unexpected large bills

tea_break

Although I don't regard myself in dire straits, at just over £5500 in debt, I realised I need to do some serious budgeting. But how is this possible when unavoidable large bills keep cropping up? Eg, since May I've had a £550 car bill, then washing machine finally died, so paid £230,for another one. Then had some small electrical jobs which came to £130. Then car needed another large bill, so gave up on that and traded it in for another at £1700. Then other car bills came up on that car as well. Boiler service for £65. All this inevitably goes on the credit card.

Its all very well budgeting to the final penny, but if you need a car, or a washing machine, or you need extra nappies or toilet roll, you have to go over budget. Don't you? How do the people who have budgeted to be debt free in, say 3 years cope with unexpected bills? I'm not an overly extravagant spender and have probably only spent around £60 on clothes since january. Just interested in your thoughts.

FireWyrm

tea_break wrote: »

Its all very well budgeting to the final penny, but if you need a car, or a washing machine, or you need extra nappies or toilet roll, you have to go over budget. Don't you? How do the people who have budgeted to be debt free in, say 3 years cope with unexpected bills? I'm not an overly extravagant spender and have probably only spent around £60 on clothes since january. Just interested in your thoughts.

Anticipation.

It's that simple.

And analysis of spending habits to get the very best guess at a forecast. I know that our family uses 45 rolls of toilet paper per month, therefore, a large packet of around 90 will last approximately two months. I factor this into my calculations of spending and knowing I can skip toilet roll this month means I will need to purchase it next month. This is a trivial example, but if you deal with all of those trivial little problems, you will find that you have more money for the bigger issues.

For instance, appliances rarely spontaneously break. You knew (if you are honest) that the washing machine was on it's last legs. You may not have known exactly when it would fail, but you must have known the situation was imminent. These things are factors in a well developed and workable budget. I am pretty sure my washing machine will fail within the next two years so I am taking steps to arrange for that eventuality. You have just replaced your washing machine, there is a good bet it will last for atleast the next 2 years. You should be saving £10 per month to that eventual replacement.

If you have grasped the principles of budgeting and you have a workable version, then unexpected bills should be a thing of the past. If you havent entirely dealt with it, it should be your number one priority. Eventually, you need to get into the situation where you have a sizeable buffer for emergencies and all known situations are already catered for.

That is why our budgets are down to the penny....every single penny is noted, accounted for and allocated to a purpose. Those pennies may be sitting in a buffer waiting to be used to pay for that broken washing machine. When you can say that you know where every single penny was spent for the last 6 months, then you will be making headway. Until then, 'you' are still playing with the idea rather than implementing it in earnest. It is not magic, I assure you. It just takes diligence and some forethought to achieve your goals.

tea_break

I probably need to look into budgeting more deeply then. I believe 'you need a budget'.com is highly recommended. I suppose the washing machine had been on borrowed time so we should have allowed for that. The electrical issues couldn't have been predicted. The boiler servicer said our boiler should last another 5-7 years, so again, we should probably allow for that and start saving. (Although is it not best to just pay off debts before saving?)

But car bills. Seeing as car finance is seen as a big no no, most people on this site will be looking at, say, up to £1000 to £4000 cars. These inevitably will have larger bills at some point, at least in my experience. So unexpected large bills are surely to be expected?

Even then, there are other house maintainence issues that need dealing with which will probably just be neglected for a year or two. Again, I don't think we're overly in debt but are an ordinary family trying to deal with various money issues.

tea_break

And idiotic question. Can you buy packets of 90 toilet rolls??!

FireWyrm

tea_break wrote: »

I probably need to look into budgeting more deeply then. I believe 'you need a budget'.com is highly recommended. I suppose the washing machine had been on borrowed time so we should have allowed for that. The electrical issues couldn't have been predicted. The boiler servicer said our boiler should last another 5-7 years, so again, we should probably allow for that and start saving. (Although is it not best to just pay off debts before saving?)

As you have rightly discovered, Murphy has a way of slapping you in the face when you can least afford it. All budgeting is a balancing act. I dont budget for a tornado ripping off the roof because well, we dont get that many in this country, and certainly ones big enough to rip off roofs are a rareity. I do however budget for the replacement of breadmakers, fridges, tv's etc.

tea_break wrote: »

But car bills. Seeing as car finance is seen as a big no no, most people on this site will be looking at, say, up to £1000 to £4000 cars. These inevitably will have larger bills at some point, at least in my experience. So unexpected large bills are surely to be expected?

