Living in the black

enthusiasticsaver

Yellow_mango wrote: »

Thank you! You’re bang on about the uncontrolled spending on the credit card.

The £3.5k is a combination of day to day stuff, plus some holiday stuff, plus some DIY / new house kind of stuff. But if I’m honest that level of monthly spending is not that unusual. There’s always something “unexpected” to cover.... plus we spend a crazy amount on groceries and eating out / takeaways. With 3 kids that all eat like adults it really adds up fast. Getting that under control is a really high priority. I’m hoping that the Starling “cash” system will help limit that.

I’ve set up a detailed budget which I think is achievable and I hope should cover everything, with some saving pot goals so hopefully we will have less “unexpected” costs.

My budget suggests that we should have around £500pm to throw at the debt, including the cc. So you’re right that we won’t be able to cover it in one month, even cutting as hard as possible on regular spending.

I have thought about it, and I think the best thing for me is to continue paying it off in full, effectively moving the debt to the overdraft. That will keep it most visible and motivate me to get rid of it ASAP. The overdraft is fee free for the first £1,000, and I think I should be able to keep within that, although it will take a few months before it’s gone and I’m back fully in the black and able to attack the other debt.

That sounds like a good plan if the overdraft is fee and interest free. It certainly sounds like moving to a system where your spending is controlled is better if £3.5k is not unusual unless you have a very high monthly income.

If you find yourself constantly having to find money to cover "unexpected costs" then doing an soa is worthwhile. Very few things should be really unexpected. Even if there is an essential house or car repair you should have some savings to cover that and most other bills can be anticipated.

Getting the whole family on board with this is essential not only for you to get to grips with your finances but also to prepare your children for the future with regards to finances. If they grow up to think that mum or dad just flash a card and that is everything sorted then they will quickly get into trouble themselves when they are old enough to get credit. As your daughter is almost 21 she is old enough to get herself into credit card debt. I would instil financial discipline not only for yourself and your DH and them also. It is not a bad thing to say no you cannot do that as we cannot afford it this month.

Do you have any emergency savings?

Yellow_mango

We currently have no savings at all. Buying a house totally cleaned us out.

I know I need to save and budget better. The trouble has been (excuses coming up!) that we have had a lot going on and a lot of changes. We have moved house 5 times in the last 6 years. Those 6 years also included a year of maternity leave (me) a redundancy (me), and a voluntary 6m career break followed by a salary cut (DH). Every time we seem to be getting back on track, something else happens to throw us off. I’m really hoping that now we have bought a house it will be our last move for many years and we can finally get ourselves properly sorted.

I know I’m probably giving the impression that our spending is totally unchecked and we live very extravagantly. The reality is very different. I am constantly stressed about money, and constantly saying no to everything. None of us have bought any new clothes for at least a year other than school uniform. The holiday I’m paying for now is our only holiday this year, and we’re driving to France to stay in an Air bnb. We don’t seem to have any “fun” at all. Yet we’re still spending a LOT of money. It sucks and I need to fix it. I’m actually hoping that budgeting properly will allow me to say “yes” more often, knowing that we have the money saved to cover it.

We do make a good income. About £8k take home (£5k his, £3k mine). But our expenses are also very high. And DH is not really on board. He basically thinks that he works hard and makes a good wage, so he should be able to have a curry when he wants. And he does work very hard. And his salary is very good.

I’ll post up my budget when I get a chance.

enthusiasticsaver

Ok that makes sense if you have just moved and unfortunately very high earners are often the worst at managing their finances. Maybe ask him what would happen if he lost his job or was ill and you have presumably a high mortgage and no savings? Very little state support these days for those who have a mortgage rather than renting. Also ask him whether he wants to be working in his 60s assuming his age is roughly the same as yours and how you will afford the same lifestyle without putting a lot into pensions? A heavy dose of realism may be needed as things can change just like that in a matter of days or weeks as evidenced by many diaries on here. I always say hope for the best but prepare for the worst.

The problem is you are going to encounter problems if you are doing this alone but on the other hand your debt is comparatively low, you seem more financially astute than your DH so can you maybe start by reining in the house expenses by prioritising what needs to be done rather than what you want to do to the house? Why are the expenses high? Expensive cars and high mortgage? High childcare costs?

Sitting down with him to discuss a budget when you are not both stressed is a good start. I have a DH who is a fritterer and has expensive hobbies and he often thought as your DH does that he earns a decent wage so why not spend it. I forced him to look at our outgoings and forced him to choose on the budget lines so he knew if he spent £300 on a new tool then something else would have to go like the sky subscription or a short break away or takeaways/clothes. He never really got on board with budgeting so I did it all for a while just constantly juggling budgets so reducing food or only buying one school uniform and having to wait a month for the other child to get one until I threw my toys out the pram so to speak and said no more. We would agree on a budget and we each get spending money in personal accounts and when it was gone we could spend no more. Luckily he is as anti debt as me so he would not go overdrawn or use a credit card unless he was repaying it from his personal spends. No personal spending or anything we had not discussed previously to come out of the joint account and I moved savings out at the beginning of the month. He gradually learned to limit his spending but it took a while. We have not fought about money since then though and he says the only reason we were able to retire at 58 was because I made us budget so he finally understands why. Of course we did do holidays and bought cars and spent on the house but we saved up to do it. Maybe try to get into that mentality and perhaps your DH will get on board.

Yellow_mango

The main big expenses are the mortgage (£2685pm on a £576k mortgage) and childcare (private school). The rest is death by a million cuts. Endless subscriptions and memberships and school shoes and dog food and car tyres and music lessons and groceries.

Thanks for listening. I’ll try to get more detailed figures up tomorrow.

Yellow_mango

OK here is my budget/ plan. This is the summary version to start with, otherwise it gets way too long!

My salary - £3,672.87
DH salary - £5,030.44
Total income - £8,703.31 - this is paid into our Barclays joint account.

From here, £1,650 will go into a Barclays cash ISA to cover school fees (paid termly), annual expenses and gas / electric.

£4,520 will stay in the Barclays main account to cover regular expenses. I’ll break these down later, there are a lot of them! That includes £500 for debt repayment

I’m thinking that for a few months I won’t make any transfers to the ISA or to repay debt until the spending cc balance is gone and I’m solidly out of the overdraft. This will mean I won’t have savings to cover school fees in September, so will go back into the overdraft and have to start again at that point.

Then the remaining £2500 will go into the Starling account. To be allocated as follows:

Saving for irregular expenses:
Holidays - £450
Car / bike - £100
Gifts - £250
Clothes - £255
House / emergency - £250
Kids activities - £145
Total - £1,450

Then £50 into my personal spending account, and £83 for the kids pocket money.

Leaving £917 for everything else.

That sounds like a lot. But it’s a lot less than we have been spending month on month. So I’ll have to see how it goes.

I’m hoping this will give far more visibility to both of us on what we are actually spending and whether we can afford things.

enthusiasticsaver

Ok well it sounds like you have lots of scope for cutting back then. Private school fees will be expensive as will a £576k mortgage but as you say you have high income and are tackling this early. Finding £500 a month out of that £8k hopefully should be fairly easy so I would focus on clearing the cards and building up some savings. Do you have car loans too?

enthusiasticsaver

Sorry when I posted I hadn't seen your latest post. You have a huge amount of disposable income but I think the old saying is true that people spend up to their income. You can easily sort this by reducing the clothes, gifts, holidays budget even if only for 6 months. Spending diary may be a good idea to see where your money is being spent.

Yellow_mango

As at today, we have £237.13 in the Starling account for the rest of the month. Not sure if it’s possible, but I’ll give it a go. We shouldn’t need petrol, and we’ve got enough food in the cupboard and freezer to get by for at least another week.

I do need to buy food for both the dog and the cat. The dog is currently eating really expensive biscuits. Might do some research and see if there’s something cheaper I can live with. The cat likes those stupid little pouches. I could probably switch to cans and biscuits and save a bit there.

enthusiasticsaver

Is your overdraft completely free?

Yellow_mango

Sorry when I posted I hadn't seen your latest post. You have a huge amount of disposable income but I think the old saying is true that people spend up to their income. You can easily sort this by reducing the clothes, gifts, holidays budget even if only for 6 months. Spending diary may be a good idea to see where your money is being spent.

You’re right. Those amounts are to try to cover what we’re actually spending. But I could easily pull them back for a few months at least. Holidays are the big one though. Going away is really important to DH, so I need to find a way to fund it without getting into debt every time. He might be open to cheaper holidays in the UK though.

He’s very keen to get an extension on the house, so I’m using that as a lever to explain the need to tighten our belt and save.

The other area we need to save more is for the car. We are struggling with one car at the moment (having moved house further from school) and so might need to consider getting a second. Plus our main car, whilst fully paid for, will need replacing at some point. Hopefully not for a few years yet (it’s a 16 plate) but I’d like to be prepared for that too. Car loans have crippled us in the past.

Anyway, I need to get to work and actually earn some money! Thank you!