Where is it all going??

gardian8

Hi All. I have been reading quite a few posts in this sub forum lately and this has prompted me to start a thread of my own as I might get some advice of my own.
Basically, I earn a good wage for where we live (in the North East), My girlfriend earns average, we have a BTL property we rent out and we have 2 kids
We recently moved in October last year to a much bigger, (much more expensive!) house and I think we might have bitten off a bit more than we can chew to be honest. I did the maths before we moved and we should have been ok, but 4 months in we still have debt and no real savings. We seem to be haemorrhaging money with not a lot to show for it so I am trying this out to see if I can get a better grasp on where its all going. I have had a go at a SOA below

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 2

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 2940

Partners monthly income after tax....... 1668

Benefits................................ 137

Other income............................ 450[b]

Total monthly income.................... 5195[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 940

Secured/HP loan repayments.............. 97

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 184

Electricity............................. 75

Gas..................................... 75

Oil..................................... 0

Water rates............................. 45

Telephone (land line)................... 0

Mobile phone............................ 26

TV Licence.............................. 25

Satellite/Cable TV...................... 0

Internet Services....................... 33

Groceries etc. ......................... 600

Clothing................................ 100

Petrol/diesel........................... 200

Road tax................................ 15

Car Insurance........................... 45

Car maintenance (including MOT)......... 10

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 100

Medical (prescriptions, dentist etc).... 12

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 0

Life assurance ......................... 0

Other insurance......................... 0

Presents (birthday, christmas etc)...... 100

Haircuts................................ 20

Entertainment........................... 300

Holiday................................. 200

Emergency fund.......................... 100

Stamp duty pay back..................... 100

Kids savings............................ 100

savings................................. 200[b]

Total monthly expenses.................. 3702[/b]

[b]

Assets[/b]

Cash.................................... 6000

House value (Gross)..................... 345000

Shares and bonds........................ 0

Car(s).................................. 7000

Other assets............................ 0[b]

Total Assets............................ 358000[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 230000...(940)......1.65<

BTL Mortage....................50000....(97).......2.75[b]

Total secured & HP debts...... 280000....-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

credit card....................811.......11........0

Car loan.......................3063......222.......3.4[b]

Total unsecured debts..........3874......233.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 5,195

Expenses (including HP & secured debts). 3,702

Available for debt repayments........... 1,493

Monthly UNsecured debt repayments....... 233[b]

Amount left after debt repayments....... 1,260[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 358,000

Total HP & Secured debt................. -280,000

Total Unsecured debt.................... -3,874[b]

Net Assets.............................. 74,126[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

The credit card we used is 0% and it was used to buy new furniture when we moved and we were planning on paying 300/month to clear this. the loan is fixed payment until March 2021
We currently have £8.11 in the bank until Payday on Friday
The savings we do have is part of money my GF got from her grandparents for house renovations and is earmarked for a new en-suite which is due to be started soon.
As we moved last year we were saving 750\month towards the deposit for the house, but the house we bought was 30k over our original budget so we had to use all of the savings, some of which was already put aside for Stamp duty. We decided that we would use some of the kids savings to pay the stamp duty otherwise we would have not been able to move. not the best but the savings is for them when they are 18+ so plenty of time to pay that back, girls are 4 and 12.
GF is wanting to go on holiday this year as we didnt last year and she turns 40 at the end of the year so wants something to look forward to.
I would like to have more savings and the CC paid off as soon as possible, but it seems that every time we get any money together, something crops up and we need to fork out the savings for it. I have only yesterday, paid £210 for the boiler to be fixed at the BTL. (hence the £8.11 left in the bank).

tlc678910

Hi OP,
I can't see any buidings or contents insurance for your own home?
I also wondered about all the costs for your buy to let.  You have listed other income as £450 which I assume is the rent from your buy to let property.  Is this £450 after you have paid for your landlord insurance, annual gas check, other maintenance and put aside the tax that you will need to pay on your rental income?  Are you going to try to put anything aside for voids and between tenant repairs and redecoration?  As I assume you are a higher rate tax payer are you aware that you will be paying tax on any income that has paid your mortgage interest? (assuming you have a mortgage).  Just making sure you are accounting for all these costs as they should be planned costs and not surprises.  Your reference to needing to pay for a boiler repair made me wonder if you are counting all the rental income as your own income and dealing with rental expenses ad hoc. 

Four months into living at your new home is really very new so I think you might not expect to have been able to improve your position much yet as moving is expensive and a lot crops up in those first few months.

