How to stay out of debt

backontrack83

Hello

i posted this in debt free wannabe but I think it might be more suited here.....

Well after lots of reading and advise in June my husband and I will be debt free for the first time in our married life. :T

My next question is how do we stay out of debt? Now I understand the concept of no credit cards/store cards etc but what I mean is budgeting.

We have survived on my husbands overtime come Christmas, Birthdays etc that now we would like to stop having that and start saving, but how do you savvy people do that? I do not want to fall backwards anytime soon!

Thank You

Sarah

PeacefulWaters

Mindset. You've done brilliantly. The next step shouldn't be too hard.

You have known bills (car service, insurance premiums, holiday, Christmas etc). Estimate a total spend for these. Divide by ten. Set that aside monthly.

Unknown bills (car repair, broken electrical item, new white goods etc). Assume one big kitchen item, one electrical item, one car repair at £500 each. That's £1,500 / 10 = £150.

Longer term bills. Replacing the car. Getting a conservatory. An extra special holiday. Having a baby. Do your sums and save accordingly.

Beyond that, kids education and pensions come into mind. Make sure you optimising any employer contributions to your pension pot.

DCFC79

Keep up to date with your accounts on a regular basis and if you spot any transactions you don't recognise you can inform the bank.

martinsurrey

backontrack83 wrote: »

Well after lots of reading and advise in June my husband and I will be debt free for the first time in our married life.

Sarah

PeacefulWaters wrote: »

Mindset.

this exactly,

You have had a lifestyle while getting out of debt (cash in more than cash out, excess pays off debt)

now you are out of Debt, if you change to spend more, you'll head backwards.

keep the mindset that you have debt to clear, but that debt is not to the credit card company, its to your emergency fund / car replacement fund.

you wont get letters though the post, bailiffs wont turn up, it'll be so easy to waiver, so you have to self motivate, but keep at it!

London50

backontrack83 wrote: »

Hello

i posted this in debt free wannabe but I think it might be more suited here.....

Well after lots of reading and advise in June my husband and I will be debt free for the first time in our married life. :T

My next question is how do we stay out of debt? Now I understand the concept of no credit cards/store cards etc but what I mean is budgeting.

We have survived on my husbands overtime come Christmas, Birthdays etc that now we would like to stop having that and start saving, but how do you savvy people do that? I do not want to fall backwards anytime soon!

Thank You

Sarah

Use logic, see what money is coming in each week/month work out what needs to come out for things that are needed, put a bit aside for unexpected problems and long term goals {holidays ect}put a little aside for birthdays ect. Then {if there is any left} have some small enjoyments {nights out ect} but spend only what you have.

agrinnall

Put simply, spend less than you earn. See Mr Micawber for a pithy summation.

MyOnlyPost

Well done, getting out of debt is the hardest part. Now you have excess income every month, the income that was paying down the debt. When I first got out of debt I spent 18 months living the same way as when I had been paying it off and put the excess money into a savings account, having an emergency budget is a good way of avoiding future debt. You may also now be able to benefit from extra savings on things such as car and house insurance as these are usually cheaper to pay in one go rather than installments. It is also cheaper to tax a car for 12 months rather than tax it twice for 6 months each, some of these may not be relevant to you but if they are these kind of savings do add up.

Finally I have lived by a wise mantra for 15 years now. If you can't afford it, you can't have it.

No_6

MS money to use on a pc !
Enter all your spends and bills...everything !! you can think of.

you can look into the future to see what you have

or NOT
it is only a nice excel spread sheet to see what your figures amount
too.
If you don't enter data then the reply is US.

trailingspouse

Brilliant work getting out of debt.

Never miss an opportunity to save money - shop wisely, think about what you're buying and why you're buying it, and whether you can achieve the same thing cheaper. For example, we used to enjoy a takeaway on a Friday night. Then we (I) realised we could buy decent steak, a bag of fancy salad and a good bottle of wine for less than a Chinese takeaway - still a Friday night treat, but at a fraction of the price (and probably better for us too...)

From time to time (I do it once a year) look at your big bills and see if you can reduce them (start with the big bills, because that's where you can make the biggest savings) - mortgage, utility bills, car insurance etc.

Be prepared to put off buying something until you actually have the money. Pay your credit cards off in full every month (if you can't manage it one month, pay off as much as you can, and stop using it until it's paid off).

Limit how much you spend at Christmas. A well chosen gift is better than an expensive gift any day of the week. Decide how much you'll spend on each person, and don't let the long build up, the Xmas ads and the jolly music tempt you to spend more.

Good luck.

backontrack83

Thanks Everyone.

We are hoping to save for IVF, so that will be a massive saving pot, but at the same time I want to get 6 months worth of salary (if just for myself) so that if I do get pregnant I can take a years maternity (in my current job I get 6 months full pay).

I like the idea of separate saving accounts, that seems to make loads of sense.

We were(are) paying £700 a month off in debt so thats a big amount to have excess for savings and even if we have £50-100 extra a month thats still £600 we can put in savings accounts and gives us the opportunity to have a lifestyle that although not excessive would be more comfortable than what we are currently living.

Thanks once again. I will have a look at an SOA and use the debts section as where I want my savings to be instead.

We will not be getting credit, not for the first few months and only the IF we can get one, will I get a credit card and use it for food shopping then pay it off with the budgeted amount but that will only be to help start rebuilding our credit file.