Starting to control my finances

lightbulbtime

Hi all,
Thanks in advance for any help you can give me. Was very enlightening creating my statement of affairs. I’ve made many changes over the past 6 months to gain tighter control over my finances, but after reading this website these past few days and seeing what everyone else has contributed and how they’ve changed their lives, I’ve realised I’ve only been scratching the surface at controlling my money.

I guess you could describe my current situation at stable, not making or losing money and can pay all my loans and mortgage and break even.

I’ve added comments to each section to clarify as much as I can; I noticed the same questions coming up time and time again so have tried to answer them up front as much as possible.
I have never done budgeting, so I realise the next step is to start. I have no clue as to how to budget correctly, so any suggestions and links to tools would be appreciated.

Lastly, thank you for everyone who’s posted or replied on SME. It’s been such a relief to know that I’m not in anywhere near as bad a shape as others, that there’s light at the end of the tunnel and that gaining control of my finances at the age of 47 is long overdue. I will be teaching my kids all about money, budgets, spending and control so they don’t fall into the traps we all have. As a parent it’s my duty to prevent them from making the same mistakes.

So far I’ve learned:
1. Be honest about where I truly am and understand my spending habits.
2. Know my enemies (debt and my own attitude), how much, how long, what interest etc.
3. Know my goals (debt free, budgeting and emergency funds, save and invest money).
4. Ask for help!

Just reading this website has opened my eyes to so much I wasn’t aware of, so again thank you all.

Time to start my journey to being debt free!

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0 – 2 visit two weekends a month
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ £1366.30 – this is basic wage, able to get overtime easily, have not included overtime as it varies month to month. I’d like to get my budget below my wage so I can use any overtime for excursions with kids and paying off debt quicker.
I’m also trying to get a better job, I have a skill set which can command twice the wage. I’m constantly applying for these jobs, had a few interviews but it’s still slow in that industry, thankfully it’s picking up though. Regardless of that I want my finances in control.

Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... £1366.30

Monthly Expense Details
Mortgage................................ £375.50
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge 0
Council tax............................. £70 – £84 split into 12 equal payments of £70, incl single person discount and water rates
Electricity............................. £50 – Gas and electric moved to cheaper supplier and awaiting smart meter as currently on pay as you go (newly bought house)
Gas..................................... £50 – as above
Oil..................................... 0
Water rates............................. 0 – included in council tax
Telephone (land line)................... 0 – cost included in internet services
Mobile phone............................ £17 – both sim only, one for me £10, one between kids £7 as only way of communication
TV Licence.............................. 0 – Don’t have one, never watch it as have internet (never watch BBC ever!)
Satellite/Cable TV...................... £5.99 – Forgot to cancel Netflix after month’s free trial last month, will cancel.
Internet Services....................... £30.98 – includes line rental
Groceries etc. ......................... £300 – shop at ALDI, high dependency on sweets which I’m trying to give up slowly, I have two kids with me at times so also feeds them. Cook all main meals from scratch.
Clothing................................ 0 – not bought any in years
Petrol/diesel........................... £60 – down from £80, walk more, drive less
Road tax................................ £22.75
Car Insurance........................... £16.75 – renewed to far lower amount using MSE, looking to pay in lump sum from next year once budgeting sorted out.
Car maintenance (including MOT)......... £150 – Have taken bills for previous year and divided by 12, I don’t save this money up, just pay it lump sum when it happens. Starting budget planning next.
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0 – I have an £800 dentist bill to complete but have the money set aside for this from my loan, so didn’t include it as it zero’s itself out.
Pet insurance/vet bills................. 0
Buildings insurance..................... £22.84 – includes contents
Contents insurance...................... 0
Life assurance ......................... 0 – Don’t have any yet
Other insurance......................... £19.74 – union fees
Presents (birthday, christmas etc)...... 0 – nothing set aside
Haircuts................................ 0 – cut own hair
Entertainment........................... 0 – don’t drink or smoke. Only socialise walking with friends as it’s free.
Holiday................................. 0 – not been on one for 5 years, nothing planned either till I can pay cash for it
Emergency fund.......................... 0 – Budget planning next
Total monthly expenses.................. £1191.55

