How do I keep track of it all??

FaithFay1992

Agree with above.

My problem was that I thought small things such as clearing out un-needed DDs were just a drop in the ocean as far as clearing a large sum o debt however once you have done it you will be surprised how it actually does help towards the debt in the long run.

And silly small things such as are you taking a pack up to work everyday? That will save you heaps of money. I was always buying lunches, meal deals at the supermarket etc and these add up to more than you can imagine and are a real set back. Being a bit more thrifty/frugal with help your situation, even if at first you are only saving pence. It all counts and adds up :D:D

enthusiasticsaver

Doing an soa is a good idea. If you are a sole trader would it not be better to keep your business expenses and income in a separate bank account and pay yourself a salary from that weekly or monthly?

I am a big fan of separate pots or accounts for different purposes. The bank account should be just for your income to go in and only sufficient left in there for direct debits (with a buffer in case the amounts go up). I would treat the overdraft as a separate debt and set up repayment plan for that as well as your credit cards. Once you have worked out how much is needed for direct debits/bills split the remaining amount up. So much to go into household account for entertainment, personal, food and fuel. So much into an emergency savings account and ideally a pension. A certain amount should also be kept separate for annual expenses such as holidays, insurances, car repairs, christmas and birthdays etc.

Fireflyaway

Do a written budget so you know for sure what's coming in and out. I find it easiest to have 2 accounts, one for bills and one for spending. Allocate yourself a set amount for spending each month and don't exceed it. I put it in 4 envelopes one for each week.
Tidy your direct debits - get them coming out in the same day. Also reduce them if you can. Switch energy provider / get better deal on TV and broadband etc. Set an amount for grocery shopping too.
After you know what left, make a plan to pay back the debt. I like the snowball method ( check out Dave Ramsey).
Even just writing it down will help you feel less overwhelmed.

Bythelight

Annie,

I am also a sole trader and I found it impossible to keep on top of what was "my money" and what was money I needed for tax/expenses etc. with one bank account.

I would definitely recommend two accounts: a "business" one, and a personal one.

Run your business through your “business” account (receipts, expenses, tax savings account etc.) and pay your personal account a regular monthly salary as if you were an employee.

Doing this gives me the stability of knowing how much I have to spend in a month and it is much easier to budget accordingly (and do my tax return!). It also helps you identify if your "living" exceeds what your business is making. (i.e. that you can only afford X salary but you spend Y).

It also means when I look at each account (business or personal) and see issues, it is easier to identify those issues: in my personal account have I overspent on food/shopping/too many dinners out or in my business account, do I need to chase invoices.

Paying a salary based on my yearly take means in the good business months I automatically save for the bad business months. I found working out my monthly salary a bit tricky at first - I low-balled it so i could build a small cushion on the business side for cash flow– but by the sounds of it you know roughly what it will be.

HTH and good luck!

anniek42

Thank you everybody for your kind replies. I am most grateful for the advice. I think by reading them I will start using my NatWest account which is laying dormant to start putting tax away at least for now. I don't think I could manage to have all my direct debits going out on same date as because I am up to my overdraft of £1740 quite often until I get this clear I can't make any headway.
I do have surplus money left and looking at what I spend it seems to be mostly food, takeaways and charity shop purchases. I think sometimes I go to cafes even on my own to be somewhere different and away from my house. It's not a bad house I just don't seem to relax very well. I often potter about a lot and we have about 6 charity shops in town and I am always popping in and finding a bargain. I am starting to realise I think I get a buzz from it as I just can't stop. The other day I bought a card making machine and have started buying all the bits (a friend started my interest) but I haven't yet made one card! What is that all about! I did the same thing with beaded jewellery. Bought all the beads (charity shop bundle) bought all the clasps, wires, tools etc. I made a couple of bracelets then realised I wasn't going to do it, boxed the whole lot up and sold it on gumtree at a big loss probably! Anyway, it's quite clear I've got a bit of OCD when it comes to some things. The one thing I should be concentrating on is my business and finances but sometimes when I feel despondent I feel like I need to do something else as my life is not much fun at the moment. ��

armchairexpert

You have two different issues.

One is the bank accounts. I'm a sole trader, and I have three accounts (well, I have more, but for the purposes of this explanation). One is my business account: that's the one from which I pay business expenses, and receive business income. I have a inked business-savings account, and at the end of each month I add up what my income is and transfer the right percentage over for tax.

What's left is sent over to my household account, which is where I pay all my bills. I would recommend trying to make this a set amount per month, so you're paying yourself a salary, but at the moment you can't afford to do that so you need to send the whole lot over (except leave a small buffer in the business account for business expenses).

That's problem one. Problem two is your budgeting. If you're at the bank every day trying to avoid going over your overdraft, that's not a problem with how many accounts you have or how you track your DDs, that's a problem because you're spending more than you earn.

YNAB is only one option, but one of its goals is to get you living on last month's money (it takes a while). So it doesn't matter if your November direct debits come out on the first or the thirtieth, because you put money away for those bills out of your October income and it's sitting there ready and waiting.

What it also does is gets you to budget for your True Expenses. I had done spreadsheet budgets in the past and thought I had loads of money left over. After I worked out mortgage, bills and food I had $2K a month (Aussie dollars, so not as much as it looks!) - which meant I would buy books, clothes, makeup without thinking about it. Almost a year into YNAB and it turns out that all along I had maybe a few hundred. Because it makes you think about things like: you'll need to replace your laptop in three years, start putting away a few pounds for that. What about MOT? What about annual levies? And so on. An SOA is also good for reminding you about those expenses. And after that, you can see what you really have left over.

So:

1. SOA
2. Use a business account for tax and any business expenses
3. Then you need an ongoing budgeting system, YNAB or a spreadsheet or whatever works for you.

tealady

Hi
I eould still ring companies re changing th DD dates. After all they are unlikey to know (or care) that you go into your o/d each month.
Also by going through them you can check if you really need them and if you do, can you get them cheaper.
Good luck

EssexHebridean

As a SE trader you MUST put tax & NI contributions aside as you get paid on each invoice and before ANY of the money is designated elsewhere. Remember that the way Tax works is that even when you sign off as being self employed in the future you will have a final bill to pay so it's important to have been putting this away from the start, and to make up any shortfall if you've not been doing this.