Self employed quest to be debt free before retirement

sunnyskies2

Well, this is my first entry to record the journey of how we get ourselves free of massive debt.:j

I've been dipping in and out of the forum for nearly a year, looking for ways to manage our money better. I work part-time, but the real problem is DH is self employed in trades and not on a huge income. He has fairly regular work but jobs may last a day or two months and customer's payments are not on a regular basis, nor for a regular amount. I have to manage paying tax, always in arrears, no holiday or sick pay and pay trade accounts each month. It is one massive juggle and we are slowly getting into more debt despite my attempts to us straighten out. We have never missed any bill/mortgage/cc payments but I've got to the point where I think a DMP is the best option, DH is now on board with the idea.

I have taken the first steps in preparing for this, but need to get the answers to some questions before I strategically plan the best time to start it - bearing in mind next tax bill due end of July - nothing saved for it!

I completed a SC budget and we are eligible, it was a reality check seeing actual debt and DFD so far in the future, but once we get going hopefully we can bring that forward. There are so many inspiring stories on the DMP/DFD threads I am certain we will get to our goal:)

I will try and do something every day to prepare the way fully before starting the DMP - taking into account being s/e.

Today I opened a joint bank account with Nationwide online (not connected to any of our creditors). I requested an o/d facility, which I do not want to use, but because of the nature of income feel we need some kind of safety net until we have saved some money to fall back on. I will explain this to SC and hopefully they will be ok about it.

Ironic, at the end of the process it offered a cc with guaranteed £1,800, I said no thanks, it said are you sure we won't offer this again, yes i'm positive!!..so good feeling in control to say no..:rotfl:


Sarah

sunnyskies2

Well, since last post things moving pretty quickly - quicker than I had planned - I suppose the reality of our situation - I knew this day would come but thought I would be able to be in more control at the beginning but now I'm having to swim with it and quick!

Am trying to juggle to keep current bank unaware of what's coming so I can switch over before they take o/draft back.

New bank details through - just have to verify with ID - DH and I will do that tomorrow

Have written to creditors not involved with bank - made token payments of £10 each and sent recorded delivery letter that SC now involved

Have received paperwork from SC - just need new bank account details before I return it to them to set up DMP

Found phone cut off this morning - lack of funds and so much on mind forgot to pay yesterday! First red mark late payment ! Have now paid it.

Received call from M&S re late payment - forgot that too! So much going on in my head (have lots of extra new responsibilities at work not matched by pay unfortunately!) - anyway I explained token payment made and letter sent and she was very very kind and left it at that for now:) phew!

Have been organising system to organise all this and making lots of lists of all expenditure I need to start budgeting for on a monthly basis, eg car tax, school bus passes, uniforms, Xmas etc.

But am keeping happy right now, feel I am in control, just need this new bank account set up asap! to start next phase.

Sarah:)

sunnyskies2

.... it feels so cloak and dagger at the moment :-

New bank card and pin through but I really need to bank online so can't continue with plan until I receive card reader this week hopefully....

Rang SC to seen whether they could allow discretionary small o/d in view of OH being s/e and nature of erratic income. They said absolutely not but suggested DMP does not start until July/August and we use usual debt payments to make a buffer. This sounds like a fantastic idea - must ensure I do actually put it behind us - things in such a mess at moment I need to get straight with trade accounts etc as OH job depends in them.

So I will continue to make £1 token payments to all creditors except bank (until I can make the switch) - sooner rather than later I hope. SC said to do this via phone - they are legally obliged to accept whatever I offer.

Received response from MBNA today following my SC template letter - they decided I could afford a reduced monthly payment of £40 - they will freeze charges and interest to 0% - SC said ignore and continue to pay £1.

M&S phoned again today - I reminded them of phone call last week ! I gave them SC ref no and they were really ok and said now they have ref number they will not review for two months - I guess allowing DMP to be set up. Good news - breathing space there then.

I have also downloaded trial of YNAB - I'm kind of fazed by it all but will work through tutorials - it has such good reviews I need to give it a good and proper go.

I should have included DMP diary in title of thread - as I think that's what this will mainly be - for now at least!

tootallulah

Hi just letting you know someone is reading! Good luck for the future and especially whilst you get sorted out over the next few weeks. You sound like you are making good and sensible progress.

Historybuff

Good luck with it all sunny, once it is all up and running you will feel a whole lot better.

boredofbeingathome

Hi Sunny skies. Good luck with your debt free journey.
One thing that will help is building a budget based on your very basic income. You can't guarantee with self employment what will happen, so starting low and assessing from there is a good idea.
Edit to add-i know you are doing a SC budget, but sometimes we can help with getting best out of your money etc.
There is a great budget planner on here-so have a brew, pull up your super person pants and get pens, pencils ( pillow to muffle screams) and get cracking. BOB x

sunnyskies2

Hi all, thanks for your very kind words of encouragement:)

BOB - yes you are right, there are no guarantees with s/e :eek: and OH going through bad patch emotionally so am keeping chin up for us both and trying not to hassle him - but tricky as I kind of really need him on board to make this work more smoothly - oh well with all the support on the threads sure I will do it:)..... So yes, after a bit off my chest lol ...,thank you I will look at the budget planner you suggest.

