I Can't Work This Out

mrs_deadline

Yes, any way you can manage to boost your income (raising your rates at decent intervals?) will certainly help with the shortfall. I'm self-employed but not the sole breadwinner, and I don't envy you that aspect at all.

Re. the One Account, at least you're never going to have a major cash flow crisis as long as you have that mortgage. If you didn't have it, presumably you'd need a business overdraft in case you had a spate of large bills or late paying customers, and that would probably be at a higher rate of interest?

Re. budgeting, when I first went self-employed I got into a terrible mess with tax bills etc. and had to come up with a plan of action to straighten things out. I decided I needed to get into a position where I could budget for the month ahead based on what I earned the previous month. It took some serious saving but it was well worth it.

I've now taken it a step further and budget based only on what I BANKED last month, minus the amount set aside for the tax man. I look where I can trim my budget to fit what came in. Also, if I have a particularly good month I try and save more rather than spending it, so there's a chance of a holiday (as in, time off) at some point during the year.

Lately I've been using the budget planner in Microsoft Money that comes with Microsoft Works. (Find this useful because it gives you a snapshot of your finances at any given point in time). It really doesn't matter how much your amounts vary from month to month, as it's almost impossible to stick to all the sections of a budget anyway! The main thing is knowing what the overall limit is to avoid overspending.

You are doing well to single-handedly support a business and a household on those figures. Without the One Account though, you would be heading for debt of some sort. Personally I wouldn't ditch it until you have a better grip on the budget or a bigger income somehow.

taka

Hiya!!

I sat down and made an annual estimated budget for bills like gas, elec, telephone, TV, insurance etc that happen annually, quarterly or infrequently (based on what I had spent in the previous year or 2, added a bit for price rises, and divided this by 12 (I get paid monthly).

I then spent a month or 2 monitoring what I spent on things like food/fuel/clothes/shoes/entertainment/dentist/prescriptions etc... basically everything right down to a newspaper and kept a track of it all!! Then decided to set myself a reasonable budget based on what I had spent for the different catagories for a month.

The way I work out my budget is that I have lots of "pots" (savings goals) in quicken (similar to MS money) eg

Holiday 50
Birthdays 15.21
Hairdressers 15.21
Clothes 30.42
Shoes 15.21
Going out 60.83
Dental/doctor savings 21.29

etc... per month

This is what I "transfer over" to my "pot" each month (the money actually stays in my current account but is assigned to whatever catagory of spending). This gets added to each month and if I spend in any of these catagories the money is removed from the pot. For example at the moment...

clothes is at 64
birthdays is at 70 (everyone is born in spring!!/summer)
Dental/doctor savings ia at 99

That means I have limits to stick to so I know what I can spend on x or y over a decent period of time.

Trying to do this for things like food is a bit complicated so I have a budget to aim for (eg Food 120, spends 40) and keep a running tally of how much I have used and have left next to my computer and on a bit of paper in my purse.

I've found it so much easier as I know what I have available to spend at any given time and have found I actually hate spending any of my "pots" and having to decrease the total so I spend less overall!!

I guess you would need to work out a budget that you can live month to month (or week to week) irrespective of your income in any given week/month as it will vary.

HTH

Taka

PS Make sure your budget tallies up with your average income over time:rotfl:

DickDastardly_2

Well another 24 hours and more thoughts, thank you. Your points on the Virgin Account are valid, we have more thinking to do. We have tackled some problems and think we can resolve some of the issues, so will let you all know how we do.

Just to clarify again, I dont run my own business as such, I am self-employed in the building trade loosely, sub-contract work. I get paid, deduct a protion of my own tax and NI, etc., but I dont manage 'business' in the wider sense. Work by its nature goes in fits and starts, including the hours and the rates. This week I have been off Monday, light job on Tuesday, two hellish 16 hour days on Wednesday and Thursday and a quiet duty today in the yard. Nothing all weekend and only three day booked up so far for next week. However, the jobs this month have been good ones so the pay is right up. Next month however I can do the same and not earn as much. This is what I am trying ot mesh with unkonw outgoings which nclude a lot of expenses connected with work. I may get a call tomorrow for work on Sunday, but then may need to get a train somehwere. I wont get paid for a couple of weeks for the job, but may have to lash out up to £70 in fares on Sunday - totally unplanned, unplannable - do you see what I mean about impossible to budget?

I kind get the idea withthe bills accounts, which thinking more seems a good call, and something we can do on our One Account by creating an 'e-account' to divvy the money up on screen.

I have alos taken the highly gutting decision to sell my pride and joy classic car on grounds of on-going costs and instant cash injection. Looking at our costs again last night, although it is comparable with our Eurobox, we cannot justify two cars at that expense. It will make our life harder though no doubt. Working harder and going backwards, I HATE IT.:mad:

Thanks again for help so far.:undecided

[Deleted User]

Hi DickDastardly. I have some idea about what you mean about unpredictable income and expenses when it comes to work.

The key in this is to break the problem down into small enough parts that at least some of them have clear solutions. There are going to remain a fair few unknowns, and in those cases you'll just have to take an average and keep a close eye on them in case the situation changes (as it invariably will, from time to time).

One thing I'd do in your position is count work-related expenditure as negative income, and in that way, keep it notionally completely separate from your normal household expenditure. So if (say) you earned £250 in one week and spent £50 on work-related travel, count it as an income of £200 for that week. This way, you remove one highly unpredictable factor from the 'expenditure' side of the balance-sheet.

Also, keep a diary of your income - after deducting work-related expenses - on a weekly basis. After a while a general picture of your income (less expenses) will start to emerge; for an accurate picture you'll probably need a year's worth of data, as seasonal variations may well be significant in your line of work. You'll then have a figure for your average income that you can at least work with. Unfortunately, getting an accurate figure will take a while, so you may have to work with a 'best guess' for a while. This will also give you a better idea of how much you need to save in order to get comfortably through a lean month - or if a lot of work comes in that requires you to travel a fair bit.

That's my ha'pence worth, anyway. HTH.

Zebedee69

Hia,
Have you thought about making sure your claiming back everything your entitled with im the business?...

Also, any other ways you can make money? Its funny what you can do when you start looking. Im an Ambulance Technician full time and run my own rapid response car for organ runs on call weekends and evenings. Just shows what you might be able to do to break up the income into bits coming in at different times of the month? Perhaps diversify into other things. Construction is a unforgiving sector my dad has been made rudundant a number of times in the past and your working hours seem a little eratic. Perhaps a phased change in the jobs you do could be on the cards?...

Pandora123_2

DH and I had an offset mortgage (not OneAccount) and I found it extremely confusing. Never quite knew how much we were paying off the mortgage and more confusing as we had an overdraft as well, which went down every month whether or not the mortgage went up or down. (Maybe I am just thick.) Anyway, we switched to a "normal" mortgage, and our new savings account makes the same interest rate as the mortgage is costing us, so kind of the same net affect as an offset mortgage but much less confusing!

Lots of people like offset mortgages and OneAccount, but I could never get my head around it.

:A

mikegould

DickDastardly wrote: »

My bank statement logs everything and out and as I said we have done this in the past, but I fail to see what it does apart from making us depressed. Where do I start? What does it do apart from make me go aarrrgghhh!!!???

Good Morning DickDastardly, I've just had a look three this page, the people on MSE are great, so caring and offer a wide range of help. I quite liked the comment about selling the pc and paying of your mortgage.

Your who problem rings true to a good friend of mine, works hard, earns good money, but for some reason, evey year he's got a shed more debt. I've been through his bills with him and got him good deals etc. But still, every six months he was another credit card in debt.

When I looked at his bank statment, I could not believe it, he was always taking cash out of the account, both him and his missis, when I asked what the money was for, they said everything we want, burgers chippy beer from local 7-11.

The answers are normally so simple you cant see them..
One of the things that worked for me was "David Bach Latte Factor", in this he said all the little things we buy mount up faster then you expect, and normally go un-noticed, I now right down every penny I spend, just in a word document, and every month I vet it, its amazing how it works, you'll see over a month how yourself and your wife waste money, it could be simple things like chocolate bars and chrisps for school for the kids. why not buy them from tesco's, we all know walkers are nicer, but you pay for them, especially if your buying them on the way to school, which most parents do.
A treat should be a treat, not every day...

so two key points, Cash out goings are bad, very hard to trace.
write everything down that you buy, from the news paper to the burger from the burger van.

minimoocow

Hi DD,

I too have a one account - I like it but it isn't as easy to get your head around as they claim and it is very easy to overspend. :eek:

Have you managed to set up the e-accounts so you have a semi-seperate current account, mortgage etc? - I would be completely lost without this.

Also another thing I do with it is set up a spreadsheet for each month with dates down the left hand column and types of spendings along the top (i.e. food shop, car ins, fun stuff etc).

I too didn't really know where everything was going until I did this. Although it's done in retrospect it has helped - i.e. I can look back at the last month and compare to previous months etc. Can be scary at first but unless you know where it is going you can't do anything about it - I found I was spending more on the food shop than I thought so I have cut this down by shopping in different places, throwing less stuff away etc. I also now have an "e-savings" account which I pay any excess into (based on what I spent last month) and then try to keep within the current account for the month - obviously can be transferred back if needs be but try not too!

I currently pay bills by DD but you are right that they take the mikey at times (currently owed £100 by Scottish Power) however it does make budgeting easier. If you don't want to do this why not set up an e-savings account in the one account for bills, pay in an amount every month and then use that to pay your bills quarterly - a self-dd!

The one account can be great, I am doing well with it currently and think their customer service is fantastic but purely on their interest rate I wouldn't have it again and would be vary wary recommending it to anyone as it is so easy to overspend.

Not sure if that is of any help to you but it has worked well for me! Hope you work it out soon - don't get too disheartened it can be done!

MMC

DickDastardly_2

Hi all and again thanks.

Yes our One account is set up as you suggest already. WHat I have done now is created some more 'savings accounts' to use as a three bill account as suggested and we can see how that goes.

Yes I agree on the grey spending especially cash, and we do try and minimise this, however as explained a lot of my cash spending is work related. I do get it back mind, just not instantly. Lots of it is parking fees, train fares, stuff like that. As suggested I will have to guess how much these are coming to each month and put it by.

I am sure we will work it out now I have clamed down a bit - it just gets so damn demoralising sometimes it makes you wonder why you bother!:rolleyes:

hypno06

Hi guys! Hope you don't mind me thread-crashing a bit!

Those of you who have fabby spreadsheets, as mentioned on this thread, would any of you care to send me a template?

I have lots of different amounts of income coming in (self employed but with lots of additions such as mystery shopping, tutoring etc) at different times of the month, and of couse the usual direct debits etc.

I have a spreadsheet, but I am a bear of very little brain, and it is not all I thought it was. Better than nothing but I strive for something better and I am not clued up enough on excel to make one myself.

If anyone does have anything they are prepared to share as a template, I would be very grateful!

Thanks, and sorry Dastardly for the thread crash. I wish you luck x