unexpected large bills

tea_break

Some quick calculations show that after all bills and petrol, I have around £700 a month left over for food and other sundries and to pay debts/save. We have a family of 5 and my wife pays for probably just over half the food and most of the childcare. Was planning to just shove as much as possible to debts, but could divert around £100-£150 to savings maybe. So if £200 goes to debts then will have around £300 to £350 for living on. Or should I be squeezing a lot more from my 'living on' money and putting it to debt/savings?

Moneymash

tea_break wrote: »

Some quick calculations show that after all bills and petrol, I have around £700 a month left over for food and other sundries and to pay debts/save. We have a family of 5 and my wife pays for probably just over half the food and most of the childcare. Was planning to just shove as much as possible to debts, but could divert around £100-£150 to savings maybe. So if £200 goes to debts then will have around £300 to £350 for living on. Or should I be squeezing a lot more from my 'living on' money and putting it to debt/savings?

You have around £700 a month, for food and other sundries (what exactly?) Could divert £100-150 (£50 is a big difference). 'Living money' (what does this include?) You talk about what you have left and what your wife pays. Combine all family income and include everything that you pay out for, daily, weekly, monthly and yearly, allow for an emergency fund, and also personal spends for you and your wife and work to a zero based budget.

FireWyrm

Your 'quick calculations' are an entertaining diversion but not what you should be basing a solid plan on. My advice is to get your accounts for the last 3 months, sit down and go through them with highlighters. Find out what you have been spending and where.

Once you have that, either model a spreadsheet, or download a free trial of YNAB and start plugging numbers in. THEN you have a plan. At the moment, we dont know what your outgoings are exactly, so we cant help you much with practical advice. I can say however that £250 a month to feed 5 is not only possible, but is a goal you should be hitting regularly.

If you have £700 a month 'spare' after your fixed outgoings, why are your debt repayments only projected to be around £100 to £200 a month? What on earth will you be spending £300 on every month (or £3600 a year?!). If you mean clothes, you very much need to reassess your priorities pronto. To put in in perspective...I treated myself last month out of a surprise bonus to £174 worth of new clothes, the first I had bought in nearly 10 years.

tea_break

I suppose the 'unexpected bill' aspect has been taking up much of the 'spare' money in the last few months. Washing machine, electrician, boiler service (OK, that wasn't unexpected). Car bills went on credit card. Also just been through the expensive 6 week summer break with the children (I'm a teacher). Even cheap days out end up costing a bit. Agree I need to stop posting and just do a proper budget! And have genuinely only spent around £60 on clothes for me since January.

getmore4less

Go back a full 12 months and see how many unexpected expenses you had.

It's not like the summer holidays were unexpected you need to plan for the days out.

quick calculation and about numbers don't work.

you have a lot to pay for from that £700

Time for a full SOA

Hermia

getmore4less wrote: »

This may seem the case but the impact is much reduced because you planned for it.

Also because there are a lot of things that might happen the pot for these things grows quite quickly and over time things going wrong spread out.

If you think something will cost on average £600 a year then you need to allocate £50 per month and if it happens in 6 months time then you will only be £300 short rather than £600 and by the following year you will have the money.

Best to try an err on the high side to start with, remebber if you don't spend it because it turn out it was cheaper or did not break down you can realocate or reduce debt, if you are on the low side something else has to give up the cash to pay for it or you get more debt.

I completely agree. I have owned my car for five years and I now always use my most expensive service/MOT bill to date to plan my car budget. I usually never use that much money, but at least I know it is there if I need it.

To really master finances I think people need to stop thinking of unexpected bills as unexpected. Appliances breaking, cars needing repair or emergency dental work etc are things that pretty much everyone will experience at some point.

getmore4less

Hermia wrote: »

I completely agree. I have owned my car for five years and I now always use my most expensive service/MOT bill to date to plan my car budget. I usually never use that much money, but at least I know it is there if I need it.

To really master finances I think people need to stop thinking of unexpected bills as unexpected. Appliances breaking, cars needing repair or emergency dental work etc are things that pretty much everyone will experience at some point.

One thing you can do over time is build up the buffer(savings or reduced debt) to cover things and can reduce the regular input freeing up money for other things.

Eg car replacement if you plan to spend £5k on a new car every 10 years, once you have saved up the money you find your current car has another years life, that's a years worth of car replacement you can add some to maintenance for the car and perhaps use some for an extra discretionary spend or just keep saving the money so you have the next cars money ready earlier.

if you can make cars last 10 years that's still quite a few cars if you get your last one at 70, probably a bit early to be planning that far ahead but cars are a major use of resources over a lifetime running cheaper cars that last longer and are more reliable can save loads of money long term.


One other thing, it takes time to get a SOA/Budget plan that covers most things and is accurate, tracking where the money goes is an important part of the planning so you can adjust as real data tell you the number your guesses should be.

hohum

Saving for regular annual bills and the inevitable has been really important in changing our finances. If you throw everything at debt it can leave you in the crash diet yoyo as unexpected expenses scupper plans.

I've never been that interested in saving for the sake of saving, but having clear targets for specific purposes is really helpful. And I have no desire to raid it because I know what the money is for.

However I will say that in the early days of doing this it's quite hard and you may have more things crop up that you don't have savings for. If that does happen, be happy for having at least a small cushion to fall back on. Don't be discouraged if progress is slow at first - it does start to snowball. I am starting to see the benefits of our small setting aside and it's great. We've managed some long overdue repairs to the car. We'll need to replace it next year so I am putting money aside to cover a new one (we could do car finance but I don't like loading us up with monthly responsibilities to pay)