SOA - How?

Compulsive

I’m new, first post so please be gentle!

I’ve seen the recommendation to complete an SOA and although I understand it, I’m really not sure how to work out what I’m actually spending? I know exactly all my DD and SO but I’ve not a clue how my general spending is broken up. I just use my card and pretend I have money. Is it just a case of printing a monthly statement and highlighting if all? If so do I write down what I’m actually spending or what I want to be spending?

My next issue is I want to do the 7 steps thing. Even though it says to save £1000 before anything else how do I do this while in my OD? Do I just start cutting spending and prioritising saving it over the OD?

I’m really sorry if these are stupid questions. My debt is g massive (2k plus 1k OD) but I should have so much more money left each month than I actually do. I yo-yo in and out of debt up to 10k and haven’t been out of my OD since 2010.

Any advice more than welcomed. Thanks

Compulsive

Sorry should say debt isn’t massive

enthusiasticsaver

An Soa needs to be completed with your actual current spending so yes it means trawling through bank statements. Only once you know where your overspend areas are can you make a budget with your desired spending level. Maybe start using cash rather than cards so you stick in budget?

If you wish to use Ramsey's baby steps then an emergency fund is usually the first step. If you have an overdraft I think I would focus on that first though rather than an emergency fund. Maybe you could start up a savings account and start putting a small amount monthly to start it off but getting out of overdraft would be my priority. As you reduce it drop the limit so you are not tempted to use it again.

Compulsive

Thank you. I’ll try and get that done today.

trailingspouse

Can I just add that, rather than using cash (where it's easy to 'forget' where all the money went...), it's better to use a debit card even for small amounts wherever possible. Then your bank statement is basically your spending diary.
I've been keeping a spending diary for over a year now. Whenever I get my bank statement or credit card statement, I record every single transaction on a spread sheet under broad headings such as 'House', 'Car', 'Holiday', which are then broken down into more detail (for example 'House' is broken down as 'mortgage', 'insurance', 'repairs' and so on. That way it becomes easier to see where you are overspending without realising, and where you can make the savings.

Once you get into a routine, ir really isn't difficult or time-consuming, and is a very powerful tool in keeping tabs on your hard-earned money.
Welcome to the DFW board, it really is a helpful place.

enthusiasticsaver

trailingspouse wrote: »

Can I just add that, rather than using cash (where it's easy to 'forget' where all the money went...), it's better to use a debit card even for small amounts wherever possible. Then your bank statement is basically your spending diary.

Using a debit card for everything is better for finding out where all your money goes as you say the bank account is then a spending diary although of course if you do multiple shops at a supermarket for all sorts of stuff unless you keep receipts for everything too multiple transactions at Tesco wont help if some are for food, petrol or clothes etc.

Using cash is better for keeping in budget as studies have shown people find handing a card over so much easier than cash. You can also see at a glance how much of the budget you have left.

Compulsive

Previously I’ve tried having cash but either forget the envelope or need it and my husband has it. It did work otherwise. I think I like the idea of using different cards for different things but just need to actually get a budget sorted first. It seem so bloody overwhelming!

Mnd

Don't worry about "stupid" questions, if you don't understand you have done the right thing by asking. You will get help on here.

Your SOA isn't written in stone, so you can still do it with best guesses where necessary and start getting a handle on your spending and refine it as you go on

EssexHebridean

First step - SOA as you already know. Ignore anything more long term fror now than that, and generally stopping to think before you spend ANYTHING. Ask yourself whether you need to spend, is there anything else you can use instead of the thing you're buying, can you manage without the thing you're buying? If the answer to the first question is no, or either of the second two, yes, then put the card away and leave the shop!

Compulsive

Thanks so much. I’ve begun to really think before I buy but still need to sort this mess out. I’m that person who can’t afford to go on holiday but probably spends £200 a month on eating out/takeaway through lack of organisation.

EssexHebridean

See that's easily fixable, which is a great thing! From right now - start being organised, and no, that's not as flippant as it sounds. Before you can "be organised" you need to put the steps in place - so, first job - what are you having for dinner every night this week? Rack your brains and remember what you have in your cupboards, fridge, freezer etc and make a plan. Anything you haven't got - come up with something to replace that with, so for example a recipe needs sweetcorn but you've only got frozen peas - switch it about. No minced beer for bolognese but a whole punnet of mushrooms in the fridge? Chop them finely and use those in place of the meat, with a nice big handful of split red lentils to add extra bulk & texture. Make the stuff you have work for you. Then repeat that planning every week going forwards - obviously as time goes on you're going to need to buy more stuff as you've used what you have - and that is where a shopping list comes in - keep one running on your phone and when you use the last of a thing, add it to the list.

Meal Plan > Ascertain what you already have > shopping list to buy the things you haven't, and need > shop according to that list. it DOES work. Set yourself a specific sum for takeaway once a month, programme that in - if you usually collect then take the money out in cash - any change goes onto a shelf and after a few months you realise you have enough for either an additional takeaway or even better a "free" month where nothing needs to come out of the bank for your regular takeaway.