Terrible with money ....

enthusiasticsaver

If you are self employed then who does your accounts and looks after your tax and national insurance etc? Obviously the soa is incorrect because as you say you end up spending money when you have it in cash and there is nothing in there for food, entertainment etc. I think you need to sit down with your wife and come up with a budget together as your defaults will also impact on her as well.

Emptysack

hohum wrote: »

I agree that no-one is 'bad with money'. It's just you made bad choices, and dealing with an irregular income is challenging for anyone. I used to think I was bad with money then I started using a budget (and looked at my last tax return!) and realised actually I have done quite well at surviving on very little.

So what was going on with the 'I'll just stop paying it' decisions? Don't have to answer, just think it's worth considering as you sort your situation out. I understand re the charges but there are ways to deal with them (most banks have discretion to refund once) and to be honest... you didn't get the money in on time. It's your job to check how long things take to clear. A painful one to chalk up to experience but I'd let it go.

I also think you are probably overestimating your income. If you are self employed, best idea is to look at your tax return for last year, look at turnover and divide that by 12. Does it really come out at 2000 per month? Plus I can't see anything in there for tax/ NI so is that your net income?

2 things that have absolutely turned it around for me:

- saving for regular bills. 'but I'm skint' yes but that means, when I'm flush I'm not really flush. The money gets spent on going out for dinner when it really needs to cover NI, car insurance, tax bill, professional subscriptions etc. Break down those annual bills. Look at when they are next coming out. Divide that by number of months. That's how much you need to find from now until bill is due. Also, birthdays and Christmas happen every year! If you don't trust yourself not to touch the money you're putting aside, can you give it to your wife to look after?

the second is joint budgeting. Absolutely revolutinary for me but it took four years before I could trust to do it due to previous negative couples budgeting experience. I also use YNAB (a paid for budgeting system) and find it invaluable.

Re the default accounts, when did they default? If they're recent you are probably best paying them off as they may have defaulted but still can be collected. And who wants to spend the next few years dodging creditors. A satisfied default is not as bad as an unsatisfied one. it's still bad, but it's better to have satisfied.

As you know its a bit more complicated filling the form out when self employed as there is items you can claim back on when doing your return which effect your income & tax etc. my last return was approx £35000, but when I take out expenses, diesel, clothing, tools insurance etc etc etc my actual earning was closer to £22000..

When I put it like this £430 seems a more realistic figure..


The stop paying decisions.... most of them where down to what I see as being irresponsible with money.. or not having the money when they where due... I may have had it the next week, but thought stupid things like " I`ll pay double next month" then they get a few payments behind and I just thought "forget about it"... TBH Ive been like this since I was old enough to get credit... I genuely think I have always had "bad credit".. and at 35 I`m determined to set things right...

Emptysack

enthusiasticsaver wrote: »

If you are self employed then who does your accounts and looks after your tax and national insurance etc? Obviously the soa is incorrect because as you say you end up spending money when you have it in cash and there is nothing in there for food, entertainment etc. I think you need to sit down with your wife and come up with a budget together as your defaults will also impact on her as well.

I do my own accounts.. The soa should be pretty much accurate as I buy certain things and my wife buys others. Anything not on the list is due to the its not something I pay for.. like food etc. This is something my wife buys with her money. We do not put our money together, our earning are separate and we each have our own things we pay for in the house.

Ironically we never miss a household bill and we never have an empty fridge.. it just my own personal things that ive messed up..

Im starting tonight to write letters to my creditors with offers of settlement and am going to try and clear them buy the summer time :-) .. just need to figure out this signature thing

I feel already I have started to make an improvement just by joining this forum..... lots of reading still to be done though :-)

enthusiasticsaver

Emptysack wrote: »

I do my own accounts.. The soa should be pretty much accurate as I buy certain things and my wife buys others. Anything not on the list is due to the its not something I pay for.. like food etc. This is something my wife buys with her money. We do not put our money together, our earning are separate and we each have our own things we pay for in the house.

Ironically we never miss a household bill and we never have an empty fridge.. it just my own personal things that ive messed up..

Im starting tonight to write letters to my creditors with offers of settlement and am going to try and clear them buy the summer time :-) .. just need to figure out this signature thing

I feel already I have started to make an improvement just by joining this forum..... lots of reading still to be done though :-)

Well done on making a resolve to deal with it and yes that is a good idea to write to your creditors and negotiate settlements. You can do a signature by going to the User CP tab at the top of the thread.


If you do nothing else though make a record every time you spend as nothing concentrates the mind better than seeing the figures in black and white. If you buy a coffee and cake or whatever every day as a routine you probably think it is only £2.50 or whatever but that works out at more than £12 a week and £600 odd over the year. Little changes can make all the difference. Good luck

hohum

It's the classic double counting of money! We would do a similar thing - with this paycheque we will pay x y and z, then before we know it we spent it in our heads three times over. That's why I am such a big fan of setting aside money every month for the big bills, because then you CAN'T double spend it!

If your profit for tax calculations was £22k, that's £1833 gross a month on average. Plus you have to set aside a bit for the tax you will pay on your earnings above personal allowance which I would estimate is in the region of £150/ month? So the actual money you should be working with as a monthly baseline is more like £1683. Once you start working within reality of that, you might be less likely to do the 'yay we've got loads of money' splurge because really, you don't!

I'm betting all the payments for self employment are mixed up with your personal finances (ours were, still are to be fair but I just make allowances for them in the household budget). So whenever you get paid I would set aside a proportion of it to be your equipment/ insurance/ somewhere where you won't touch it until you need it. I use YNAB, you could use other budgeting tools or just give it to someone (your wife?) who is a good money manager.

Then I would start setting aside money to repay debt. If you're not in contact with any of the creditors I'd let sleeping dogs lie but start building up a fund because if you defaulted in the last 6 years they will eventually catch up with you.

A warning - you might not necessarily feel more flush if you start doing this. In fact the first couple of months we actually budgeted properly it was soooo hard because we had to face the reality that if we went out for dinner, we would be spending the bill money. But then very quickly the benefits started coming - paid for a holiday in cash, went from paying £75/month in fees and interest to £0, have a (tiny!) emergency fund. And we earn on average £2k between us a month. But the best thing was no longer having that seesaw panic/ living like rockefeller/ panic/ living on beans cycle. I am so done with that!

I thought that a) I was at the mercy of a variable income that b) I wasn't brilliant with money and c) I can't have nice things. Turns out that's not true, I just needed a system that worked for me (and a budget!).

theoretica

As you have a variable income I suggest you have an 'even it out' bank account. Choose a figure that you can live on and usually exceed - say £1800 - and pay yourself this every month into your spending account while leaving the rest in a savings account. But you could also keep track of your monthly earnings and pay yourself a bonus as a reward for doing particularly well - perhaps 1/4 of everything you earn over £2400. At the end of the year you should have a nice emergency savings pot or can make well considered larger purchases rather than the burning a hole in your pocket sort of spending.

gfplux

Theoretica, what an excellent idea.