Help Please - Want to be Debt Free

Andrew_P

Thanks for your reply

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

That will cover any things like entertainment, eating out etc

£100 a month towards emergency savings sounds fine.

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

Groceries we now have a pot and we put £40 cash each in it each week

What have you decided re debt repayments and how much each month? - Not sure on how much yet was hoping we could do £600 a month based on our budget?

Will you be saving for annual bills and how much and where will you put these savings? - Perhaps £10 per month into another savings account rather than the emergency fund?

Thanks for your help

getmore4less

Andrew_P wrote: »

My wife has just checked her bank statement and seems its around £27 a month in overdraft charges.

Wife's Overdraft...............3000......0.

If the OD is hovering at £3k and there are £27 a month charges you need that on the SOA somewhere as it is not part of the surplus until the OD is sorted.


As you are separating your money into pots you need to be very clear which categories are coming out of which pots so they are all covered.

there are a number of ways to manage that.

One is to stick with the SOA format and make a mini one for each pot.

Or you could start a custom spreadsheet to model your finances.


Can't be said enough times, the spending diary is essential.

Mnd

Glad to hear that you have started making progress.

Please start your diary and we can help you to your debt free future!

enthusiasticsaver

OK so a very rough soa is income is £2900.

Presumably you will leave the bulk of your money in your Nat West account then to pay bills, debt repayments etc.

£100 to emergency savings and £500 split between you for personal entertainment, hair, clothes and eating out. £600 to debt and maximum of £200 a month for groceries . That leaves £1500 to cover all bills and anything not covered above including insurances, annual bills etc.

Did your wife manage to get a money transfer card sufficient to get rid of overdraft? If not you need to account for the monthly charges somewhere.

EssexHebridean

On the car expenses and the annual costs like insurance etc, absolutely the right thing to do to pay for then annually but of course you still need to budget for them. So work out all your costs from what you paid last year - for insurance, breakdown and that sort of thing add on 10% on top. Start putting that amount plus some extra for servicing, depreciation etc into a completely separate savings account, along with enough extra that you will make up any shortfall there might be when these bills next come due, then pay when due, and start all over again with the savings. Remember to include things like tyres, screenwash, oil, wiper blades etc, also.

As an example, we run two cars and put aside £160 a month for routine maintenance and annual bills - currently we're running in surplus but that just means there is a cushion there to take account of any unexpected mechanical repairs that are needed.

For a general emergency fund aim for £1000 to start with then divert the money you were putting to this to one of the debts instead,. If you have to use any of the EF top it back up again as soon as you can thereafter - the aim is to always keep it running at the 1k level

Andrew_P

enthusiasticsaver wrote: »

OK so a very rough soa is income is £2900.

Presumably you will leave the bulk of your money in your Nat West account then to pay bills, debt repayments etc.

£100 to emergency savings and £500 split between you for personal entertainment, hair, clothes and eating out. £600 to debt and maximum of £200 a month for groceries . That leaves £1500 to cover all bills and anything not covered above including insurances, annual bills etc.

Did your wife manage to get a money transfer card sufficient to get rid of overdraft? If not you need to account for the monthly charges somewhere.

Thanks for your reply

Yeah that's right we will leave the majority of funds in our new NatWest account once it's opened. The only thing is we are currently putting £40 each into our grocery pot we have created which we are using cash for so makes it easier to budget. Would you say it would be possible to spend just £50.00 a week on groceries?

My wife is still waiting to hear in regards to the credit limit for the money transfer card. For the emergency fund I was thinking of opening a separate savings account with another bank so we wouldn't be tempted to dip into, would you say this is a good idea?

Also in terms of the debt repayments for the wife overdraft would you say its best to setup a direct debt for the minimum payment out of the joint account?

Thank you in advance

Andrew

enthusiasticsaver

Andrew_P wrote: »

Thanks for your reply

Yeah that's right we will leave the majority of funds in our new NatWest account once it's opened. The only thing is we are currently putting £40 each into our grocery pot we have created which we are using cash for so makes it easier to budget. Would you say it would be possible to spend just £50.00 a week on groceries? Yes. £50 is easily enough. We manage it using a mix of Lidl and Waitrose. We don't go mad with wine or beer though and I meal plan so we have little waste

My wife is still waiting to hear in regards to the credit limit for the money transfer card. For the emergency fund I was thinking of opening a separate savings account with another bank so we wouldn't be tempted to dip into, would you say this is a good idea? Yes, very good idea.

Also in terms of the debt repayments for the wife overdraft would you say its best to setup a direct debt for the minimum payment out of the joint account? Yes that sounds sensible. It will be a standing order

Thank you in advance

Andrew

Sounds like you have a plan

getmore4less

Always to have all card min payments set up as direct debits not standing orders.

That way they never default as the company is responsible for collecting the correct amount on their chosen dates.

standing orders are your responsibility to get right and payment amounts and dates change.

Just make sure the designated account has enough money.

enthusiasticsaver

I don't think you can set up a direct debit to repay an overdraft. Yes definitely for credit cards but overdraft facilities need to be repaid manually or by a regular standing order set up to cover the fees plus reduction of overdraft.

Andrew_P

Thanks for your replies

I am going to attempt to open a today savings account online for our emergency fund, and presumably the best type would be a instant access account with either Marcus or Post Office that Martin talks about on the below link?

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/#easyaccess

Also still my wife is still waiting to hear from MBNA, we are eager to get this overdraft paid off as quickly as possible.

Thank you