Assets
Cash.................................... -£600 – account is normally in overdraft, was -£900 last month but made £300 in overtime, this month will be the same in overtime
House value (Gross)..................... £70000 – bought last year
Shares and bonds........................ 0
Car(s).................................. £5500 – owned outright, no outstanding payments, extremely fuel efficient van (55mpg)
Other assets............................ £1000
Total Assets............................ £75900

Secured & HP Debts
Description....................Debt...... Monthly... APR
Mortgage...................... £60900.90 £375.5.... 4.04% - 2 year fixed deal, started last year
Total secured & HP debts...... £60900.9

Unsecured Debts
Description....................Debt...... Monthly... APR
Loan........................... £6633...... £110.2..... 7.9% - Dentist surgery and home improvements to new house. Any more will be budgeted for and paid in cash.
Loan........................... £859.2..... £42.96..... 0% - house had no carpets, managed to carpet whole house for £1031 with interest free loan.
Total unsecured debts... £7492.2.... £153.16

Monthly Budget Summary
Total monthly income.................... £1,366.3
Expenses (including HP & secured debts). £1,191.55
Available for debt repayments........... £174.75
Monthly UNsecured debt repayments....... £153.16
Amount left after debt repayments....... £21.59 – feels accurate, buying lightbulbs and cleaning products can wipe me out of all leftover cash for month. Again, never budget for anything.

Personal Balance Sheet Summary
Total assets (things you own)........... £75,900
Total HP & Secured debt................. -£60,900.9
Total Unsecured debt.................... -£7,492.2
Net Assets.............................. £7,506.9

Anymore questions I’m more than happy to answer

MovingForwards

You can cut down your food bill.
Sweets have them as a Friday treat or whatever day of the week is your last working day; be a lot healthier too!

Clothing you must put something down, even if it's £1 a month.

Dentist and medical - you must put something as you won't always have the money out aside.

Emergency fund you really need to put something aside in case you have some house related expense.

Holidays fund, again just put a £1 away for now, then once settled you can start planning to go away, even if it's a few days in a caravan somewhere.

Presents you have kids so put a couple of quid away each payday.

I would suggest opening up another current account or savings account with a different bank so all the things you are paying yearly or saving money for each month can go into that, it will force you to learn the money isn't available. You will also earn interest over the year.

Pay cash in the supermarket, I found if I saw money leaving my hand/purse I stopped buying a load of unnecessary items from the supermarket.

If you get paid monthly, draw out cash each week for shopping / fuel when it's gone that's it til you pay yourself the next week.

Where do you get your petrol? Do they have a loyalty scheme? If so, sign up as you can earn a few extra quid easily filling up over the year! I've built up a fair bit with Morrison's due to filling my car

I assumed you were in Scotland as your water is included in the council tax

Good luck and well done for recognising you needed to make changes!

It's all easier now.

Willing2Learn

Yay - A nice new diary

Firstly, welcome to the forum

My thoughts on your SOA:

With your job, you have stated that you can easily get overtime, yet you have not included in your SOA. If it were me, I would total the overtime I did during the last year and then divide by 12 to get an average monthly amount for your SOA.

As it stands, I don't think you are being realistic with some of your spending. Nothing for entertainment, presents, clothing and emergency fund is not being realistic in the long-term. If you add in the average monthly overtime to your SOA income then you would be able to have something allocated to these important monthly budget categories.

Mrsn

A warm welcome to you. Some excellent advice already given, my only point would be is your food bill it’s far too much even with your sweetie habit. As a family of 2 adults, 2 children and a small dog we budget £220 a month for food, toiletries and cleaning products. We have at least 1 meat free meal a week and utilise the freezer with batch cooking.

lightbulbtime

Hi,


Thanks for the quick responses, much appreciated.


Willing2Learn - I wanted to make sure all my expenses could come out of my wage only, but I will amend to include my average overtime going forward. I think that's a very good idea as I start to budget.


You are spot on that I'm unrealistic in my budgeting, I just never have. My next action is, with your guys help, is to learn how to budget correctly. I've always tended to move lump sums, never bit by bit and I'm seeing this is one of my many issues.


Movingforwards - I really like your idea regarding a separate account to move my budgeted figures into. I have a separate current account already where I have my dentist money, I will set up a direct debit to this account so I don't see the money in my current account any more.