Many thanks once again all

Sarah

hohum

Hi, we're also self employed/erratic income. I always struggled with budgeting because it seemed so imaginary - as if I could predict what we will bring in even in the next month! We have a small ish amount of debt (my OD of £1900 odd) but it has been difficult to shift. Our borrowing costs us a lot.

This is where ynab really worked for us. The principle of only budgeting when you have money meant I was working with actual figures. I took one of their online seminars which I recommend. With our erratic incomes, the ideal would be their principle of having a month's money in hand as a buffer. I am focusing on handling our debt first and getting a proper understanding of our spending. The first month was hard! But coming to the end of the second month I am now £250 off my overdraft limit (I am usually right up to limit), bills account has money sat there ready to go for our monthły utilities, saved some money and 'paid back' £100 of overdraft (it's in a category accruing until I can reduce)

sunnyskies2

Hello

Thank you hohum, your comments have inspired me to take another look and take online seminar... Was thinking about trying to create my own formatted spreadsheet instead..but ynab is obviously working for you - with your hard work too:)

It has arrived...:T online banking info ....so now it's full steam ahead...I logged in to check it works and one customer has all ready paid into it yay!... Worried once switch made someone will pay invoice into old account :eek::eek: and obviously they won't be offering on to us when we owe them about £25k:eek:!

So today have been switching over direct debits - wanted them all to switch smoothly rather than have to 'catch up' if missed. Tomorrow I will post out rest of 'temp agreement' letters to all creditors and go into bank and explain situation - find out whether they might reduce to basic account or freeze charges? - worth a try!

Then from 1st June, seems like a symbolic date, will be living completely within means and no overdraft or available credit - so looking forward to this fresh start although will be a challenge dealing with creditors to start with. Our debt is HUGE - - about £38k - phew - think that's the first time I've posted the amount!...but confident with SC help we will get to the end of this journey:). ...will be sending agreement etc to them tomorrow too - start date August....then the waiting game..........

The various posts I read on here keep me confident and reassure me when I get worried - thank you all:)

Sarah:)

sunnyskies2

...not much to update with - Friday had a frazzled brain day making sure all creditors written to with £1 token payment and sent off recorded delivery - that's all of June payments made so this month i can focus on getting straight.

Also I pulled out balance of o/d, as depended upon for living expenses now, then handed letter in to bank explaining all. I did feel bad about this but o/d forms part of our monthly living - OH was not happy about this and after a restless night I toyed with paying it back and struggling/borrow from family - but asked for advice from other posters and then decided to leave it as is.

Today received a text - your o/d is near its limit - that made me think that maybe I won't incur charges until I don't pay the monthly bank charges and then I go over my limit - so it may take a while for my bank to write to me - unless they respond to my DMP letter before that happens - will have to wait and see.

I've had another look at YNAB - thank you hohum - and think I can see how this can work - maybe if I have a category for OH s/e running costs and monthly trade bills - I can see them waiting to be paid at the beginning of the month rather than waiting till the end of the month and scrambling to pay - will keep posting re this as I learn more.

Started out a basic budget/allowance for the week - first time having an amount to stick to - straight away unexpected expenses popped up - but have managed to keep within allowance so fingers crossed will make if through to end of week:)

All in all - not too much to report - nothing scary, yet, anyway:)

hohum

sunnyskies2 wrote: »

...not much to update with - Friday had a frazzled brain day making sure all creditors written to with £1 token payment and sent off recorded delivery - that's all of June payments made so this month i can focus on getting straight.

Also I pulled out balance of o/d, as depended upon for living expenses now, then handed letter in to bank explaining all. I did feel bad about this but o/d forms part of our monthly living - OH was not happy about this and after a restless night I toyed with paying it back and struggling/borrow from family - but asked for advice from other posters and then decided to leave it as is.

Today received a text - your o/d is near its limit - that made me think that maybe I won't incur charges until I don't pay the monthly bank charges and then I go over my limit - so it may take a while for my bank to write to me - unless they respond to my DMP letter before that happens - will have to wait and see.

I've had another look at YNAB - thank you hohum - and think I can see how this can work - maybe if I have a category for OH s/e running costs and monthly trade bills - I can see them waiting to be paid at the beginning of the month rather than waiting till the end of the month and scrambling to pay - will keep posting re this as I learn more.

Started out a basic budget/allowance for the week - first time having an amount to stick to - straight away unexpected expenses popped up - but have managed to keep within allowance so fingers crossed will make if through to end of week:)

All in all - not too much to report - nothing scary, yet, anyway:)

It's all sounding like it's progressing as it should. Like you say, a case of waiting I suppose?

I know that in good practice you shouldn't mix up your business and personal finance...however in practice we find that with our self employment cashflowing business expenses does have an impact on how much personal finance we have available!

We have a line in our personal YNAB budget for each of our self employed expenses. I've put it in a category called 'expenses', and fund as necessary. We still keep our self employed books as before but as our businesses are sole traders and very simple (service, no goods to worry about) so they are more a record of what was spent. I have a cashflow projection for my company but I don't attempt to project my boyfriend's income, as he can pick up work from one week to the next. Putting this category bracket round it helps me to sort it from the personal finance situation. We also have a line for our class 2 NI contributions in monthly bills. And a line for repayment of Class 2 NI debt (grumble grumble) which should be clear next month.

I know that strictly it's about drawing from the my business and paying self employed from my earnings, but in practice they have got lumped together in one pot. So this is my solution! So far it seems to be working by using YNAb in this way.