Help Please - Want to be Debt Free

enthusiasticsaver

Andrew_P wrote: »

Mobiles come out of our own sole accounts, things like car expenses and insurances I used to put on credit card when they were due so these were not budgeted for.

Its tricky as we have just spent on credit without keeping track and that's partly how the virgin card has ended up being so much as I have just done money transfers to pay off spend on my Tesco card.

Definitely could be an option having both incomes paid Into our joint account and then transfer spending money to our sole accounts. I have spoken to my wife about having every bill coming out of our joint account even our own mobile bills.

I think you would find it simpler to have everything coming out of one joint account with you both having the same personal money. As you say you obviously have spent without regards to your income for some time until the debt is now so high you cannot ignore it any longer. Budgeting and keeping within your income and not using credit for anything will be the only way you will get this sorted. You have sufficient income to sort this within 3 years I reckon but it will be a lifestyle change to watch your spending. If you kept to the spending on your soa you would clear it within 2 but given you have more than £1k of unaccounted monthly expenditure I do not think your soa is anything other than aspirational.

Little_Miss_Winner

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Little_Miss_Winner

I agree with enthusiasticsaver - a bills account is what is needed ASAP that way the monthly bills are taken care of with a set amount each month. Everything seems to higgledy piggly at the moment - I would do that first then you can realistically see what is left over.

getmore4less

Andrew_P wrote: »

Thanks so much both of you for your advice

I was just wondering also what to do in regards to how we manage our finances currently. So at the moment we have a joint account for just bills and we both pay in 600 a month to cover these. This just about see's us through the month until next months pay.

Would you say this Is still the best thing to do?

Also in terms of an emergency fund, how much would you pay in each month to this? Would you create an account elsewhere that you can't touch easily?

Thank you

Andrew

What I would do is use this(or another*) account for the bills and spends that are under control ie. those that are fixed&priority and a few others that are known not to be variable but are not priority.

All need to be reviewed to see if they can be reduced.

This way you know how much needs to go into it and can add a bit more to build up a cushion for them rising like the utilities.

These are the ones that left alone will just look after themselves, most of the time but may need review.

You will need to decide if you can be disciplined to include some of the annual bills in this or keep them separate for now.

This account can be used to do a full 12 month(and beyond) cashflow plan for just the categories allocated to this account.

NO other spending from this account.

Anything that is currently a guess or variable can come from elsewhere for now.


* might be worth looking at the various switching incentives you should have enough DD to open a new account and switch over some all of then to get a bonus.

You could then have another account for some of the other joint but variable/guess spending.


With budgets and tracking where the money is becomes redundant but many find splitting things into pots can help a lot to get started.


The real key to success is going to be the spending diary and keeping the SOA up to date as the real numbers become known.

One strategy is to have a new rule that until it is in the budget you can't spend it.

Make a list of needs and wants and get them in the plan.
a good one to start is

Clothing................................ 0

You may have plenty of clothes but do an audit of what you have and think about what you might need in the next 12 months, it might just be a pair of socks or some shoes or a new shirt fairly rare to get through a year without buying something.

How much did you spend on clothes in 2018?

I try to use the rule of thinking about buying stuff for at least a few days before committing to spending.
Some things are on the list just waiting for the right price.
use tools like pricespy to see what the cheap price for stuff is.

Same for household stuff, bulk buy when cheap, you know how many toilet rolls you need a month, buy 6 months worth when cheap more if you have space.

Say you have a regular spend of £10pm and £120 to pay off a debt at 10%

If you bulk buy with a discount and use the saving and the £10pm to pay of the debt you only need a discount of 5.3%. to be better off.

Mnd

Hi there, I think your SOA is a bit optimistic to be honest, but overall it seems pretty good. I doubt if your groceries comes to just £100, track that and check it out.
As a rough guide, we budget £1000 a month for bill's, groceries etc, no mortgage so this ties up with your total.

Go carefully through what enthusiastic saver has said above regarding money planning ( although what I would do with £200 a month personal money, I just don't know!) If you follow those figures you can soon get to grips with this.

Do the card juggling as recommended, and then you can start making inroads into your debts, but it needs to be an on going task. You seem to have realised that you got into this situation without realising but now you need to both concentrate on clearing this.

May I suggest you start a diary, and keep us updated on your progress, and help you keep track yourself.

Good luck to you both

enthusiasticsaver

Mnd wrote: »

Hi there, I think your SOA is a bit optimistic to be honest, but overall it seems pretty good. I doubt if your groceries comes to just £100, track that and check it out.
As a rough guide, we budget £1000 a month for bill's, groceries etc, no mortgage so this ties up with your total.

Go carefully through what enthusiastic saver has said above regarding money planning ( although what I would do with £200 a month personal money, I just don't know!) If you follow those figures you can soon get to grips with this.

