2 years to get debt free

StressedSteph

Hi there,

Some absolutely fantastic advice has been given already. Alot of it harsh but totally true.

Just a little comment from me.

We were in a very similar situation and all you need is a structured budget.

Over the years I have tried spreadsheets galore and never succeeded until this January when i found YNAB (You Need a Budget).

You get the first 90 days free and if you shop around you can pay for the lifetimes pacakge for about £18.

It makes you give "Every Pound a job" and it is truly amazing. It has turned my finances around.

You DO earn enough money but you HAVE to get on an efficient budget.

At the beginning of every month, hubby and I sit down and give EVERY PENNY a job. We don't look at the bank balance to see if we can afford that haircut or the takeaway anymore, we check our YNAB budget.

Looking at your bank statement gives you a false feeling of having spare money, where if you budget properly, your YNAB budget will tell you that ACTUALLY all of that money is ear marked for bills next week etc.

PLEASE check it out. You are on the spiral of debt we were in and with YNAB's help we are slowly crawling out of it.

You can try it for 90 days with NO financial commitment, you don't have to give them your credit card details for the trial so it is completely free.

If you get paid weekly, you may need to watch some of their tutorial videos to get it to make sense but once it clicks in your head, it is a life saver.

Best of luck. You can do it xx

On_my_way

Hi

I don't have anything more to add, because everyone has made brilliant suggestions here.

One thing I would say is that you have to make sure that your wife is on board with this as well. By being much more careful with shopping etc, working out offers, using up food that you already have in the house and not aimlessly buying more etc will make a huge different. I am sure that you can trim that monthly bill down to £300 or even £250 with some super-careful shopping.

Good luck, you know that you need to get a grip of all of this, a lot of us are in similar situations and we all have to go through a little pain to seriously reduce our spending.

[Deleted User]

Mobile Phones and internet are :eek:

You should easily be avble to take £60 off the mobile costs (assuming two phones), by going PAYG/sim only, and halve the internet costs.

Gas seems high, so check for a better deal on comparison sites.

Also, if you are paying by a monthly budget scheme, check if you are well in credit. If yes, contact them to refund it, and adjust the payments down.

If CT is over 10 months, swapping to 12 months will reduce it to about £104.

Look to cut back/out Shopping for fun, Drinking out and Eating out.

Those three alone, are currently costing you £310 per month, which is £3,720 per year.

Stopping smoking will save you £480 per year.

I suggest redoing your SOA using the MSE calculator (link below), which is more detailed.

Also, there are several categories which are empty, but I suspect should have figures in them, such as the child related ones.

http://www.stoozing.com/calculator/soa.php

[Deleted User]

bobylon5 wrote: »

and "internet" is virgin media package.

Then dump the TV part and go Freeview/Freesat.

bobylon5

Update time,

Will post some more details tomorrow, but it's been a bad month, partly due to previous commitments, partly due to the car needing work, but also because of spending getting out of control.

Income: £1914
Spending: £2776.75

£200 was on a short break that we would have had no refund for would we have cancelled, and £347 was for MOT and repairs, but the other £315.45, I only have petty excuses for. I hope to come away from this first month of keeping a water-tight budget with a better idea of where cuts can be made, and that I need to find some other ways of getting some cash together, including the sale of all non-essential items possible.

FireWyrm

What tool are you using to budget with?

You absolutely must get control. We know how you feel, we've all been there. I myself consolidated at least 3 times before I had my Damscene moment.

StressedSteph is right. YNAB is the way to go. If you can make it work for you, then it will revolutionise the way you handle money. Sadly, you just missed out on a flash summer sale of 25% off, but there'll be others later in the summer. Keep and eye on Steam. In the meantime, I wrote a walk-through for another forumite just the other day. You can see it here : http://forums.moneysavingexpert.com/showpost.php?p=65918990&postcount=30. That ought to get you started even if you just use the trial for the 34 days it is active.

bobylon5

FireWyrm wrote: »

What tool are you using to budget with?

You absolutely must get control. We know how you feel, we've all been there. I myself consolidated at least 3 times before I had my Damscene moment.

StressedSteph is right. YNAB is the way to go. If you can make it work for you, then it will revolutionise the way you handle money. Sadly, you just missed out on a flash summer sale of 25% off, but there'll be others later in the summer. Keep and eye on Steam. In the meantime, I wrote a walk-through for another forumite just the other day. You can see it here :
That ought to get you started even if you just use the trial for the 34 days it is active.

I have been using a Google Docs Template which seems to be working for me for now. I will have a look at YNAB, though.

