I’m taking control of my life, now.

boxofpaws

It turns out my return to this forum was extremely timely. Our overdraft is just chaos. It’s the 1st and we are £1400 overdrawn. That will increase by another £88 before payday. Then it will be Christmas. Effectively our mortgage payment this month may as well not have happened.

What I have done to try to improve on this 

• claimed outstanding work expenses (£30)
• stopped naked wines account and applied for refund of balance (£80)
• Chased up insurance claim with ombudsman. Hopefully this will be £500
• claimed expenses for my mum (I do her shopping now) £100
• Opened 2 betting accounts. I’m going to try the forbidden thing if I can work up the nerve 

Then we need to put as little on the spends credit card as poss this month so that next month’s payment is small (we pay in full every month but it’s all our spends so is always quite big). How we will do this 

Christmas turkey is bought and in the freezer
expensive items are all stocked up (coffee, loo rolls, cat food etc). I do need washing powder.
larder is full
wine is stocked up (possibly have 60 bottles or so, which is actually around a years worth, hence cancelling my account 
beer is stocked up around 6 boxes
so just fruit and veg to buy for the next few weeks
we get weekly deliveries so we are fairly consistent and don’t waste anything 
so spending less should be easy?

I will record spends here

EssexHebridean

That’s sounding really organised and well thought through. 

I’m keeping you company on the ongoing mission to put less on the spends credit card as well. We’ve slipped into a habit of effectively being a month behind in it rather than - as I’d prefer for the things like food, diesel, and other travel having the money there before it goes on the card, so time to play catch up. 

boxofpaws

Essex Hebridean - it’s a good way to spend really, pay in arrears with no interest BUT for me, is borderline dangerous. I am a spender by nature, and while I have managed ok spending this way for the last 18 months, it’s starting to feel precarious.

First spend
Pub £50. We don’t do this a lot, but Mr P has had a truly terrible few days, which I might post about here one day but not yet. 

EssexHebridean

Sometimes Paws, pub is just what's required. Sending positive vibes and virtual hugs. 

boxofpaws

@EssexHebridean - hug received and accepted.

Today's task - SOA. This is more for my reference really, but its been quite an interesting activity, and it doesn't take a genius to see why we now have an overdraft. It feels about right but some of the spends are not necessary. We knew that it would be tight shortening the term of the mortgage HOWEVER, I also added a £300 overpayment each month, which in hindsight, has pushed us over the limit. We need to decide if we want to take that off or cut back elsewhere

Statement of Affairs and Personal Balance Sheet

Household Information

Number of adults in household........... 2

Number of children in household......... 

Number of cars owned.................... 2

Monthly Income Details

Monthly income after tax................ 2123. I am currently paying for shares, pension and bike to work on salary sacrifice. Next year (from April) the bike to work will end and I will get a payrise so I expect this to be £2300 +

Partners monthly income after tax....... 1875 - he gets more than this but keeps some back to cover car/bike expenses and the tv subscriptions. It does make the budget a little trickier but this is how we have always worked and he won't take any persuading. Overall, he is very reliable with that payment into the joint account and doesn't spend on ANYTHING other than his vehicles so this is one I just accept

Benefits................................ 0

Other income............................ 0

Total monthly income.................... 3998

Monthly Expense Details

Mortgage................................ 2087 (this includes the £300 overpayment)

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 204

Electricity............................. 50

Gas..................................... 50 - hoping this will go down with the new boiler?

Oil..................................... 0

Water rates............................. 37

Telephone (land line)................... 23.28 - includes fibre broadband. This is Mr Paws job and a grand one he has done at that, the speed is fab and its very cheap

Mobile phone............................ 0 - mine is paid by work. His is £10 but comes out of his account

TV Licence.............................. 13.37 

Satellite/Cable TV...................... 0 - Mr Paws pays for this, we have amazon, disney and netflix so I think we pay £20. We have a freesat box that you can record. We got this to replace sky in january because the cost had become ridiculous

Groceries etc. ......................... 400. For 2 of us. this is clearly somewhere we could cut back

Clothing................................ 40. i tend to shop twice a year in the next online sale and spend £200 to top up a capsule wardrobe. I don't really care for clothes shopping. My Paws cannot be persuaded to buy clothes so gets them as gifts and his friend who buys loads of clothes passes on stuff a lot

Petrol/diesel........................... 150 - mostly running to and from and with our parents!

Road tax................................ 60

Car Insurance........................... 40

Car maintenance (including MOT)......... 150 - we have old cars (nice ones though!) and old motorbike so we do pay quite a bit in maintenance. Its a toss up with vehicles to pay depreciation or maintenance, we have gone for the latter.

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 60 - 2 lovely old moggies

Buildings insurance..................... 15

Contents insurance...................... 0

Life assurance ......................... 21

Other insurance......................... 0

Presents (birthday, christmas etc)...... 80 - 4 stepchildren

Haircuts................................ 40 

Entertainment........................... 100 - maybe? its been a bit changeable through the last 18 months so this is quite difficult to calculate

Holiday................................. 200 - again, might have been more if not for the pandemic

Emergency fund.......................... 200 -  not really emergency fund, more stuff on the house. On average we have spent this in the last 18 months, but we did redecorate and recarpet large areas of the house last Spring/Summer

(Unnamed monthly expense)............... 0

Charity................................. 16

Postcode Lottery........................ 20 - although we have won this back 5 times in the last year!

