How could I simplify my finances?

UserX

I'm not a spendthrift by nature or particularly extravagant. I've accumulated a modest amount of debt - about £5k - just, I'm afraid from being time poor and somewhat disorganised. I've been a single parent for many years having been left on my own very suddenly just before my youngest was born. Although I have always worked full-time, there have been some lean times so I've never managed to accumulate any savings, nor have I been very good about planning ahead for bigger lump sums to go out - holidays, Christmas and so on always come as a bit of a shock lol :j

So, I have one current account from which everything gets paid - household bills are on DDs etc. I have one CCard I use for regular spends and pay off in full each month. I have 2 other 0% cards with about £4k on them that I need to pay off. And an overdraft that maxes out at about £2k each month and which I really need to get shot of. I feel constantly confused by the fact some of my direct debits - for the CC I pay in full each month for example - change each month and by the fact that some months are longer than others :rotfl: Now I'm in my mid 40s, I really ought to have cottoned on.

I need a better system of keeping track and one which helps me to know how much I should set aside for future bills etc. I could consider doing something electronically but TBH I like stationery and I'd probably prefer this to be a paper-based exercise.

I was going to complete a SOA but to be perfectly honest, I actually don't know enough about what I spend on things to be able to fill in half the categories accurately. I've been keeping a tight rein on all of my spending for weeks now, but I've come to realise I need to try to be a bit better organised rather than keep getting by on a wing & a prayer. If you asked me how much our pets cost us, for example - well, I have no idea.

I'd really value some helpful suggestions. I guess the first place to start is to begin to log everything but without having a full year's worth of spending logged and broken down, any analysis of the information I collect will only be relevant to part of a year and therefore won't be completely accurate for a long time! I know I could look back at the bank account but I've only very recently stopped using a lot of cash so most of my banking history just shows cash leaving the a/c and no way of figuring out how it all got spent.

[Deleted User]

until you know what you spend you wont be able to sort out the problem
one suggestion for the new year would be in january to keep a diary of EVERY penny you spend,then you can see where savings could be made

Doodles1971

I find it really helpful to have one bank account for all the dd etc to come out of and a separate account with money for spends etc.

This helped us to get more organised with our spends

UserX

Doodles1971 wrote: »

I find it really helpful to have one bank account for all the dd etc to come out of and a separate account with money for spends etc.

This helped us to get more organised with our spends

I've been wondering about that but with an OD to pay down, 3 credit cards and various payments in / out each month that vary, I'm a bit anxious about whether it might make things more complicated. Do you put the same amount each month into the second a/c?

117pauline

I would invest in a small notebook and record every spend as soon as you can. I know Christmas is different, but again it will allow you to see some of the areas you might be able to cut back on.

Have a look to check your utilities etc are on the best tariff.

When you have time, map out your year - where birthdays, car MOT etc are due so you can see where the peaks and troughs of your year are. Your bank statements will show patterns too if you have time to look at them.

I find it easiest to have everything from one current account and only now use cash to buy food, petrol, extras etc - I notice more when I actually hand over real money than my card. I know other people find it better to use credit cards.

You have made the first step to making a change which is great, especially as it is coming up to Christmas.

If recording all your spends helps, keep it up. And if it doesn't have a look at other suggestions to see if they suit you better. It really is trial and error to begin with.

Good luck with your journey. Hit the overdraft first!!!!!!

Doodles1971

UserX wrote: »

I've been wondering about that but with an OD to pay down, 3 credit cards and various payments in / out each month that vary, I'm a bit anxious about whether it might make things more complicated. Do you put the same amount each month into the second a/c?

Hi, on pay day I tot up all bills, dd etc like you some vary each moth. Make sure all that money is in the bill account then anything over goes into our spend account.

That way you can see what's left, what needs to be budgeted for like groceries, petrol and what extra money you have but with the peace of mind that all bills are covered first. If your spare money is tight you know you need to juggle groceries etc to see you through.

Hope that makes sense to you, we had OD used to run out of money with bills unpaid each month then when we started this we have no OD all bills are paid on time and even though we have debts which we are paying life is manageable without worrying about how to pay bills

asparagus1968

you could fill out the SOA as much as you can to make a start, whilst filling in a daily spend record from today, will get you used to knowing your financial situation a bit better, which you will improve on over time. I don't think anyone of us changed overnight!
good luck, you will get there!

ReadingTim

If you haven't already done so, try and change your DD payment date to a few days* after payday - that way you ensure that most of your bills are paid, and the rest is what you have left to spend/save for that month.

* but not too close in the event payday is a weekend or bank holiday and you're paid on the working day after that date, rather than before it!

