How could I simplify my finances?

UserX

ReadingTim wrote: »

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!

Thanks - yes, payday is 28th and most of my DDs come out between 1st and 3rd of the month. Good idea though - I'll perhaps have a look and see which other ones I can move!

UserX

Thanks everyone. I'm hopefully going to be in the position to pay off my overdraft after Christmas - M&D always give me & my siblings money and although I don't want to count my chickens, I've been working really hard to bring the OD down and Christmas should see the back of it. It's cost me a fortune My CC's are all 0% at the moment and I can then review how much I'm paying them off by. I've just had to take out a new one to fund a holiday I have booked and half paid for so my situation is going to get slightly worse before it gets better. Luckily it's not an expensive holiday :rotfl: but it's to help a friend celebrate a big birthday so I'm committed, unfortunately (and can't justify losing the money I'd paid for flights anyway!)

So, I'm then thinking about defecting to a bank that will be better for accounts which stay in the black - Santander probably, but am open to other suggestions!

I need to concentrate on getting the CC debts paid off so although I can't really think about saving too much, I'm wondering if the following will work....

Current a/c one - monies in, direct debits out
Current a/c two - monthly spend allowance food, clothing, leisure etc
Credit card - I mainly use this for petrol as I get petrol expenses from work, so this way means I'm never paying their petrol out of my own real money! It's a reward card, so I do tend to also use it for bigger (£50+) transactions though. I guess I need to begin taking a closer look at this
Savings a/c - I guess I can set this up already and maybe pay in a nominal sum to give me some 'ease' while the CCs are all 0% - perhaps just £50 a month

I'll link both current a/cs and the savings a/c.

Does that sound workable? Having never had more than one a/c and one CC for regular spends (the others have been there just to transfer debt to ) I don't know how complicated to get!

I guess if I spent some time learning Excel that might help, but my computer doesn't smell as nice as a nice notepad!

I KNOW that when I'm thinking consciously about money, I shouldn't have a shortfall in that my income is good and coveres my standard outgoings. I AM guilty of wanting more/better holidays than I should really have. I spend very little on clothes, nights out etc etc but just adore travelling :j

FireWyrm

UserX wrote: »

Current a/c one - monies in, direct debits out Use a totally separate bank. If Natwest goes belly up, and you have all your eggs in one basket, you're screwed.

Current a/c two - monthly spend allowance food, clothing, leisure etc Split out 'leisure' from food and fuel. Clothing should be separate too. The thinking is that leisure and clothing are discretionary, but food and fuel are obligatory. You want to ensure you have sufficient funds in the 'obligatories' and if you have anything left AFTER that, then it goes to 'discretionaries'. It's about priorities. What this means is that you can no longer just whip out the CC for that slinky dress you saw in the window when you were passing...you have to make a conscious choice and you have to check your balance first to ensure you have all the money. It means you cannot accidentally run out of money for food and fuel because you have already budgeted for them.


Credit card - I mainly use this for petrol as I get petrol expenses from work, so this way means I'm never paying their petrol out of my own real money! It's a reward card, so I do tend to also use it for bigger (£50+) transactions though. I guess I need to begin taking a closer look at this Use it for one thing or another. Use it for ONLY petrol and never anything else. If you have 'rewards' on it, then either move that excess money elsewhere, or make a careful note of the running 'reward' balance and use it for a special purpose. Never spend on CC's without thinking. Trust me, I know because I've been there many many times in the past.

Savings a/c - I guess I can set this up already and maybe pay in a nominal sum to give me some 'ease' while the CCs are all 0% - perhaps just £50 a month

Ease of what? Do you mean 'discretionary play money'? Didnt you have some debts to pay off first?

I'll link both current a/cs and the savings a/c. NO! Savings accounts should be difficult to get to, annoying to log and and a pain to move money out of. The more difficult you can make it to get to the money, the less likely you are to bother trying. I use Tesco because they have an appalling login system, worse user interface and getting money out requires my mobile phone, several text messages, my laptop and patience while I wade through the security. Needless to say, I never bother taking money out except for when I need it...like now, Christmas. Requirement fulfilled, money saved and not frittered.

Does that sound workable? Having never had more than one a/c and one CC for regular spends (the others have been there just to transfer debt to ) I don't know how complicated to get! As complicated as you like and what works for you. I have the following :

1 x current account (receives salary and pays SO's and DD's)
1 x current account with Natwest (food and fuel) with 6 assorted sub-pots (with their own account and sort code numbers) for long term savings like CarTax, Dental, Glasses etc.
1 x e-saver (Tesco) - Christmas. Never gets touched and only receives money
1 x current account (another bank entirely and hence different colour card, green) for 'entertainment'. No overdraft facility.
1 x current account (with another bank again, blue this time) which takes money from child benefit and funds shoes, clothes, school uniforms, trips etc. No overdraft.
2 x credit cards on 0% holding debt and being overpaid as fast as possible ( I dont know the PIN numbers and never will although in an emergency, I can ring up and have it sent to me).
1 x old building society account which is administering to a loan overpayment.



I guess if I spent some time learning Excel that might help, but my computer doesn't smell as nice as a nice notepad! To each his own. I prefer a combination. I do my spreading and forecasting on Excel, but keep paper records of everything else.

I KNOW that when I'm thinking consciously about money, I shouldn't have a shortfall in that my income is good and coveres my standard outgoings. I AM guilty of wanting more/better holidays than I should really have. This is your lightbulb moment, dont waste it.

I spend very little on clothes, nights out etc etc but just adore travelling :j[/QUOTE]

My thoughts above in red.

UserX

Thanks FireWyrm

Hmm, I think that might be too many accounts for me to want to keep track of at the moment. I see what you mean about not keeping them with the same bank though - good call!

The 'ease' I referred to wasn't so that I can have access to extra fun monies! I really meant 'short term savings' set aside for planned future events - like my annual holiday, kids' birthday pressies, the fact one of them will need entire new set of uniform next August (which may well be before I've paid off my debt I expect). Obviously if I use every spare penny each month now to pay off the 0% CC, I'll soon run into a month where I need more expendable money and need to begin setting a small amount aside for those spends IYKWIM. I have no intention of wasting my lightbulb moment, but I do realise that I need to start preparing now for the months over the next year that will be more expensive than usual.

FireWyrm

UserX wrote: »

Thanks FireWyrm

Hmm, I think that might be too many accounts for me to want to keep track of at the moment.

I can understand that. My situation actually sounds more complicated than it is. In reality, I have 1 main account and a bunch of lesser accounts and pots. The lesser accounts have debit cards and limited facilities and are there to allow me to categorise spending. If I go to Tesco and I buy some food, some baby milk and some clothes for the baby, I split that into two transactions, one for food, the other for clothes and two different coloured cards to pay for it. The rest are just pots to hold money. You can achieve the same thing by keeping careful paper records and split 'virtual' pots in an accounting book.

UserX wrote: »

I see what you mean about not keeping them with the same bank though - good call!

Natwest online banking just went down again thismorning....

UserX wrote: »

The 'ease' I referred to wasn't so that I can have access to extra fun monies! I really meant 'short term savings' set aside for planned future events - like my annual holiday, kids' birthday pressies, the fact one of them will need entire new set of uniform next August (which may well be before I've paid off my debt I expect).

Natwest (current IT problems aside) do allow piggy banking and I believe so do LLoyds which means that although you have a current account with them, they allow you to have many sub-accounts which do not require a card, just have an account number and a sort code. These are virtual piggy banks and it is how I manage those long term savings. I have money to pay my car tax simply because a SO has been going into that account for the last year. Childrens' uniform is a perennial problem and I solve that one the same way.

UserX wrote: »

Obviously if I use every spare penny each month now to pay off the 0% CC, I'll soon run into a month where I need more expendable money and need to begin setting a small amount aside for those spends IYKWIM. I have no intention of wasting my lightbulb moment, but I do realise that I need to start preparing now for the months over the next year that will be more expensive than usual.

Of course, everyone should. The more information you gather about your finances will help you with your new regime of forward planning. At the moment, you cant quite see the wood for the trees, but in a few months, or a year, this will all be second nature and you will know exactly when the peaks and troughs are imminent and will have (hopefully) planned well in advance for them.

Little_Miss_Uni-Debt

I know exactly how this happens and it took me a long time to figure out. I too love stationery so I take the low tech approach where possible.

Overspending by just £2.75 a day over 5 years adds up to £5k.

On a day to day basis it's not extravagant (a newspaper here, a coffee there) yet long term 'just winging it' on your finances can cause a lot of problems that makes life very stressful.

If you start planning now 'future you' will thank you for it

You need to set things up so it becomes easier on you. Put systems in place so that when things happen - which they always do, your planning will save you and it won't make your situation worse.

Remember, appliances break, costs go up, emergencies happen, bill due dates get forgotten, people get ill & take time off work, expect that and plan for it.

Your biggest help in all of this is accuracy. No more rounding up or rounding down, guessing or estimating. By working with the exact facts & figures (however tough they are to look at) enables you to plan for the reality.

The main hurdles are having regular fixed amount income and being able to last the month without spending on your cards/increasing debts (that makes your CC minimums stable)

Once you're at that stage, the rest is much easier.

The main tips that really helped me :-

1)Start working with accurate figures

2)Set up Direct Debits / Standing orders for fixed amounts slightly above your minimums (even just by a few pounds)

3)Protect your income bank account - do not have any direct debits or automated transactions coming out of there. You control what comes out of there.

4)Don't live in your overdraft, living in negative numbers is
demotivating & calculating negative figures makes it planning hard.

5)Get into the habit of checking your balances regularly

6)Collect all contact details for all the companies/banks you deal with, checking balances or querying things become less hassle when you have everything to hand.

I also started the 1% challenge thread on here, I usually find that once bills get settled and you're making payments towards your debts it's nice to have a small amount to focus on. That has helped me a lot.

Debt_Free_Guy

Not everyone likes spreadsheets and money tracking software and I can understand that. A notebook is fine. However you choose to do it you need to start getting a good idea of how much you spend each month. You can then work backwards and identify spending habits that could be tackled.

You don't need a year's worth of information about 3 months should do.

I have recently switched to a Santander 123 account which is currently paying 3% interest providing that I pay in at least £500 into the account each month. It's a current account not a savings account.

It's not much but might earn you an extra £10 a month towards the bills.

Please note I'm not connected with Santander in any way, in fact quite the opposite, I had quite a bad opinion of them until I gave them a try.

UserX

Debt_Free_Guy wrote: »

I have recently switched to a Santander 123 account which is currently paying 3% interest providing that I pay in at least £500 into the account each month. It's a current account not a savings account.

It's not much but might earn you an extra £10 a month towards the bills.

Thank you! That's what I am shooting for - to get rid of my OD ASAP so I can end up with a current a/c that gives me money and doesn't cost me!!

I've got going this evening with notepad & paper working out all of the categories of spending I want to track (while watching Grand Designs!) and will begin working on this bit by bit over the next few days.

asparagus1968

FireWyrm wrote: »

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.



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.

I LOVE this post!!