National Trust.......................... 10[b]

Total monthly expenses.................. 4066.65

Assets

Cash.................................... 0

House value (Gross)..................... 310000

Shares and bonds........................ 12000 - we both pay into the work share scheme. He just started but I started in 2018 and there is £11k in there, which makes me feel better about the overdraft.

Car(s).................................. 15000. 2 cars, 1 bike - all 'modern classics'

Other assets............................ 2000

Total Assets............................ 339000

Secured & HP Debts

Description....................Debt......Monthly...APR

Mortgage...................... 164812...(2087).....1.26

Total secured & HP debts...... 164812....-.........-   

Unsecured Debts

Description....................Debt......Monthly...APR

Total unsecured debts..........0.........0.........-  

Monthly Budget Summary

Total monthly income.................... 3,998

Expenses (including HP & secured debts). 4,066.65

Available for debt repayments........... -68.65

Monthly UNsecured debt repayments....... 0

Amount short for making debt repayments. -68.65

[b]Personal Balance Sheet Summary

Total assets (things you own)........... 339,000

Total HP & Secured debt................. -164,812

Total Unsecured debt.................... -0

Net Assets.............................. 174,188

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

EssexHebridean

You already know the answer don't you - you've even mentioned it - it's that grocery budget. have you established why it's so high - for two of you that is a fair old whack, I spend less than half that amount per month again for a two person household.  cutting it by 25% clears your shortfall though AND gives you a few squids (see what I did there?!) over to further feed a dedicated EF. 

On the subject of the EF and other "we put money aside for this monthly" stuff - that money is actually getting set aside is it? Only no cash assets showing always rings alarm belles there - my suspicion is in your case that you've just not included that figure because you don't consider any of the amounts saved to be "touchable" other than for their specific purposes, and including it almost feels like double-accounting. 

Is the overdraft free or are you paying for it? 

Assuming I'm right on "money being put aside" then is there enough in - for example - the holiday savings pot that there is a potential surplus there that could be used to simply clear the OD and take you back to being able to zero-based budget? 

AntoMac

I’m very much a late noser on this thread.
That’s some great advice from @EssexHebridean to use your EF money that you’ve set aside to clear your overdraft and save yourself from the associated costs. You can of course look to rebuild your EF and very worst case if another emergency comes along then you might just have to dip into your overdraft again short term.
I do all sorts of ‘loans’ between various accounts to either make some interest (regular savers etc) or to save having to pay interest on other things.
It’s all little savings but they add up. With online banking it’s so easy to do these days and I can even rename various accounts online to record how much I ‘owe’ them.
That was quite a long post I’ve made to not actually say much! Good luck with your ongoing financial challenges.
Also, well done for paying into the work share schemes. Hopefully when they mature you’ll get much more out than you paid in 

boxofpaws

EssexHebridean said:

You already know the answer don't you - you've even mentioned it - it's that grocery budget. have you established why it's so high - for two of you that is a fair old whack, I spend less than half that amount per month again for a two person household.  cutting it by 25% clears your shortfall though AND gives you a few squids (see what I did there?!) over to further feed a dedicated EF. 

I have put it under the wrong heading. Should be house maintenance and repairs.  We spend, on average, £200 a month on the house, we have redecorated, recarpeted, replaced the boiler, put a new consumer unit in etc, reshelved the garage, set up a home office for me, fixed the dishwasher twice. There is NOTHING in an emergency fund, completely depleted. I would hope that we wouldn't have to spend so much in the upcoming year but it does feel like there is always something, and it probably averages at £200 per month. 

On the subject of the EF and other "we put money aside for this monthly" stuff - that money is actually getting set aside is it? Only no cash assets showing always rings alarm belles there - my suspicion is in your case that you've just not included that figure because you don't consider any of the amounts saved to be "touchable" other than for their specific purposes, and including it almost feels like double-accounting. Nothing gets saved

Is the overdraft free or are you paying for it? Paying - i think it cost £20 last month. It needs to go

Assuming I'm right on "money being put aside" then is there enough in - for example - the holiday savings pot that there is a potential surplus there that could be used to simply clear the OD and take you back to being able to zero-based budget? These are all averages. None of the pots have anything in them, both the boiler and the holiday were recent so they wiped everything out (and more). I can't see us being in a position to save anything up for a while until this overdraft is paid off. 

Focus areas = food and not doing anything to the house apart from repairs

EssexHebridean

I'd urge caution on using an actual EF for debt clearing - but if someone has other "savings pots" like holiday savings for example, that because of covid there is a surplus in, that can be quite a sensible move to transfer that surplus to get shot of an overdraft. If you know it's going to be very short-term, and you'll be able to rebuild fast, I mean within months, then it can work, otherwise though it's risky - remember that an OD isn't "safe" - it can  be withdrawn at any time, and if you then have an emergency only to find your previous facility has been withdrawn or halved you could find yourself in a LOT of trouble. 
Agree about small savings adding up - even the rounding out of the pennies from account balances can mount up to a surprising level over a year. 

boxofpaws

Hello @AntoMac - the shares are great, they’re on salary sacrifice so I don’t even notice the payment. I had forgotten about them until recently and was very pleasantly surprised at the balance when I checked.

They’re part of the retirement plan