Help with budget and want to pay mortgage off.....

TopCat1978

Thanks Tommelise

We go on holiday once a year and the cost £250 for the accommodation and it is self catering so included the day trips in the entertainment costs.

I know the reasons we go into debt, I spend too much and buy whatever I want whenever I see it rather than save but then I have always thought - already in debt so what is another £100. Also the household extension cost c £50k over the last 4 years so that counts for a lot.

Just hoping a clean slate will help me start a fresh.

tizerbelle

Said without judgement -consolidating your debts into your mortgage isn't recommended as the debts now become a secured debt and unless you address the root cause of the problem, it could put your home at risk. I understand why you did it - I did similar but I consolidated to an unsecured loan AND changed my spend/save habits radically.

Now you have the breathing room, you MUST work on a budget for every penny you earn, spend and save - it is the only way. No more using credit cards (unless you have the money saved already in your account to pay it off in full)

The scariest bit of your post is this:

Topcat1978 wrote: »

Yeah we need to change our way of thinking but we have also spent a lot of money on extending our house which we did by using our cards and money as we have earned it. That is 90% finished now so this shouldn't happen again.

This can not happen again and its down to you and hubby working together to ensure it doesn't.

I would recommend you take a look at YNAB (www.youneedabudget.com). Its an electronic envelope budgeting system and it works great - there are threads about it all over MSE. You can use it for a month for free before buying it. If there aren't any special offers available it will cost around £30 but in my mind, it was the best value purchase I made in 2013. Make sure you watch the video tutorials

When you work out your budget, don't forget to save for a remortgage arrangement fee in 2 years so when your fixed is at an end, you have money to pay the arrangement fee if required.

Dobbibill

Topcat1978 wrote: »

Hi all

We are a family of 2 adults and 2 boys (7&4) so what should be reasonable for food? Should we have separate accounts for food and petrol and then another for other bills? We do have a santander 123 account paying our dd's each month at the moment.


Xxxxxxx

How you manage all different budgets is an individual preference. I use several acc's for different things like bills/shopping/birthdays/Christmas/emergency/car savings/personal spends and find it works for me. I have standing orders set up from bills acc to fund emergency & Christmas so that I put the same amount in every month and it just takes care of itself that way there is no temptation not to save as it's all inclusive of total.
I know alot of people are massive fans of the apps as mentioned and that works for them. Whichever method you choose, stick to it rigidly, self discipline is key for success.

good luck

DB

TopCat1978

tizerbelle wrote: »

Said without judgement -consolidating your debts into your mortgage isn't recommended as the debts now become a secured debt and unless you address the root cause of the problem, it could put your home at risk. I understand why you did it - I did similar but I consolidated to an unsecured loan AND changed my spend/save habits radically.

Now you have the breathing room, you MUST work on a budget for every penny you earn, spend and save - it is the only way. No more using credit cards (unless you have the money saved already in your account to pay it off in full)

The scariest bit of your post is this:


This can not happen again and its down to you and hubby working together to ensure it doesn't.

I would recommend you take a look at YNAB. Its an electronic envelope budgeting system and it works great - there are threads about it all over MSE. You can use it for a month for free before buying it. If there aren't any special offers available it will cost around £30 but in my mind, it was the best value purchase I made in 2013. Make sure you watch the video tutorials

When you work out your budget, don't forget to save for a remortgage arrangement fee in 2 years so when your fixed is at an end, you have money to pay the arrangement fee if required.

Thank tizerbelle, it wasn't my first choice for consolidating but when all the credit cards were at such high rates and the debts were more than an amount the unsecured loan would lend on the mortgage seemed the best option.

I see you point, yes that should be won't happen again. I am going to be strict, both me and hubby have agreed and he has said he will get more involved in the finances so he understands them and supports me.