Summary Projected Actual Difference
Total Income +1,750.00 +1,920.00 +170.00
Total Expenses (1,904.21) (2,776.73) (872.52)

INCOME Projected Actual Difference
Job #1 + 1,750.00 +1,750.00 0.00
Mileage 0.00 +170.00 +170.00
Total + 1,750.00 + 1,920.00 +170.00

HOME EXPENSES Projected Actual Difference
Rent 450.00 450.00 0.00
Electric & Gas 110.00 105.00 5.00
Water 44.00 44.00 0.00
Council Tax 125.00 125.00 0.00
Virgin Media 50.00 69.74 (19.74) - late payment
Lawn / Garden 0.00 0.00 0.00
Furnishings s 0.00 0.00 0.00
Cell Phones 70.00 70.00 0.00
Total (849.00) (863.74) (14.74)

DAILY LIVING Projected Actual Difference
Groceries 200.00 284.22 (84.22)
Baby Supplies 60.00 82.59 (22.59)
Clothing 40.00 62.83 (22.83)
Alcohol 30.00 99.02 (69.02) - friend's birthday at beer festival
Beauty 20.00 11.80 8.20
Nicotine 40.00 54.55 (14.55)
Bike Maintenance 40.00 55.39 (15.39) - annual service (DIY)
Total Daily Living (430.00) (650.40) (220.40)

TRANSPORTATION Projected Actual Difference
Vehicle Payment(s) 0.00 0.00 0.00
Insurance 25.00 25.00 0.00
Fuel 80.00 80.72 (0.72)
Registration 15.00 15.00 0.00
Bus / Taxi 0.00 0.00 0.00
Maintenance / Repair 50.00 347.04 (297.04) - MOT and new Tyre
Total Transportation (170.00) (467.76) (297.76)

HEALTH Projected Actual Difference
Dental insurance 32.15 32.15 0.00

ENTERTAINMENT Projected Actual Difference
Books 0.00 0.00 0.00
Date Night 50.00 200.00 (150.00) - Anniversary meal and hotel booked previously
Hobbies 0.00 0.00 0.00
Toys 0.00 0.00 0.00
Birthdays 50.00 122.42 (72.42)
Music 20.00 84.20 (64.20)
Bikes 40.00 0.00 40.00
Total Entertainment (160.00) (406.62) (246.62)

OBLIGATIONS Projected Actual Difference
Student Loans 20.00 20.00 0.00
Amazon 57.06 57.06 0.00
MBNA 56.00 56.00 0.00
Tesco 40.00 100.00 (60.00)
Barclaycard 90.00 90.00 0.00
Total Obligations (263.06) (323.06) (60.00)

FireWyrm

Wow, Entertainment blew the budget wide open huh.
You have got to stop spending more than you earn and that's the bottom line. Clearly your obligations are your priority and all frivolous spending should be put on hold while that issue is outstanding. Once you are out of debt, then you can go back to spending £99 on beer and £122 on birthdays and burning £50 a month in cigarettes. I am an ex-smoker so I know how you think you will struggle to give up, but you have to - there is no two ways around it. Think of it as taking the food out of your babys mouth if it helps.

The other classic mistake I think you are making is not acknowledging the inevitable. MOTs come around every year, we know this and yet most of us fail to budget anything for it. The baby needs nappies, it is no good pretending that this expense isnt going to happen because it is. You cant go out and spend money on entertainment and then be surprised when you get bitten in the bum by a higher priority expense like an MOT or the baby needs nappies. I suggest you redraw that budget for next month and instead allocate money to known and suspected things that are going to happen first, before you put it against anything that isnt actively keeping you alive.

Roof
Food
Council Tax (grrr, but it is a high priority)
Baby
Car (your only means of earning a living)
Fixed bills
Debts
.
.
.
.
.
.
.
.
.entertaiment......(and that includes TV, sports channels, the license fee and going out).


In ^^^ that order.

You still are not taking this seriously enough. You will be £30,000 in debt in two years at this rate. I'm sorry to be blunt, but your budget isnt tight enough, you need to go back and consider it again and then again and then again. When you have something you think is water tight, you then stick to it ruthlessly until your debts are paid. There is no easy way out of the situation you are in and with the rising cost of living, your income is marginal at best to keep a family in decent clothes and food.

moxter

Sorry Firewyrm, I can't agree with that. Looking at your suggestions above, were the OP to follow all of them, they would end up with a dirty house and unkempt garden; no TV; no family days out ("for what purpose?" was the comment - I presume you don't have kids); no shopping for fun; no hobbies; no eating or drinking out (or drinking in, for that matter); with unkempt hair to match the garden; not travelling to visit friends and family; and so on. You begrudge £10 a month on work clothes (that's a £250 suit every two years for one person, with no shirts, ties, or shoes - ever). You suggest that £8 a month on meals is too much (that's 40p a day) and give a throwaway "stop smoking".

That's the budgeting equivalent of telling someone who wants to lose 8 stone to eat nothing but carrot sticks. Result: person eats carrot sticks for a week, feels miserable, goes and buys pies, puts on a stone net.

Things like drinks out for example - assuming the OP is a reasonably sociable person with British mates, then they'll probably meet their mates down the pub. I know people can say glibly "you don't need to drink to have fun" but the reality is that if friends are meeting down the pub every fortnight and you don't turn up, ever, then those friendships melt away slowly by slowly, which would be far more tragic than having to make cutbacks elsewhere.