When it comes to the sweets though, I have been battling this addiction since I was a teenager hence why I never started to drink or smoke. I'm thankfully still average build as I exercise a lot. I used my average bill over the past six month to get the £300, but last month it was only £190 as I've cut down a lot. When I stop eating sweets my appetite seems to disappear overall and I eat less of everything else too. So I'm getting somewhere already. Next month it will be up again as I will see my kids more again, but I will start moving £50/month over so I'm starting to save. When I save in other areas, I will increase the direct debit to account for it.


Petrol - I shop at Morrisons, cheapest in my area, I don't have the loyalty card but will get one now thanks.


Cash purchase - when it comes to spending cash instead of using a card I'm the opposite. I'm really good at making a shopping list and sticking to it and I reconcile my bank account each month to a spreadsheet. Taking out cash makes it harder for me to remember what I spent it on and categorize it. I also tend to think I have spare money to burn if I have change in my pocket, I never do that with a card. And I also tend to leave my card at home unless I'm going to buy food or fuel, that way I don't impulse buy because I have no means to do so.


Mrsn - wow, £220 for all that, I'm impressed! I would say the snacking is my main issue and could account for half my bill. I've been good this past month so the bill dropped to £190, just shows how much of a problem with food I have!


So my next questions are:


1. I have an extra £300 in overtime coming in at the end of this month and possibly £1000 next month, what's best use of it? I like Movingforwards idea of moving it to a different account and leaving it there as part of my emergency funds etc. Or would it be better to pay off my car insurance and start direct debiting the money to the other account month by month to save on interest? What other suggestions do you guys have?


2. What tools are there out there for keeping track of everything?

FootyFanDan

Hey,

Happy new diary. I just wanted to wish you luck on your journey.

lightbulbtime

While I have plenty of time on nightshift, I decided to search the depths of MSE to find more things to motivate me. And I found "The Demotivator"!!!! So remember my sweet addiction above? Well it turns out that my addiction is costing me over £1000 per year!! that's over £80 per month. So what best to do with my chocolate addiction? I think I'll move £50 of it to overpaying my mortgage and some of the rest, but not all because I'll still treat myself every now and then, to one of my new budget funds. It should also help me cut down my body % fat too! Haha.....

MovingForwards

With the OT how about splitting it? Distribute it!
A bit of fun money, some for savings towards your annual bills/ dental etc, a bit of an overpayment to your mortgage (if allowed) and the rest as emergency fund

Yellow_mango

Just dropping in to say hi and good luck!

lightbulbtime

MovingForwards wrote: »

With the OT how about splitting it? Distribute it!
A bit of fun money, some for savings towards your annual bills/ dental etc, a bit of an overpayment to your mortgage (if allowed) and the rest as emergency fund

Thanks for the responses. One thing I’ve always wanted since buying my house last year was to clear my overdraft on both accounts. I know the fee of £6 per month isn’t much, but achieving this mental goal after so many months would be really satisfying and give me a boost motivationally speaking. I know it’s probably not the most sensible way of using the money, but mentally I think it would be worth it. I’m feeling really happy just thinking I could achieve that in the next two months. It would mean I still have £400 left over, and I think the emergency fund would be a good location for half of it and I’ll take my kids away for a very long needed weekend away where we can chill, enjoy the outdoors and recharge my batteries. So thanks MF, splitting it this way would suit me just perfectly!

FootyFanDan

lightbulbtime wrote: »

While I have plenty of time on nightshift, I decided to search the depths of MSE to find more things to motivate me. And I found "The Demotivator"!!!! So remember my sweet addiction above? Well it turns out that my addiction is costing me over £1000 per year!! that's over £80 per month. So what best to do with my chocolate addiction? I think I'll move £50 of it to overpaying my mortgage and some of the rest, but not all because I'll still treat myself every now and then, to one of my new budget funds. It should also help me cut down my body % fat too! Haha.....

Wow! This resonates with so much. I have a similar thing with picking up C*sta coffee on my way to work. I only worked out a month and the figure scared the life out of me. I dont even want to see the annual cost of it. I am going to buy a jar of coffee and use the facilities we have at work to fix this. On days i am not so bad but night shifts are so different If i was to work out what i spent at work in a month just on food and drink that figure would terrify me... dare I even total it up :eek: