New year, new start

timbstoke

So, here we go again. It's a new year, and this time I'm ready for it. I'm not in a horrific place all told, but it's been stagnant for a couple of years now - nothing going into arrears, but only the minimum being paid off. I tried a few different strategies in 2014 to get on top of everything - YNAB being the big one - but it didn't quite catch. So 2015 brings a new budget, a new tracking system, and a new way of life.

Where we are now

For values of "Now" being the 4th of January - i.e. the day before my first payday of the year. The day before payday is hereby designated as "take stock" day - it's the day where I'm as broke as I'm going to be this pay period, so it's the perfect time to benchmark progress.

Overdraft: £450. It's been £500 for months, so getting it £50 down on Christmas month is a pretty good head start. Target is £50/month balance reduction after interest

Credit Card The First: £1230. Unused and sitting in the emergency drawer. Target is £50/month balance reduction after interest.

Credit Card The Second: £1736. Same as above. Target is £75/month balance reduction after interest.

Isme: £416. Target is £50/month balance reduction after interest

Very: £7.50. Already paid in full this month, and on the calendar to check in a week or so in case they’ve added any interest. Yay, 1 down!

Where we’re going

These are my targets for the end of 2015. Pay rises, bonuses and any other income are not counted, but then neither are any other unexpected expenses, so let’s see where we end up.

Overdraft: Clear, and £75 left in my current account at month end. This will be my buffer, increasing by £25/month.

Credit Card The First: £625 outstanding

Credit Card The Second: £700 outstanding

Very: Clear

Isme: Clear

How we’re getting there

For the last 6 months, I’ve been tightening my belt in the last week before payday, and still scraping the ceiling of my overdraft. I’m using a few approaches to change that in 2015:

First, I’m tracking my spending better. YNAB has been dumped in favour of a homegrown spreadsheet, reviewed at least every Monday and Friday – that way, we know how the money looks going into the week, and again going into the weekend. It’s surprisingly easy to have plenty left over when you’re aware of how much is allocated for each category, and have to search the budget to justify any extra purchases. Simply knowing how much money is there is motivating me to manage it better.

Second, I’ve started to walk to work. It’s a four mile round trip, so that’s saving money in both gym membership and petrol. On the other hand, I’ve spent about £50 on a winter coat and warm gloves and hat. Even with that and the occasional hiding from the rain in the pub on the way home, I’m still well ahead.

Third, we’re eating healthier. Let me rephrase that. We’re eating properly. After a hard day at work, dinner a month ago was throwing a pie and some chips in the oven. We might still do that occasionally, but adding half a plate of veg and a bit of gravy cuts down on the chips and makes it feel like a meal rather than just something to eat. Also, breakfast every day, which I used to always skip and pay for with lethargy at work. More porridge = less snacks.

The next stage is to start looking at small moneymaking plans that we can do on the side. There’s a craft fair on this weekend, so we’re getting a table and taking a load of handbags, brooches and other such things that my partner makes. She’s also a qualified and insured nail technician and face painter, so we’re looking out for events where she can offer those services.

So far, we’re doing OK. We’ve absorbed her unexpected (to me, when I was drawing up the budget) Avon bill with no real trouble, and when her customers pay that money will go in a separate envelope so it doesn’t bite us again next month. If we keep up at this pace, we might even cover the rent with this month’s pay – it’s due on the 1st Feb, and is currently budgeted for next months pay which lands on the second. Our pub budget of £150 has proven overly generous so far, standing at about £20 a fortnight into the month.

I’ll try and keep this one actually updated fairly regularly, ideally at least weekly so I can plan my weeks spending and reflect on targets achieved and missed.

timbstoke

So, it's the end of Week 2, and halfway into the first pay period of 2015. Interest payments have gone out on one of the cards, so I've made an overpayment to account for the interest and bring the balance to the budgeted amount. Interest for the other card goes out in about a weeks time, so I'll probably need to transfer a bit more out yet.

Still, I have £900 remaining, with £300 accounted for in scheduled outgoings. The remaining £600 is budgeted away, but I'm playing beat the budget to try and keep as much in the account as possible.

Looking at the budget for this month so far, I'm £3 over on my entertainment category, but nothing else to buy in that category. Everything else is under budget, and I can cover the entertainment overrun from the beer fund, which has plenty left to play with. Fuel budget hasn't been touched, and in fact I've lent my clubcard to FIL so he can use my 6p off before it expires.

Good times so far...let's see how much I can keep in the account at month end!

timbstoke

Well, I just spent half an hour writing a long detailed update for the week, and then MSE decided it wanted me to log in again so I lost it.

So, let's try again, shall we?

It's been a bit of a tight week. My partner's account isn't in the budget yet, and when she checked it midweek she'd gone overdrawn. I had to transfer another £50 to her account to bring it back into the black. That's £150 to her account this pay period that I wouldn't usually have had go out. Along with her Avon bill, that's about £220 that I didn't anticipate spending this month. That's OK, this is why the budget is still a draft - fine tuning is inevitable for a couple of months yet.

The last week before payday has traditionally been my bogey week. I've had a tendency to not worry about money too much, and then check my account out of interest around now, and panic because I'm £400 into my £500 overdraft, and my good plans to clear £50 of it this month are ruined. The £50 allocated to the overdraft this month, plus the £100 in credit card overpayments that aren't usually made (I've been coasting along on the minimum for a while), plus the £150 to my partner's account, makes for £300 which isn't usually 'spent'. Plus, I know I've crept over the £150 I've allowed for 'fun money'. I'm taking control now, and that's good, but I was still worried when I fired up my internet banking to start reconciling. I logged in and checked my balances first of all.

My current account is £200 in credit. £200. In credit. Not £400 overdrawn.

That can't be right, can it? Let's do a quick check of my accounts.

Current account: £215. Target is to be less than £400 overdrawn by payday (2nd Feb).
Current account 2: £40. Target is £50. £10 off target, but that's OK. This account just maintains a £50 balance to cover the couple of scheduled payments it still has set up on it.
Credit Card 1: £-1138. Target is £-1175. There's still interest to go out, but that should only be £20, so this should stay ahead of target until payday.
Credit Card 2: £-1675. Target is £1675. Budgeted to the penny. All interest has already gone out, this account should be done for the month.
Isme: £-375. Target is £-375. Perfect.

So I'm £600 better off than I usually am at this time of the month, and I'm at a loss to tell you where it's come from. The only real change I've made is actually looking at my balance regularly, which has led to me using my card more so I can categorise things more easily. Old me used to just take out £50 cash at a time.

Let's not complain though, eh? Time to re-evaluate a target or two I think. The overdraft isn't due to be paid off until September, at £50 a month. Now I can't actually clear it this month - I have £200 in bills due out on 1st Feb - but I think I can still win on a technicality. 1st Feb is a Sunday, so those bills won't leave my account until 2nd Feb, which is payday. If I can keep my current account in the black for the next week, then my account will never actually go overdrawn this month.

My original plan was to split any excess with myself. For example, I'm budgeted to be £400 overdrawn this period. If I'm only £300 overdrawn, then the overdraft gets £50, and I get £50. But I think the psychological win is more important. If I can get to payday without my statement ever showing my account as being overdrawn, then I've cleared two accounts (Very and the overdraft) in full, on the first month of my new budget. That's a huge result, and I don't mind forgoing a little treat or doing a bit of creative accounting to make it fit.

Let's see how we do, shall we?

timbstoke

Well, I didn't manage to stay in credit. A couple of miscalculated scheduled payments meant going over was inevitable, so being in a good place anyway, I decided to pick up a few of the things I'd been putting off. Which takes us to:

Current account: £-200. £200 above budget on the first month. Oh yes.
Current account 2: £40. There didn't seem much point topping this back up before payday just to match the numbers.
Credit Card 1: £-1138.
Credit Card 2: £-1675.
Isme: £-375.

So, a month in, all my accounts are where my budget expected them to be, I've bought a few things that were in the 'lets see where we are at the end of the month' category, and I'm still £200 ahead of where the budget expected me to be.

Next task is to review the budget a little, and look at increasing repayments. Version 1 had the overdraft cleared in September, and cards halved by December. Do I consider a challenge to clear the lot in 2015?