The Debtline article linked above "How far to cut back?" is superb.

OP, you know there are things which can be done and a combination of tackling the major expenses, combined with pulling back on some enjoyments. There are big things already paid for which can't be got back (weddings come but once a lifetime, and don't even think about selling a bike which will give you years of free, healthy, adrenaline-and-endorphin-giving fun, not to mention transport). Mind you, don't be tempted to buy another bike!

I'm not an expert by any means but your gas bill seems on the high side and unless TV is your main hobby then Freeview should suffice as that Virgin bill is extortionate. I'm all for spending good money on decent ingredients to improve quality of life but you probably need to analyse your shopping bills - as others have said, it seems very high as well.

As for enjoyments/entertainments/luxuries - there undoubtedly have to be some significant cutbacks. The decision you'l have to make is whether to cut something out entirely - maybe "drinks in" if you want to escape to the pub from time to time, or the unspecified hobby; or whether to slash al non-essential spending by 30%+. You're lucky enough to have kids so perhaps remembering that they're the best hobby one could ever have might help to cut down on other things. It's a personal view but some of the most expensive things are the things you only get a brief hit of enjoyment from. £100 on a meal out is a lot for a couple of hours of enjoyment. Better to spend £25 a week on a big special meal which takes you all day to cook, as that then becomes a hobby, for example, as well as something to look forward to and get excited about each week.

It's a quality of life thing, I suppose - what are the things you spend money on that you really, passionately love and care about and look forward to and get excited about; and which are the things which money just dribbles away on (your words, and a great phrase)? That should help you tighten up. Spend more time - and money, if needed - on things which are cheap but rewarding. I don't have a garden, but maybe knackering yourself out every weekend making the garden look good might be a good idea - you might have to increase your budget, but think of all the things you WON'T be spending money on.

FireWyrm

moxter wrote: »

Sorry Firewyrm, I can't agree with that. Looking at your suggestions above, were the OP to follow all of them, they would end up with a dirty house and unkempt garden;

At the rate he's going, he'll declare bankrupsy in about 5 years and wont have a house at all. I dont know how you keep your house clean, but a vacuum cleaner is perfectly adequate.

moxter wrote: »

no TV;

You dont need it. There is catchup and I bet he has a cupboard full of videos. It is an expense he cant afford right now. The license fee alone is £140 a year which could be better spent.

moxter wrote: »

no family days out ("for what purpose?" was the comment - I presume you don't have kids);

Rubbish. Plenty to do that doesnt cost a packet.

And I have 3 children.

moxter wrote: »

no shopping for fun;

I'm not even sure what to say to this? Who in their right mind shops for 'fun'?

moxter wrote: »

no hobbies;

Get cheaper hobbies. Once he is debt free, he can indulge himself as long as he likes to whatever depth he feels inclined.

moxter wrote: »

no eating or drinking out (or drinking in, for that matter);

Rubbish. Just cut it out. £20 a month is quite adequate and you can brew your own wine and beer for a fraction of what you pay in a shop or pub.

moxter wrote: »

with unkempt hair to match the garden;

:rotfl: You've obviously never heard of soap. You know, that stuff we used for centuries before shower gel was invented.

moxter wrote: »

not travelling to visit friends and family; and so on.

Just cut it down, plan and budget for it.

moxter wrote: »

You begrudge £10 a month on work clothes

Unless he suddenly grew out of it, or fell over and put a hole in them, they are unnecessary for most adults. Your clothes will last years.

moxter wrote: »

You suggest that £8 a month on meals is too much (that's 40p a day) and give a throwaway "stop smoking".

He cant afford to smoke. Giving up is easy, if you stop listening to the hype of NRT industry.

moxter wrote: »

That's the budgeting equivalent of telling someone who wants to lose 8 stone to eat nothing but carrot sticks.

No, it's the budgeting equivalent of telling them to stop eating lobster and caviar every night and change to a balanced nutritious diet that gives them all the vitamins and minerals they need to live, not grow blusterous with gluttony they cannot afford.

moxter wrote: »

Result: person eats carrot sticks for a week, feels miserable, goes and buys pies, puts on a stone net.

Then they'll die, fat, miserable and broke. Good luck with that.

moxter wrote: »

Things like drinks out for example - assuming the OP is a reasonably sociable person with British mates, then they'll probably meet their mates down the pub. I know people can say glibly "you don't need to drink to have fun" but the reality is that if friends are meeting down the pub every fortnight and you don't turn up, ever, then those friendships melt away slowly by slowly, which would be far more tragic than having to make cutbacks elsewhere.

He cannot afford the level of socialising he is currently doing. End of.

moxter wrote: »

#As for enjoyments/entertainments/luxuries - there undoubtedly have to be some significant cutbacks.

Wait...you were just deriding me for suggesting the same thing.