Once you are on an even keel I would prioritise saving more into the kids savings as if you want money set aside to help with driving lessons/ possibly a car/insurance and university I think you need to do more there, particularly as one of your children is 12.  You really need to try to replace their savings that were spent quickly if you can and then add to their pots.  I know not everyone is in a position to do this but I do think that you are and your children will not receive the full university loans because you will be expected to top up their money due to your household income.  There is information on how much parents are expected to contribute on this site.

gardian8

Thanks for replying, to answer your questions..I paid the home insurance off as a one off payment when we moved in so i would save the cost of the interest.
£450 is the rent income. We have along term tenant in and we dont anticipate any movement on that front for a good while. He will be in until we sell up. 
We tend to just pay the rent into our account and spend what we want,  when problems arise like the boiler we have always got a fall back either a credit card or a bit spare cash. since we moved our emergency fund was depleted totally so we are trying to sort that out so there will be a pool of money available for this, we used to have that in the past and i think this is what we are lacking now.
We both pay extra tax through PAYE as we are both basic tax payers. I am hovering at 40% the threshold after some tax saving benefits were bought from work. 
It has been expensive when moving, we had a new boiler fitted (from GF;s gifted money) and then a radiator wasnt working so that was another £400 to pull out. we also have just spent £900 on new blinds.
With regards to the kids savings, we used to save 100/month each. I have lowered this until we have paid the credit card off and then will put this back up. we aim to save 1000/year for them both, 12 year old is a little behind this she has around 11500 saved up 4 year old is a bit in front with about 5000 saved so far. We are in the process of moving the savings we had to them over to ISA's we have set up for their savings as they pay better, we were advised to move the money over monthly so we woudl get the average of the price of the shares rather than a lump sum. we are moving 200/month from savings into the ISA's and then adding the additional savings. The Stamp duty repayment is set at 100/month and will be paid in 3 years at this rate, so there is plenty of time to get that paid back before  the eldest will be accessing that money.

Whiterose23

That grocery bill could definitely come down! Try shopping at Aldi or Lidl.

Naomim

gardian8 said:

 I have had a go at a SOA below

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 2

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 2940

Partners monthly income after tax....... 1668

Benefits................................ 137

Other income............................ 450[b]

Total monthly income.................... 5195[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 940

Secured/HP loan repayments.............. 97

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 184

Electricity............................. 75 - have you checked to see if you can get a better deal

Gas..................................... 75  - have you checked to see if you can get a better deal

Oil..................................... 0

Water rates............................. 45

Telephone (land line)................... 0

Mobile phone............................ 26

TV Licence.............................. 25 - do you pay for both properties? 

Satellite/Cable TV...................... 0

Internet Services....................... 33

Groceries etc. ......................... 600 This can definitely be improved. I feed a family of four including a 14year old man-child and budget £425 a month. I shop at Tesco. Meal planning and on-line shopping have helped a lot!

Clothing................................ 100 - could this be cut down for now? I know children grow but if you have two girls do you have anything from the elder you can put by for the younger one? Cut out buying clothes for yourself & your GF unless absolutely necessary

Petrol/diesel........................... 200

Road tax................................ 15

Car Insurance........................... 45

Car maintenance (including MOT)......... 10

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 100

Medical (prescriptions, dentist etc).... 12

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 0

Life assurance ......................... 0

Other insurance......................... 0

Presents (birthday, christmas etc)...... 100

Haircuts................................ 20

Entertainment........................... 300 - This is a lot on a monthly basis. 

Holiday................................. 200

Emergency fund.......................... 100

Stamp duty pay back..................... 100

Kids savings............................ 100

savings................................. 200[b]

Total monthly expenses.................. 3702[/b]

[b]

Assets[/b]

Cash.................................... 6000

House value (Gross)..................... 345000

Shares and bonds........................ 0

Car(s).................................. 7000

Other assets............................ 0[b]

Total Assets............................ 358000[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 230000...(940)......1.65<

BTL Mortage....................50000....(97).......2.75[b]

Total secured & HP debts...... 280000....-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

credit card....................811.......11........0

Car loan.......................3063......222.......3.4[b]

Total unsecured debts..........3874......233.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 5,195

Expenses (including HP & secured debts). 3,702

Available for debt repayments........... 1,493

Monthly UNsecured debt repayments....... 233[b]

Amount left after debt repayments....... 1,260[/b] -  

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 358,000

Total HP & Secured debt................. -280,000

Total Unsecured debt.................... -3,874[b]