Do the card juggling as recommended, and then you can start making inroads into your debts, but it needs to be an on going task. You seem to have realised that you got into this situation without realising but now you need to both concentrate on clearing this.

May I suggest you start a diary, and keep us updated on your progress, and help you keep track yourself.

Good luck to you both

Good suggestion to keep a diary.

I suggested amounts for personal money and monthly living expenses but of course that will not work for everyone. As MND says some people would find £200 more than enough as personal spends each month but others would struggle depending on lifestyle. That is the amount both DH and I get each month and mine builds up because apart from a clothing spree twice a year, the odd coffee or lunch or theatre trip with a friend and haircuts I don't get through it. One year I managed a Caribbean holiday with my sister on the personal money I saved throughout the year. My DH has expensive hobbies and is always scratching round for money.

Given you have £1000+ unaccounted for I am guessing some of that unallocated spend goes on personal spends for you and your wife. Someone mentioned further up that you look at your spends fir the last two weeks and redo that soa with accurate figures of what you really spend not what you think you spend or want to spend.

Andrew_P

Hi Folks,

I just thought I would update my SOA in my original post with some more accurate information I have been able to get. I have updated entertainment as we had been eating out at least 2 times per week and also forgot about the ground rent for our lease hold flat which is £120 per year. Also my wife's credit card was slightly more than I thought as I got her to check the balance this evening.

If you would be able to check over my SOA again and suggest a new plan of action (if required) based on the new information that would be appreciated

I have applied for a new bank account with NatWest as they are currently doing the £150 switching offer and also this will come with one debit card each. I have changed the direct debit for my mobile SIM only contract and my wife has done the same. Then we will just transfer our personal spending money into our sole accounts for £200 each and hopefully this will help.

Onwards and upwards from hear hopefully. Hopefully I will be able to have the Tesco card nearly paid off by the time I get paid on Friday

Thanks everyone

Andrew

enthusiasticsaver

Your soa looks more realistic now at least and explains in part why you are in debt although it still shows a surplus so presumably there are other reasons why. The groceries figure looks more realistic and the entertainment is not off the scale. It can obviously be reduced by eating out less and being more careful with grocery shopping and maybe using cheaper brands or supermarkets. We each find our things we would prefer not to compromise on and to be honest I think with you it is more important you find a budget you can live with and start to see the debt reduce.

Opening up a new bank account with Nat West is presumably for monthly spends? I think that is a sensible idea so you can really get to grips with not overspending. Just make sure you keep an eye on the balance and find a way of you both recording spends whether it is on an app, paper and pencil diary, whats app conversation or spreadsheet.

Presumably now all your bills will come out of your current joint household expenses account along with the debt repayments? How do you intend saving for annual insurances, breakdown cover, car maintenance, Christmas and birthdays and emergencies? It is important you do not use credit for buying these in future or all your hard work will be undone.

Andrew_P

enthusiasticsaver wrote: »

Your soa looks more realistic now at least and explains in part why you are in debt although it still shows a surplus so presumably there are other reasons why. The groceries figure looks more realistic and the entertainment is not off the scale. It can obviously be reduced by eating out less and being more careful with grocery shopping and maybe using cheaper brands or supermarkets. We each find our things we would prefer not to compromise on and to be honest I think with you it is more important you find a budget you can live with and start to see the debt reduce.

Opening up a new bank account with Nat West is presumably for monthly spends? I think that is a sensible idea so you can really get to grips with not overspending. Just make sure you keep an eye on the balance and find a way of you both recording spends whether it is on an app, paper and pencil diary, whats app conversation or spreadsheet.

Presumably now all your bills will come out of your current joint household expenses account along with the debt repayments? How do you intend saving for annual insurances, breakdown cover, car maintenance, Christmas and birthdays and emergencies? It is important you do not use credit for buying these in future or all your hard work will be undone.

Thank you for your reply

The account with NatWest will be our new joint account for all monthly bills etc which is also where the debt repayments will come from as well. I have a sole account with First Direct and my wife has a sole account with NatWest which is where our £200-£300 each for our own spending money will go.

I have said to my wife that if we both transfer £50.00 each a month to a separate savings account this will go towards our emergency fund. My wife was a bit concerned that £200 may not be enough so I suggested trying £300 with £50 going to our emergency fund once the account is setup. So £250 each for personal spend to last for the month, do you think this would be doable?

Hope all that makes sense

enthusiasticsaver

What will the £250 personal spends each month cover? Is your wife on board with getting rid of the debt?

£100 a month towards emergency savings sounds fine.

How do you intend budgeting for groceries, fuel and entertainment?

What have you decided re debt repayments and how much each month?

Will you be saving for annual bills and how much and where will you put these savings?

That is a lot of questions but these are all things you need to think about to prepare a proper budget.