For people that have escaped the paycheck-to-paycheck cycle, how much has it impacted your life?

Rich1976

For me the best and worst thing happened last November when I was made redundant. However despite losing a job I loved I found another straight away within walking distance from home.
This not only meant I received a large redundancy payout but also decided to sell my car as was no point leaving it on the driveway every day. So becoming a one Car household meant we could clear our remaining debt. My redundancy pay is now our Emergency fund and because of the last few months we have substantially increased our savings each month to the point we now have more than we ever have.
The stress this eradicated is unbelievable beyond words. Seriously. I know that if either if us lost our jobs again we would be ok for about 7 months. Also if something needs repairing there is no issue in getting it seen to because the money is there.
Previously it wasn't the inconvenience factor but the worry of the savings being reduced further as a result which may have resulted in going without something else until next pay day.
Clearing debt has been a massive boost. I can no longer envisage why i would want to do it again. People dont seem to appreciate the burden a debt can be until things go wrong and why people choose to spend a fair percentage on car loans or loans to replace the kitchen etc is beyond me. You have to have been there to realise how stressful debt can be hanging over your head each month. Especially in times we live in now. Nobody knows what's round the corner.

newlywed

My whole working life has been spent waiting for payday because there was no money left.

until I discovered ynab last year and have finally gone from being in my overdraft Halfway through the month to having 20% of my wages left on payday. Not needing to spend on travel to work at the moment has helped loads though!

it feels very strange knowing I have enough not just to the end of the month but to the end of August.  I have been slowly trying to shave more off my bills so that I can save a bit more and stretch my money into September.

I honestly think I never learnt how to properly budget. I would always check my bank to see if I could afford things whereas now I always check my actual budget to see what money I have available, since all of the money is allocated to categories and future expenses.

I wish I had known how much stress would go by doing this and wish I had learned this to budget properly a couple of decades ago!

Rich1976

newlywed said:

My whole working life has been spent waiting for payday because there was no money left.

until I discovered ynab last year and have finally gone from being in my overdraft Halfway through the month to having 20% of my wages left on payday. Not needing to spend on travel to work at the moment has helped loads though!

it feels very strange knowing I have enough not just to the end of the month but to the end of August.  I have been slowly trying to shave more off my bills so that I can save a bit more and stretch my money into September.

I honestly think I never learnt how to properly budget. I would always check my bank to see if I could afford things whereas now I always check my actual budget to see what money I have available, since all of the money is allocated to categories and future expenses.

I wish I had known how much stress would go by doing this and wish I had learned this to budget properly a couple of decades ago!

Yes a good budget has worked wonders. A simple spreadsheet or pen and paper with everything written down that is to be paid for the following month. The one I use is split into Fixed essentials  variable essentials, entertainment and savings and pensions. All balances to zero and the secret is not to spend more than what's in the account. Helps to identify any overspending on insurances etc too and where savings can be made

blue.peter

newlywed said:

I honestly think I never learnt how to properly budget.

That's the thing, isn't it? Budgeting in some form or another is hugely important in life, but it's just not taught. Even my father, who was good at it and who was otherwise a good parent, never thought to teach it to his children. It ought to be a basic subject in school. I was in my mid 20s before I worked out how to do it for myself. (You've found a much more sophisticated method than I did, but please remember that there was no publicly-accessible Internet when I had to start.)

newlywed

@blue.peter I thought I was budgeting, I would plan what I hoped to spend... then not keep track, overspend in one area and then totally give up and ignore it all! 

I also would forget to make a note of what I had or hadn’t spent, and my bank takes days to show up card payments.  My tracking every spend always used to give up after a week.  Now I have he budget on my phone, iPad and can log into it on the web from work or laptop so I have no excuse!

i have finally got into the habit of checking my bank And my budget every morning and making sure every single transaction is in my budget and accounted for. 

newlywed

@Rich1976 mine has fixed needs, variable needs, wants and savings. 