Net Assets.............................. 74,126[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

The credit card we used is 0% and it was used to buy new furniture when we moved and we were planning on paying 300/month to clear this. the loan is fixed payment until March 2021
We currently have £8.11 in the bank until Payday on Friday
The savings we do have is part of money my GF got from her grandparents for house renovations and is earmarked for a new en-suite which is due to be started soon.
As we moved last year we were saving 750\month towards the deposit for the house, but the house we bought was 30k over our original budget so we had to use all of the savings, some of which was already put aside for Stamp duty. We decided that we would use some of the kids savings to pay the stamp duty otherwise we would have not been able to move. not the best but the savings is for them when they are 18+ so plenty of time to pay that back, girls are 4 and 12.
GF is wanting to go on holiday this year as we didnt last year and she turns 40 at the end of the year so wants something to look forward to.
I would like to have more savings and the CC paid off as soon as possible, but it seems that every time we get any money together, something crops up and we need to fork out the savings for it. I have only yesterday, paid £210 for the boiler to be fixed at the BTL. (hence the £8.11 left in the bank).

I made some comments above but can't work out how to change the colour *new look forum  *
As you have £8 left in your bank account until Friday, it means there is £1,000 unaccounted for after repairing the BTL boiler. That's a big amount to "lose" with no idea where it's going.  You may need to go through your bank accounts and see where this has got to.

gardian8

Thanks Naomim. I had that issue with trying to colour the reply in.
I know the gas and electricity bill is high, we work from home full time so there is always something on. We have just had new smart meters fitted so we are trying to keep an eye on things. we pay 150/month for both with Bulb who were the cheapest when i looked when we moved.
The groceries is high, but this is what we budgeted on so we would always have enough for the month. I doubt we ever spend this on food alone in the month, but normally all of the money each month has gone come payday!
the 300 entertainment is partly for daughters pocket money and treats, going out for food and drinks. i need to be stricter and only spend whats allocated but its just one pot of money that gets emptied by everything at the minute.

Naomim

gardian8 said:

Thanks Naomim. I had that issue with trying to colour the reply in.
I know the gas and electricity bill is high, we work from home full time so there is always something on. We have just had new smart meters fitted so we are trying to keep an eye on things. we pay 150/month for both with Bulb who were the cheapest when i looked when we moved.
The groceries is high, but this is what we budgeted on so we would always have enough for the month. I doubt we ever spend this on food alone in the month, but normally all of the money each month has gone come payday!
the 300 entertainment is partly for daughters pocket money and treats, going out for food and drinks. i need to be stricter and only spend whats allocated but its just one pot of money that gets emptied by everything at the minute.

This is where I had a big problem, in that everything was in one place so there was no actual budget for anything and I think this easily lends itself to overspending.  Once I started properly budgeting things have vastly improved.  Without sounding like a cheerleader for them, but a MONZO bank account has changed my life in terms of budgeting.  I kept all my regular DD's in my old bank account and mine and MrM's salaries still hit that account as normal.  The rest is transferred to Monzo and into specific pots.  These are the pots I currently have:

Car Insurance	-              35.00
Car MOT & repairs	-              80.00
Birthday Presents	-              30.00
Xmas savings	-              70.00
House Insurance	-              25.00
Clothing / Haircuts	-              30.00
Vets	-              25.00
Emergency Fund	-              40.00
CICM Memebership	-                9.50
Days out	-              30.00
Groceries	-            425.00
Kids savings automatic	-              20.00
school lunches	-              65.00
Teen pocket money	-              30.00
Petrol	-            140.00
Dog Food	-              60.00
Teen school trip	-              25.00
Tween school trip	-              20.00

By not being in my main bank account and not on my available balance, the money doesn't get touched until it has to. So some of them are "locked" ie Christmas & Emergency Fund.  They are all building nicely so when the car insurance is due, I will have the funds available without needing to use the credit card.
However, I still think you need to look long and hard at your bank statements as there's a huge chunk of missing money that unless you work out now where it's going, you will never be able to pin down a budget.
Naomim 

EssexHebridean

It's all well and good paying insurances upfront to save on the fees for paying monthly but if you're not now putting the money aside ready for the payment next time round where is that going to come from when the renewal comes up? 

At the moment your SOA is showing a healthy surplus - in the region of £14,000 a year which is a substantial figure and well in excess of your unsecured debt - so your first question even before you start thinking about cutting any costs elsewhere is to track that down. Bluntly as things stand one or the other of you is spending stuff that is't being accounted (or budgeted) for - and you need to work out what those costs are. 

