I Can't Work This Out

DickDastardly_2

I have decided I must be pretty thick as I cannot solve my problem which is this:

My wife does not work as she is bringing up our son at home. I am self-employed and last year (Sep to Sep) earnt in the region of £30k all in but my tax has to come out of that. We managed to spend £33k which obviously not good.

We have no loans, no credit cards, no debts, no HP, nothing. I dont even like Direct Debits. I have a pension which I no longer pay into as I am convinced I wont see it. My wife pays a minimal amount into hers. We run two cars very frugally. We dont smoke or drink. We hardly ever go out.

Our main outgoings consist of mortgage (£800 approx), fuel, food, bills, taxes, etc. The usual living expenses. We dont holiday only have days out.

So why dont the ends meet? I am getting sick of it.:mad:

I have tried using all these silly calculators here and elsewhere but they all revolve around fixed income and outgoings which bear no relation to our reality which is very variable month to month, week to week. So how the hell do we 'budget' on complete unknowns? How can we manage to get our spending below our earnings when we know not what either is unitl after it has occured?

It is really starting to get me down. This site has made me look harder at our money and the more I look the worse it is. It's not like I dont work hard either which makes it worse. Everywhere I turn it only ever seems like more bills with nothing to show for it.

Any advice then?

brownbabygirl

Complete a statement of affiars. Also which costs are FIXED?
To help you we need to have a breakdwn of your income and expenditure (give a range even if you cant be exact).
Also, look into putting into a diary evey cent you spend for 4 weeks or 8-12 weeks. Then you will have a much better idea. The money must be going somewhere. It is possible that you are really underestimating certain costs.

DickDastardly_2

You miss my point entirely - I DONT KNOW!!! It is ALL variable every week, every month! Its like nailing water to a fence and at the moment all it is doing is really hacking me off!! ALL the budget tools rely on known figures or 'estimates' - well guessing stuff has got me this far so it clearly doesn't work. Of course the money is going somewhere, its going on bills, food, travel, etc. as I said in the first post.

I really dont want (for personal data protection) to start labouriously typing into here every penny we spend and TBH I dont see what that does? We have kept those records before and its never shown up and unknown drug habit etc, only the things we buy like food, bills, etc. So any other ideas?

Is no-one else in the same boat, i.e. variable income and outgoings??

johncolescarr

Hi,

If your incomming and outgoings vary a lot each month (not unusual for a self-employed person) you can try budgeting over longer periods, say 3, 6, 9 or even 12 months. It will obviously take a long time to see the results but will be more accurate than looking at one month where you might get more money in than out, and another month where theres more out than in. As you are self employed you probably keep a very close eye on your business account. To keep track of your personal finances you really need to be geeky over them and write exactly where everything goes (spending diary), it feels stupid but I think its the only way. You don't need to use the fancy budget calculators, all you need is to add up everything that comes in (whichever way you draw an income from your business) and everything that goes out each quarter/year. Group your outgoing into rough groups, ie food, car/travel, clothes etc. If things dont stack up, look at the easy ways to cut your outgoings, a fantastic article (that you've probably already seen on the homepage) explains this. Look at each expenditure and ask yourself if you can reduce it.

The most important thing is that you have no credit cards, loans etc so your in a much better position than a lot of people. Its frustrating that everyone else seems to be able to spend more than you, but its probably on credit and they'll pay for it in the long run!


One final thing, its really not easy, especially at the beginning but if you persevere it pays dividends.

Good luck

tiamai_d

Budget for what you need week by week or month by month. eg, Mortgage, gas, electric, phone, etc. Everything that NEEDS to be paid regardless. You must have some idea of what it is. Your phone, gas, electric comes through every quarter, so what is that amount divided by three?

Once you know what you have to spend each month, you know what you have to keep each month, so when you make more, put it in an account for the months you make less.

My guess is that when you are making less and living 'poor' you get by, then suddenly you get some money, get excited and go splashing out. It's easy to do and not so easy to realise your doing it. Plus, when you do get that extra money a bill arrives.

If you honestly don't know how much your gas, electric, phone works out as each month over the year, phone them up and ask. Outgoings are not that variable when looked at over a year.

I use the same amount of petrol over a month if not over a week. Road tax is the same every year, my gas bill is more in winter but less in summer, electric is the same. Phone bill works out the same every month with an internet package.

Plus, if you post asking for help, you should not be so !!!!ed off sounding when someone does answer. It makes you look rude.