Similar, and makes it easier to decide which bits you might need to cut back on if the money doesn’t go far enough.  

hugheskevi

I have never been short of money in my adult life (now aged 42) but grew up in a household with no money. This was due to being in a single-parent household in the 1990s following the death of a parent, which led to an unusual situation of having nothing until age 16 then about £60K (in today's terms) - a decent albeit not life changing amount.

I have however always set financial targets, such as ensuring all income subject to higher rate tax was put into a pension, or making maximum ISA contributions for myself and my wife, etc. There is always a very clear short-term goal to work toward, and a very clear long-term plan that is progressing. I find that it is only by having those plans that you can properly assess trade-offs - for example, is a new car worth the extra months of work it will require?

Most people would describe me as very frugal, although my wife and I do spend a decent amount on travel. However, there is a huge difference between voluntary and enforced frugality. It is one thing not to purchase something because you choose not to, and another because you can't afford to.

I recently got to the point of financial independence, ie, could retire if I wanted to, and that is another great point to reach that takes a good amount of stress out of life.  That was far more significant than paying off mortgage which many point toward as a great relief, but which I was always very relaxed about, especially once the mortgage was covered by ISA investments.

blue.peter

newlywed said:

i have finally got into the habit of checking my bank And my budget every morning and making sure every single transaction is in my budget and accounted for. 

Yup, that's good practice.

I don't check my bank accounts and credit cards every morning, but I do it several times a week. The important thing for me is to empty the card vouchers from the back of my wallet as I get home, and enter them into my own records the same day (I use AceMoney). Direct Debits and standing orders are automatically entered: AceMoney's Schedule function takes care of those. That gives me a running picture of where I think I am. Checking with the banks is then only a matter of reconciliation - making sure that they agree with AceMoney. (The banks/card issuers that show pending items are particularly helpful, since they're often a day or two behind me in showing card transactions.) On the rare occasions when I do see a mismatch, it's invariably an error on my part - a number mistyped, or a card voucher still in my wallet. These are easily and quickly corrected.

blue.peter

blue.peter said:

I don't check my bank accounts and credit cards every morning, but I do it several times a week.

My comment above has sparked a little thought. It's wonderful that we can take the ability to check our bank accounts daily for granted. But it's only in the last ~20 years that this has been possible. And even 20 years ago, not everyone had home computers or Internet access. When I was young, I had to wait for my monthly bank statement to arrive in the post before I could reconcile it with my own paper records. Times change, and some changes are for the better.

MovingForwards

Thank you @blue.peter I went into the detail I did as learning to save, goes hand in hand with budgeting.

I was taught the practical side of life growing up eg how to fix cars, wire plugs, fill holes in walls, decorate, cook etc but not the financial side as my mom was a single parent on benefits.
In my former life I had to hit the ground running as I moved out quite young. Then I was in a relationship it wasn't a team and my ex could drink and spend more than he earned, my wages didn't cover everything, juggling only works for so long. I had a career where climbing the ladder and reaching the top was my goal even after my accident. A CCJ / DMP saw everything I had worked towards and studied for years instantly wiped out.

Image finally getting the money together to pay off what was left of the CCJ and asking the firm who obtained it if they will sign a set aside document, drafted by me, to say how much they want to sign it and I will lodge it with the court so I can get a job in my profession because of starting my life over to be told 'no, a CCJ won't stop you' and listing how many times I had been rejected because of it, then hearing the 'oh, still can't do it'

It's a road I never want to drive down again, so of course I will be using every trick I know to avoid it. If that means using skills picked up through work, that's what I will do.

I'm living proof that there is life after a 21 year relationship / marriage. After being in debt owning a home and getting credit can be achieved. Being female doesn't mean I can't put up shelves, change sparkplugs, use power tools and be independent; things just take a lot longer now due to my health.

If just one bit of how I do things is useful to someone, then everything I have been through isn't wasted, giving people hope is free and empowers those reading it.