Thanks for the link, will have a look! Xxx

TopCat1978

Dobbibill wrote: »

How you manage all different budgets is an individual preference. I use several acc's for different things like bills/shopping/birthdays/Christmas/emergency/car savings/personal spends and find it works for me. I have standing orders set up from bills acc to fund emergency & Christmas so that I put the same amount in every month and it just takes care of itself that way there is no temptation not to save as it's all inclusive of total.
I know alot of people are massive fans of the apps as mentioned and that works for them. Whichever method you choose, stick to it rigidly, self discipline is key for success.

good luck

DB

Thanks dobbibill. That's what I thought, I don't know whether to set up a couple of regular savers so I am putting money aside for Christmas and holidays.

I thought a couple of say tsb accounts where I paid £500 into each and knew they were separate would stop me overspending!

Xx

getmore4less

Start a spending diary of what you spend and keep the SOA upto date.

Amount left after debt repayments....... 624.17

If this is not left every month the SOA is wrong so fix it.
(no one gets the SOA right first time and thye are continualy changing as life moves on)

Make a 5 year plan, you need to start saving for stuff so you have the cash to buy replace/items when needed.

Make a list of everything that you might need or change or break down in the next 5 years and start a saving pot for those.
Some will be a risk analysis based on age, but most whites goods last between 5 and 15 years, if stuff is older save more pm for the replacement I work on an average of 10 years and you probably have £1k+ worth of washer fridge irons,vacuums etc, thats £10pm min and if stuff is older you will need more.
you can lump this into the emergency fund but if you have an idea of where some of it will go you can assess how big it needs to be.

(the emergency fund is for things you can't predict this should get smaller over time as the planning gets better, emergency spending only happens once for each type, it goes in the plan for next time so if something happens a bit sooner than planned the emergency part is reduced)

Cars(these are the big drain), make sure the maintenance budget is good(when are the big items due like tyres), replacement even if you make a £5k car last 10 years thats £40pm, needs to be on the SOA

house 90% done where is the rest of the money coming from?
I don't see this itemiszed on the SOA.

We are taking out more than enough to clear them all which is a relief
Where is this cash on the SOA for the excess money you got on the new mortgage?

The Idea of a budget is a plan of how you want to allocate your resources, the SOA is a snapshot trying to reflect the averages, I find it better to look at a full year and normalize all the items as annual cost, you get a much better idea of relative value that way.

The longer the plan the better, I think 5 years is the minimum for forward looking items, gives time to save, 10 years ahead comes next but that tends to be thing like house moves kids going to uni/leaving home

The Key to staying on plan is to track the spending but you can go over one month as long as you are under another.

One way to manage this is to have a rolling years worth
eg clothes. You have £1200py to spend every month this goes up £100, every time you spend it goes down, as you are starting out at zero it may go negative to start with but over time the £100s add up.

Another good idea on clothes is have an audit use stuff up and plan what you need for the year or so ahead, then you can preemp by buying when cheap, we all need socks and pants, so no harm in buying them if you see a bargain.

Once you get the hang of tracking is does not matter where the money is.

longtermplanner

We are taking out more than enough to clear them all which is a relief.

I hope very litte more

This extra cash isnt shown on your SOA. This is your starting emergency fund. Don't fritter it away!

moohound

Topcat1978 wrote: »

Thanks Moohound

Yeah it allows 10% overpayments of original loan amount. Thought would try and build a buffer of c£5-10k and then start paying £100 extra per month. Does that sound ok?

Yeah I am planning on closing the accounts and cutting the cards up as my total credit limits total c £70k which is scary.

Also should I set up a new account to pay a set amount over each month for food? Our current account pays all the bills and I want to ensure that there is more than enough in that account and leave it to grow.

Also hubby is self employed so £500 is the min I have said he has to pay in but some months he earns more than this but I am going to leave that as savings!

Thanks again !:T

Building a substantial buffer sounds like a good plan especially with your OH being self employed.

TopCat1978

longtermplanner wrote: »

I hope very litte more

This extra cash isnt shown on your SOA. This is your starting emergency fund. Don't fritter it away!

Yeah the extra is only a few pounds so not a lot.

lewpster

Good luck lovely. We will get through this together and can be each other's debt buddy's. There will be tough times ahead but we can do it! x