you've saved it doesn't mean you have to spend it. That hot 2006 frock can mean you start 2013 with some money left over in the account as a result of a cheaper Christmas.

Give it a go. Come up with your own list, your own expenses and your own amounts. If in doubt round them up.

Then add them together, add on 10% and divide by 10. Then save that amount every month. If you get a payrise, increase the saving amount by the same percentage.

Get it right, and you will never need to take out a loan again. Ever.

A good time to remind everyone about this excellent post 12 months ago today.