With 2 cars I have to say I think £10 a month is a long way from getting you through all the costs - think MoT Test, at least one service per vehicle, then depreciative things like tyres, wiper blades, plus screenwash, cleaning....it all mounts up, and even at the most budget of prices I'm getting those costs for a couple of cars coming up at somewhere about £800 as a minimum. 

Where is the money you're currently saving for things like holiday, presents etc being saved as if I'm reading you correctly the £6000 showing in cash assets is the ringfenced money for the house renovations? You are saving £100 a month for emergency fund and £200 for other savings but you had to raid your current account for the £210 boiler repair at the BTL? 

The food budget is also a concern as you're saying that you don't spend that amount in a month but then again also that you don't have anything left at the end of the month -  so is the grocery money being dipped into for other things? 

I'm going to suggest three things to start with - the first is that from tomorrow you start both keeping spending diaries and writing down everything you spend. The second is that you go back over that SOA with ayear's worth of card & bank statements to hand, and you correct any categories that are currently incorrect. It might also be worth adding up cash withdrawals and averaging those for a month too. Third I'm going to suggest that you take £100 of the money currently allocated to just "savings" and start paying that into a separate BTL Emergency Fund to cover things like the boiler issue when they next occur. You have a responsibility as a landlord to be able to get repairs done in a timely fashion and this will potentially save you a lot of stress down the line. 

gardian8

Thanks EssexHebridean for a prompt for me to check the last 12 months of spending. its not a pretty picture for our spending habits tbh. I have just done a running 12 month total and we have taken £7500 cash out of the bank since 19/2/19. This is not including the cash we will have had when using cash back. Also I have totalled up the takeaway total and thats a whopping £3895 so there is 10k in 12 months we have spent but not budgeted/accounted for, this is without the trips to the likes of BnM where we will go in for toothpaste and quickly spend £70 on things we didnt need. We have no discipline it seems when it comes to spending and now we are paying much higher bills its going to come to a head.

The bills we have that are paid off in a lump sum are rarely saved for and we just use up the surplus we know we have for that month on that bill. My car tax is due at the end of the month and my insurance due next month, we will just buy these outright which will come out of our none budgeted fund (if that makes sense?). We really need to get a handle on this as things seem to be spiralling out of control. I recently read a post on here asking why someone on the same salary as me has no savings. I can only answer that by saying i have no savings as i have no discipline with money

I guess my real aim  and the reason for starting this diary is to learn and budget properly. Neither of us are hiding anything from each other but we spend the money as though it has to be spent for that month, with very little moving into savings.
We are saving 200/month into a separate account and the emergency fund is just left in the bank each month, which always seems to be eaten up so never grows. The 200/month was for a holiday fund, and has 400 in there at the minute.
the car fund is again just as and when we need something we can pay for it using the surplus, there is a theme developing here and i am realising this the more i type this out. 
It may sound daft, but because i know we are getting a good income every month and there is a fair bit surplus we dont need to budget and thats the mindset i want to get out of. I want to have a pot of money so that when the BTL boiler finally packs in we can get it replaced straight away without having to think about it.

Moneywhizz

With your income you are in a good position to pay back your debt and get some good savings behind you. iAs you are beginning to realise it won't happen by accident. Setting a realistic budget and including every category is definitely the way to get control of your money and get into much better position than you are now. Once you have the budget sorted it will be good idea to allow a reasonable amount of spending money for both of you so that you can continue to buy the things that are important to you individually. It is a learning curve but once you start this way of managing your money you will enjoy the feeling of control and knowing exactly how much money you have to spend. You are in the right place for helping in learning how to budget and it is good that you have recognised the need for this before things got out of hand. 

MidsHollie

gardian8 said:

It may sound daft, but because i know we are getting a good income every month and there is a fair bit surplus we dont need to budget and thats the mindset i want to get out of. I want to have a pot of money so that when the BTL boiler finally packs in we can get it replaced straight away without having to think about it.

I think many of us are on here because we thought our income was good enough that we don’t have to worry. I would sometimes spend over £20 a day on food out, because “I deserve a coffee on the way to work” which became a coffee and croissant and lunch and a frappe on the way home. 
Since December I’ve been putting money away for all expenses. I’m actually itching to get my car MOT and service done because the money is sat there waiting for it! I really do recommend a spending diary - looks like you’ve already worked out why you need one!