FireWyrm

UserX wrote: »

I need a better system of keeping track and one which helps me to know how much I should set aside for future bills etc. I could consider doing something electronically but TBH I like stationery and I'd probably prefer this to be a paper-based exercise.

That's pretty simple really. Filofax is the answer (or similar non branded version). Have a large A5 house hold binder with sections for 'diary', 'finance', 'shopping', 'to-do' etc. I could give you some pointers. There are plenty of free inserts out there to print and fill in. I have a finance section that is further split into 'animals', 'cars', 'bank accounts', 'credit cards', 'ad-hoc spending', 'children' etc. You get the idea.

I run a spreadsheet which is a simple XLS with all the DD's in one section, all the discretionary outgoings (savings) in another and when you subtract those two from your income, you have what is left.

Get yourself a couple of bank accounts - they should be the 'free' versions offered by most banks - dont pay for them. Designate one of your accounts as the master and then, when you have a budget set, set up the SO's to funnel money into those other accounts. For instance, my wages go into HSBC, but I never buy anything using it. I pay for food and fuel via Natwest that receives a SO of £400 a month, every month. Anything left over at the end of the month is bunted into a savings account for 'emergencies'. I save for Christmas with a SO to another bank for £150 a month which I never touch. I save for glasses, car tax, insurances etc in exactly the same way - separate accounts/pots/piggy banks.

I've just received my annual car tax reminder for £220. It isnt a shock, I'm not worried because I saved for it and the money is sitting there ready to be used. I know you are not in that position yet, but with some discipline, you could be and it really isnt that hard to administer once it is running. Just remember, budget rigorously, never cheat the system, have cards for different purposes and never have your running expenses and your fixed outgoings from the same account.

UserX wrote: »

I'd really value some helpful suggestions. I guess the first place to start is to begin to log everything but without having a full year's worth of spending logged and broken down, any analysis of the information I collect will only be relevant to part of a year and therefore won't be completely accurate for a long time!

Not true. Get your bank statements for the last year from the bank printed out for you - nominal fee may be charged and get a packet of highlighters. Sit down with a large cup of coffee and go through it highlighting spends for whichever categories you care to use. I suggest highlighting particularly things like 'cash withdrawal' and 'DD'. I'm pretty sure that when you add it all up, you'll find you have spent a truly horrifying amount of money and not even remember it. I know you say that you've been using cash allot, but you can at least get the gist of the DD's and you could probably guess from the amounts where you were spending that money. Do the best you can for now. If you keep this up, it gets better as the more information you gather improves the situation.

Get a small notebook and rule lines for cash accounting. Make a note of every single transaction and it's purpose. Dont forget and if you are disciplined enough, you just ratchet yourself out of trouble simply by not wasting your money of frivolities you have forgot your bought 20 minutes afterwards.

japmis

I started on this path a few years ago when my dad asked questions like "do you spend more than you earn" and I would shrug my shoulders and say I have no idea!

The biggest revelation for me was being able to download my bank statements straight from my online account into excel; I know you want this to be a paper based exercise but there's 1001 advantages to doing this in excel.

My first task was downloading 12 months worth of statements into excel and doing a pivot table showing how much I spent at Asda, petrol, paypal, pets at home, eating out, clothes shops.... I was staggered..... and I was definitely spending more than I earned.

My second task was working out how much went out before breathing, how much I should budget for essentials like food and how much disposable income I had left for luxuries like cinema or new clothes.

I budgeted £50 a week for Asda, pet food and toiletries, and took this money as cash every Friday without fail (what money I had left over I saved for treats). Now I'm a bit further down the line, this £50 now goes into a different account which I have a debit card for and my main current account debit card rarely gets used.

This really helped me to live within my means and to set aside money for expenses I knew were imminent like car tax, holidays, Christmas etc.

I run 2 spreadsheets: 1 to forecast that month's income and outgoings. I update this every few days as money trickles out of my account. The second spreadsheet is cashflow, which gets updated every Friday with my actual bank balance, and forecasts future bank balance (and shows historical data). This really has helped me no end in clearing my overdraft, I know pretty much exactly when I'm going to pay it off and helps me sleep at night knowing my finances are going in the right direction.

Hope this helps?
If you would like some blank templates I can easily email them to you.

PS Whats an SOA?

tiger_eyes

FireWyrm wrote: »

... and never have your running expenses and your fixed outgoings from the same account.

Could not agree more. This was a revelation to me when I first started getting to grips with my finances. Fixed bills from one account, all other spending from another. There is no fretting about whether there'll still be enough to pay rent tomorrow if I buy groceries today. Totally separate.