You are making excuses. Trust Murphy...murphy applies. In any case, your assumption is inaccurate. I have a car I bought for £400 (I beat the breakers yard down from £550). If it fails, I dont fix the stupid thing, I ditch it back at the breakers and buy another, for which I have the money in hand.

tea_break wrote: »

Even then, there are other house maintainence issues that need dealing with which will probably just be neglected for a year or two.

With respect, more excuses. You know those jobs need doing, you are ignoring them on purpose pretending they dont exist. Realistically, you should be estimating cost, forecasting approximate date of the work needed and saviing for it.

tea_break wrote: »

Again, I don't think we're overly in debt but are an ordinary family trying to deal with various money issues.

You asked how we do it. That is the answer. No, you cant be omniscient, but you can be pretty near to it if you are reasonably intelligent and on the ball. For those things that you cant foresee, like the tornado and the missing roof, there is a buffer that should be saved for those very emergencies. Your attention should be spent understanding what resources and liabilities your household has and how best they can be used or trimmed. Once you have a clear picture you can then formulate a working plan which includes built in buffers for all of the things you have mentioned.

FireWyrm

tea_break wrote: »

And idiotic question. Can you buy packets of 90 toilet rolls??!

Costco. £11 - £14 depending on offers and max purchases.

Bulk buying is the key.

I buy (on average) the following staples.

32Kg of flour
8Lbs butter
5 dozen eggs
6lbs of bacon
3 lbs of breakfast cereal
1 kg of coffee
6 ltrs milk
4Kg greek yoghurt
1kg block of cheese
25 - 35lbs of meat
assorted fruit and veg.

Periodically....
20Kg of rice
10Kg of pasta
90 toilet rolls
2 doz tins of tomatoes
various herbs and spices
sliced, preserved and dried meats

and assorted other stuff now and again.

I feed 5 on circa £250 a month and we eat very well indeed.

tea_break

Ok. But is it not the case that you pay off debt before saving, as interest you pay on debt will be far greater than any you make on savings? Therefore you can't save till debt is paid off.

Armorica

While it will almost certainly cost you more, you can get increased certainty for some of the things you mention:
boiler insurance or 'hire purchase' a boiler
rent washing machine
etc.

FireWyrm

tea_break wrote: »

Ok. But is it not the case that you pay off debt before saving, as interest you pay on debt will be far greater than any you make on savings? Therefore you can't save till debt is paid off.

Its an old argument. However, how much interest will you ultimately pay on those surprise purchase that you had to put on the credit card?

In any case, your goal has not changed. You should be marshalling all your resources to achieving BOTH and paying off debt as fast as possible whilst still maintaining a healthy buffer for the issues you have described. It's the old tortoise and the hare argument. Pay off debt fast, but you may have a few set backs as you have experienced and ultimately spend more time paying off debt which costs you more in the long run, or, you pay off debt more slowly, but you are covered for those surprise issues and you dont pay interest on their purchase. Balancing act...again.

tea_break

Plenty of food for thought here. Was the food budget from costco? Will have to look into that, seems like bigger savings than with aldi.

Thanks again for all comments. Sounds like you're into serious bangernomics regarding cars.

FireWyrm

tea_break wrote: »

Plenty if food for thought here. Was the food budget from costco? Will have to look into that, seems like bigger savings than with aldi.

Sometimes. You have to pick your items and know what they are worth. Costco are cash and carry, so they specialise in bulk not price. Whilst buying in bulk is generally cheaper, this is not always the case. For instance, butter at Costco is double the price of Aldi (when you go by unit price) but cheese is half the price of Aldi. Cereal is way cheaper than any supermarket but you must buy it in 3Lb lots. You can buy massive trays of cherry tomatoes for pennies, but if you cant eat them, it is a false economy. I have a large family which requires large quantities so I know I can use the produce effectively.

tea_break wrote: »

Thanks again for all comments. Sounds like you're into serious bangernomics regarding cars.

Just tighter than a ducks ****.. I've dropped £3K of debt in as many months.

Cars are transport. I dont care what colour it is or whether it has heated seats, I only care that it is mechanically sound and reasonably reliable. I wont pay a penny more than necessary for any commodity and I know how much it is worth before I buy it. Car dealers are easy to haggle with...they are usually desperate to get rid of the car. Never be afraid to haggle by the way, on anything.