DickDastardly_2

TBH then I think we've had it. I do most of what you have suggested and if we cut down anymore, we will be living like monks. I dont see how I have managed to get my earnings to their highest level ever and have the least money I have ever had in my pocket! I have honestly had more free cash when I have been out of work. Very depressed now.:-(

DickDastardly_2

Dont mean to be rude, just very fed up with it - I have been peering over accounts for the last 6 hours and whatever way I turn it it looks bad, so please no offence to anyone - i only asked cause I dont know what else to do.

regularsaver1

looking at essentials ??? and non-essentials

your income can't just be going on mortgage and other bills as you are taking home £2500 per month. I know you said tax has to come out of this - are you saving this monthly?

zekepes

I have never been able to get on with the budget calculator either, and that is without the non-fixed income/expenditure problem.

One thing I have tried, successfully, in the past is to have a separate account for all the things that can be estimated (car servicing, road tax, utilities , mortgage etc) and the total amount for them, averaged over the year, DD in each month. Maybe it would work better for you to DD it in weekly amount.

Then I always knew what was left over for the more movable stuff, and knew I had covered the commitments. Then it was CASH for everything else. We took out an amount each week in cash each week to cover things like fuel, travel, entertainment and food and that was a fixed amount. If we were getting short then it was beans on toast for the week and no DVD rental etc but definately no more cash out.

I know, as you said, that your income is variable as are your outgoings and this will be a slog to start. I think the trick may be ensure that you have cash left over in flush weeks to carry forward to the less flush ones.

brownbabygirl

Dont worry dear, I understand the frustration.

did you say you have two cars. can you live without one? sure, you say you use both frugally but both still need to be insured and taxed, MOT'ed, repaired etc. Those are costs that you will need to pay whether or not you drive them.

Also, how many days out per year do you have? You may find that it all adds up in the end.

Also why not try to FIX the costs like the weekly food bill and telephone costs and aim to BEAT your estimates each and every month.

I also agree with the one that said you can get utilities to send you a bill and you can work out rough estimates.

Where there is a WILL.....!

Dithering_Dad

I can understand how fed up you must feel, so make yourself a cuppa and lets get started

As you're a little reticent about posting your income/expenditure, all I can do is make a few suggestions that work for me and may work for you (my income is also variable as I am self employed, so we're kinda in the same boat there). So here is Dithering Dad's guide to financial freedom!!

Step 1 - You must have some fixed expenses like mortgage payment, your wife's pension, gas, electricity, council tax, savings plans, investments, mortgage overpayments, building & contents insurance, etc). If you tend to pay your bills when they come due - DON'T. You get cheaper bils for paying by direct debit and they don't charge you for using them. They also allow you to spread your bills over the course of a year and so help you see where the money goes. Once you have everything set up by standing order and direct debit, open a joint current account with your missus and arrange for all your fixed direct debits to be paid from this account. If you get any cheque books and debit cards with this accopunt, rip them up. You now have a bank account that is set up purely for your bills and you cannot (easily) get money out of this account. You also know pretty much exactly how much is going out each month, so in the account that you pay yourself into(we'll call it the "Pay Account"), create a single standing order from this into the bill account that is timed to pay as soon as your pay arrives. You have now paid all of your bills in one go and no longer have anything to worry about on that score. All the Dither household bills come to just less than £1400 per month, so that's what I transfer into there every month.

Step 2 - Keep a shopping diary for food, toiletries, clothing, and other items you may buy on a monthly basis. Once you have an average idea of how much your monthly shop is, set up a second current account with a debit card (destroy any cheque books) and set up a second standing order in your "Pay Account" to pay your monthly shopping money into here. Again, set this standing order to pay on the day you are paid. You now know the family will eat and be clothed for a month. All the Dither household expenses come to £1200.

Step 3 - Keep the remaining amount in the "Pay Account" for holidays, Christmas, etc. This is your fun money!

Step 4 - You now know exactly what goes where, so revisit your "Bills Account" and check them against uswitch/moneysupermarket and other sites to make sure you get the best value for your money. If you trim your outgoings, then you can pay less into this account and keep more in the "Pay Account" for holidays and such. Check the items paid by this account once per year to see if you are still getting the best deal. If not, then uSwitch!!!

Step 5 - Try to reduce your household bills by buying in bulk, from cheaper stores (we go to Aldi), batch cooking, etc. Any savings made in this account can stay in here in case you have expensive months.

If you follow my guide, you now have three bank account. One you never take money out of, one you only use for household goods and one for partying and holidays and treats (and you won't feel bad for spending it cos you have already paid your bills n such!!). You'll never go overdrawn and you'll never need credit cards.

Now, you might think this is pretty lame, but it really works!